Corporate Update
20/01/2022 07:00
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RNS Number : 0224Z Serica Energy PLC 20 January 2022
Serica Energy plc
("Serica" or the "Company")
Corporate Update
London, 20 January 2022 - Serica Energy plc (AIM: SQZ), a British independent
upstream oil and gas company with operations centred on the UK North Sea and
over 85% gas production, today releases a Corporate Update presentation for
the year ended 31 December 2021 which can be found on the Company's website at
www.serica-energy.com (http://www.serica-energy.com)
Mitch Flegg, Chief Executive of Serica Energy, commented:
"2021 was a very busy year for Serica, which reinforced the value of our
through-cycle investment strategy as our expenditure during the low gas price
environment of 2020 on the R3 and Columbus projects bore fruit this year. The
importance of our contribution to the provision of vital lower carbon gas to
the UK's energy market was also demonstrated. We will continue to pursue our
investment-led strategy this year with a planned well intervention programme
on Bruce and Keith in addition to our exploration well at North Eigg. As
always, we continue to look for acquisition opportunities that fit our
criteria and will add value for our stakeholders."
Production
· With the introduction of R3 and Columbus, Serica's production is
now 85% gas, a vital part of the UK's energy mix as we move towards Net Zero.
As operator of Bruce, Keith and Rhum, Serica is responsible for over 5% of the
UK's gas production. This production has a significantly lower carbon
footprint than imported LNG and helps maintain the UK's security of supply
· The Rhum R3 well was put into production in late August 2021 and has
boosted total Rhum production significantly, adding up to 6,000 boe/d net to
Serica
· First production from the Columbus field was achieved in late
November 2021. Early production was initially constrained due to temporary
unavailability of full capacity in the export system but average rates of
3,270 boe/d net to Serica were achieved in the period up to year-end
Financial
· Gas prices closed 2021 very strongly, contributing to a market
average for the year of over 113p/therm (2020: 25p/therm) with oil also
higher, averaging over $70/bbl (2020: $45/bbl)
· This allied to growing production volumes drove Serica's total cash
resources to £218.4 million at 31 December 2021 of which £103.0 million was
held as cash and deposits (2020: £89.3 million) and a further £115.4 million
was lodged as temporary security with gas price hedge counterparties (2020:
£1.8 million)
o Security is lodged based on future period gas price hedge valuations and
the high year-end level reflected the exceptional gas price spike in December.
Surplus security is returned to Serica as forward prices fall and when monthly
contracts expire
o Such valuations reflect the impact of high forecast forward prices on
hedged production but do not reflect the far greater revenues that would be
realised should actual prices match those forward prices
· The BKR net cash flow sharing arrangements came to an end on 31
December 2021. From 1 January 2022, we enter a new phase for the Company where
we will be retaining 100% (2021: 60%) of the net cash flow from the BKR
fields, benefitting fully from the recent increase in production levels
Outlook
· Serica intends to continue with its programme of through-cycle
investment in its diversified portfolio of assets. A rig has now been
contracted for the drilling of the high-impact North Eigg exploration well in
the summer of 2022. North Eigg is a gas prospect located close to Serica's BKR
fields and it is expected that a successful discovery could be tied back to
existing infrastructure in a carbon neutral manner
· Plans are also in place for a well intervention campaign to take place
in 2022 to improve the production potential of several Bruce and Keith wells
during subsequent years
· Growing cash balances offer increasing options for further
investment, acquisition, and distributions. Serica's Board continues to
evaluate the optimum balance between these elements to deliver further
shareholder returns
Regulatory
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, as retained in the UK pursuant to S3 of the European
Union (Withdrawal) Act 2018.
The technical information contained in the announcement has been reviewed and
approved by Fergus Jenkins, VP Technical at Serica Energy plc. Mr. Jenkins
(MEng in Petroleum Engineering from Heriot-Watt University, Edinburgh) is a
Chartered Engineer with over 25 years of experience in oil & gas
exploration, development and production and is a member of the Institute of
Materials, Minerals and Mining (IOM3) and the Society of Petroleum Engineers
(SPE).
Enquiries:
Serica Energy plc +44 (0)20 7390 0230
Tony Craven Walker, Executive Chairman
Mitch Flegg, CEO
Peel Hunt (Nomad & Joint Broker) +44 (0)20 7418 8900
Richard Crichton / David McKeown / Alexander Allen
Jefferies (Joint Broker) +44 (0)20 7029 8000
Tony White / Will Soutar
Vigo Consulting +44 (0)20 7390 0230
Patrick d'Ancona / Chris McMahon serica@vigoconsulting.com (mailto:serica@vigoconsulting.com)
NOTES TO EDITORS
Serica Energy is a British independent oil and gas exploration and production
company with a portfolio of exploration, development and production assets.
Serica is the operator of the producing Bruce, Keith and Rhum fields in the UK
Northern North Sea, holding interests of 98%, 100% and 50% respectively, and
holds a 50% operated interest in the newly-producing Columbus field in the UK
Central North Sea. Serica also holds an 18% non-operated interest in the
producing Erskine field in the UK Central North Sea.
Over 85% of Serica's production is natural gas, a key element in the UK's
energy transition.
Further information on the Company can be found at www.serica-energy.com
(http://www.serica-energy.com/) .
The Company's shares are traded on the AIM market of the London Stock Exchange
under the ticker SQZ and the Company is a designated foreign issuer on the
TSX. To receive Company news releases via email, please subscribe via the
Company website.
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