REG - Serinus Energy PLC - Interim Results for 3 months ended 31 March 2022
12/05/2022 07:00
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RNS Number : 1913L Serinus Energy PLC 12 May 2022
12 May 2022
Press Release
Interim Results for the three months ended 31 March 2022
Jersey, Channel Islands, 12 May 2022 -- Serinus Energy plc ("Serinus" or the
"Company") (AIM:SENX, WSE:SEN) is pleased to announce its interim results
for the three months ended 31 March 2022.
Financial
· Revenue for the three months ended 31 March 2022 was $13.4 million
(31 March 2021 - $7.6 million)
· The Company generated net income of $1.0 million (31 March 2021 -
$1.0 million loss)
· EBITDA for the three months ended 31 March 2022 was $3.1 million
(31 March 2021 - $2.6 million)
· Gross profit for the three months ended 31 March 2022 was $2.9
million (31 March 2021 - $0.7 million)
· The Company realised a net price of $184.57/boe for the three
months ended 31 March 2022, comprising:
o Realised oil price - $90.13/bbl
o Realised natural gas price - $33.94/Mcf ($203.64/boe)
· The Group's operating netback remained strong for the three months
ended 31 March 2022 and was $148.88/boe (31 March 2021 - $23.90/boe),
comprising:
o Romania operating netback - $182.79/boe (31 March 2021 - $26.23/boe)
o Tunisia operating netback - $41.88/boe (31 March 2021 - $18.33/boe)
· Capital expenditures of $1.5 million (31 March 2021 - $3.5
million), comprising:
o Romania - $1.3 million
o Tunisia - $0.2 million
· Cash balance as at 31 March 2022 was $6.2 million
Operational
· The Satu Mare 2D seismic acquisition programme has been completed
and interpretation work to support the drilling of up to three prospects
adjacent to the Moftinu field is underway
· Well permitting is underway and rig availability has been
determined for a multi-well drilling program in the latter half of 2022 in
Romania
· The Sabria W-1 wellsite has been prepared for the intervention
which will install the first submersible pump for the Artificial Lift
programme in the Sabria field. Tubulars and workover consumables are
onsite
· The Company has signed a rig contract and is awaiting rig
mobilization from another operator and the workover and pump installation at
the Sabria W-1 well will commence as soon as the rig is available
· Upon completion of the workover and pump installation at Sabria
W-1, the rig will move to the Sabria N-2 well to perform a workover to
recomplete the well. All materials required for this intervention are
sourced
· Additional pumps and long-lead items in Tunisia have been ordered,
to mitigate longer lead times created by global supply chain disruptions
· Production for the period averaged 1,115 boe/d, comprising:
o Romania - 610 boe/d
o Tunisia - 505 boe/d
· The Company performed a lifting in April 2022 of 42,000 bbls of
Tunisian crude oil at a price of $104.79/bbl. Revenue will be recognised in
the second quarter of 2022
About Serinus
Serinus is an international upstream oil and gas exploration and production
company that owns and operates projects in Tunisia and Romania.
For further information, please refer to the Serinus website
(www.serinusenergy.com) or contact the following:
Serinus Energy plc +44 204 541 7859
Jeffrey Auld, Chief Executive Officer
Andrew Fairclough, Chief Financial Officer
Calvin Brackman, Vice President, External Relations & Strategy
Shore Capital (Nominated Adviser & Joint Broker) +44 207 408 4090
Toby Gibbs / John More (Corporate Advisory)
Arden Partners plc (Joint Broker) +44 207 614 5900
Ruari McGirr/Alexandra Campbell – Harris (Corporate Finance)
Camarco (Financial PR - London) +44 203 781 8334
Owen Roberts
Phoebe Pugh
TBT i Wspólnicy (Financial PR - Warsaw) +48 602 214 353
Katarzyna Terej
Forward Looking Statement Disclaimer
This release may contain forward-looking statements made as of the date of
this announcement with respect to future activities that either are not or may
not be historical facts. Although the Company believes that its expectations
reflected in the forward-looking statements are reasonable as of the date
hereof, any potential results suggested by such statements involve risk and
uncertainties and no assurance can be given that actual results will be
consistent with these forward-looking statements. Various factors that could
impair or prevent the Company from completing the expected activities on its
projects include that the Company's projects experience technical and
mechanical problems, there are changes in product prices, failure to obtain
regulatory approvals, the state of the national or international monetary, oil
and gas, financial , political and economic markets in the jurisdictions where
the Company operates and other risks not anticipated by the Company or
disclosed in the Company's published material. Since forward-looking
statements address future events and conditions, by their very nature, they
involve inherent risks and uncertainties, and actual results may vary
materially from those expressed in the forward-looking statement. The Company
undertakes no obligation to revise or update any forward-looking statements in
this announcement to reflect events or circumstances after the date of this
announcement, unless required by law.
Translation: This news release has been translated into Polish from the
English original.
Serinus Energy plc
First Quarter Report and Accounts 2022
(us dollars)
First Quarter 2022 Highlights
Financial
· Revenue for the three months ended 31 March 2022 was $13.4
million (31 March 2021 - $7.6 million)
· The Company generated net income of $1.0 million (31 March 2021
- $1.0 million loss)
· EBITDA for the three months ended 31 March 2022 was $3.1 million
(31 March 2021 - $2.6 million)
· Gross profit for the three months ended 31 March 2022 was $2.9
million (31 March 2021 - $0.7 million)
· The Company realised a net price of $184.57/boe for the three
months ended 31 March 2022, comprising:
o Realised oil price - $90.13/bbl
o Realised natural gas price - $33.94/Mcf ($203.64/boe)
· The Group's operating netback remained strong for the three
months ended 31 March 2022 and was $148.88/boe (31 March 2021 - $23.90/boe),
comprising:
o Romania operating netback - $182.79/boe (31 March 2021 - $26.23/boe)
o Tunisia operating netback - $41.88/boe (31 March 2021 - $18.33/boe)
· Capital expenditures of $1.5 million (31 March 2021 - $3.5
million), comprising:
o Romania - $1.3 million
o Tunisia - $0.2 million
· Cash balance as at 31 March 2022 was $6.2 million
Operational
· The Satu Mare 2D seismic acquisition programme has been
completed and interpretation work to support the drilling of up to three
prospects adjacent to the Moftinu field is underway
· Well permitting is underway and rig availability has been
determined for a multi-well drilling program in the latter half of 2022 in
Romania
· The Sabria W-1 wellsite has been prepared for the intervention
which will install the first submersible pump for the Artificial Lift
programme in the Sabria field. Tubulars and workover consumables are
onsite
· The Company has signed a rig contract and is awaiting rig
mobilization from another operator and the workover and pump installation at
the Sabria W-1 well will commence as soon as the rig is available
· Upon completion of the workover and pump installation at Sabria
W-1, the rig will move to the Sabria N-2 well to perform a workover to
recomplete the well. All materials required for this intervention are
sourced
· Additional pumps and long-lead items in Tunisia have been
ordered, to mitigate longer lead times created by global supply chain
disruptions
· Production for the period averaged 1,115 boe/d, comprising:
o Romania - 610 boe/d
o Tunisia - 505 boe/d
· The Company performed a lifting in April 2022 of 42,000 bbls of
Tunisian crude oil at a price of $104.79/bbl. Revenue will be recognised in
the second quarter of 2022
Operational Update and outlook
Serinus Energy plc and its subsidiaries ("Serinus", the "Company" or the
"Group") is an oil and gas exploration, appraisal and development company.
The Group is the operator of all its assets and has operations in two
business units: Romania and Tunisia.
ROMANIA
The Group's Romanian operating subsidiary holds the licence to the Satu Mare
concession area, covering approximately 3,000 km(2) in the north-west of
Romania. The Moftinu Gas Development project began production in 2019. The
development project includes the Moftinu gas plant, and currently operates
four gas wells - Moftinu-1003, Moftinu-1004, Moftinu-1007 and Moftinu-1008
with a second compressor installed and commissioned on Moftinu-1007 in
February 2022. During the three months ended 31 March 2022, the Company's
Romanian operations produced a total of 327 MMcf of gas and 417 barrels of
condensate, equating to an average daily production of 610 boe/day. Production
continues to decrease due to natural declines as well as water breakthrough in
some producing formations within some of the producing wells. The Company
has an extensive capital programme underway in Romania in 2022 to find
additional gas resources that can be produced and processed through the
existing capacity available at the Moftinu gas plant.
Serinus conducted a thorough review of the Satu Mare exploration portfolio and
high-graded the area and prospects to the immediate north and east of the
Moftinu field. In February 2022, the 112km 2D seismic acquisition programme
over high-ranked prospects was executed over this area and compliments
reprocessed legacy 2D seismic and the existing Moftinu 3D data-set. The 2D
seismic data has been processed. AVO analysis and interpretation has
confirmed the recoverable resource potential of the highly-ranked prospects.
From this interpretation, the Company has determined optimal drilling
locations for the 2022 drilling programme with permitting underway.
Additional interpretation work is also being conducted on the Santau 3D area
with a view to confirming drilling locations on prospects that will form the
basis for future multi-well drilling campaigns.
Gas pricing in Romania remained at unprecedented high levels through the first
quarter of 2022, with an average realised price of $36.19/mcf. Gas prices on
the Romanian Commodity Exchange ("BRM") continue to remain strong over the
second quarter of 2022 to date.
Tunisia
The Company currently holds three concession areas within Tunisia and all of the Tunisian licence areas have discovered oil and gas reserves and are currently producing; Sabria, Chouech Es Saida, and Ech Chouech. The largest asset is the Sabria field, a large, conventional oilfield which the Company's independent reservoir engineers have estimated to have approximately 445 million barrels of oil originally in place. Of this oil in place only 1.0% has been produced to date due to a low rate of development on the field.
The Sabria W-1 wellsite has been prepared for the intervention which will
install the first submersible pump for the Artificial Lift programme in the
Sabria field. All materials required for this intervention are in our
in-country warehouse. The Company has signed a rig contract for the CTF 006
rig and is awaiting mobilization from another operator and the workover and
pump installation at the Sabria W-1 well will commence as soon as the rig is
available, expected in the second quarter of 2022.
Upon completion of the workover and pump installation at Sabria W-1, the rig
will move to the Sabria N-2 well to perform a workover to recomplete the
well. This well was drilled in 1980 but was damaged during completion and,
although in proximity to producing wells, was not able to flow oil to surface
due to damage during completion. The workover program will re-complete the
well and remove any wellbore restrictions. The Company anticipates that the
N-2 well will be on production in the latter half of 2022.
Additional pumps and long-lead items for the Sabria field artificial lift
programme have been ordered.
Ongoing workover programmes continue in the Chouech Es Saida field, installing further pumps to enhance production.
Financial Review
Liquidity, Debt and Capital Resources
During the three months ended 31 March 2022, the Company invested a total of
$1.5 million (2021 - $3.5 million) on capital expenditures before working
capital adjustments. In Romania the Group invested $1.3 million (2021 - $3.0
million) on compression at the Moftinu-1007 well as well as the completion of
the 2D seismic acquisition programme. In Tunisia, the Company invested $0.2
million (2021 - $0.5 million) for workovers on wells.
The Company's funds from operations for the three months ended 31 March 2022
was $2.9 million (2021 - $2.4 million). Including changes in non-cash
working capital, the cash flow used in operating activities in 2021 was $3.5
million (2021 - $1.8 million). The Company continues to be in in a strong
position to expand and continue growing production within our existing
resource base. The Company is debt-free and has adequate resources available
to deploy capital into both operating segments to deliver growth and
shareholder returns.
(US$ 000s) 31 March 31 December 2021
Working Capital
2022
Current assets 18,297 17,625
Current liabilities 16,196 16,994
Working Capital 2,101 631
The working capital at 31 March 2022 was $2.1 million (31 December 2021 - $0.6
million). The increase in working capital is primarily a result of strong
cash flows.
Current assets as at 31 March 2022 were $18.3 million (31 December 2021 -
$17.6 million), an increase of $0.7 million. Current assets consist of:
· Cash and cash equivalents of $6.2 million (31 December 2021 - $8.4
million)
· Restricted cash of $1.2 million (31 December 2021 - $1.1 million)
· Trade and other receivables of $8.7 million (31 December 2021 -
$8.9 million)
· Product inventory of $2.2 million (31 December 2021 - $0.6 million)
Current liabilities as at 31 March 2022 were $16.2 million (31 December 2021 -
$17.0 million), a decrease of $0.8 million. Current liabilities consist of:
· Accounts payable of $8.7 million (31 December 2021 - $9.7 million)
· Decommissioning provision of $6.9 million (31 December 2021 - $6.6
million)
o Brunei - $1.6 million (31 December 2021 - $1.6 million)
o Canada - $1.0 million (31 December 2021 - $1.0 million) which is offset by
restricted cash in the amount of $1.2 million (31 December 2021 - $1.1
million) in current assets
o Romania - $0.3 million (31 December 2021 - $0.3 million)
o Tunisia - $4.0 million (31 December 2021 - $3.7 million)
· Income taxes payable of $0.2 million (31 December 2021 - $0.5
million)
· Current portion of lease obligations of $0.4 million (31 December
2021 - $0.2 million)
Non-current assets
Property, plant and equipment ("PP&E") decreased to $68.3 million (31
December 2021 - $71.7 million), primarily due to depletion in the period of
$2.5 million as well as a change in decommissioning estimates of $1.6 million
partially offset by capital expenditures in PP&E of $0.9 million.
Exploration and evaluation assets ("E&E") increased to $5.6 million (31
December 2021 - $5.0 million), primarily due to expenditures incurred on the
2D seismic acquisition programme. Right-of-use assets ("ROU") increased to
$0.5 million (31 December 2021 - $0.3 million) due to expenditures incurred on
corporate assets.
Funds from Operations
The Group uses funds from operations as a key performance indicator to measure
the ability of the Group to generate cash from operations to fund future
exploration and development activities. The following table is a
reconciliation of funds from operations to cash flow from operating
activities:
Period ended 31 March
(US$ 000s) 2022 2021
Cash flows (used in) from operations (587) 1,802
Changes in non-cash working capital 3,534 631
Funds from operations 2,947 2,433
Funds from operations per share 0.00 0.00
Romania generated funds from operations of $4.0 million (2021 - $2.9 million)
and Tunisia generated $0.4 million (2021 - $0.6 million). Funds used at the
Corporate level were $1.5 million (2021 - $1.1 million) resulting in net funds
from operations of $2.9 million (2021 - $2.4 million).
Production
Period ended 31 March 2022 Tunisia Romania Group %
Crude oil (bbl/d) 441 - 441 39%
Natural gas (Mcf/d) 381 3,630 4,011 60%
Condensate (bbl/d) - 5 5 1%
Total production (boe/d) 505 610 1,115 100%
Period ended 31 March 2021
Crude oil (bbl/d) 490 - 490 23%
Natural gas (Mcf/d) 670 8,929 9,599 76%
Condensate (bbl/d) - 7 7 1%
Total production (boe/d) 602 1,495 2,097 100%
During the three months ended 31 March 2022 production volumes decreased by
982 boe/d (47%) to 1,115 boe/d (2021 - 2,097 boe/d).
Romania's production volumes decreased by 885 boe/d (59%) to 610 boe/d (2021 -
1,495 boe/d). Production continues to decrease due to natural declines as
well as water breakthrough in some producing formations within some of the
producing wells. In February 2022, a second compressor was installed and
commissioned on Moftinu-1007. The Company also has an extensive capital
programme underway in Romania in 2022 to find additional gas resources that
can be produced and processed through the existing capacity available at the
Moftinu gas plant.
Tunisia's production volumes decreased by 97 boe/d (16%) to 505 boe/d (2021 -
602 boe/d). The Sabria W-1 wellsite has been prepared for the intervention
which will install the first submersible pump for the Artificial Lift
programme in the Sabria field. All materials required for this intervention
are in our in-country warehouse. The Company has signed a rig contract and
is awaiting rig mobilization from another operator and the workover and pump
installation at the Sabria W-1 well will commence as soon as the rig is
available, expected in the second quarter of 2022. Ongoing workover
programmes continue in the Chouech Es Saida field, installing further pumps to
enhance production.
Oil and Gas Revenue
(US$ 000s)
Period ended 31 March 2022 Tunisia Romania Group %
Oil revenue 1,045 - 1,045 7%
Natural gas revenue 429 11,846 12,275 92%
Condensate revenue - 43 43 1%
Total revenue 1,474 11,889 13,363 100%
Period ended 31 March 2021
Oil revenue 2,381 - 2,381 31%
Natural gas revenue 468 4,698 5,166 68%
Condensate revenue - 33 33 1%
Total revenue 2,849 4,731 7,580 100%
REALISED PRICE 1
Period ended 31 March 2022 Tunisia Romania Group
Oil ($/bbl) 90.13 - 90.13
Natural gas ($/Mcf) 12.47 36.19 33.94
Condensate ($/bbl) - 82.21 82.21
Average realised price ($/boe) 85.06 215.86 184.57
Period ended 31 March 2021
Oil ($/bbl) 54.03 - 54.03
Natural gas ($/Mcf) 7.77 5.85 5.98
Condensate ($/bbl) - 49.73 49.73
Average realised price ($/boe) 52.65 35.14 40.16
During the three months ended 31 March 2022 revenue increased by $5.8 million
(76%) to $13.4 million (2021 - $7.6 million) as the Group saw the average
realised price increase by $144.41/boe (359%) to $184.57/boe (2021 -
$40.16/boe).
The Group's average realised oil price increased by $36.10/bbl (67%) to
$90.13/bbl (2021 - $54.03/bbl), and average realised natural gas prices
increased by $27.96/Mcf (468%) to $33.94/Mcf (2021 - $5.98/Mcf).
Under the terms of the Sabria Concession Agreement the Group is required to
sell 20% of its annual crude oil production from the Sabria concession into
the local market, which is sold at an approximate 10% discount to the price
obtained on its other crude sales. The remaining crude oil production was
sold to the international market.
Royalties
Period ended 31 March
(US$ 000s) 2022 2021
Tunisia 149 445
Romania 377 383
Total 526 828
Total ($/boe) 7.26 4.38
Tunisia (% of revenue) 10.1% 15.6%
Romania (% of revenue) 3.2% 8.1%
Total (% of revenue) 3.9% 10.9%
During the three months ended 31 March 2022 royalties decreased by $0.3
million (37%) to $0.5 million (2021 - $0.8 million) and the Group's royalty
rate decreased to 3.9% (2021 - 10.9%). The decrease in the Romanian royalty
rate is due to the decrease in the level of production and as a result the
royalty rate dropped to 3.5% (2021 - 7.5%) as well as the realised price
exceeding the royalty reference price, compared to the comparative period when
the reference price exceeded the realised price. In the comparative period
2021 there was a historic penalty in Tunisia for delayed gas royalty payments
of $0.1 million.
In Romania, in the first quarter of 2022, the Company is incurring a 3.5%
royalty for gas (2021 - 7.5%) and 3.5% royalty for condensate (2021 - 3.5%).
The royalty is calculated using a reference price that is set by the
Romanian authorities and not the realised price to the Company. Romanian
royalty rates vary based on the level of production during the quarter.
Natural gas royalty rates range from 3.5% to 13.0% and condensate royalty
rates range from 3.5% to 13.5%.
In Tunisia, royalties vary based on individual concession agreements. Sabria
royalty rates vary depending on a calculation of cumulative revenues, net of
taxes, as compared to cumulative investment in the concession, known as the "R
factor". As the R factor increases, so does the royalty percentage to a
maximum rate of 15%. During the first quarter of 2022, the royalty rate
remained unchanged in Sabria at 10% for oil and 8% for gas. Chouech Es Saida
and Ech Chouech royalty rates are flat at 15% for both oil and gas.
Production Expenses
Period ended 31 March
(US$ 000s) 2022 2021
Tunisia 599 1,418
Romania 1,445 819
Canada 14 9
Group 2,058 2,246
Tunisia production expense ($/boe) 34.58 26.13
Romania production expense ($/boe) 26.23 6.07
Total production expense ($/boe) 28.43 11.88
During the three months ended 31 March 2022 production expenses decreased by
$0.2 million (12%) to $2.0 million (2021 - $2.2 million), which is an increase
of $16.55/boe (139%) to $28.43/boe (2021 - $11.88/boe). The decrease in
costs during the period is the result of lower sales volumes, fewer costs
related to workovers being completed in Tunisia as well as the inclusion of
historic mining taxes related to Sanrhar and Zinnia of $0.3 million in the
comparative period in 2021.
Tunisia's production expenses decreased by $0.8 million (63%) to $0.6 million
(2021 - $1.4 million), being an increase of $8.45/boe (32%) to $34.58/boe
(2021 - $26.13/boe). The decrease in production expenses is due to lower
sales volumes in the period, a reduced number of workover programs initiated
and historic mining taxes of $0.3 million related to Sanrhar and Zinnia
included in the comparative period in 2021.
Romania's overall production expenses increased by $0.6 million (76%) to $1.4
million (2021 - $0.8 million), being an increase of $20.16/boe (332%) to
$26.23/boe (2021 - $6.07/boe). The increase in production costs is primarily
a result of higher water disposal costs and general inflation in Romania.
Canadian production expenses relate to the Sturgeon Lake assets, which are not
producing and are incurring minimal operating costs to maintain the property.
Operating Netback
Serinus uses operating netback as a key performance indicator to assist
management in understanding Serinus' profitability relative to current market
conditions and as an analytical tool to benchmark changes in operational
performance against prior periods. Operating netback consists of petroleum
and natural gas revenues less direct costs consisting of royalties and
production expenses. Netback is not a standard measure under IFRS and
therefore may not be comparable to similar measures reported by other
entities.
($/boe)
Period ended 31 March 2022 Tunisia Romania Group
Sales volume (boe/d) 2 192 612 804
Realised price 85.06 215.86 184.57
Royalties (8.60) (6.84) (7.26)
Production expense (34.58) (26.23) (28.43)
Operating netback 41.88 182.79 148.88
Period ended 31 March 2021
Sales volume (boe/d) 602 1,495 2,097
Realised price 52.65 35.14 40.16
Royalties (8.19) (2.84) (4.38)
Production expense (26.13) (6.07) (11.88)
Operating netback 18.33 26.23 23.90
During the three months ended 31 March 2022 the Group's operating netback
increased by $124.98/boe (523%) to $148.88/boe (2021 - $23.90/boe). The
increase is due to increased realised prices partially offset by increased
royalties as well as increased production expenses in Romania. The Company
also realised an increase in gross profit of $2.2 million to $2.9 million
(2021 - $0.7 million), largely due to a significant increase in the Company's
netbacks as well as a decrease to depletion as described below.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
Serinus uses EBITDA as a key performance indicator to assist management in
understanding Serinus' cash profitability. EBITDA is computed as net
profit/loss and adding back interest, taxation, depletion & depreciation,
and amortisation expense. EBITDA is not a standard measure under IFRS and
therefore may not be comparable to similar measures reported by other
entities. During the three months ended 31 March 2022, the Group's EBITDA
increased by $0.5 million to $3.1 million (2021 - $2.6 million). The
increase is mainly due to higher netbacks in the current period.
Period ended 31 March
(US$ 000s) 2022 2021
Net income (loss) 1,045 (1,010)
Interest expense 13 20
Depletion and amortization 1,795 3,162
Tax expense 210 410
EBITDA 3,063 2,574
Windfall Tax
Period ended 31 March
(US$ 000s) 2022 2021
Windfall tax 6,035 642
Windfall tax ($/Mcf - Romania gas) 18.44 0.80
Windfall tax ($/boe - Romania gas) 110.63 4.79
During the three months ended 31 March 2022 windfall taxes increased by $5.4
million (841%) to $6.0 million (2021 - $0.6 million). This increase is
directly related to higher realised gas prices which increased from $5.85/Mcf
to $36.19/Mcf.
In Romania, the Group is subject to a windfall tax on its natural gas
production which is applied to supplemental income once natural gas prices
exceed 47.53 RON/Mwh. This supplemental income is taxed at a rate of 60%
between 47.53 RON/Mwh and 85.00 RON/Mwh and at a rate of 80% above 85.00
RON/Mwh. Expenses deductible in the calculation of the windfall tax include
royalties and capital expenditures limited to 30% of the supplemental income
below the 85.00 RON/Mwh threshold.
Depletion and Depreciation
Period ended 31 March
(US$ 000s) 2022 2021
Tunisia 322 1,049
Romania 1,435 2,075
Corporate 38 38
Total 1,795 3,162
Tunisia ($/boe) 18.58 19.32
Romania ($/boe) 26.06 15.40
Total ($/boe) 24.79 16.73
During the three months ended 31 March 2022 depletion and depreciation expense
decreased by $1.4 million (43%) to $1.8 million (2021 - $3.2 million),
primarily due to lower production during the period. Per boe, depletion and
depreciation expense increased by $8.06/boe (48%) to $24.79/boe (2021 -
$16.73/boe), primarily due to lower reserves in the current period.
General and Administrative ("G&A") Expense
Period ended 31 March
(US$ 000s) 2022 2021
G&A expense 1,388 1,052
G&A expense ($/boe) 19.16 5.57
During the three months ended 31 March 2022 G&A expenses increased by $0.3
million (31%) to $1.4 million (2021 - $1.1 million), being an increase of
$13.59/boe (244%) to $19.16/boe (2021 - $5.57/boe) due to higher compliance
expenses and impact of foreign exchange rates in the current period. Per boe,
G&A expense is higher due to lower sales volumes in the period.
Share-Based Payment
Period ended 31 March
(US$ 000s) 2022 2021
Share-based payment 26 88
Share-based payment ($/boe) 0.36 0.47
During the three months ended 31 March 2022 share-based compensation decreased
to $0.02 million (2021 - $0.1 million) due to lower stock options granted in
the preceding 12 months.
Net Finance Expense
Period ended 31 March
(US$ 000s) 2022 2021
Interest on leases 8 17
Accretion on decommissioning provision 190 88
Foreign exchange and other 107 1
305 106
During the three months ended 31 March 2022 net finance expenses increased by
$0.2 million (188%) to $0.3 million (2021 - $0.1 million). This increase is
mainly due to foreign exchange losses on due to the strengthening of the US
dollar, as well as higher accretion on decommissioning provision increased due
to the higher discount rates during the period.
Taxation
During the three months ended 31 March 2022 tax expense was $0.2 million (2021
- $0.4 million). The decrease in the tax expense is directly related to
lower taxable income in Tunisia during the period.
Share Data
As at the date of issuing this report, the following are the Directors stock
options outstanding, LTIP awards, and shares owned up to the date of this
report.
Share Options LTIP Awards Shares
Executive Directors:
Jeffrey Auld 26,800,000 16,563,548 3,908,752
Andrew Fairclough 1,750,000 9,036,313 1,080,533
Non-Executive Directors:
Jim Causgrove 100,000 - 400,000
Lukasz Redziniak - - 720,000
Jon Kempster 3 (#_ftn3) - - 602,607
28,650,000 25,599,861 6,711,892
As of the date of issuing this report, management is aware of the following
shareholders holding more than 5% of the ordinary shares of the Group, as
reported by the shareholders to the Group: Richard Sneller 11.36%, CRUX Asset
Management 8.25%, and Quercus TFI SA 7.11%.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information on the Group's website. Legislation in
Jersey governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Foreign Currency Translation
Foreign currency translation occurs from the revaluation from fluctuations in
the foreign exchange rates in entities with a different functional currency
than the reporting currency (USD). The revaluation of the condensed
consolidated interim statement of financial position to the period-end rates
resulted in a loss of $0.4 million (2021 - loss of $1.4 million) through Other
comprehensive income (loss).
Going Concern
The Group's business activities, together with the factors likely to affect
its future development and performance are set out in the Operational Update
and Outlook. The financial position of the Group is described in these
condensed consolidated interim financial statements and in the Report from the
CFO.
The Directors have given careful consideration to the appropriateness of the
going concern assumption, including cashflow forecasts through the going
concern period and beyond, planned capital expenditure and the principal risks
and uncertainties faced by the Group. This assessment also considered
various downside scenarios including oil and gas commodity prices and
production rates. Following this review, the Directors are satisfied that
the Group has sufficient resources to operate and meet its commitments as they
come due in the normal course of business for at least 12 months from the date
of these condensed consolidated interim financial statements. Accordingly,
the Directors continue to adopt the going concern basis for the preparation of
these condensed consolidated interim financial statements.
Declarations of the Board of Directors Concerning Accounting Policies
The Board of Directors of the Company confirms that, to the best of their
knowledge, the condensed consolidated interim financial statements together
with comparative figures have been prepared in accordance with applicable
accounting standards and give a true and fair view of the state of affairs and
the financial result of the Group for the period ended 31 March 2022.
The Financial Review in this report gives a true and fair view of the
situation on the reporting date and of the developments during the period
ended 31 March 2022, and include a description of the major risks and
uncertainties.
Serinus Energy plc
Condensed Consolidated Interim Statement of Comprehensive Loss
(US$ 000s, except per share amounts)
Three months ended
31 March
Note 2022 2021
Revenue 13,363 7,580
Cost of sales
Royalties (526) (828)
Windfall tax (6,035) (642)
Production expenses (2,058) (2,246)
Depletion and depreciation (1,795) (3,162)
Total cost of sales (10,414) (6,878)
Gross profit 2,949 702
Administrative expenses (1,388) (1,052)
Share-based payment expense (26) (88)
Total administrative expenses (1,414) (1,140)
Decommissioning provision recovery (expense) 25 (56)
Operating income (loss) 1,560 (494)
Finance expense (305) (106)
Net income (loss) before tax 1,255 (600)
Taxation expense (210) (410)
Income (loss) after taxation attributable to equity owners of the parent 1,045 (1,010)
Other comprehensive (loss) income
Other comprehensive (loss) income to be classified to profit and loss in
subsequent periods:
Foreign currency translation adjustment (423) (1,390)
Total comprehensive income (loss) for the period attributable to equity owners 622 (2,400)
of the parent
Income (loss) per share:
Basic 4 0.00 (0.00)
Diluted 4 0.00 (0.00)
The accompanying notes on pages 15 to 16 form part of the condensed
consolidated interim financial statements.
Serinus Energy plc
Condensed Consolidated Interim Statement of Financial Position
(US$ 000s, except per share amounts)
As at 31 March 31 December 2021
2022
Non-current assets
Property, plant and equipment 68,319 71,747
Exploration and evaluation assets 5,580 5,042
Right-of-use assets 527 370
Total non-current assets 74,426 77,159
Current assets
Restricted cash 1,168 1,144
Trade and other receivables 8,722 7,396
Product inventory 2,252 656
Cash and cash equivalents 6,155 8,429
Total current assets 18,297 17,625
Total assets 92,723 94,784
Equity
Share capital 401,426 401,426
Share-based payment reserve 25,513 25,487
Treasury shares (323) (121)
Accumulated deficit (386,941) (387,986)
Cumulative translation reserve (1,797) (1,374)
Total Equity 37,878 37,432
Liabilities
Non-current liabilities
Decommissioning provision 26,437 28,232
Deferred tax liability 10,640 10,516
Lease liabilities 213 252
Other provisions 1,359 1,358
Total non-current liabilities 38,649 40,358
Current liabilities
Current portion of decommissioning provision 6,940 6,636
Current portion of lease liabilities 377 193
Accounts payable and accrued liabilities 8,879 10,165
Total current liabilities 16,196 16,994
Total liabilities 54,845 57,352
Total liabilities and equity 92,723 94,784
The accompanying notes on pages 15 to 16 form part of the condensed
consolidated interim financial statements.
These condensed consolidated interim financial statements were approved by the
Board of Directors and authorised for issue on 11 May 2022.
Serinus Energy plc
Condensed Consolidated Interim Statement of Changes in Equity
(US$ 000s, except per share amounts)
Share capital Share-based payment reserve Treasury Shares Accumulated deficit Accumulated other comprehensive loss Total
Balance at 31 December 2020 401,426 25,274 - (396,410) 1,089 31,379
Comprehensive loss for the period - - - (1,010) - (1,010)
Other comprehensive loss for the period - - - - (1,390) (1,390)
Total comprehensive loss for the period (1,010) (1,390) (2,400)
Transactions with equity owners
Share-based payment expense - 88 - - - 88
Balance at 31 March 2021 401,426 25,362 - (397,420) (301) 29,067
Balance at 31 December 2021 401,426 25,487 (121) (387,986) (1,374) 37,432
Comprehensive income for the period - - - 1,045 - 1,045
Other comprehensive loss for the period - - - - (423) (423)
Total comprehensive loss for the period - - - 1,045 (423) 622
Transactions with equity owners
Share-based payment expense - 26 - - - 26
Shares purchased to be held in Treasury (202) - - (202)
Balance at 31 March 2022 401,426 25,513 (323) (386,941) (1,797) 37,878
The accompanying notes on pages 15 to 16 form part of the condensed
consolidated interim financial statements.
Serinus Energy plc
Condensed Consolidated Interim Statement of Cash Flows
(US$ 000s, except per share amounts)
Three months ended
31 March
2022 2021
Operating activities
Income (loss) for the period 1,045 (1,010)
Items not involving cash:
Depletion and depreciation 1,795 3,162
Accretion expense on decommissioning provision 190 88
Share-based payment expense 26 88
Change in other provisions - (14)
Decommissioning provision (recovery) expense (25) 56
Unrealised foreign exchange gain (10) (10)
Taxation 210 (410)
Income taxes paid (284) (329)
Funds from operations 2,947 2,433
Changes in non-cash working capital 5 (3,534) (631)
Cashflows (used in) from operating activities (587) 1,802
Financing activities
Lease payments (69) (105)
Shares purchased to be held in treasury (202) -
Cashflows used in financing activities (271) (105)
Investing activities
Capital expenditures 5 (1,269) (2,447)
Proceeds on disposition of property, plant and equipment - 8
Cashflows used in investing activities (1,269) (2,439)
Impact of foreign currency translation on cash (147) 9
Change in cash and cash equivalents (2,274) (733)
Cash and cash equivalents, beginning of period 8,429 6,002
Cash and cash equivalents, end of period 6,155 5,269
The accompanying notes on pages 15 to 16 form part of the condensed
consolidated interim financial statements.
Serinus Energy plc
Notes to the Condensed Consolidated Interim Financial Statements
(US$ 000s, except per share amounts)
1. General information
Serinus Energy plc and its subsidiaries are principally engaged in the
exploration and development of oil and gas properties in Tunisia and
Romania. Serinus is incorporated under the Companies (Jersey) Law 1991.
The Group's head office and registered office is located at 2(nd) Floor, The
Le Gallais Building, 54 Bath Street, St. Helier, Jersey, JE1 1FW.
Serinus is a publicly listed company whose ordinary shares are traded under
the symbol "SENX" on AIM and "SEN" on the WSE.
2. Basis of presentation
The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") and their
interpretations issued by the International Accounting Standards Board
("IASB") as adopted by the United Kingdom applied in accordance with the
provisions of the Companies (Jersey) Law 1991.
These condensed consolidated interim financial statements are expressed in
U.S. dollars unless otherwise indicated. All references to US$ are to
U.S. dollars. All financial information is rounded to the nearest
thousands, except per share amounts and when otherwise indicated.
Information about significant areas of estimation uncertainty and critical
judgements in applying accounting policies that have the most significant
effect on the amounts recognised in the condensed consolidated interim
financial statements are described in Note 5 to the consolidated financial
statements for the year ended 31 December 2021. There has been no change in
these areas during the three months ended 31 March 2022.
Going concern
The Group's business activities, together with the factors likely to affect
its future development and performance are set out in the Operational Update
and Outlook. The financial position of the Group is described in these
condensed consolidated interim financial statements and in the Report from the
CFO.
The Directors have given careful consideration to the appropriateness of the
going concern assumption, including cashflow forecasts through the going
concern period and beyond, planned capital expenditure and the principal risks
and uncertainties faced by the Group. This assessment also considered
various downside scenarios including oil and gas commodity prices and
production rates. Following this review, the Directors are satisfied that
the Group has sufficient resources to operate and meet its commitments as they
come due in the normal course of business for at least 12 months from the date
of these condensed consolidated interim financial statements. Accordingly,
the Directors continue to adopt the going concern basis for the preparation of
these condensed consolidated interim financial statements.
3. Significant accounting policies
The condensed consolidated interim financial statements have been prepared
following the same basis of measurement, accounting policies and methods of
computation as described in the notes to the consolidated financial statements
for the year ended 31 December 2021.
4. Income (Loss) per share
Period ended 31 March
(US$ 000s, except per share amounts) 2022 2021
Income (loss) for the period 1,045 (1,010)
Weighted average shares outstanding:
Basic and diluted shares (000s) 1,147,525 1,302,013
Income (loss) per share:
Basic and dilutive 0.00 (0.00)
In determining diluted net loss per share, the Group assumes that the proceeds
received from the exercise of "in-the-money" stock options are used to
repurchase ordinary shares at the average market price. In calculating the
weighted-average number of diluted ordinary shares outstanding for the period
ended 31 March 2022, the Group excluded nil stock options (2021 - 33.1
million) as they were anti-dilutive.
5. Supplemental Cash Flow Disclosure
Period ended 31 March
2022 2021
Cash provided by (used in):
Trade and other receivables (1,428) 316
Product inventory (841) -
Accounts payable and accrued liabilities (1,265) (962)
Restricted cash - 15
Changes in non-cash working capital from operating activities (3,534) (631)
The following table reconciles capital expenditures to the cash flow
statement:
Period ended 31 March
2022 2021
PP&E additions 884 3,335
E&E additions 628 194
ROU additions 220 -
Total capital additions 1,732 3,529
Changes in non-cash working capital from investing activities (463) (1,082)
Total capital expenditures 1,269 2,447
1 For the three months ended 31 March 2022, Tunisia realised oil prices are
calculated using oil sales volumes of 129 bbl/d (31 March 2021 - 490 bbl/d).
As at 31 March 2022 there were 39,711 bbls of oil held in product inventory
(31 March 2021 - nil).
2 For the three months ended 31 March 2022, sales volumes of 192 boe/d
represented quantities of oil and gas sold during the period. As at 31 March
2022 there were 39,711 bbls of oil held in product inventory (31 March 2021 -
nil).
3 Shares held by Catherine Kempster (the spouse of Jon Kempster)
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