REG - Serinus Energy PLC - Q3 2023 Results
27/11/2023 07:00
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RNS Number : 6677U Serinus Energy PLC 27 November 2023
27 November 2023
Press Release
Interim Results for the Nine Months Ended 30 September 2023
Jersey, Channel Islands, 27 November 2023 -- Serinus Energy plc ("Serinus" or
the "Company") (AIM:SENX, WSE:SEN) is pleased to announce its interim results
for the nine months ended 30 September 2023.
Financial
· Revenue for the nine months ended 30 September 2023 was $13.3
million (30 September 2022 - $41.8 million)
· Funds from operations for the nine months ended 30 September
2023 were $1.2 million (30 September 2022 - $11.1 million)
· EBITDA for the nine months ended 30 September 2023 was $1.2
million (30 September 2022 - $12.6 million)
· Gross profit for the nine months ended 30 September 2023 was
$1.8 million (30 September 2022 - $11.8 million)
· The Company realised a net price of $76.84/boe for the nine
months ended 30 September 2023 comprising:
o Realised oil price - $78.68/bbl
o Realised natural gas price - $12.03/Mcf
· The Group's operating netback decreased, in line with commodity
prices, for the nine months ended 30 September 2023 and was $34.15/boe (30
September 2022 - $120.13/boe), comprising:
o Romania operating netback - $4.22/boe (30 September 2022 - $195.73/boe)
o Tunisia operating netback - $40.68/boe (30 September 2022 - $59.11/boe)
· Capital expenditures of $5.3 million for the nine months ended
30 September 2023 (30 September 2022 - $8.6 million), comprising:
o Romania - $0.5 million
o Tunisia - $4.8 million
· Cash balance as at 30 September 2023 was $1.5 million (31
December 2023 - $4.9 million). As at 15 November 2023, the Group had cash
balances of $3.5 million
Operational
· Production for nine months ended 30 September 2023 averaged
641 boe/d, comprising:
o Tunisia - 524 boe/d
o Romania - 117 boe/d
· Production in Chouech Es Saida continues to be stable and
benefits from artificial lift programme
· Static and dynamic reservoir models of the Sabria field are
being constructed. The study will help inform optimum reservoir management
including potential well workovers and new well locations
· Installation of artificial lift in the Sabria W-1 well will
require a sidetrack. The sidetrack design has been completed and the tender
process for the long lead items has commenced
· The Sabria N-2 well is dewatering at a slow rate and the
Company is in discussions with its partner regarding stimulation techniques to
enhance the dewatering of this well
· The Company performed a lifting of 56,600 bbls of Tunisian
crude oil at a price of $85.59/bbl in October
· In October 2023, the Company was granted a further
exploration period on the Satu Mare Concession in Romania by Romanian National
Agency for Mineral Resources ("NAMR"). The exploration period extension is in
two phases. The first phase, until 27 October 2025, includes the acquisition
of 100 kilometres of 2D seismic. The second optional phase of two years
requires the drilling of one well with no depth obligation
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
Calvin Brackman, Vice President, External Relations & Strategy
Shore Capital (Nominated Adviser & Broker) +44 207 408 4090
Toby Gibbs
Lucy Bowden
Camarco (Financial PR - London) +44 203 781 8334
Owen Roberts
RES Consulting (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
Third Quarter Report and Accounts 2023
(US dollars)
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 has four gas
production wells - Moftinu-1003, Moftinu-1004, Moftinu-1007 and
Moftinu-1008. During the nine months ended 30 September 2023, the Company's
Romanian operations produced a total of 192 MMcf of gas, equating to an
average daily production of 117 boe/day.
The Canar-1 water injection well is currently injecting all produced water
volumes from the Moftinu field. The use of Canar-1 as a water injection well
is delivering significant cost savings in operating expenses due to the
elimination of the high costs of trucking produced water volumes for disposal
off-site.
The Company has completed all its commitments under the third exploration
phase of the Satu Mare Concession Agreement, and in October 2021, received an
additional two-year evaluation phase on the Satu Mare Concession until 27
October 2023. In October 2023, the Company was granted further exploration
phase extension of the Satu Mare Concession by NAMR. The extension is in two
phases. The first phase of the extension is two years in duration starting on
28 October 2023. The work commitment for the first phase is the reprocessing
of 100 kilometres of legacy 2D seismic as well as a 2D seismic acquisition
program of 100 kilometres including processing the acquired seismic data.
The second phase of the licence extension is optional and is two years in
duration starting on 28 October 2026 with a work commitment of drilling one
well within the concession area with no total drilling depth requirement
stipulated. The greater Moftinu gas field area has been declared a
commercial field and is exempt from this routine licence extension procedure.
The Company announced on 15 February 2023 that the International Chamber of
Commerce ("ICC") had awarded a decision in favour of Serinus, confirming that
as a result of Oilfield Exploration Business Solutions S.A. ("OEBS") default
under the Joint Operating Agreement ("JOA") between OEBS and Serinus, OEBS'
40% participating interest in the Satu Mare Concession in Romania will be
transferred to Serinus. Furthermore, the Company has received in October 2023,
from the Romanian Courts, the recognition of the ICC award.
The Company is currently planning for the workover interventions in M-1003 and
M-1007, scheduled for the first half of 2024. These interventions are
intended to access additional gas volumes in the Moftinu field.
Tunisia
The Company currently holds two concession areas within Tunisia - Sabria and
Chouech Es Saida. These concession areas both contain discovered oil and gas
reserves and are currently producing. The largest asset is the Sabria field,
which is a large, conventional oilfield. The Company's independent reservoir
engineers have estimated Sabria to have approximately 445 million barrels of
oil equivalent originally in place. Of this oil in place only 1.6% has been
produced to date due to a low rate of development on the field. Serinus has
spent extensive time studying the best means of further developing this field
and considers this to be an excellent asset for remedial work to increase
production and, on completion of ongoing reservoir studies, to conduct further
development operations.
The workover to install a pump into the Sabria W-1 well encountered unexpected
conditions as a result of old drilling mud and tubulars left in the well from
operations in 1998. The Company and its partner, Enterprise Tunisienne
D'Activite Petroliere ("ETAP"), suspended the workover and have determined
that a sidetrack is required to complete the operation. The sidetrack design
has been completed and the tender process for the long lead items has
commenced.
The Company and ETAP also conducted workover operations on the Sabria N-2
well. Workover operations were completed on time and within budget. The
objectives of the workover were to remove wellbore restrictions, install new
production tubing, and remediate reservoir damage around the wellbore.
Wellbore restrictions were removed and new production tubing was installed.
The well will need further stimulation to clean up the formation damage and
discussions are continuing with the partner on this issue. The well was
drilled in 1980 but was damaged during completion and, although in proximity
to producing wells, in particular the prolific WIN-12bis well, was not able to
flow oil to surface. The Company's engineering analysis estimates that a
successful workover and recompletion will initially increase gross production
from the Sabria field by approximately 420 boe/d.
Financial Review
Liquidity, Debt and Capital Resources
During the nine months ended 30 September 2023, the Company invested a total
of $5.3 million (2022 - $8.6 million) on capital expenditures before working
capital adjustments. In Romania, the Group invested $0.5 million (2022 -
$6.9 million) on Canar-1 water injection pump, solar powered radio
telecommunication system to the Moftinu gas plant, and further extension of
the Satu Mare Concession. In Tunisia, the Company invested $4.8 million
(2022 - $1.6 million) of which $3.5 million was invested in workovers on wells
and $1.3 million in capital inventory additions.
The Company's funds from operations for the nine months ended 30 September
2023 were $1.2 million (2022 - $11.1 million). Including changes in non-cash
working capital, the cash flow generated from operating activities in 2023 was
$1.7 million (2022 - $8.7 million). The Company continues to be in a strong
position to expand and continue growing production within our existing
resource base. The Company remains debt-free and has adequate resources
available to deploy capital into both operating business units to deliver
growth and shareholder returns.
($000) 30 September 31 December
Working Capital 2023 2022
Current assets 14,200 16,654
Current liabilities (18,468) (16,571)
Working Capital surplus (deficit) (4,268) 83
Working capital deficit as at 30 September 2023 is $4.3 million (31 December
2022 - $0.1 million surplus).
Current assets as at 30 September 2023 were $14.2 million (31 December 2022 -
$16.7 million), a decrease of $2.5 million. Current assets consist of:
· Cash and cash equivalents of $1.5 million (31 December 2022 -
$4.9 million)
· Restricted cash of $1.1 million (31 December 2022 - $1.1 million)
· Trade and other receivables of $10.9 million (31 December 2022 -
$10.0 million)
· Product inventory of $0.7 million (31 December 2022 - $0.7
million)
Current liabilities as at 30 September 2023 were $18.5 million (31 December
2022 - $16.6 million), an increase of $1.9 million. Current liabilities
consist of:
· Accounts payable of $13.0 million (31 December 2022 - $9.3
million)
· Decommissioning provision of $5.4 million (31 December 2022 -
$5.1 million)
o Canada - $0.8 million (31 December 2022 - $0.8 million) which is offset by
restricted cash in the amount of $1.1 million (31 December 2022 - $1.1
million) in current assets
o Romania - $0.5 million (31 December 2022 - $0.5 million)
o Tunisia - $4.1 million (31 December 2022 - $3.8 million)
· Income taxes payable of $nil (31 December 2022 - $1.9 million)
· Current portion of lease obligations of $0.2 million (31 December
2022 - $0.3 million)
Non-current assets
Property, plant and equipment ("PP&E") increased to $63.0 million (31
December 2022 - $62.3 million), primarily due to capital expenditures in
PP&E of $5.3 million offset by depletion in the period of $3.2 million as
well as a change in decommissioning estimates of $1.4 million which decreased
due to the higher discount rates applied to the calculation during the
period. Exploration and evaluation assets ("E&E") increased to $10.7
million (31 December 2022 - $10.5 million), due to change in decommissioning
estimates. Right-of-use assets decreased to $0.4 million (31 December 2022 -
$0.7 million) due to depreciation in the period.
Financial Review - NINE months ended 30 SEPTEMBER 2023
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:
Nine months ended 30 September
($000) 2023 2022
Cash flow from operations 1,697 8,713
Changes in non-cash working capital (518) 2,342
Funds from operations 1,179 11,055
Funds from operations per share 0.01 0.10
Romania used funds in operations of $0.7 million (2022 - generated $8.4
million) and Tunisia generated $5.8 million (2022 - $7.1 million). Funds
used at the Corporate level were $3.9 million (2022 - $4.4 million) resulting
in net funds from operations of $1.2 million (2022 - $11.1 million).
Production
Nine months ended 30 September 2023 Tunisia Romania Group %
Crude oil (bbl/d) 454 - 454 71%
Natural gas (Mcf/d) 415 703 1,118 29%
Condensate (bbl/d) - - - -
Total (boe/d) 524 117 641 100%
Nine months ended 30 September 2022
Crude oil (bbl/d) 451 - 451 48%
Natural gas (Mcf/d) 395 2,518 2,913 52%
Condensate (bbl/d) - 2 2 0%
Total (boe/d) 517 422 938 100%
During the nine months ended 30 September 2023 production volumes decreased by
297 boe/d to 641 boe/d against the comparative period (2022 - 938 boe/d).
Romania's production volumes decreased by 305 boe/d to 117 boe/d against the
comparative period (2022 - 422 boe/d). Production continues to reflect the
natural decline profile of shallow gas fields.
Tunisia's production volumes increased by 7 boe/d to 524 boe/d against the
comparative period (2022 - 517 boe/d). Production remains stable during the
nine months of 2023 as a result of the oil fields' maintenance programme.
Ongoing workover programmes continue in the Chouech Es Saida field, with the
aim to optimize production.
Oil and Gas Revenue
($000)
Nine months ended 30 September 2023 Tunisia Romania Group %
Oil revenue 9,732 - 9,732 73%
Natural gas revenue 1,203 2,331 3,534 27%
Condensate revenue - - - -
Total revenue 10,935 2,331 13,266 100%
Nine months ended 30 September 2022 Tunisia Romania Group %
Oil revenue 12,569 - 12,569 30%
Natural gas revenue 1,280 27,888 29,168 69%
Condensate revenue - 57 57 1%
Total revenue 13,849 27,945 41,794 100%
Realised PricE
Nine months ended 30 September 2023 Tunisia Romania Group
Oil ($/bbl) 78.68 - 78.68
Natural gas ($/Mcf) 10.61 12.92 12.03
Condensate ($/bbl) - - -
Average realised price ($/boe) 76.69 77.52 76.84
Nine months ended 30 September 2022
Oil ($/bbl) 101.04 - 101.04
Natural gas ($/Mcf) 11.88 40.54 36.66
Condensate ($/bbl) - 81.33 81.33
Average realised price ($/boe) 97.29 242.25 162.18
During the nine months ended 30 September 2023 revenue decreased by $28.5
million to $13.3 million (2022 - $41.8 million) as the Group saw the average
realised price decrease to $76.84/boe (2022 - $162.18/boe) and production
decline in Romania.
The Group's average realised oil price decreased to $78.68/bbl (2022 -
$101.04/bbl), and average realised natural gas prices decreased to $12.03/Mcf
(30 September 2022 - $36.66/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
Nine months ended 30 September
($000) 2023 2022
Tunisia 1,366 1,714
Romania 111 943
Total 1,477 2,657
Total ($/boe) 8.55 10.31
Tunisia oil royalty (% of oil revenue) 12.5% 12.4%
Romania gas royalty (% of gas revenue) 4.7% 3.5%
Total (% of revenue) 11.1% 6.4%
For the nine months ended 30 September 2023 royalties decreased to $1.5
million (30 September 2022 - $2.7 million) while the Group's average royalty
rate increased to 11.1% (30 September 2022 - 6.4%).
In Romania, during nine months of 2023, the Company incurred a 3.5% royalty
rate for gas (30 September 2022 - 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. The reference gas prices during nine months of 2023
remained higher than the realised prices by 40%. 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 nine months of 2023, the royalty rate remained
unchanged in Sabria at 10% for oil and 8% for gas. Chouech Es Saida royalty
rates are flat at 15% for both oil and gas.
Production Expenses
Nine months ended 30 September
($000) 2023 2022
Tunisia 3,768 3,720
Romania 2,094 4,424
Canada 31 40
Group 5,893 8,184
Tunisia production expense ($/boe) 26.43 26.14
Romania production expense ($/boe) 69.64 38.35
Total production expense ($/boe) 34.14 31.74
During the nine months ended 30 September 2023 production expenses decreased
by $2.3 million to $5.9 million (30 September 2022 - $8.2 million). Per unit
production expenses increased to $34.14/boe (30 September 2022 -
$31.74/boe).
Tunisia's production expenses increased by $0.1 million to $3.8 million (2022
- $3.7 million), with per unit production expenses increasing to $26.43/boe
(30 September 2022 - $26.14/boe) which is consistent with the slight increase
in production during the period.
Romania's overall operating costs decreased by $2.3 million to $2.1 million
(2022 - $4.4 million), however per unit production expenses increased to
$69.64/boe (30 September 2022 - $38.35/boe) due to naturally declining
production and the impact of inflation in Romania.
Canada production expenses relate to the Sturgeon Lake assets, which are not
producing and are incurring minimal operating costs to maintain the property.
Operating Netback
Serinus uses operating netback as a key performance indicator to assist
management in understanding Serinus' profitability relative to current market
conditions and as an analytical tool to benchmark changes in operational
performance against prior periods. Operating netback consists of petroleum
and natural gas revenues less direct costs consisting of royalties and
production expenses. Netback is not a standard measure under IFRS and
therefore may not be comparable to similar measures reported by other
entities.
($/boe)
Nine months ended 30 September 2023 Tunisia Romania Group
Sales volume (boe/d) 522 110 632
Realised price 76.69 77.52 76.84
Royalties (9.58) (3.66) (8.55)
Production expense (26.43) (69.64) (34.14)
Operating netback 40.68 4.22 34.15
Nine months ended 30 September 2022 Tunisia Romania Group
Sales volume (boe/d) 521 422 944
Realised price 97.29 242.25 162.18
Royalties (12.04) (8.17) (10.31)
Production expense (26.14) (38.35) (31.74)
Operating netback 59.11 195.73 120.13
For the nine months ended 30 September 2023 the Group's operating netback was
$34.15/boe (30 September 2022 - $120.13/boe). The decrease is due to lower
realised prices and higher per unit production expenses.
The Company also generated a gross profit of $1.8 million (30 September 2022 -
$11.8 million), largely due to a significant decrease in the Company's
netbacks.
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 and 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 nine months ended 30 September 2023, the Group's EBITDA
decreased by $11.4 million to $1.2 million (30 September 2022 - $12.6
million).
Nine months ended 30 September
($000) 2023 2022
Net income (loss) (4,559) 3,367
Finance costs, including accretion 1,277 1,313
Depletion and amortization 3,432 4,924
Decommissioning provision recovery (36) (62)
Tax expense 1,112 3,079
EBITDA 1,226 12,621
Windfall Tax
Nine months ended 30 September
($000) 2023 2022
Windfall tax 661 14,233
Windfall tax ($/Mcf - Romania gas) 3.44 20.68
Windfall tax ($/boe - Romania gas) 21.97 124.05
For the nine months ended 30 September 2023 windfall taxes were $0.7 million
(30 September 2022 - $14.2 million). This decrease is directly related to a
combination of lower production and lower realised gas prices in Romania.
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
Nine months ended 30 September
($000) 2023 2022
Tunisia 2,617 2,067
Romania 742 2,763
Corporate 73 94
Total 3,432 4,924
Tunisia ($/boe) 18.35 14.52
Romania ($/boe) 24.67 23.95
Total ($/boe) 19.88 19.11
For the nine months ended 30 September 2023 depletion and depreciation expense
was $3.4 million (30 September 2022 - $4.9 million). The decrease is primarily
due to lower production during the period. Per boe, depletion and
depreciation expense increased to $19.88/boe (30 September 2022 - $19.11/boe),
primarily due to lower reserves in the current period.
General and Administrative ("G&A") Expense
Nine months ended 30 September
($000) 2023 2022
G&A expense 4,006 4,050
G&A expense ($/boe) 23.20 15.72
For the nine months ended 30 September 2023 G&A expenses comprised $4.0
million and remained on the level consistent with the prior year period (30
September 2022 - $4.1 million) regardless of the current high inflationary
environment.
Share-Based Payment
Nine months ended 30 September
($000) 2023 2022
Share-based payment 3 59
Share-based payment ($/boe) 0.02 0.23
During the nine months ended 30 September 2023 share-based compensation
decreased to $nil (30 September 2022 - $0.06 million) due to lower stock
options granted in the preceding 12 months.
Net Finance Expense
Nine months ended 30 September
($000) 2023 2022
Interest on leases 34 28
Accretion on decommissioning provision 1,272 753
Foreign exchange and other (29) 532
1,277 1,313
During the nine months ended 30 September 2023 net finance expenses stayed
constant at $1.3 million (30 September 2022 - $1.3 million).
Taxation
During the nine months ended 30 September 2023 income tax expense was $1.1
million (30 September 2022 - $3.1 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 - 3,153,603 1,338,875
Non-Executive Directors:
Jim Causgrove - - 290,000
Lukasz Redziniak - - 302,000
Jon Kempster 1 (#_ftn1) - - 60,261
- 3,153,603 1,991,136
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: CRUX Asset Management (8.42%),
Michael Hennigan (7.94%), Xtellus Capital Partners Inc (7.44%), Quercus TFI
SA (7.18%), Marlborough Fund Managers (5.48%), and Spreadex LTD (4.10%).
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 $0.1 million (30 September 2022 - loss of $3.4 million)
through Other comprehensive loss.
Going Concern
The Group's business activities, together with the factors likely to affect
its future development and performance are set out in the Operational Update
and Outlook. The financial position of the Group is described in these
condensed consolidated interim financial statements.
The Directors have given careful consideration to the appropriateness of the
going concern assumption, including cashflow forecasts through the going
concern period and beyond, planned capital expenditure and the principal risks
and uncertainties faced by the Group. This assessment also considered
various downside scenarios including oil and gas commodity prices and
production rates. Following this review, the Directors are satisfied that
the Group has sufficient resources to operate and meet its commitments as they
come due in the normal course of business for at least 12 months from the date
of these condensed consolidated interim financial statements. Accordingly,
the Directors continue to adopt the going concern basis for the preparation of
these condensed consolidated interim financial statements.
Declarations of the Board of Directors Concerning Accounting Policies
The Board of Directors of the Company confirms that, to the best of their
knowledge, the condensed consolidated interim financial statements together
with comparative figures have been prepared in accordance with applicable
accounting standards and give a true and fair view of the state of affairs and
the financial result of the Group for the period ended 30 September 2023.
The Financial Review in this report gives a true and fair view of the
situation on the reporting date and of the developments during the period
ended 30 September 2023 and include a description of the major risks and
uncertainties.
Serinus Energy plc
Consolidated Interim Statement of Comprehensive Loss
(US$ 000s, except per share amounts)
Nine months ended 30 September
Note 2023 2022
Revenue 13,266 41,794
Cost of sales
Royalties (1,477) (2,657)
Windfall tax (661) (14,223)
Production expenses (5,893) (8,184)
Depletion and depreciation (3,432) (4,924)
Total cost of sales (11,463) (29,988)
Gross profit 1,803 11,806
General and Administrative expenses (4,006) (4,050)
Share-based payment expense (3) (59)
Total administrative expenses (4,009) (4,109)
Decommissioning provision recovery 36 62
Operating income (loss) (2,170) 7,759
Finance expense (1,277) (1,313)
Net income before tax (3,447) 6,446
Tax expense (1,112) (3,079)
Income (loss) after taxation attributable to equity owners of the parent (4,559) 3,367
Other comprehensive loss
Other comprehensive loss to be classified to profit and loss in subsequent
periods:
Foreign currency translation adjustment (70) (3,441)
Total comprehensive loss for the period attributable to equity owners of the (4,629) (74)
parent
Earnings (loss) per share:
Basic 4 (0.04) 0.03
Diluted 4 (0.04) 0.03
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 30 September 31 December
2023 2022
Non-current assets
Property, plant and equipment 63,049 62,311
Exploration and evaluation assets 10,722 10,529
Right-of-use assets 369 688
Total non-current assets 74,140 73,528
Current assets
Restricted cash 1,128 1,088
Trade and other receivables 10,865 10,007
Product inventory 748 705
Cash and cash equivalents 1,459 4,854
Total current assets 14,200 16,654
Total assets 88,340 90,182
Equity
Share capital 401,426 401,426
Share-based payment reserve 25,560 25,557
Treasury shares (458) (455)
Accumulated deficit (390,915) (386,356)
Cumulative translation reserve (3,442) (3,372)
Total equity 32,171 36,800
Liabilities
Non-current liabilities
Decommissioning provision 23,887 24,046
Deferred tax liability 12,048 10,942
Lease liabilities 408 465
Other provisions 1,358 1,358
Total non-current liabilities 37,701 36,811
Current liabilities
Current portion of decommissioning provision 5,365 5,085
Current portion of lease liabilities 151 280
Accounts payable and accrued liabilities 12,952 11,206
Total current liabilities 18,468 16,571
Total liabilities 56,169 53,382
Total liabilities and equity 88,340 90,182
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 Changes in Shareholder's Equity
(US$ 000s, except per share amounts)
Share capital Share-based payment reserve Treasury Accumulated deficit Accumulated other comprehensive loss Total
Shares
Balance at 31 December 2021 401,426 25,487 (121) (387,986) (1,374) 37,432
Loss for the period - - - 3,367 - 3,367
Other comprehensive loss for the period - - - - (3,441) (3,441)
Total comprehensive loss for the period - - - 3,367 (3,441) (74)
Transactions with equity owners
Share-based payment expense - 59 - - - 59
Shares purchased to be held in Treasury - - (202) - - (202)
Balance at 30 September 2022 401,426 25,546 (323) (384,619) (4,815) 37,215
Balance at 31 December 2022 401,426 25,557 (455) (386,356) (3,372) 36,800
Comprehensive loss for the period - - - (4,559) - (4,559)
Other comprehensive loss for the period - - - - (70) (70)
Total comprehensive loss for the period - - - (4,559) (70) (4,629)
Transactions with equity owners
Share-based payment expense - 3 - - - 3
Shares purchased to be held in Treasury - - (3) - - (3)
Balance at 30 September 2023 401,426 25,560 (458) (390,915) (3,442) 32,171
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)
Nine months ended 30 September
Note 2023 2022
Operating activities
Income (loss) for the period (4,559) 3,367
Items not involving cash:
Depletion and depreciation 3,432 4,924
Share-based payment expense 3 59
Tax expense 1,112 3,079
Accretion expense on decommissioning provision 1,272 753
Foreign exchange loss (gain) (20) 68
Other income (25) (3)
Decommissioning provision recovery (36) (62)
Income taxes paid - (1,130)
Funds from operations 1,179 11,055
Changes in non-cash working capital 5 518 (2,342)
Cashflows from operating activities 1,697 8,713
Financing activities
Lease payments (12) (355)
Shares purchased to be held in treasury (194) (202)
Cashflows used in financing activities (206) (557)
Investing activities
Capital expenditures 5 (4,925) (7,476)
Cashflows used in investing activities (4,925) (7,476)
Impact of foreign currency translation on cash 39 (324)
Change in cash and cash equivalents (3,395) 356
Cash and cash equivalents, beginning of period 4,854 8,429
Cash and cash equivalents, end of period 1,459 8,785
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, unless otherwise noted)
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 2022. There has been no change in
these areas during the nine months ended 30 September 2023.
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 Financial
Review.
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 2022. There has been no change to the
accounting policies or the estimates and judgements which management are
required to make in the period. The business is not subject to seasonal
variations. Information in relation to the operating segments and material
primary statement movements can be found within the management discussion at
the front of this report.
While the financial figures included within these condensed consolidated
interim financial statements have been computed in accordance with IFRS's
applicable to interim periods, this report and financial statements do not
contain sufficient information to constitute an interim financial report as
set out in IAS34 Interim Financial Reporting.
4. Earnings per share
Nine months ended 30 September
($000's, except per share amounts) 2023 2022
Income (loss) for the period (4,559) 3,367
Weighted average shares outstanding:
Basic 113,097 114,714
Diluted 113,097 114,714
Income per share - Basic and diluted (0.04) 0.03
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.
5. Supplemental cash flow disclosure
Nine months ended 30 September
2023 2022
Cash provided by (used in):
Trade and other receivables (845) (3,085)
Product inventory (43) (19)
Accounts payable and accrued liabilities 1,403 764
Restricted cash 3 (2)
Changes in non-cash working capital from operating activities 518 (2,342)
The following table reconciles capital expenditures to the cash flow
statement:
Nine months ended 30 September
2023 2022
PP&E additions 5,313 4,402
E&E additions - 4,221
Total capital additions 5,313 8,623
Changes in non-cash working capital from investing activities (388) (1,147)
Total capital expenditures 4,925 7,476
6. Prior year comparatives
The prior year comparatives have been reclassified to align with the current
year disclosure. These reclassifications are immaterial.
7. Subsequent event
On 31 October 2023, the Company announced that it was granted exploration
phase extension of the Satu Mare Concession in Romania by Romanian National
Agency for Mineral Resources ("NAMR"). The extension is in two phases with the
first phase being mandatory till 27 October 2025, and the second phase being
optional for further two years in duration.
In Romania, the Company continues to pursue its process of challenging the
non- applicability of the Solidarity Tax for the year ended 31 December 2022.
In the first quarter of 2023, the Company has received a legal opinion
detailing the legal arguments of the non-applicability of the Solidarity Tax,
has submitted a Petition to the Romanian Government and has engaged in formal
discussions with the Romanian Fiscal Authorities, in order to obtain a
derogation of this Tax.
1 (#_ftnref1) Shares held by Catherine Kempster (the spouse of Jon Kempster)
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