Serica Energy PLC · LSE:SQZ
Serica Energy — Investor Presentation (May 2012)
28 slides from Serica Energy's investor presentation, May 2012
Slide 1: Clear underlying value growth - Shareholder presentation May 2012
Clear underlying value growth Shareholder presentation - May 2012
Slide 2: Disclaimer
Disclaimer ● The information presented herein is subject to amendment and has not been independently verified. Serica does not represent that the information and opinions contained herein are necessarily adequate or accurate and no liability is accepted for any errors or omissions. ● This presentati
Slide 3: Serica has significantly changed its risk/reward profile
Serica has significantly changed its risk/reward profile Overview • Serica's objective is to provide shareholders with maximum opportunity for growth but with commensurate and prudent management of the risks inherent in exploration. • Material progress was made in 1Q2012 with substantial value added
Slide 4: Geographical location of assets
Geographical location of assets Business divided between UK and Atlantic Margin interests Core reserves in UK & Indonesia. Major upside in Atlantic Margin. !3
Slide 5: Serica has moved from Indonesia to Atlantic Margin
Serica has significantly changed its risk/reward profile Over the past few months: Serica has moved to Atlantic Margin from Indonesia off Africa & Europe •Limited potential •Very high potential •High taxation •Lower taxation •Opportunity limited •Opportunity large •Risk moderate •Risk moderate to hi
Slide 6: Comparison of marginal tax rates
Comparison of marginal tax rates Serica is focussed on areas of high impact/lower tax: base % Sliding Resource Rent 80% Serica has switched from high tax/low impact 78 to low tax/high impact areas 75 60% 62 54 40% 15 37 20% 25 0% Ireland Morocco Namibia UK Indonesia Norway NOTE: Shows rates typicall
Slide 7: Strategic targets have transformed activities
Strategic targets have transformed activities This has been achieved by: • Disposal of Indonesian exploration properties and operating subsidiaries • Award of high impact/high reward Namibian offshore exploration opportunity • Doubling of holdings in the Irish Rockall Basin - a high impact/low tax r
Slide 8: Operational achievements
Operational achievements In 1Q2012 and to-date Serica met all targets set • Reached agreement with field and infrastructure participants to bring North Sea Columbus Field to project sanction mid year • Commenced discussions for Columbus debt financing • Secured major licence award in Namibia and rea
Slide 9: Core business units performing well
Core business units performing well Value being demonstrated in all Serica's underlying assets Agreeing Columbus North Sea business unit development has Development & Exploration added significant value Atlantic margin prospects Signing Namibia and BP farm-out has added High Impact drilling signific
Slide 10: Core Assets & Upside Potential
Presentation Agenda Core Assets & Upside Potential Core Assets • Serica has valuable Reserve Backed Core Assets in its operated Columbus field reserves, now slated for production end 2014/early 2015, and in its remaining Kambuna field production • In Norway Serica has a valuable economic interest in
Slide 11: Strong Reserve Backed Core Assets
Strong Reserve Backed Core Assets Producing and awaiting development: Columbus Field - UK North Sea • Serica Operator with 33.2%. Project going forward. • Development sanction targeted for mid 2012 Bream Field - Norway • Economic interest in Bream field in Norway • Target for development sanction st
Slide 12: Columbus field - Serica Operator
Columbus field - Serica Operator Production planned to commence end 2014/early 2015 • Serica 2P Columbus reserves 5.6 mmboe (*) • Field development cost sharing agreed • Tariffing terms for export routes agreed • Targeted project sanction mid 2012 • Targeted production start end 2014/early 2015 • Pe
Slide 13: Columbus field development
Columbus field development Field Development Plan awaiting DECC approval • Serica to Operate field development • Two directional development wells plus manifold & short pipeline to Lomond BLP • BG to build BLP • Serica share of Capex c. £40 million, bulk not required before 2014 • Production start t
Slide 14: Columbus Economics
Columbus Economics Greatly improved Columbus economics: • Columbus economics have benefitted greatly from: • Agreement with partners removing risk of further delay • Changes in cost sharing which reduces capex contribution to infrastructure • Changes in expenditure timing which increases current val
Slide 15: Columbus Economics (continued)
Columbus Economics (continued) Projected Annual P50 Columbus cash flows $100 bbl/50p mcf real pricing Stand alone After cf Tax Allowances Columbus is worth close US$mm Serica share (MOD) 80 60 to 40p/share to Serica (*) 40 After cf Stand Tax p/share 20 Alone allow 0 US -20 61.5 112.2 39.4 $mm -40 -6
Slide 16: Bream field - Serica economic interest
Bream field - Serica economic interest Serica has a valuable economic interest in the Bream field, Norway • Serica sold its interest in the Bream field in 2008 for a deferred consideration • The consideration varies with oil price and is due to Serica on field start-up • Field participants have anno
Slide 17: Kambuna field - Production in Indonesia
Kambuna field - Production in Indonesia The Kambuna field is Serica's sole remaining asset in Indonesia • Serica field interest 25% • Field produces gas and gas condensate. Gas delivered to Medan power station • Asset is a cash generator (US$4 million revenue net to Serica in 1Q2012) but is now a fi
Slide 18: Columbus production to take over from Kambuna
Columbus production to take over from Kambuna Production shortfall in 2014 but production of sales volumes climbs over 3,000 boepd in 2015 Kambuna Columbus 4,000 Forecast sales 3,000 volumes net to Serica boepd 2,000 1,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Colum
Slide 19: Summary Reserve Backed Core Asset Values
Summary Reserve Backed Core Asset Values Core assets excluding exploration potential Market price Cash Columbus Bream Kambuna Assumptions 60 • NSAI audited Columbus Reserves & Profile Market price 50 at large • Mid 2012 values discount to 40 Reserve Backed Assets • 10% discount rate p/share 30 • US$
Slide 20: Atlantic Margin properties hold material prospectivity
Atlantic Margin properties hold material prospectivity Serica has established a strong position in Atlantic margin • Atlantic margin is now established as a new hydrocarbon exploration area • Serica has built significant position in four Atlantic margin basins • Rockall & Slyne Basins - Ireland • Ta
Slide 21: Very substantial exploration potential on Serica's blocks
Very substantial exploration potential on Serica's blocks Aggregated unrisked gross P50 prospective resources independently estimated over 4 billion boe • Figures taken from Competent Persons UK Ireland Report prepared for Serica by NSAI as at Morocco Namibia (2D only) 31/12/11 (*) 20,000 mmboe • Mi
Slide 22: Exploration potential on net basis still massive for Serica
Exploration potential on net basis still massive for Serica Aggregated unrisked net P50 prospective resources independently estimated over 1.25 billion boe • Figures taken from Competent Persons Report prepared for Serica by NSAI as at UK Ireland 31/12/11 (*) Morocco Namibia (2D only) 5,000 • Midlet
Slide 23: Forward Exploration activity
Forward Exploration activity Developing Columbus but also active forward exploration programme • 3D seismic acquisition survey to take place in York area licences in 2H2012. Licences recently awarded • Spaniards well (North Sea) to be drilled 3Q2012 • Objective to drill Doyle and one of South Otter
Slide 24: Forward strategy
Presentation Agenda Forward strategy Serica's forward strategy is designed to unlock the Company's significant underlying value by: • Managing the Company's assets to demonstrate and increase their value • Evaluating opportunities for amalgamation or acquisition where these can generate improved ret
Slide 25: Valuation - Summary facts
Valuation - Summary facts Company tightly financed but undervalued & with huge potential: • At current share price (23.5p on 15/5/12) Company is valued at approximately £42 million but has: • 55% carried interest on $40-50 million 3D seismic acquisition programme in Namibia • Approximately 6 mmboe P
Slide 26: Investment case - What differentiates Serica from its peers?
Investment case - What differentiates Serica from its peers? Serica has a number of compelling characteristics: Four emerging Atlantic Margin basins, plus Reserve Backed Core Asset Unique portfolio Value in UK & Norway and UK Exploration Not over-exposed to any one area. Interests in UK, Norway (ind
Slide 27: Strategy Implementation to realise value and potential
Strategy Implementation to realise value and potential The Company's business strategy in a tough market is to:- • Seek opportunities to optimise critical mass and improve fiscal and financial efficiencies through consolidation or acquisition of complementary business opportunities, whilst • continu
Slide 28: Serica's objective is to provide shareholders with maximum opportunity
Streamers deployed on Serica's Luderitz Basin 3D seismic survey offshore Namibia Serica's objective is to provide shareholders with maximum opportunity for growth but with commensurate and prudent management of the risks inherent in exploration