Serica Energy PLC · LSE:SQZ
Serica Energy — FY2021 Earnings Presentation
27 slides from Serica Energy's earnings presentation, April 2022
Slide 1: 2021 Full Year Results and Outlook
2021 Full Year Results and Outlook
Slide 2: Disclaimer
Disclaimer • This document is personal to the recipient and has been issued by Serica Energy plc (the "Company"). This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company, nor
Slide 3: Nimble, dynamic and experienced
Nimble, dynamic and experienced Serica is now one of the UK’s leading mid-tier independent oil and gas companies, responsible for delivering over 5% of the UK’s gas production - a vital contribution to the country’s security of supply Key attributes: • Talented team, comprising 170+ professionals •
Slide 4: 2021 Highlights
2021 Highlights DELIVERING RESULTS • £386.8 million group gross profit • 22,200 boe/d average net production (2020: loss of £2.9 million) after extended maintenance programmes (2020: 23,800 boe/d) • £157.6 million cash flow from operations (2020: £44.1 million) • Incremental production following com
Slide 5: >85% Gas: contribution to UK gas supply
Serica is making a significant contribution to UK gas supply, a vital part of the UK’s energy mix With the introduction of R3 and • The new British Energy Security Strategy recognises the importance of domestic production to our energy security, Columbus, Serica’s production is now and that producin
Slide 6: Contributing to domestic fuel supply
Serica’s production is a vital part of the UK’s energy mix Contributing to • At any given time around 9,000* personnel are at work on energy industry installations in the UK's waters, providing the gas that will fuel UK homes, schools and hospitals domestic fuel supply • Our industry supports almost
Slide 7: Financial strength
Financial strength • Serica has a strong balance sheet with significant cash, no borrowings and limited decommissioning liabilities • The Company’s investment strategies are being executed despite short-term commodity price fluctuations • In 2020/21 Serica invested to increase production and made co
Slide 8: Financial Performance
& SERICAENERGY FINANCIAL PERFORMANCE
Slide 9: Financial highlights
Financial highlights Sales Revenue (£million) Gross Profit (£million) Profit before taxation (£million) 2021 514 2021 387 2021 135 2020 2020 -3 2020 13 126 2019 86 2019 109 2019 251 2018 20 2018 39 2018 YE Net 2P Reserves (million boe) YE Cash Resources* (£million) Dividend (p/sh) 2021 62.2 2021 218
Slide 10: Strong and growing cash position
Serica has a strong and growing cash position During 2021: £81.3 million BKR acquisition liabilities paid £52.2 million Net capital expenditure (mainly Columbus and the Rhum R3 project) £218.4 million Cash, cash equivalents and hedging advances at 31 December 2021 (£102.7 million 30 June 2021) Cash,
Slide 11: Prudent hedging
Prudent hedging • No new gas price hedges added since July 2021 due to extreme market volatility Weighted average price Volume of gas • Downside protection for over 20% of projected gas volumes already in place for 2022 p/th th/d • Servicing additional fixed price hedges not practical during such ex
Slide 12: Intense commodity price fluctuation
Intense commodity price fluctuation Heren NBP day-ahead gas prices (p/th) (Brent spot shown as comparison) • Average oil and gas prices were depressed during 2020 creating 300 difficult trading conditions 280 • The recovery in gas prices since mid-2020 has been exceptional 260 240 • 2021 market gas
Slide 13: Increased dividend recommended for 2022
Increased dividend recommended for 2022 • Serica’s improving financial performance supported the introduction of a dividend policy in 2020 despite a challenging environment at that time • 3p per share was paid in respect of full year 2019 • 3.5p per share was paid for 2020 maintaining yield level •
Slide 14: Investing in our assets
INVESTING IN OUR ASSETS Our investment strategy is to use technology and innovation to maximise the productive life of our assets while improving the environmental impact of our operations
Slide 15: Updated reserves report
Updated reserves report • Serica commissioned a new Competent Person’s Report (“CPR”) effective 1 January 2022 • This identified several upgrades to 2P Reserves estimates particularly due to: • Production enhancement programmes on Bruce • Forward stimulation plans for Bruce and Keith • Upgrade to Rh
Slide 16: A third year of relentless focus on ESG
A third year of relentless focus on ESG Total flaring volumes 53% lower than 2019 12,000 10,000 8,000 TONNES 6,000 4,000 2,000 0 2019 2020 2021 Scope 1 CO2 emissions 13% lower than 2019 250,000 200,000 TONNES 150,000 100,000 50,000 0 2019 2020 2021 Waste to landfill 88% lower than 2019 Our third ann
Slide 17: Committing to ESG for the long term
Embedding ESG in our working practices and attitudes Committing to ESG for the long term • ESG targets included in all staff incentive schemes • Active staff engagement in social giving and health activities • 2022 targets include flaring, Scope 1 CO2 emissions, waste management and methane • Electi
Slide 18: 2021 production increases in H2
2021 production increases in H2 Serica net production (boe/d) • BKR production levels in the first half of 2021 were impacted 30,000 by the planned shutdown of the Forties Pipeline System from late May until late June 25,000 • During this period valuable maintenance programmes were carried out in or
Slide 19: Serica now benefitting from 100% of its share of BKR cash flows
The Bruce, Keith and Rhum (BKR) cashflow sharing mechanism has finished Serica now benefitting from 100% of its share of BKR cash flows • A major milestone for Serica was achieved on 31 December 2021 as the 2018 earn out deals with BP, Total E&P and BHP came to an end • These innovative acquisition
Slide 20: Investment in R3 delivers incremental production
Rhum (Serica 50%) production boosted by successful R3 intervention Increasing average gross production from Investment in R3 delivers incremental production the Rhum field since R3 first production on 23 August 2021 • The R3 intervention carried out in 2020/21 was a complex engineering project invol
Slide 21: A Serica-led project from discovery to production
First production from Serica operated Columbus development (Serica 50%) A Serica-led project from discovery to production Gross Columbus production (boe/d) • Columbus Development well was drilled in spring/summer 2021 and first 7,000 production was achieved in late November 2021 Columbus C1z CTIS 6,
Slide 22: BKR Light Well Intervention Vessel campaign
BKR Light Well Intervention Vessel campaign A new campaign to add reserves and prolong production from BKR Multi-disciplinary team in place working with industry-leading service providers subsea wells on planning and procurement to allow • The scope of the campaign will be production re-instatement,
Slide 23: North Eigg well to be drilled in 2022
North Eigg (Serica 100%) well to be drilled in 2022 An infrastructure led exploration project – North Eigg Unrisked Prospective Resources to be drilled this year (Recoverable) Serica Internal Estimates • The North Eigg exploration prospect is estimated to contain Dry Gas Condensate 60mmboe (P50) and
Slide 24: 2022 Production guidance
2022 Production guidance • 2022 guidance has been revised slightly to reflect: 2022 Production Guidance • Deferral of some Rhum production in Q1 2022 due to a temporary shut down caused by a subsea control module Serica net production (boe/d) failure. This issue has been fixed and Rhum production is
Slide 25: Principles of our M&A Strategy
Serica’s business development focus is on opportunities to spread risk and enhance production • The UKCS presents a wide range of merger and acquisition opportunities Principles of our M&A Strategy • Recent commodity price volatility has added complexity and risk to the M&A market Regional focus • D
Slide 26: Well positioned for the future
Serica is in a strong position and looking to grow further Well positioned Production > 85% gas • Investing to provide essential low carbon energy to aid UK energy for the future security • Benefitting from sustained high Ongoing investment to extract growth from wholesale gas prices existing portfo
Slide 27: For further information
For further information visit Website www.serica-energy.com Email [email protected] Linkedin linkedin.com/company/serica-energy-plc