TIDMSQZ
RNS Number : 0262S
Serica Energy plc
28 September 2017
Serica Energy plc
("Serica" or the "Company")
Interim Results
London, 28 September 2017 - Serica Energy plc (AIM: SQZ)
announces its interim financial results for the six months ended 30
June 2017. The results are summarised below and copies are
available at www.serica-energy.com and www.sedar.com.
Highlights
Financial
Serica is reporting excellent first half financial performance
with strong cash flow and increasing cash resources:
-- Gross profit of US$13.6 million for 1H 2017 (1H 2016 loss of US$2.6 million).
-- Profit after tax of US$10.3 million for 1H 2017 (1H 2016 loss of US$2.8 million).
-- Operating costs, including transportation and processing,
were US$14 per boe during 1H 2017 (FY2016: US$23 per boe, impacted
by 2016 shut-in).
-- Sales revenues in 1H 2017 were US$21.9 million (1H 2016:
US$5.7 million) at average realised prices of US$51.5/bbl for oil
(1H 2016: US$36.6/bbl) and approximately 42 p/therm for gas (1H
2016: 30 p/therm).
-- End period cash and short-term deposits increased to US$30.7 million with zero debt.
Operations
Erskine field continues to perform well and plans move forward
on Columbus and Rowallan.
-- Strong production from the Erskine field for 1H 2017
averaging 3,100 boepd net to Serica to the end of May and 2,800
boepd net for the full half.
-- High uptime performance from Erskine/Lomond export facilities
and good performance from the Erskine wells.
-- Good progress towards optimising the Columbus development
plan in conjunction with other asset owners in the area with
submission of field development plan targeted by mid-2018.
-- Pre-drilling activities commencing on the Rowallan Prospect
with site survey due to commence in early October and orders to be
placed for long-lead items. Well to be drilled in 2018 targeting 20
million boe (P50) net to Serica. Serica fully carried with 15%
interest.
Outlook
-- Erskine full-year production guidance maintained at
2,200-2,400 boepd net notwithstanding suspension of production in
August/September for facilities and pipeline maintenance.
-- Production re-started on 22 September 2017 achieving rates of
approximately 2,500 boepd net to Serica from three wells, planned
to increase once pipeline cleaning operations permit.
-- Company strongly placed financially and strategically to
deliver its plan for further growth both organically and through
appropriate value accretive acquisition.
Tony Craven Walker, Serica's Chairman commented:
"Serica has produced a strong set of first half results and,
although production to-date in the second half has been reduced to
resolve various pipeline and maintenance issues, our production
guidance for the full-year remains in the 2,200-2,400 boepd net
range. We are now entering the winter months in the northern
hemisphere, when hydrocarbon prices are traditionally stronger and
this helps to underpin our financial performance.
With this strong financial position Serica is well placed to
take advantage of new opportunities to grow both through our
existing portfolio and through acquisition in the UK North Sea,
where our demonstrated capability and experience give us a
competitive edge and where we continue to benefit from tax
efficiencies. We have adopted a keen but measured approach to this
potential and are currently actively reviewing a small number of
value accretive opportunities that match our strategic
objectives."
Enquiries:
Serica Energy
plc
Tony Craven +44 (0)20
Walker tony.cravenwalker@serica-energy.com 7487 7300
Peel Hunt
+44 (0)20
Richard Crichton richard.crichton@peelhunt.com 7418 8900
+44 (0)20
Ross Allister ross.allister@peelhunt.com 7418 8900
Instinctif
+44 (0)20
7457 2020
David Simonson david.simonson@instinctif.com +44 (0)20
Laura Syrett laura.syrett@instinctif.com 7457 2020
+44 (0)20
George Yeomans george.yeomans@instinctif.com 7457 2020
NOTES TO EDITORS
Serica Energy is an oil and gas exploration and production
company with exploration, development and production assets in the
UK and exploration interests in the Atlantic margins offshore
Ireland and West Africa. The Company is in partnership with other
companies in its licences offshore UK, Ireland and Namibia. Further
information on the Company can be found at
www.serica-energy.com.
The technical information contained in the announcement has been
reviewed and approved by Clara Altobell, Head of Operations at
Serica energy plc. Clara Altobell (MSc in Petroleum Engineering
from Imperial College, London) has 20 years of experience in oil
& gas exploration, production and development and is a member
of the Society of Petroleum Engineers (SPE) and the Petroleum
Exploration Society of Great Britain (PESGB).
The Company is listed on AIM under the ticker SQZ and is a
designated foreign issuer on the TSX. To receive Company news
releases via email, please contact serica@instinctif.com and
specify "Serica press releases" in the subject line.
FORWARD LOOKING STATEMENTS
This disclosure contains certain forward looking statements that
involve substantial known and unknown risks and uncertainties, some
of which are beyond Serica Energy plc's control, including:
geological, geophysical and technical risk, the impact of general
economic conditions where Serica Energy plc operates, industry
conditions, changes in laws and regulations including the adoption
of new environmental laws and regulations and changes in how they
are interpreted and enforced, increased competition, the lack of
availability of qualified personnel or management, fluctuations in
foreign exchange or interest rates, stock market volatility and
market valuations of companies with respect to announced
transactions and the final valuations thereof, and obtaining
required approvals of regulatory authorities. Serica Energy plc's
actual results, performance or achievement could differ materially
from those expressed in, or implied by, these forward looking
statements and, accordingly, no assurances can be given that any of
the events anticipated by the forward looking statements will
transpire or occur, or if any of them do so, what benefits,
including the amount of proceeds, that Serica Energy plc will
derive therefrom.
INTERIM REPORT FOR THE SIX MONTH PERIODED 30 JUNE 2017
The following Interim Report of the operations and financial
results of Serica Energy plc ("Serica") and its subsidiaries
(together the "Group") contains information up to and including 27
September 2017 and should be read in conjunction with the unaudited
interim consolidated financial statements for the period ended 30
June 2017, which have been prepared by and are the responsibility
of the Company's management and have not been reviewed by the
Company's independent auditors.
References to the "Company" include Serica and its subsidiaries
where relevant. All figures are reported in US dollars ("US$")
unless otherwise stated.
The results of Serica's operations detailed in the interim
financial statements are presented in accordance with International
Financial Reporting Standards ("IFRS").
The Company's shares are listed on AIM in London. Although the
Company delisted from the TSX in March 2015, the Company is a
"designated foreign issuer" as that term is defined under National
Instrument 71-102 - Continuous Disclosure and Other Exemptions
Relating to Foreign Issuers. The Company is subject to the foreign
regulatory requirements of the Alternative Investment Market of the
London Stock Exchange in the United Kingdom.
Serica is an oil and gas company with production, development
and exploration activities based in the UK, Ireland and
Namibia.
CHAIRMAN'S REVIEW
Serica has made substantial progress on all fronts during the
first half of 2017 and is reporting strong financial results for
the period. Revenue of US$22 million from sales of Erskine oil and
gas production has resulted in a profit after tax of US$10.3
million for the period and a period ending cash balance of US$30.7
million after early repayment of US$2.9 million due to BP. With no
borrowings or material exploration commitments this results in a
strong balance sheet and gives Serica the foundation to extract
further value from existing assets as well as to achieve its stated
strategy of enhancing value, increasing opportunity and spreading
risk through further acquisition.
The Erskine field is Serica's only current source of production
and continued its strong performance from the latter part of 2016,
producing an average 2,800 boepd net to Serica over the first half
of 2017. This was achieved notwithstanding a 10 day shut-in for
maintenance in February and a June cut-back in production levels to
prepare for further maintenance, this time to clear wax build-up in
the Lomond to Everest condensate export pipeline. Production
efficiencies for the period remained high at 75% uptime.
Extended pipeline cleaning operations, which included an
eight-week production suspension from end July, have resulted in
lower production levels for the three months to end September but
production restarted during 22 September and is running at initial
rates over 2,500 boepd net (rate at 25 September). The reservoir
continues to perform strongly and with ongoing maintenance of
production and export facilities, particularly focused on improving
control of pipeline wax deposits, it is our expectation that good
production levels can be maintained through the balance of the
year.
Erskine continues to demonstrate its value to the Group. Its
material contribution to Serica's cash position is expected to be
ongoing and supports Serica's efforts to bring Columbus closer to
production. Discussions continue with Shell as operator of both the
Lomond platform and the Shearwater platform to determine the best
export route for Columbus. This has to take into account both the
need to maximise commercial value and to reduce risk as well as
meeting the requirement of the OGA to maximise economic recovery.
The technical feasibility of development through either route has
been fully demonstrated. Commercial terms for the Lomond route are
expected to be received from Chrysaor, as the new Lomond operator,
as soon as their transaction to take over from Shell, as current
operator, has been completed and further commercial terms are
expected to be received from Shell in respect of Shearwater. A
final decision on the optimum route will depend upon the definitive
commercial terms received and, in the case of the Shearwater route,
firm commitments from other operators but it is Serica's aim, as
Columbus operator, to reach a decision and submit a field
development plan for maximising economic recovery of reserves from
the area by mid-2018.
Work has also commenced on preparations for drilling the
Rowallan well, a sizeable high pressure high temperature prospect
located two blocks to the west of Columbus. ENI, the operator of
the Rowallan block, is starting site survey operations in October
and preparing to place orders for long lead drilling equipment. We
are looking forward to the drilling of this well in which the
Company has a 15% carried interest. The well remains scheduled to
commence drilling in the third quarter of 2018.
The Company is strongly financed with material and growing cash
resources currently standing at over US$32 million, a solid and
robust income stream from Erskine production, low corporate
overheads, production costs around US$15 per boe and material
upside potential (Erskine, Columbus, Rowallan). We are confident
that this provides shareholders with the opportunity to secure
additional rewards from these assets as well as providing the basis
upon which the Company will be able to build through further
acquisition.
Antony Craven Walker
Executive Chairman
27 September 2017
REVIEW OF OPERATIONS
UK Operations
Production
Central North Sea: Erskine Field - Blocks 23/26a (Area B) and
23/26b (Area B), Serica 18%
All of Serica's production comes from its 18% interest in
Erskine, a gas and condensate field located in the UK Central North
Sea. Serica's co-venturers are Chevron 50% (operator) and Shell
32%. Erskine fluids are processed and exported via the Lomond
platform, which is 100% owned and operated by Shell. In January
this year Shell announced a sale of its interests in Erskine and
Lomond, subject to certain consents, to Chrysaor Holdings Limited,
a private equity-backed oil and gas company. The completion of this
sale is expected to take place in the fourth quarter of 2017.
An updated independent audit of the Erskine field confirmed
Serica's share of estimated proven plus probable reserves at 3.8
million boe as of 1 January 2017, an increase of 50% from
pre-acquisition estimates after adjusting for production.
Production for 1H 2017 averaged 2,800 boe per day net. Between 1
January and 31 May 2017 production was excellent, with a net
average of 3,100 boe per day and peaking at over 4,100 boe per day
net. This was achieved through high uptime performance from export
facilities and good performance from the Erskine wells. During June
and July, production was temporarily reduced by approximately 50%
to regulate wax deposition in the condensate export pipeline and
some wax treatment procedures were carried out.
Following the period end, a planned maintenance programme on the
Lomond platform took place in August, coinciding with maintenance
activities at the Forties Pipeline System (FPS). As previously
announced, the operator also took the opportunity to undertake a
chemical clean of the condensate export pipeline to treat wax
deposits. Production restart was delayed as the operator of FPS
imposed a restriction on production from the field in order to
manage the specialist fluids used in the wax treatment process. In
addition, an inspection carried out on a caisson on the Lomond
platform identified the need for repair work which will be
scheduled for the next Lomond planned shut-in.
Erskine was brought back into production during Friday 22
September and rates net to Serica were gradually increased to over
2,500boe/d, with only three out of five wells producing, whilst the
impact of the chemical clean is assessed and the treated wax is
cleared from the line.
Serica is working with the operators of Erskine and Lomond to
implement long-term maintenance solutions, using pigging and
chemical treatments, to improve uptime of the export facilities and
return to performance levels seen at the beginning of the year.
Development
Central North Sea: Columbus Field - Blocks 23/16f and 23/21a
(part), Serica 50%
The Columbus gas condensate field is located in the UK Central
North Sea, just north of the Lomond platform, which is the offtake
route for production from Serica's Erskine producing interest.
Serica is progressing two development options for Columbus. One
option is an extended-reach development well drilled into Columbus
from the Lomond platform, located 5 kilometres away. The other
option is drilling a subsea well and joining a future Arran
development to the Shearwater platform, located 35 kilometres from
Columbus.
Studies into drilling an extended reach well from the Lomond
platform have been carried out and have successfully demonstrated
feasibility and satisfied the Lomond platform operator that it
passes their internal HSE and operational requirements. Serica is
now working to progress commercial terms with the host operator.
This route offers the opportunity to accelerate the first
production date by a year or more as it does not require pipelines
or subsea equipment, and involves few parties. It brings additional
potential benefits of deferring the date of Lomond and Erskine
abandonment and attracting further third party fields to the
hub.
In parallel, Serica is working with the Arran field operator to
appraise the option of tying Columbus into a proposed new pipeline
running from Arran to the Shearwater platform. A joint FEED (Front
End Engineering Study) between Arran and Columbus is ready to start
and discussions on commercial terms are making good progress. The
advantage of this route is the opportunity to share capital costs
with the Arran owners and share operating costs with the other
parties producing over the Shearwater platform. It also involves a
shorter drilling programme.
Whichever option is selected, Serica plans to take full
advantage of current market conditions and latest drilling and
subsea technology to ensure a low-cost, efficient and reliable plan
for development. Following an analysis of the commercial terms
associated with the two export routes, a field development plan
will be submitted to the Oil and Gas Authority.
Exploration
Central North Sea: Rowallan Prospect - Block 22/19c, Serica
15%
Detailed well planning for the Rowallan prospect is underway,
with spending on a site survey and long-lead items approved by
partners for 2017. A vessel is due to be deployed in early October
2017 to perform a site survey in preparation for drilling in 2018.
The prospect is located within Serica's core Central North Sea
area, close to Erskine and Columbus. Serica is fully carried on all
costs for a well on this high pressure high temperature prospect.
There are similarities to the nearby Culzean field, with the well
targeting the same age Jurassic/Triassic reservoir sands and a
fault-and-dip closed trap.
A discovery could deliver 20 million boe net to Serica (P50
resource estimate), with further upside in the form of two similar
prospects, Dundonald and Sundrum, also identified on the block.
East Irish Sea: Blocks 113/22a, 113/26b and 113/27c, Serica
20%
Serica had a 20% non-operated interest in Blocks 113/26b and
113/27c in partnership with Zennor Petroleum. Zennor were unable to
secure a partner prior to the licence termination date of 30 April
2017 and, as a result, these blocks were relinquished in Q2
2017.
Serica retains a 20% non-operated interest in Block 113/22a
(Licence P2124).
Ireland
Serica has a large presence offshore Ireland and has
concentrated on robust structural prospects in areas of proven
hydrocarbon systems with discoveries in close proximity. It has no
significant financial commitments outstanding on any of its Irish
licences and is seeking farm-in partners before committing to drill
prospects identified on these licences.
Rockall Basin: Frontier Exploration Licences 1/09 and 4/13,
Serica 100%
Serica secured a two-year extension on Licence 4/13 up to the
end of November 2018. The licence contains structural prospects
Aghla Beg and Aghla More and the overlying stratigraphic prospect
Derryveagh. Earlier this year, Serica completed a process to
enhance the 3D seismic data over the prospects which has enabled
the identification of a fractured basement play within the Aghla
Beg prospect. This work has also shown Aghla More to be relatively
unfractured and so strengthens the interpretation that it comprises
a clastic sedimentary section comparable to nearby Dooish
discovery.
Serica estimates P50 prospective resources for these stacked
prospects to be in the order of 4tcf of gas and 250 million barrels
of condensate.
Serica has recently secured an extension of Licence 1/09 to
January 2019. Licence 1/09 contains a large, clearly defined
structural prospect, which is also analogous to the Dooish
discovery, and Serica is seeking a partner to drill a well ideally
as part of the same drilling programme as 4/13.
Slyne Basin: Frontier Exploration Licence 1/06, Serica 100%
Serica has increased its equity from 50% to 100% following the
withdrawal of DEA from the licence and has secured a two-year
extension to further explore the potential first identified through
the Bandon oil discovery drilled in 2009. Serica has commissioned a
study to investigate the quality of oil that could be expected in
the Boyne prospect and results are due in October.
Serica is seeking to identify a farm-in partner to drill the
Boyne oil prospect and take advantage of low drilling and
development costs. In the event of a commercial discovery, a swift
development could be implemented to achieve an early first oil
date. Delivery of the P50 prospective resource estimate of 115
million barrels of oil would result in an attractive economic
development at current oil prices.
Namibia
Luderitz Basin: Blocks 2512A, 2513A, 2513B and 2612A (part),
Serica 85%
Serica has progressed to the first renewal period of the
licence, running until the end of 2018. Seismic re-processing
carried out this year fulfilled remaining licence commitments and
confirmed the presence of robust amplitude-based seismic anomalies
that indicate the potential presence of porous, hydrocarbon-charged
reservoir sandstones. The anomalies are optimally located up-dip of
the regional proven source rock and lie in relatively shallow
(500m) water depth. These prospects are in addition to the large
carbonate prospect previously identified, located in deeper
water.
Serica is seeking a partner to drill one or more of the
prospects located on the licence and are talking to other operators
in the area about potentially joining a wider drilling programme
offshore Namibia.
Morocco
Sidi Moussa
Serica held 5% working interest and has elected to withdraw from
the licence. The licence operator was previously considering a
second well, in which Serica retained a back-in option, but decided
to seek to undertake an alternative work programme. In view of this
decision, the materiality of a 5% interest to Serica and in line
with Serica's view of the costs and benefits of retaining an
interest, Serica has elected to withdraw.
FINANCIAL REVIEW
The completion of the Erskine acquisition in mid-2015 brought
significant oil and gas revenue streams, accelerating the
utilisation of Serica's past UK tax losses.
Group profit after tax from continuing operations of US$10.3
million for 1H 2017 compares to a loss of US$2.8 million for 1H
2016. Results for 1H 2016 were adversely impacted by a six-month
Erskine field shut-in running until August of that year. Strong
well performance and offtake facility uptime, allied to rising
commodity prices, delivered a particularly strong Q4 2016 and 1H
2017.
Erskine asset overview
Erskine field production averaged approximately 2,800 boe per
day net to Serica in 1H 2017. The Brent oil benchmark averaged over
US$52 per barrel in 1H 2017 (2016 year average of US$45 per barrel)
whilst UK gas prices rose to over 60 pence per therm in January and
averaged over 42 pence across the 1H 2017 period (2016 year average
of 35 pence per therm).
Serica's operating costs including transportation and processing
were US$14 per boe during 1H 2017, averaging well below annual 2016
levels of US$23 per boe, which were impacted by the shut-in.
Serica's significant UK ring fence tax losses brought forward
(approximately US$165 million as at 31 December 2016) from prior
periods have been applied to fully shelter Erskine net income from
tax payments and are expected to be sufficient to cover future
income from the field leaving a surplus available to cover new UKCS
sources of income.
Strong net income from Erskine has allowed Serica to continue to
rebuild cash resources. As at 26 September 2017, cash balances and
term deposits had increased from the period-end balance of US$30.7
million to US$32.3 million.
Results from operations
A summary of the income statement results for continuing
operations is given below.
Income statement - continuing operations
Serica generated a 1H 2017 gross profit of US$13.6 million (1H
2016: gross loss US$2.6 million) from its 18% Erskine field
interest. Net combined oil and gas production of 507,000 boe in 1H
2017 compared to 194,000 boe for 1H 2016 which was significantly
impacted by the extended Erskine field shut-in for four months of
that period.
Sales revenues
The Company currently generates all its sales revenue from the
Erskine field in the UK North Sea. Serica's condensate allocation
is delivered as Forties crude oil and sold in US$ at monthly
average spot prices. From 1 October 2016 all of Serica's gas
allocation is sold in GBGBP at monthly average spot prices. NGLs
derived from gas production are sold in US$ at monthly average spot
prices for the respective products.
Net Erskine field gas production averaged 9.0 mmscf per day
during 1H 2017, while net condensate production averaged 1,312
barrels per day. In the 1H 2016 comparative period, net Erskine
field gas production averaged 3.3 mmscf per day together with
average net condensate production of 513 barrels per day.
Sales revenues in 1H 2017 from lifted barrels of oil were
US$11.9 million (1H 2016: US$5.5 million) at an average realised
price of US$51.5/bbl (1H 2016: US$36.6/bbl). Associated NGL
products earned additional revenue of US$0.2 million (1H 2016:
US$0.1 million).
Sales revenues in 1H 2017 also include a charge of US$0.6
million (1H 2016: US$3.1 million) reflecting the liquids overlift
position at 30 June 2017 compared to an underlift position at 31
December 2016. Over/underlifts occur when volumes of oil and NGLs
sold exceed/are below volumes produced and movements are classified
within revenues.
The 1H 2017 gas production was sold at prices averaging US$5.3
per mscf (1H 2016: US$4.1 per mscf) and generated US$8.7 million
(1H 2016: US$2.4 million) of revenue net to Serica. A gas sales
contract, under which Serica supplied approximately one quarter of
its Erskine gas production at relatively low contract prices
(approximately 30 pence per therm in the 2015/6 contract year),
terminated on 30 September 2016.
Three NGL products (Propane, Butane and Naphtha) are derived
from associated gas production and contributed revenue of US$1.6
million (1H 2016: US$0.8 million) net to Serica.
Cost of sales and depletion charges
Cost of sales is driven by production from the Erskine field and
comprises field operating costs and a depletion charge against the
asset's net book amount.
The overall 1H 2017 charge of US$8.3 million (1H 2016: US$8.4
million) comprised direct field operating costs of US$7.1 million
(1H 2016: US$8.0 million) and non-cash depletion of US$1.2 million
(1H 2016: US$0.4 million). The most significant elements of the
field operating costs are as follows: Erskine's contribution to the
running costs of the Lomond facilities, standalone Erskine field
operating costs, other transportation costs for use of the FPS and
CATS pipelines, and charges for any necessary surface or
sub-surface maintenance work. Operational expenditure continues
during periods of field shut-in when no revenue is earned.
The US$0.9 million decrease in field operating costs from 1H
2016 to 1H 2017 is largely due to 1H 2016 expense including
exceptional costs incurred to resolve the Lomond/Everest pipeline
blockage. Operating costs are billed in GBGBP and, following the
decline in the strength of GBGBP against US$ in June 2016, the
reported US$ equivalent figures have reduced during 1H 2017
compared to US$ oil revenue streams.
Depletion charges principally represent the costs of Erskine
acquisition spread over the estimated remaining commercial life of
the field on a unit of production basis.
Other expenses and income
Other expenditure of US$0.1 million in 1H 2017 (1H 2016: other
income of US$0.4 million) represented hedging premium net of
gains.
Pre-licence expenditure of US$0.1 million for 1H 2017 remained
similar to the 1H 2016 charge of US$0.1 million. Pre-licence costs
included direct costs and allocated general administrative costs
incurred on oil and gas activities prior to the award of licences,
concessions or exploration rights.
Asset write-offs of US$1.5 million in 1H 2017 relate to the
relinquished Doyle block and minor exploration and evaluation
("E&E") assets where no further prospectivity is envisaged. The
E&E asset impairment charge of US$0.03 million in 1H 2016
comprised minor asset write-offs from licences in Morocco and the
UK.
Administrative expenses of US$0.9 million for 1H 2017 were
reduced slightly from the 1H 2016 charge of US$1.0 million. The
Company continues to see the benefit of cost reductions achieved in
2015. During 2H 2016 and 1H 2017, the weaker average GBGBP exchange
rate compared to US$ has reduced reported overheads incurred in
GBGBP.
Foreign exchange
Serica retains certain non-US$ cash holdings and other financial
instruments relating to its operations. The US$ value of these may
fluctuate from time to time causing reported foreign exchange gains
and losses. Serica maintains a broad strategy of matching the
currency of funds held on deposit to the expected expenditures in
those currencies. Management believes that this mitigates most of
any actual potential currency risk from financial instruments.
Foreign exchange gains of US$0.3 million for 1H 2017 (1H 2016:
charge of US$0.4 million) largely reflect an increase in the
reported US$ equivalent of GBGBP cash balances caused by the
strengthening of GBGBP against the US$ during the 1H 2017 period.
Unrealised gains on the revaluation of GBGBP cash balances have
been partially offset by realised losses on settlement of GBGBP
creditors.
Finance revenue of US$0.1 million in 1H 2017 increased from
negligible levels in 1H 2016, and consisted of bank interest
receivable.
Finance costs of US$0.1 million were incurred in 1H 2017 (1H
2016: US$0.1 million) largely comprising the interest accruing on
the liability payable to BP relating to the Erskine
acquisition.
The income statement deferred taxation charge of US$0.8 million
in 1H 2017 (1H 2016: credit of US$1.1 million) arose from the
release of a corresponding deferred tax asset on the Erskine field
interest.
Balance Sheet
During 1H 2017, total investments in E&E assets decreased by
US$0.5 million from US$53.2 million to US$52.7 million.
The decrease relates to a write-off of US$1.5 million following
the relinquishment of the UK licence P1482 (containing the Doyle
prospect) in April 2017, partially offset by US$1.0 million of
expenditure on the Group's exploration portfolio capitalised in the
period.
Additions in the 1H 2017 period have occurred on the following
assets. In the UK, US$0.5 million was incurred on the Columbus
development and other exploration licences. In Ireland, US$0.2
million was incurred on exploration work on the Rockall licences
and US$0.1 million on the Slyne interest. In Africa, US$0.2 million
was incurred in respect of the Luderitz basin licence interests in
Namibia.
The property, plant and equipment balance of US$7.6 million as
at 30 June 2017 entirely comprises the net book amount of the
Erskine asset acquisition costs capitalised on completion of the
transaction net of depletion charges to-date.
Trade and other receivables at 30 June 2017 totalled US$4.9
million, a decrease of US$1.9 million from the 2016 year-end
balance of US$6.8 million. The 30 June 2017 balance included US$2.6
million from June oil, gas and NGL sales. The decrease in the
balance from the 2016 year-end is largely due to lower receipts due
from June sales compared to the December sales amount of US$4.3
million due at the year-end.
Cash and cash equivalents, and short-term deposits, increased
from US$16.6 million to US$30.7 million during 1H 2017. Term
deposits are disclosed separately on the face of the balance sheet
when their term is greater than three months and they are
unbreakable. Operating cash inflows from net Erskine field sales
were boosted by strong production levels in the period. The Company
elected to pay the third US$2.9 million tranche of Erskine
consideration to BP early, in April 2017, whilst other cash
outflows were incurred on E&E assets across the portfolio in
the UK, Ireland and Namibia, ongoing administrative costs and
corporate activity.
Short-term trade and other payables totalled US$4.9 million at
30 June 2017. This balance comprises capital and operational
liabilities for the Erskine interest, and other creditors and
accruals for E&E asset, corporate and administrative
expenditure.
Provisions of US$2.2 million relate to an estimate for certain
contingent payments related to savings in field operating costs
that may be made to BP under the terms of the Erskine
acquisition.
Long-term liabilities of US$2.9 million as at 30 June 2017
comprise the final tranche of Erskine consideration payable to BP
on 1 July 2018.
Serica's share of estimated Erskine field decommissioning costs
will be met by BP up to a level of GBGBP31.3 million, adjusted for
inflation, with Serica being responsible for any costs beyond that.
Serica has recorded no provision for decommissioning liabilities at
30 June 2017.
Cash balances and future commitments
Current cash position, capital expenditure commitments and other
obligations
At 30 June 2017, the Group held term deposits, cash and cash
equivalents of US$30.7 million. The cash balance had increased to
US$32.3 million as at 26 September 2017.
At 30 June 2017, the Group held gas put options covering July
2017 volumes of 40,000 therms per day, August 2017 volumes of
20,000 therms per day, and September 2017 volumes of 40,000 therms
per day, all at floor prices of 38 pence per therm.
Erskine field commitments
Net revenues from the Erskine field are expected to cover
ongoing field expenditures as well as the remaining tranche of
US$2.775 million (excluding interest) cash consideration payable to
BP on or before 1 July 2018.
Non-Erskine commitments
The Group has no significant exploration commitments.
In the UK, the Group's costs of the exploration well on 22/19c
will be fully carried by a third party. Financing plans for the
Columbus project will be worked in conjunction with the FDP
submission.
Other
Asset values and Impairment
At 30 June 2017 Serica's market capitalisation stood at US$93.4
million (GBP71.9 million), based upon a share price of GBP0.2725,
which was exceeded by the net asset value at that date of US$95.4
million. By 26 September 2017 the Company's market capitalisation
had increased to US$95.8 million. Management conducted a thorough
review of the carrying value of the Group's assets and determined
that no significant write-downs were required.
Additional Information
Additional information relating to Serica, can be found on the
Company's website at www.serica-energy.com and on SEDAR at
www.sedar.com
Approved on behalf of the Board
Antony Craven Walker
Executive Chairman
27 September 2017
Forward Looking Statements
This disclosure contains certain forward looking statements that
involve substantial known and unknown risks and uncertainties, some
of which are beyond Serica Energy plc's control, including: the
impact of general economic conditions where Serica Energy plc
operates, industry conditions, changes in laws and regulations
including the adoption of new environmental laws and regulations
and changes in how they are interpreted and enforced, increased
competition, the lack of availability of qualified personnel or
management, fluctuations in foreign exchange or interest rates,
stock market volatility and market valuations of companies with
respect to announced transactions and the final valuations thereof,
and obtaining required approvals of regulatory authorities. Serica
Energy plc's actual results, performance or achievement could
differ materially from those expressed in, or implied by, these
forward looking statements and, accordingly, no assurances can be
given that any of the events anticipated by the forward looking
statements will transpire or occur, or if any of them do so, what
benefits, including the amount of proceeds, that Serica Energy plc
will derive therefrom.
Serica Energy plc
Group Income Statement
For the period ended 30 June
Six Six
months months Year
ended ended ended
30 June 30 June 31 Dec
Notes 2017 2016 2016
Continuing operations US$000 US$000 US$000
(Unaudited) (Unaudited) (Audited)
Sales revenue 4 21,922 5,739 21,432
Cost of sales 5 (8,332) (8,372) (14,860)
Gross profit/(loss) 13,590 (2,633) 6,572
Other (expense)/income (148) 389 (113)
Pre-licence costs (99) (126) (240)
Impairment and write-off of E&E assets 7 (1,523) (25) (62)
Administrative expenses (920) (991) (2,062)
Foreign exchange gain/(loss) 292 (391) (556)
Share-based payments (24) (49) (90)
Operating profit/(loss) from
continuing operations 11,168 (3,826) 3,449
Finance revenue 81 35 61
Finance costs (67) (107) (185)
Profit/(loss) before taxation 11,182 (3,898) 3,325
Taxation (charge)/credit for the period 11 (839) 1,121 7,521
Profit/(loss) after taxation and
profit/(loss) for the period 10,343 (2,777) 10,846
Discontinued operations
Loss for the period 6 - (5) (8)
Profit/(loss) for the period 10,343 (2,782) 10,838
Earnings per ordinary share (EPS)
Profit/(loss) on continuing operations
Basic and diluted EPS (US$) 0.04 (0.01) 0.04
Profit/(loss) for the period
Basic and diluted EPS (US$) 0.04 (0.01) 0.04
Total Statement of Comprehensive Income
There are no other comprehensive income items other than those
passing through the income statement.
Serica Energy plc
Consolidated Balance Sheet
30 June 31 Dec 30 June
2017 2016 2016
US$000 US$000 US$000
Notes (Unaudited) (Audited) (Unaudited)
Non-current assets
Exploration & evaluation assets 7 52,742 53,170 52,577
Property, plant and equipment 8 7,608 9,078 8,518
Deferred tax asset 9,115 9,954 3,554
------------
69,465 72,202 64,649
------------ ---------- ------------
Current assets
Inventories 396 401 392
Trade and other receivables 4,931 6,849 934
Term deposits 5,600 - -
Cash and cash equivalents 25,083 16,593 20,820
------------ ---------- ------------
36,010 23,843 22,146
------------ ---------- ------------
TOTAL ASSETS 105,475 96,045 86,795
------------ ---------- ------------
Current liabilities
Trade and other payables (4,899) (5,877) (9,670)
Non-current liabilities
Trade and other payables (2,924) (2,883) (5,691)
Provisions (2,190) (2,190) -
TOTAL LIABILITIES (10,013) (10,950) (15,361)
------------ ---------- ------------
NET ASSETS 95,462 85,095 71,434
============ ========== ============
Share capital 9 229,308 229,308 229,308
Other reserves 20,739 20,715 20,674
Accumulated deficit (154,585) (164,928) (178,548)
TOTAL EQUITY 95,462 85,095 71,434
============ ========== ============
Serica Energy plc
Statement of Changes in Equity
For the year ended 31 December 2016 and period ended 30 June
2017
Group Share Other
capital reserves Deficit Total
US$000 US$000 US$000 US$000
At 1 January 2016
(audited) 229,308 20,625 (175,766) 74,167
Profit for the year - - 10,838 10,838
--------- ---------- ---------- -------
Total comprehensive
income - - 10,838 10,838
Share-based payments - 90 - 90
At 31 December 2016
(audited) 229,308 20,715 (164,928) 85,095
Profit for the period - - 10,343 10,343
--------- ---------- ---------- -------
Total comprehensive
income - - 10,343 10,343
Share-based payments - 24 - 24
At 30 June 2017 (unaudited) 229,308 20,739 (154,585) 95,462
========= ========== ========== =======
Serica Energy plc
Consolidated Cash Flow Statement
For the period ended 30 June
Six Six
months months Year
ended ended ended
30 June 30 June 31 Dec
2017 2016 2016
US$000 US$000 US$000
(Unaudited) (Unaudited) (Audited)
Operating activities:
Profit/(loss) for the period 10,343 (2,782) 10,838
Adjustments to reconcile profit/(loss) for the period
to net cash flow from operating activities
Taxation charge/(credit) 839 (1,121) (7,521)
Net finance (income)/costs (14) 72 124
Depletion and amortisation 1,217 414 1,274
Oil and NGL overlift increase/(reduction) 592 3,070 (516)
Impairment and write-offs of E&E assets 1,523 25 62
Share-based payments 24 49 90
Other non-cash movements (292) 391 866
Decrease/(increase) in receivables 1,568 3,211 (1,862)
Decrease /(increase) in inventories 5 61 52
Increase/(decrease) in payables 1,845 (2,613) (3,270)
Net cash inflow from operations 17,650 777 137
Investing activities:
Interest received 81 37 61
Purchase of E&E assets (1,095) (788) (1,418)
Purchase of P, P & E - (38) -
Cash outflow arising on asset acquisition (2,775) - (2,775)
Changes in term deposits (5,600) - -
Net cash outflow from investing activities (9,389) (789) (4,132)
------------ ------------ ----------
Financing activities:
Finance costs paid (133) (2) (77)
Net cash outflow from financing activities (133) (2) (77)
------------ ------------ ----------
Cash and cash equivalents
Net increase/(decrease) in period 8,128 (14) (4,072)
Effect of exchange rates on cash and cash equivalents 362 (768) (937)
Amount at start of period 16,593 21,602 21,602
Amount at end of period 25,083 20,820 16,593
============ ============ ==========
Serica Energy plc
Notes to the Unaudited Consolidated Financial Statements
1. Corporate information
The interim condensed consolidated financial statements of the
Group for the six months ended 30 June 2017 were authorised for
issue in accordance with a resolution of the directors on 27
September 2017.
Serica Energy plc is a public limited company incorporated and
domiciled in England & Wales. The Company's ordinary shares are
traded on AIM in London. The principal activity of the Company is
to identify, acquire and exploit oil and gas reserves.
2. Basis of preparation and accounting policies
Basis of Preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2017 have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting"
as adopted by the European Union.
These unaudited interim consolidated financial statements of the
Group have been prepared in accordance with International Financial
Reporting Standards following the same accounting policies and
methods of computation as the consolidated financial statements for
the year ended 31 December 2016. These unaudited interim
consolidated financial statements do not include all the
information and footnotes required by generally accepted accounting
principles for annual financial statements and therefore should be
read in conjunction with the consolidated financial statements and
the notes thereto in the Serica Energy plc annual report for the
year ended 31 December 2016.
A number of new standards, amendments to existing standards and
interpretations were applicable from 1 January 2017. The adoption
of these amendments did not have a material impact on the Group's
interim condensed consolidated financial statements for the period
ended 30 June 2017.
Going Concern
The Directors are required to consider the availability of
resources to meet the Group's liabilities for the foreseeable
future. The financial position of the Group, its cash flows and
capital commitments are described in the Financial Review
above.
At 30 June 2017 the Company held net current assets of US$31.1
million including cash and term deposit resources of US$30.7
million with no borrowings outstanding. The Erskine asset
acquisition, completed in early June 2015 brought to Serica a
producing interest capable of generating robust continuing cash
flow at current oil and gas prices. Existing resources plus Erskine
revenues are expected to be sufficient to cover ongoing Erskine
costs and the outstanding instalment of the acquisition price plus
other operational, technical and administrative costs in the short
to medium term.
Mindful of the risks of reliance on revenues from a single
field, management will seek to continue building Group cash
reserves so as to improve its financial resilience. The financial
strategy is to restrict near-term spend on exploration licences,
only committing to exploration drilling where the costs are
substantially carried by third parties.
Management continues to seek new business opportunities to add
shareholder value and, where these can offer attractive returns,
appropriate financing structures will be investigated. When the
final decision to proceed with the Columbus development is made,
the Group would consider a range of alternative means of finance to
fund its share of development costs.
After making enquiries and having taken into consideration the
above factors, the Directors have reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Accordingly they continue to adopt the
going concern basis in preparing the interim financial
statements.
Significant accounting policies
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 31 December 2016. The
impact of seasonality or cyclicality on operations is not
considered significant on the interim consolidated financial
statements.
The Group financial statements are presented in US dollars and
all values are rounded to the nearest thousand dollars (US$000)
except when otherwise indicated.
Basis of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries Serica Holdings UK
Limited, Serica Energy Holdings B.V., Serica Energy Corporation,
Asia Petroleum Development Limited, Petroleum Development
Associates (Asia) Limited, Serica Energy (UK) Limited, PDA Lematang
Limited, Serica Glagah Kambuna B.V., Serica Foum Draa B.V., Serica
Sidi Moussa B.V., Serica Energy Rockall B.V., Serica Energy Slyne
B.V. and Serica Energy Namibia B.V.. Together, these comprise the
"Group".
All inter-company balances and transactions have been eliminated
upon consolidation.
3. Segmental Information
The Group's business is that of oil & gas exploration,
development and production. The Group's reportable segments are
based on the location of the Group's assets.
The following tables present revenue, profit and certain asset
and liability information regarding the Group's geographical
reportable segments for the periods ended 30 June 2017 and 2016.
Costs associated with the UK corporate centre are included in the
UK & Ireland reportable segment. Reportable information in
respect of the Group's interest in the Kambuna field in Indonesia
is disclosed as a separate segment, with income statement
information for this segment additionally classified as
'discontinued'.
Period ended 30 June Continuing Discontinued
2017 UK &
Ireland Africa Total
US$000 US$000 US$000 US$000
Revenue 21,922 - 21,922 -
--------- ------- -------- ----------- -------------
Operating and segment
profit/(loss) 11,182 (14) 11,168 -
Finance revenue 81 -
Finance costs (67) -
Profit before taxation 11,182 -
Taxation charge for
the period (839) -
--------- ------- -------- ----------- -------------
Profit after taxation 10,343 -
UK &
Ireland Africa Kambuna Total
US$000 US$000 US$000 US$000
Other segment information:
Segmental assets 101,920 3,555 - 105,475
Unallocated assets -
Total assets 105,475
-----------
Segment liabilities (9,985) (28) - (10,013)
Total liabilities (10,013)
-----------
Period ended 30 June Continuing Discontinued
2016 UK &
Ireland Africa Total
US$000 US$000 US$000 US$000
Revenue 5,739 - 5,739 -
--------- ------- -------- ----------- -------------
Operating and segment
loss (3,801) (25) (3,826) (5)
Finance revenue 35 -
Finance costs (107) -
Loss before taxation (3,898) (5)
Taxation credit for
the period 1,121 -
--------- ------- -------- ----------- -------------
Loss after taxation (2,777) (5)
UK &
Ireland Africa Kambuna Total
US$000 US$000 US$000 US$000
Other segment information:
Segmental assets 83,576 3,219 - 86,795
Unallocated assets -
Total assets 86,795
-----------
Segment liabilities (15,302) (58) (1) (15,361)
Total liabilities (15,361)
-----------
Unallocated assets and liabilities comprise financing items
(including cash on deposit).
4. Sales Revenue
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2017 2016 2016
US$000 US$000 US$000
----------- ----------- -------
Gas sales 8,658 2,431 8,374
Oil sales 11,933 5,457 11,090
NGL sales 1,923 921 1,451
(Increase)/reduction in liquids overlift (592) (3,070) 517
21,922 5,739 21,432
----------- -----------
5. Cost of sales
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
Six months ended 30 June: 2017 2016 2016
US$000 US$000 US$000
----------- ----------- -------
Operating costs 7,115 7,958 13,586
Depletion (note 8) 1,217 414 1,274
8,332 8,372 14,860
----------- -----------
6. Discontinued Operation
During 2013, Serica's sole remaining interest in Indonesia was
its 25% interest in the Glagah Kambuna Technical Assistance
Contract ("TAC"). The TAC covered an area of offshore North Sumatra
and contained the Kambuna gas field.
Following the cessation of production and the decommissioning of
the Kambuna field facilities in Indonesia in the second half of
2013, the financial results of the Kambuna field business segment
are disclosed within 'discontinued operations' in the financial
statements and separate from the results of the retained core
business segments.
Results of discontinued operations
This discontinued operation has no further activity and
generated a result of US$nil in 1H 2017 (loss of US$5,000 in 1H
2016). The loss for 2016 comprised a final charge as residual
matters were closed out. There are no taxation components within
discontinued operations.
Basic and diluted Earnings per ordinary share (EPS) on the
result for 1H 2017 amounted to US$nil (1H 2016: US$nil).
7. Exploration and Evaluation Assets
Total
US$000
Cost:
At 1 January 2016 (audited) 64,378
Additions 1,418
Asset write-offs (62)
At 31 December 2016 (audited) 65,734
Additions 1,095
Asset write-offs (1,523)
At 30 June 2017 (unaudited) 65,306
=========
Provision for impairment:
At 1 January 2016 (audited) (12,564)
Impairment (charge)/reversal for the -
year
At 31 December 2016 (audited) (12,564)
Impairment charge for the period -
At 30 June 2017 (unaudited) (12,564)
=========
Net Book Amount:
30 June 2017 (unaudited) 52,742
=========
31 December 2016 (audited) 53,170
=========
1 January 2016 (audited) 51,814
=========
E&E asset write offs in the Income Statement in 1H 2017
consisted of a US$1.5 million charge following the relinquishment
of Doyle and a final minor charge against costs incurred on the
Sidi Moussa block in Morocco.
E&E asset write offs in the Income Statement in 2016
comprised minor asset write-offs from licences in Morocco and the
UK.
8. Property Plant and Equipment
Oil and
gas
properties
US$000
Cost:
At 1 January 2016
(audited) 10,235
Acquisitions 1,458
At 31 December 2016
(audited) 11,693
Additions/revisions (253)
At 30 June 2017 (unaudited) 11,440
Depreciation and
depletion:
At 1 January 2016
(audited) 1,341
Charge for the period
(note 5) 1,274
At 31 December 2016
(audited) 2,615
Charge for the period
(note 5) 1,217
At 30 June 2017 (unaudited) 3,832
------------
Net book amount:
At 30 June 2017 (unaudited) 7,608
============
At 31 December 2016
(audited) 9,078
============
At 1 January 2016
(audited) 8,894
============
The property, plant and equipment balance of US$7.6 million as
at 30 June 2017 entirely comprises the net book amount of the
Erskine asset acquisition costs capitalised on completion of the
transaction on 4 June 2015. This includes non-cash consideration in
the form of 13,500,000 ordinary shares issued to BP at nominal
value of US$0.10 each as part of the acquisition consideration.
Additions of US$1.5 million during 2016 comprise US$2.2 million
relating to the Company's estimate of contingent payments due to BP
partially offset by other pre-completion date adjustments and
revisions. Revisions of US$0.3 million in 1H 2017 include
additional minor acquisition adjustments in the period.
9. Equity Share Capital
The share capital of the Company comprises one "A" share of
GBP50,000 and 263,679,039 ordinary shares of US$0.10 each. The "A"
share has no special rights.
The balance classified as total share capital includes the total
net proceeds (both nominal value and share premium) on issue of the
Group and Company's equity share capital, comprising US$0.10
ordinary shares and one 'A' share.
Allotted, issued and fully paid: Share Share Total
capital premium Share capital
Group Number US$000 US$000 US$000
At 1 January 2016 263,679,040 26,458 202,850 229,308
Shares issued - - - -
At 31 December 2016 263,679,040 26,458 202,850 229,308
Shares issued - - - -
At 30 June 2017 263,679,040 26,458 202,850 229,308
As at 27 September 2017 the issued voting share capital of the
Company is 263,679,039 ordinary shares and one "A" share.
10. Share-Based Payments
Share Option Plans
Following a group reorganisation in 2005, the Company
established an option plan (the "Serica 2005 Option Plan") to
replace the Serica Energy Corporation Share Option Plan (the
"Serica BVI Option Plan"). There are no options outstanding under
the Serica BVI Option Plan, nor can further options be granted
under the Serica BVI Option Plan. No further options will be
granted under the Serica 2005 Option Plan as the ability to do this
expired on this plan's 10(th) anniversary in November 2015.
A new plan, the Serica Energy plc Company Share Option Plan
("Serica CSOP"), was approved for adoption at the Company's AGM in
June 2016. This will govern all future grants of options by the
Company to Directors, officers, key employees and certain
consultants of the Group. The Directors intend that the maximum
number of ordinary shares which may be utilised pursuant to the
Serica CSOP will not exceed 10% of the issued ordinary shares of
the Company from time to time in line with the recommendations of
the Association of British Insurers.
As at 30 June 2017, the Company has granted 24,332,460 options
under the Serica 2005 Option Plan, 8,196,330 of which were
outstanding. 400,000 of these options were granted to a consultant
subject to performance conditions, and the 2,500,000 options
granted to a director in July 2015 were all awarded at exercise
prices higher than the current market price at the time of the
grant to establish firm performance targets.
The Company calculates the value of share-based compensation
using a Black-Scholes option pricing model (or other appropriate
model for those Directors' options subject to certain market
conditions) to estimate the fair value of share options at the date
of grant. There are no cash settlement alternatives. The estimated
fair value of options is amortised to expense over the options'
vesting period. US$24,000 has been charged to the income statement
in continuing operations for the six month period ended 30 June
2017 (1H 2016 - US$49,000) and a similar amount credited to the
share-based payments reserve, classified as 'Other reserve' in the
Balance Sheet.
No options were granted in 2016 or 2017 to date. Assumptions for
options granted in 2015, which were consistently valued in line
with the Company's valuation policy, included a weighted average
risk-free interest rate of 3%, no dividend yield, a weighted
average expected life of three years, and a volatility factor of
expected market price of in a range from 50-70%.
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the period:
Serica 2005 Option Plan WAEP
GBP
Outstanding at 1 January 2016 8,601,330 0.30
Expired during the period (135,000) 1.035
Outstanding at 31 December 2016 8,466,330 0.28
Expired during the period (270,000) 1.036
Outstanding at 30 June 2017 8,196,330 0.25
---------- ------
In January 2016, 135,000 share options under the Serica 2005
Option Plan expired.
In January 2017, 60,000 share options under the Serica 2005
Option Plan expired.
In May 2017, 210,000 share options under the Serica 2005 Option
Plan expired.
Share Options
As at 30 June 2017, the following director and employee share
options were outstanding:
Expiry Date Amount Exercise cost
GBP
March 2018 318,000 238,500
January 2020 1,155,000 785,400
April 2021 50,000 15,685
January 2022 1,123,330 240,112
October 2022 400,000 116,000
January 2023 300,000 81,750
November 2023 400,000 72,000
January 2024 450,000 58,500
June 2025 1,500,000 99,000
July 2025 1,000,000 120,000
July 2025 1,000,000 180,000
July 2025 500,000 120,000
11. Taxation
The major components of income tax (charged)/credited in the consolidated income statement
are:
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2017 2016 2016
US$000 US$000 US$000
Current income tax charge - - -
Deferred income tax (charge)/credit (839) 1,121 7,521
Total taxation (charge)/credit for the period (839) 1,121 7,521
-------------- -------------
Recognised and unrecognised tax losses
Following the acquisition of a producing UK asset in 2015, the
Group has recognised a deferred tax asset of US$9.1 million as at
30 June 2017 in respect of certain carried forward losses that are
expected to be utilised in the foreseeable future to offset the
taxable profits that the acquired asset is expected to
generate.
The Group has UK ring fence tax losses of approximately US$165
million available as at 31 December 2016 that are available
indefinitely for offset against future ring fence trading profits
of the company in which the losses arose.
Changes to UK corporation tax legislation
The main rate of UK corporation tax changed from 20% to 19% on 1
April 2017 and will change to 18% on 1 April 2020. The UK Finance
Bill 2016 includes a reduction of the UK corporation tax rate to
17% on April 2020. This will replace the 18% UK corporation tax
rate that is currently legislated to take effect. In March 2016 it
was announced that the rate of Supplementary charge (SC) would be
reduced from 20% to 10% with effect from 1 January 2016. This was
substantively enacted on 6 September 2016 and reduced the headline
rate of tax to 40% for ring-fenced trading profits.
12. Publication of Non-Statutory Accounts
The financial information contained in this interim statement
does not constitute statutory accounts as defined in the Companies
Act 2006. The financial information for the full preceding year is
based on the statutory accounts for the financial year ended 31
December 2016, which are available at the Company's registered
office at 52 George Street, London W1U 7EA and on its website at
www.serica-energy.com and on SEDAR at www.sedar.com.
This interim statement will be made available at the Company's
registered office at 52 George Street, London W1U 7EA and on its
website at www.serica-energy.com and on SEDAR at www.sedar.com.
GLOSSARY
bbl barrel of 42 US gallons
bcf billion standard cubic feet
boe barrels of oil equivalent (barrels of oil, condensate and LPG plus the heating equivalent
of gas converted into barrels at a rate of 6,000 standard cubic feet per barrel)
boepd barrels of oil equivalent per day
bpd barrels of oil per day
caisson A steel chamber that surrounds equipment below the waterline of a platform or rig.
CATS Central Area Transmission System
CPR Competent Persons Report
FEED Front End Engineering Design
FPS Forties Pipeline System
HPHT High Pressure High Temperature
mscf thousand standard cubic feet
mmbbl million barrels
mmboe million barrels of oil equivalent
mmscf million standard cubic feet
mmscfd million standard cubic feet per day
NGL Natural Gas Liquid
P(10) A high estimate that there should be at least a 10% probability that the quantities recovered
will actually equal or exceed the estimate
P(50) A best estimate that there should be at least a 50% probability that the quantities recovered
will actually equal or exceed the estimate
P(90) A low estimate that there should be at least a 90% probability that the quantities recovered
will actually equal or exceed the estimate
pigging The process of sending a cleaning device, known as a pig, along a pipeline to clean and/or
inspect the pipeline.
Proved Reserves Proved reserves are those Reserves that can be estimated with a high degree of certainty to
be recoverable. It is likely that the actual remaining quantities recovered will exceed the
estimated proved reserves.
Probable Reserves Probable reserves are those additional Reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining quantities recovered will
be greater or less than the sum of the estimated proved + probable reserves.
Possible Reserves Possible reserves are those additional Reserves that are less certain to be recovered than
probable reserves. It is unlikely that the actual remaining quantities recovered will exceed
the sum of the estimated proved + probable + possible reserves
Reserves Estimates of discovered recoverable commercial hydrocarbon reserves calculated in accordance
with the Canadian National Instrument 51--101
Contingent Resources Estimates of discovered recoverable hydrocarbon resources for which commercial production
is not yet assured, calculated in accordance with the Canadian National Instrument 51--101
Prospective Resources Estimates of the potential recoverable hydrocarbon resources attributable to undrilled
prospects,
calculated in accordance with the Canadian National Instrument 51--101
TAC Technical Assistance Contract
tcf trillion standard cubic feet
UKCS United Kingdom Continental Shelf
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKODDOBKDNCB
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