Serica Energy Share Discussion Threads

[fardels bear] 18/12/2019 20:47

If you're going to Algarve we might miss Friday's huge deluge. But north of Lisboa it looks horrid. Not cold though. In fact warmer than last Christmas.

[spawny100] 18/12/2019 18:48

Ha ha yeah we fly out tomorrow FB and I'd seen it looks pretty wet out there! Better at weekend I think.

[bountyhunter] 18/12/2019 17:39

Gas up another 4.5% today and it's not even cold.

[bountyhunter] 18/12/2019 17:05

Cheers marvelman :-)

[captainfatcat] 18/12/2019 16:16

Back to the 1.30's

8-)

[marvelman] 18/12/2019 16:13

Certainly good to have you back Bounty...many thanks

[bountyhunter] 18/12/2019 12:48

Ok I've been a bit lazy with no.17 but at a brief lunch break with plenty of work pressure right now!

[bountyhunter] 18/12/2019 12:47

Updated 18/12/19 - see 5 & 17 added/updated following today's RNS

SQZ positives...

1) BKR production increased from 26k boepd to 31k for H1 2019
[ 2019 Full year net production expected to be towards upper end of 26,000-30,700 boe/d guidance range ]

2) Operating costs reduced to US$12.30 per boe (GBP9.50 per boe) compared to full year 2018 costs of over US$18 per boe

3) Serica will pay contingent cash consideration to BP, Total E&P and BHP calculated as a percentage (60% in 2018, 50% in 2019 and 40% in each of 2020 and 2021, nothing after that) of net cash flows resulting from the respective field interests acquired

4) Columbus development started 2019. The FDP provides for the supply of up to 40 million cubic feet of gas per day (gross) at peak to the UK gas market and 1,150 barrels per day (gross) of condensate and natural gas liquids ("NGLs"). Timing will depend on the Arran-Shearwater pipeline being tied into the Shearwater platform in Q3 2020. Columbus start-up is expected during the first half of 2021. On-time and on budget.

5) Rhum R3 - following investigative work successfully carried out H1 2019 and in view of production from R1 and R2 continuing at higher than anticipated levels economic analysis indicates that a deferral of R3 capital expenditures is beneficial and consequently execution of the rig intervention in 2020 designed to bring the Rhum-3 well into production

6) BKR hub has capacity to handle increased production including from any nearby fields which may be developed by other companies which could increase revenues - BP did not pursue this opportunity for political reasons

7) Looking to extend life of BKR fields and so push back decommissioning as SQZ has lower overheads and is more focused on BKR than BP

8) Decommissioning costs - SQZ will pay 15% after taking into account HMRC's 50% contribution to the initial 30% liability. Serica’s has limited decommissioning liability due to the innovative nature of the Erskine transaction and the various BKR transactions.

9) Erskine - In 1H 2019 production has averaged 3,008 boe/d net to Serica, ahead of the forecast production and in line with the strongest periods of performance since Serica acquired its interest in mid-2015.

10) An independent report performed by Netherland Sewell and Associates estimated Erskine 2P reserves of 5.7 million boe net to Serica as at 31 December 2018.

11) Potential Erskine further development - as operator of Erskine, Ithaca have highlighted in their June 2019 presentation "Defined infill drilling and step-out exploration targets" for Erskine.

12) With Brent priced in USD, Serica is benefiting from the weak pound against the dollar exchange rate.

13) Cash balance accumulating - cash rich / debt free:
At 30 June 2019 the Group held cash and cash equivalents of GBP84.2 million (31 December 2018 - GBP42.1 million) plus term deposits of GBP3.9 million (31 December 2018 - GBP1.0 million), an increase in combined cash and deposits in excess of 100% during 1H 2019.

14) Namibia assets - Luderitz Basin
Serica is running an active farm-out process with an open data-room and a number of oil and gas companies are reviewing the opportunity to drill an exploration well on the licence. Recent drilling results offshore Namibia have strengthened the case for drilling the giant Prospect B, Serica's highest ranked prospect on the blocks.

15) The Board continues to assess the appropriate timing to commence dividend payments for shareholders.

16) UKCS 32nd Round - Serica expects to be active in the 32nd Offshore Licensing Round and other licencing rounds in the coming year.

17) 18/12/19 award of a 100% interest in the UK petroleum licence P2501, blocks 3/24c and 3/29c. These are located in the area adjacent to the Serica operated Rhum field. The award contains the HPHT North Eigg and South Eigg prospects. The primary prospect is North Eigg which is estimated to contain 360 bcf (P50) and potentially over 1Tcf (P10) of recoverable gas. The North Eigg prospect is interpreted to share many geological similarities with the Rhum field. It is clearly defined on 3D seismic and forms a structural trap sealed against the East Shetland bounding fault.

Serica has committed to drilling an exploration well within three years and in the event of a commercial discovery intends to develop the field via a subsea tie-back to the Serica operated and 98% owned Bruce facilities. As well as providing Serica with potentially significant additional reserves, a tie-back to the Bruce platform would reduce unit operating costs and extend the economic life of this strategic North Sea infrastructure.

18) Further accretive deals anticipated.

[bountyhunter] 18/12/2019 12:45

Updated 18/12/19 - see 5 & 17 added/updated following today's RNS

SQZ positives...

1) BKR production increased from 26k boepd to 31k for H1 2019
[ 2019 Full year net production expected to be towards upper end of 26,000-30,700 boe/d guidance range ]

2) Operating costs reduced to US$12.30 per boe (GBP9.50 per boe) compared to full year 2018 costs of over US$18 per boe

3) Serica will pay contingent cash consideration to BP, Total E&P and BHP calculated as a percentage (60% in 2018, 50% in 2019 and 40% in each of 2020 and 2021, nothing after that) of net cash flows resulting from the respective field interests acquired

4) Columbus development started 2019. The FDP provides for the supply of up to 40 million cubic feet of gas per day (gross) at peak to the UK gas market and 1,150 barrels per day (gross) of condensate and natural gas liquids ("NGLs"). Timing will depend on the Arran-Shearwater pipeline being tied into the Shearwater platform in Q3 2020. Columbus start-up is expected during the first half of 2021. On-time and on budget.

5) Rhum R3 - following investigative work successfully carried out H1 2019 and in view of production from R1 and R2 continuing at higher than anticipated levels economic analysis indicates that a deferral of R3 capital expenditures is beneficial and consequently execution of the rig intervention in 2020 designed to bring the Rhum-3 well into production

6) BKR hub has capacity to handle increased production including from any nearby fields which may be developed by other companies which could increase revenues - BP did not pursue this opportunity for political reasons

7) Looking to extend life of BKR fields and so push back decommissioning as SQZ has lower overheads and is more focused on BKR than BP

8) Decommissioning costs - SQZ will pay 15% after taking into account HMRC's 50% contribution to the initial 30% liability. Serica’s has limited decommissioning liability due to the innovative nature of the Erskine transaction and the various BKR transactions.

9) Erskine - In 1H 2019 production has averaged 3,008 boe/d net to Serica, ahead of the forecast production and in line with the strongest periods of performance since Serica acquired its interest in mid-2015.

10) An independent report performed by Netherland Sewell and Associates estimated Erskine 2P reserves of 5.7 million boe net to Serica as at 31 December 2018.

11) Potential Erskine further development - as operator of Erskine, Ithaca have highlighted in their June 2019 presentation "Defined infill drilling and step-out exploration targets" for Erskine.

12) With Brent priced in USD, Serica is benefiting from the weak pound against the dollar exchange rate.

13) Cash balance accumulating - cash rich / debt free:
At 30 June 2019 the Group held cash and cash equivalents of GBP84.2 million (31 December 2018 - GBP42.1 million) plus term deposits of GBP3.9 million (31 December 2018 - GBP1.0 million), an increase in combined cash and deposits in excess of 100% during 1H 2019.

14) Namibia assets - Luderitz Basin
Serica is running an active farm-out process with an open data-room and a number of oil and gas companies are reviewing the opportunity to drill an exploration well on the licence. Recent drilling results offshore Namibia have strengthened the case for drilling the giant Prospect B, Serica's highest ranked prospect on the blocks.

15) The Board continues to assess the appropriate timing to commence dividend payments for shareholders.

16) UKCS 32nd Round - Serica expects to be active in the 32nd Offshore Licensing Round and other licencing rounds in the coming year.

17) 18/12/19 award of a 100% interest in the UK petroleum licence P2501, blocks 3/24c and 3/29c. These are located in the area adjacent to the Serica operated Rhum field. The award contains the HPHT North Eigg and South Eigg prospects. The primary prospect is North Eigg which is estimated to contain 360 bcf (P50) and potentially over 1Tcf (P10) of recoverable gas. The North Eigg prospect is interpreted to share many geological similarities with the Rhum field. It is clearly defined on 3D seismic and forms a structural trap sealed against the East Shetland bounding fault.

Serica has committed to drilling an exploration well within three years and in the event of a commercial discovery intends to develop the field via a subsea tie-back to the Serica operated and 98% owned Bruce facilities. As well as providing Serica with potentially significant additional reserves, a tie-back to the Bruce platform would reduce unit operating costs and extend the economic life of this strategic North Sea infrastructure.

18) Further accretive deals anticipated.

[bountyhunter] 18/12/2019 12:45

previously they said... "R3 well work is now expected in late 2020 or early 2021"

[bountyhunter] 18/12/2019 12:44

This is also interesting to note...

"rig intervention in 2020 designed to bring the Rhum-3 well into production"

[fanshaw] 18/12/2019 12:07

Good News but we need a Oil as we are becoming too dependant on Gas and do not want to

become a one trick Pony company.

[rivaldo] 18/12/2019 11:36

And Malcy....



"Serica Energy

Serica has announced that it has received an out of round award of a 100% interest in the UK petroleum licence P2501, blocks 3/24c and 3/29c. These are located in the area adjacent to the Serica operated Rhum field and contains the HPHT North Eigg and South Eigg prospects.

The primary prospect is North Eigg which is estimated to contain 360 bcf (P 50) and potentially over 1. Tcf of recoverable gas. Any success on the one commitment well leading to a discovery would tick all the boxes as a tie back to Serica’s Bruce platform would reduce unit costs and extend the life of the infrastructure.

This is an important step in Serica’s hub strategy and will remind followers that the company does actually do exploration…. All is going well at the company which should continue to deliver going forward."

[rivaldo] 18/12/2019 11:33

Peel Hunt reiterate their Buy and 186p target:

[captainfatcat] 18/12/2019 11:30

With an easily accessible route to market via Bruce there should I would think be plenty of interest for a farm in partner.

[pineapple1] 18/12/2019 11:00

Manicat.......ok thanks. I 'd assumed we would be using a conventional jack up rig as its not deep water particularly. Whats the day rate for one of the conventional rigs . Maybe £100kish per day as a guess x 30 days. Any idea of cost per day on a HP/HT capable rig.
I'll acquiesce to your greater knowledge if the rig needs to be of a different type as a high pressure/high temperature prospect.
imho

[spandy83] 18/12/2019 10:56

And up we go again :)

[manicat] 18/12/2019 10:54

pineapple HPHT wells are very expensive wells to drill serica will need to farm out at least 50%

[captainfatcat] 18/12/2019 09:41

At last a bit of seasonal cheer

[fardels bear] 18/12/2019 08:42

Pucker up, steel.

[steelwatch] 18/12/2019 08:15

How d'ya like your Eiggs in the morning?

[pineapple1] 18/12/2019 07:08

Some news re licence award near to our existing ops.

[bountyhunter] 17/12/2019 17:29

Yes gas up 5% today but highly volatile.

At least we will get that additional 10% of BKR revenue from around 2 weeks time!