Tuesday 20 December 2022

Serica Energy plc is pleased to announce that it has entered into an agreement to acquire the entire issued share capital of Tailwind Energy Investments Ltd ("Tailwind") from Tailwind Energy Holdings LLP (the "Seller") (the "Transaction"). The consideration for the acquisition comprises:

• The issue of up to1 111,048,124 new ordinary shares in Serica (the "Consideration Shares"). Following the issue of the Consideration Shares, they will represent up to 28.9 per cent of Serica’s enlarged issued share capital

• A cash payment on Completion of £58.7 million (the "Cash Consideration")

On the basis of the Serica closing price as of 19 December 2022 of 278 pence per share this would be equivalent to £367 million. Serica will also be taking on Tailwind’s net debt, which as at 30 November 2022 was c.£277 million2.

As part of the Transaction, Mercuria, the largest ultimate shareholder of Tailwind, will become a strategic investor in Serica with a 25.2 per cent holding and will enter into a Relationship Agreement with Serica as further described below.

Transaction Highlights

Significant increase in Serica’s scale, portfolio diversity and organic investment opportunities

• Estimated proforma combined production in 2023 will rise significantly to between 40,000 boe/d and 45,000 boe/d putting Serica in the top 10 UKCS producers and top 3 UKCS listed independent producers

• Acquiring fully developed 2P reserves of 42 million boe3 to create a combined portfolio with 2P reserves of 104 million boe4

• Will create a balanced spread of production from two main hubs - Bruce and Triton - which have separate transportation infrastructure

• Number of producing fields will increase from 5 to 11 with substantial upside and organic growth opportunities

• Enlarged group will operate more than 80 per cent of its net production

• Adding predominantly oil reserves reduces concentration of commodity price risk whilst gas remains more than 50% of production

• The carbon intensity of the enlarged group’s producing assets is projected to remain below the UKCS average

Introduces Mercuria as a strategic investor with a 25.2 per cent shareholding in Serica

• Serica will benefit from the availability of Mercuria’s financing and hedging capacity combined with its wide geographic reach

• Relationship Agreement between Serica and Mercuria will govern ongoing relationship

• Two Mercuria nominated non-executive directors joining the Serica board on completion5 Reinforces Serica’s financial strength

• Highly cash generative portfolio and expected to have a significant net cash position on completion

• Existing Tailwind reserves-based lending (“RBL”) and junior facility expected to be rolled over on completion with subsequent refinancing to take advantage of the increased strength of the enlarged group during 2023

• Markedly lower decommissioning liabilities compared to North Sea peers

• Dividend policy to be maintained

• Tailwind holds significant ring fence tax losses carried forward for future use Combines the two companies’ complementary leadership, technical and commercial expertise

• Tony Craven Walker and Mitch Flegg remaining as Non-Executive Chairman and CEO respectively

• Steve Edwards and Jacques Tohme will be joining the senior management team

• Serica’s North Sea operating capability combining with Tailwind’s sub-surface expertise

• All current Tailwind employees to be offered positions in the enlarged group Creates an enlarged platform from which to consider future investments in the UK, overseas and in the wider energy sector

• Greater financial capability of the enlarged group

• Enhanced and complementary skill sets

• Strategic shareholder with a wide geographic reach and extensive activities in the broader energy sector