Monday 26 November 2018

Serica Energy plc announced that it has published the supplementary AIM admission document in relation to the proposed acquisition by Serica UK of BP’s interests in the Bruce, Keith and Rhum fields and associated infrastructure in the North Sea (the “BKR Acquisition”) and the re-admission of the Company's Ordinary Shares to trading on AIM.

The Supplementary Admission Document has been published in accordance with AIM Rule 14, to disclose matters arising since the publication of the admission document issued by the Company and dated 30 November 2017 relating to the BKR Acquisition. The Supplementary Admission Document also contains material information on the subsequent acquisitions from Total E&P, BHP and Marubeni of interests in Bruce and Keith and associated infrastructure (the “BK Transactions”), as well as certain other updates in respect of Serica’s other assets, as well as corporate governance changes and board changes.

As the BKR Acquisition constitutes a reverse takeover under the AIM Rules, admission of the Ordinary Shares will be cancelled on completion of the BKR Acquisition expected on 30 November 2018. Application will be made for 264,757,819 Ordinary Shares to be re-admitted to trading on AIM on or around 30 November 2018.

Summary of principal changes relating to the BKR Acquisition

Since the date of the Admission Document:

- Serica has agreed to purchase the remaining interests in Bruce and Keith fields and associated infrastructure from Total E&P, BHP and Marubeni(1). Following completion of the BKR Acquisition and the BK Transactions, Serica UK will be the operator of the Bruce, Keith and Rhum fields and hold a 98% interest in the Bruce field, a 100% interest in the Keith field, and a 50% interest in the Rhum field.

- Based on the Updated BKR CPR and Updated Serica CPR, Serica’s pro forma net 2P reserves are expected to increase over 20-fold to 63.7 mmboe, as of 1 August 2018, following completion of the BKR Acquisition and BK Transactions(2).

- Net production from the interests to be acquired in the Bruce, Keith and Rhum fields has averaged in excess of 23,000 boepd YTD 2018

- Commodity prices have remained strong in 2018 with oil prices averaging $72.50/bbl and gas prices averaging 59p/therm. Realised prices for 2018 production from the interests being acquired (which consists of >80% gas) exceed $45/boe.

- YTD cash operating, processing and transportation costs for the interests being acquired were in line with expectations at approximately $18/boe

- As announced on 5 November 2018, the conditions required by U.S. Office of Foreign Assets Control (OFAC) in respect of the licence issued to Serica and BP on 5 October 2018 to continue safe operations at Rhum, have been met in full.

- Licences issued by OFAC typically run for one year and the licence issued in respect of Rhum runs until 31 October 2019 provided that its conditions continue to be met.

- A workover on the Rhum R3 well was planned to be carried out in May 2018. However, following the re-imposition of wider sanctions in relation to Iran and the associated uncertainties with regard to contractor availability, BP took the decision to defer the work.

- Serica is undertaking a thorough review of the R3 workover plans and will select the optimum time to carry out the work when a suitable rig comes available.

- Repair work related to conductor pipes that connect the individual wells on the seabed to the production facilities on the platform was completed in summer 2018.

- In addition to the 111 employees who will transfer across to Serica with the BKR Assets, Serica is recruiting a further 21 employees for the Enlarged Group with Mike Killeen expected to join from BP as an additional Senior Manager of the Company.

(1) With the exception of 1% of the Bruce field which is being retained by Total E&P

(2) As at 1 August 2018 in respect of the BKR Assets and BK Assets and as at 31 October 2018 in respect of Serica's assets.