Friday 11 September 2020

Operational

• Significantly lower Group average production of 21,600 boe per day net to Serica (FY 2019: 30,000 boe per day) reflected the impact of the Bruce caisson shut-in on the BKR fields and maintenance work carried on Erskine.

• Underlying operating costs on BKR have been reduced by approx. 10% in 2020 although an increase in costs per barrel to US$15.12 per boe from US$12.30 reflected fixed cost elements spread over lower production volumes and additional expenditures on Bruce caisson repairs.

• Preparations for the Rhum R3 well intervention are in progress with operations expected to start shortly.

• Columbus development well rescheduled to Q2 2021 to match the deferred commissioning of the Arran to Shearwater pipeline with first gas now expected in late 2021.

Outlook

• Commodity prices remain volatile but both oil and gas have shown strong rebounds from their respective historical lows and appear to be moving closer to supply and demand balancing after initial severe COVID-19 disruption. Nonetheless the Company will continue to build on its price hedging programme where it identifies value in doing so.

• We will continue to maximise production and reduce costs in order to generate increased value from our existing assets whilst simultaneously using our strong position to identify growth opportunities for the Company.

• In parallel with pursuing these objectives we will continue to increase our focus on ESG issues, in particular in efforts to reduce the carbon intensity of our production.

• Following the payment of a maiden dividend for 2019, the position will be reviewed in conjunction with the 2020 full year results. It is the intention that a regular dividend will be paid subject to maintaining a favourable financial position and an appropriate balance between growth, risk management and total shareholder return.

Commenting on the 1H 2020 results, Mitch Flegg, Serica's CEO stated:

“I am pleased that we are able to report a mid-year profit before and after tax despite the challenging economic conditions encountered during the first half of 2020.

Serica benefits from an extremely low cost base and we have managed to further reduce our absolute costs in 2020. We have also profited from significant gas price hedges covering approximately 50% of H1 retained gas sales after adjustment for net cash flow sharing and we expect to continue to benefit from the strategy that has seen us increase and extend these hedges this year. As a result, we have not had to furlough or lay off any staff nor have we had to take advantage of any of the various government schemes that were made available to support industry.

The health and safety of employees remains Serica’s top priority and the Company continues to monitor the potential impact of the COVID pandemic. I would like to thank all of our colleagues for their resilience and outstanding performance in this challenging period.

We are now seeing a recovery in commodity prices and with our strong cash balances, no debt, full-lifecycle operational capability and capacity to grow, Serica is wellpositioned to play a leading role in the industry recovery.”

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