TIDMSQZ
RNS Number : 9761I
Serica Energy plc
30 November 2018
Serica Energy plc ("Serica" or the "Company")
Completion of the acquisition of BP's interests in Bruce, Keith
and Rhum fields
and Re-Admission to Trading on AIM
London, 30 November 2018 - Serica Energy plc (AIM: SQZ) is
pleased to announce the completion of the acquisition of interests
in the Bruce, Keith and Rhum fields and associated infrastructure
in the UK North Sea from BP ("BKR Acquisition") by Serica Energy
(UK) Limited ("Serica UK") and the re-admission of its Ordinary
Shares to trading on AIM at 08:00 today, 30 November 2018.
Completion of the subsequent acquisitions of interests in Bruce
and Keith and associated infrastructure from Total E&P UK
Limited ("Total E&P UK"), BHP Billiton Petroleum Great Britain
Limited ("BHP ") and Marubeni Oil & Gas (UK) Limited
("Marubeni") (the "BK Transactions") are conditional on the
completion of the BKR Acquisition and are expected to occur
imminently. Serica will make a separate announcement later today in
relation to the BK Transactions.
Following completion of the BKR Acquisition and the BK
Transactions (together "the Acquisitions"), 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 50% interest in the Rhum field.
As the BKR Acquisition constitutes a reverse takeover under the
AIM rules, admission of the Ordinary Shares has been cancelled on
completion and the Ordinary Shares have been readmitted to trading
on AIM from this morning.
Under the net cash-flow sharing arrangements with BP, Total
E&P UK and BHP, Serica is due to receive a 40% share of the net
cash flow, adjusted for notional tax of 40%, for the period from
the effective date of 1 January 2018 to completion on 30 November
2018. Additionally, Serica is due to receive 100% of the net cash
flow (also on a notional post-tax basis) from Marubeni for the same
period. This amounts to approximately US$50 million before payment
by Serica of initial consideration of approximately US$22
million.
BKR and BK Transaction Highlights
-- Significant increase in reserves and production post BKR and BK completion
o Serica's pro-forma net 2P Reserves increased over 20-fold to
63.7 mmboe([1])
o Net production from the assets acquired has averaged in excess
of 23,000 boepd YTD of which over 85% is gas
o Acquisitions expected to be immediately cash flow and value
accretive
-- Diversification of production streams and export routes
o Serica's asset and production base expanded from one to four
fields, mitigating sole producing asset risk
o Serica will now be delivering hydrocarbons via three export
systems: Frigg, the Central Area Transmission System and the
Forties Pipeline System
-- Acquisitions mitigate financial risk and maintain balance sheet strength
o Bulk of consideration deferred and contingent
o Combined initial consideration of US$22 million exceeded by
Serica's share of net post-tax cash flows from the BKR Assets and,
subject to completion, the BK Assets between 1 January 2018 and
Completion of approximately US$50 million
o Future payments linked to the performance of the BKR Assets
and BK Assets, allowing all parties to share the benefits of
improving field recoveries and production efficiencies
o Serica has not raised any equity finance to fund the
Acquisitions
o BP, Total E&P UK and BHP are retaining decommissioning
liability for existing facilities of the BKR Assets and BK Assets
related to the respective interests acquired or, on completion, to
be acquired from each of them
-- Operatorship positions Serica to deliver the full potential of the acquired assets
o Serica expects to drive value through investment and
implementation of operational efficiencies, focusing on the OGA's
target of Maximising Economic Recovery
o 111 employees join Serica from BP with the BKR Assets,
together with a further 21 employees externally recruited
o Serica's management experience and skill sets will be combined
with those of existing BP staff, who now become an integral part of
Serica's team
o New Aberdeen office established to house Serica personnel and
manage North Sea operations
-- Increased scale to support strategic growth plans
o The Acquisitions increase Serica's prominence and profile and
improve its ability to attract new investment opportunities and
access funding as required
o The Enlarged Group's diversified asset base, increased scale
and operating capabilities will position Serica for both organic
growth and further acquisitions
-- Strengthening of Board
o We are pleased to welcome Trevor Garlick and Malcolm Webb who
have joined the Board today as Independent Non-Executive
Directors
Tony Craven Walker, Chairman of Serica Energy, commented:
"The Acquisitions, once complete, are transformational for
Serica firmly placing us as one of the leading 'mid-tier'
independent exploration and production companies operating in the
UK North Sea. They bring a significant production and reserve base
from which we can build our position further in the UKCS. For our
shareholders it represents the delivery of a real enhancement to
their investment with no dilution.
I am incredibly proud of the Serica team that has worked
tirelessly in delivering both this and the related Total, BHP and
Marubeni acquisitions. Undertaking four simultaneous and
interconnected transactions has not been easy and we are grateful
for the support from BP, our field partners, the UK Government and
the OGA to help us overcome the various challenges and bring this
to a successful conclusion. We are firm believers that the
independent sector can go a long way to helping the UK maximise the
economic recovery of the country's North Sea resources and we aim
to be at the forefront of this process."
Mitch Flegg, Chief Executive of Serica Energy, said:
"On completion of these transactions we assume operatorship of
the Bruce, Keith and Rhum fields and we fully intend to use our
agility and experience to significantly enhance the productivity
and efficiency of their respective operations.
We are today warmly welcoming the 111 colleagues who are joining
us from BP. We have spent a large part of the last year putting in
place a detailed transition programme, of which the health, safety,
welfare and future of our staff are the number one priority. We
will highly value the knowledge and expertise of the transferring
staff and our other new recruits and believe that our strategic
vision and plans will provide an exciting operating environment in
which to excel."
Ariel Flores, BP North Sea Regional President, said:
"Bruce, Keith and Rhum have been an important part of BP's North
Sea story and Serica are taking on a first-class team of people who
know these assets well. We wish the team at Serica the very best
for the future."
Analyst Conference Call
A conference call for institutional analysts and investors will
be held today at 10:00am GMT. If you are an institutional analyst
or investor and wish to participate in this call, please contact
serica@instinctif.com for registration details.
Technical Information
The technical information contained in this announcement has
been reviewed and approved by Clara Altobell, VP Technical at
Serica Energy plc. Clara Altobell (MSc in Petroleum Engineering
from Imperial College, London) has over 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).
Regulatory
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
Enquiries
Serica Energy
plc
Tony Craven Walker +44 (0)20 7457
Executive Chairman tony.cravenwalker@serica-energy.com 2020
Mitch Flegg +44 (0)20 7457
CEO mitch.flegg@serica-energy.com 2020
Peel Hunt
+44 (0)20 7418
Richard Crichton richard.crichton@peelhunt.com 8900
+44 (0)20 7418
Ross Allister ross.allister@peelhunt.com 8900
+44 (0)20 7418
James Bavister james.bavister@peelhunt.com 8900
Instinctif
+44 (0)20 7457
David Simonson david.simonson@instinctif.com 2020
+44 (0)20 7457
Catherine Wickman catherine.wickman@instinctif.com 2020
+44 (0)20 7457
George Yeomans george.yeomans@instinctif.com 2020
Definitions
Save where otherwise provided, defined terms in this
announcement have the same meanings as those terms have in the
Admission Document and Supplementary Admission Document, both of
which can be found on the Company's website -
www.serica-energy.com
Notes to Editors
Serica Energy is an oil and gas company with exploration,
development and production assets in the UK and exploration
interests in the Atlantic margins offshore Ireland and Namibia.
Serica holds an 18% non-operated interest in the Erskine field in
the UK Central North Sea and a 50% operated interest in the
Columbus field scheduled to commence development in 2019. OGA
approval of the Columbus FDP was granted in October 2018.
In November 2017 Serica announced the BKR Acquisition under
which Serica UK has today acquired interests in the Bruce, Keith
and Rhum fields in the North Sea and associated infrastructure from
BP. Under the terms of the BKR Acquisition Serica UK has acquired a
36% interest in Bruce, a 34.83% interest in Keith and a 50%
interest in Rhum. The deal has an effective date of 1 January
2018.
In August 2018, Serica announced the Total E&P UK
Transaction under which further interests in the Bruce and Keith
fields and associated infrastructure in the UK North Sea are to be
acquired from Total E&P UK. Under the terms of the Total
E&P UK Transaction, Serica UK will acquire a 42.25% interest in
the Bruce field and a 25% interest in the Keith field and
associated infrastructure. The Total E&P UK Transaction also
has an effective date of 1 January 2018 and completion is subject
to completion of the BKR Acquisition. Completion of the Total
E&P UK Transaction is expected to take place later today.
In November 2018, Serica announced the BHP Transaction under
which further interests in the Bruce and Keith fields and
associated infrastructure in the UK North Sea are to be acquired
from BHP. Under the terms of the BHP Transaction, Serica UK will
acquire a 16.0% interest in the Bruce field and a 31.83% interest
in the Keith field and associated infrastructure. The BHP
Transaction also has an effective date of 1 January 2018 and
completion is subject to completion of the BKR Acquisition.
Completion of the BHP Transaction is expected to take place later
today.
Most recently Serica announced the Marubeni Transaction under
which Serica will acquire a 3.75% interest in the Bruce field and
the 8.33% interest in the Keith field and associated infrastructure
from Marubeni. The structure of the Marubeni Transaction differs
from the other deals that Serica has entered into with BP, Total
E&P UK and BHP, in that Serica will acquire the decommissioning
obligations of Marubeni but will receive in turn a cash
consideration from Marubeni and there will be no deferred or
contingent consideration. The Marubeni Transaction also has an
effective date of 1 January 2018 and completion is subject to
completion of the BKR Acquisition. Completion of the Marubeni
Transaction is expected to take place later today.
Together the BKR Acquisition and the BK Transactions will result
in Serica UK holding a 50% interest in the Rhum field, a 98 %
interest in the Bruce field and a 100% interest in the Keith field
and be operator of all three fields.
Further information on the Company can be found at
www.serica-energy.com.
The Company's shares are traded on the AIM market of the London
Stock Exchange under the ticker SQZ and the Company is a designated
foreign issuer on the TSX. To receive Company news releases via
email, please subscribe via the Company website.
([1]) 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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