Under normal circumstances, todays update would have been greeted positively by investors. All is in order and 2013 looks like an exciting year for Serica. That said – the disappointment in todays news is due to what appears to be a prolonged analysis period on the 3D seismics. This is out of Serica’s hands and very much with their partners – BP. Management had previously stated that they expected Seimsics results before year end (2012). This now looks more like May/June although the H1 statement suggests it could be anytime up to June 30th.
One reason why BP may be delaying their commitment/drill plans on Namibia could be down to HRT’s impending drill program. Due to start in a matter of weeks, HRT could set the region buzzing with a discovery. Perhaps BP would prefer to see HRT’s results before getting stuck in heavily? Chariot Oil & Gas also have commitments with BP on their licences and news on seismics appears stretched out there too.
No one would blame BP for playing a wait and see game as the region is very much wild cat territory.
For the time being – Serica shareholders will have to be patient. But with HRT due to spud a well in the region, catalysts for share price growth might not be that far away.
Any success by HRT will spark significant interest in companies with assets in the region.
21 January 2013, Serica Energy plc
SERICA PROVIDES OPERATIONS UPDATE & FORWARD PROGRAMME
London, 21 January 2013 – Serica Energy plc (TSX & AIM: SQZ) provides an operations update and announces its forward programme for 2013.
During 2013 the Company is planning for the following events:
– Columbus field – final development approvals expected to achieve mid-2015 first gas production
– Namibia – full results from the Luderitz Basin 3D seismic survey with drilling decision 2H2013
– Morocco – two well programme, commencing 4Q2013
– Ireland Rockall – partnership arrangements to drill the Muckish prospect
– Ireland Slyne – farm-out campaign to follow up the 2009 oil discovery
– UK North Sea – 3D seismic survey to appraise gas prospects in the York area
– UK East Irish Sea – completion of the Doyle farm-out and site survey prior to drilling
The following provides an update on current operations and further details of the forward programme which is aimed at unlocking the significant value of Serica’s exploration and development projects.
North Sea – Columbus field.
The Department of Energy and Climate Change (“DECC”) has indicated that it is content with the Columbus Field Development Plan subject to certain standard conditions. The project is currently proceeding on schedule for first gas in mid-2015. Tender documents for the construction and installation of the Bridge Linked Platform (“BLP”), through which Columbus field gas and condensate production will be exported, have been issued by BG as operator of the Lomond field with contractor bids to be received in the first quarter. Subject to the receipt of acceptable bids and arrangements between BG and the partners of the Arran field, the BLP construction project is projected to commence on schedule in 2013. In accordance with this schedule, first gas from the Columbus field will be achieved in mid-2015. The Company is evaluating financing proposals which it has received for its share of development costs and which it expects to put in place when final sanctions for the project are given.
At the end of November, Serica received the fast-track on-board processed data from the 4,180 square kilometre 3D seismic survey undertaken by the Company over its blocks in the Luderitz Basin. Data quality and coverage of the survey area is excellent and preliminary work on the results supports the presence of the very large four-way dip closed structure known as Prospect B which was targeted by the survey. The fast-track data also indicates the presence of significant channel sand features with associated strong seismic amplitudes. The preliminary review of the fast-track data is very encouraging but to fully evaluate these early results it will be necessary to complete the full-scale processing and interpretation which is currently underway with BP and likely to take until later in 1H2013. Following this interpretation a drilling decision will be made later this year.
The operators of Serica’s Sidi Moussa and Foum Draa blocks, Genel Energy and Cairn Energy, have put forward proposals for one well to be drilled in each of the two blocks with the drilling programme expected to commence in 4Q2013. Serica has a 5% interest in the Sidi Moussa block, an 8 1/3% interest in the Foum Draa block and the benefit of a carry on each of the two wells up to a maximum gross US$50 million in the case of Sidi Moussa and US$60 million in the case of Foum Draa.
Foum Draa. The operator of the Foum Draa block (Cairn) has stated that two key prospects on the block have been identified. The partners have budgeted the drilling of the first exploration well for Q42013 subject to securing a suitable drilling unit and regulatory approvals.
Sidi Moussa. Genel (the operator of the Sidi Moussa block) has stated that it is targeting over 850 mmboe of gross resources. Extensive 2D and 3D seismic has been completed and reprocessed, and a number of leads and prospects identified with significant resource potential across multiple play types. The first exploration well is targeted in the first half of 2014
Serica holds 100% in 12 blocks or part blocks in the Rockall Basin and is reviewing the potential to bring forward drilling of the Muckish prospect which has been fully detailed by Serica from 3D seismic data. The Muckish prospect is a large structure analogous to the nearby Dooish gas condensate discovery and provides material upside in a proven hydrocarbon basin. In view of the need to share costs, discussions with potentially interested partners are continuing. In the Slyne Basin, Serica, in partnership with RWE, has completed site surveys on the Boyne and Liffey prospects to follow up on the presence of oil discovered by Serica on the blocks in 2009. The partners are planning to drill a well in 2014 and will be commencing a farm-out campaign later in the year.
Serica is involved in several UK offshore initiatives which are expected to see progress in 2013. In the York area of the Southern North Sea, the Company will be participating in a 3D seismic survey operated by Centricato fully evaluate gas prospects adjacent to the York gas field. In the East Irish Sea, the Company expects to complete a farm out of the Doyle prospect and prepare for early drilling. The possibility of farming out the North Darwin prospect is also under review following receipt of a farm-in proposal. In the Central North Sea a deep prospect has been identified in Block 22/19c, in which the Company has a 15% carried interest and further proposals have been received in respect of this block. In the Spaniards area, work continues to evaluate the results of the East Spaniards well and its implications for the Spaniards oil discovery. In the Northern North Sea, Serica did not receive sufficient proposals to enable a well to be drilled in Blocks 210/19a and 20a and has made the decision to relinquish the blocks to comply with the terms of the licence.
Tony Craven Walker, Chairman and Interim CEO, said
“Serica has a very busy year ahead of it during which we expect to see a number of the projects, which we have worked hard to bring forward, start to demonstrate their real value. In difficult financial markets the Company has had to operate with limited cash resources, and that continues to be the case, but the success of our 2012 farm-out programme has resulted in the major benefit of carried interests over large parts of our portfolio, where the potential for high impact exploration success is large. Our resources, although limited, are sufficient to meet our current programme and we are confident that we will be able to raise the funding required for our share of the Columbus field development when that is needed.
Serica’s exposure to the major exploration potential of largely unexplored Atlantic Margin basins offshore Ireland, Morocco and Namibia, coupled with a field development and undrilled prospects in the maturer UK, provides the opportunity for both steady growth and transformational success and we look forward with confidence to 2013.”