TIDMSENX
RNS Number : 6965H
Serinus Energy PLC
28 November 2022
28 November 2022
Press Release
Interim Results for the nine months ended 30 September 2022
Jersey, Channel Islands, 28 November 2022 - Serinus Energy plc
("Serinus" or the "Company") (AIM:SENX, WSE:SEN), is pleased to
announce its interim results for the nine months ended 30 September
2022.
Financial
-- Revenue for the nine months ended 30 September 2022 was $41.8
million (30 September 2021 - $25.7 million)
-- During the period Moftinu Gas Plant surpassed produced
revenues of $87.0 million since first gas in 2019
-- Net income for the nine months ended 30 September 2022 was
$3.4 million (30 September 2021 - $0.8 million)
-- Funds from operations for the nine months ended 30 September
2022 were $ 11.1 million (30 September 2021 - $ 7.8 million)
-- EBITDA for the nine months ended 30 September 2022 was $11.4
million ( 30 September 2021 - $8.9 million)
-- Gross profit for the nine months ended 30 September 2022 was
$11.8 million (30 September 2021 - $4.4 million)
-- The Company realised a net price of $162.18/boe for the nine
months ended 30 September 2022 comprising:
o Realised oil price - $101.04/bbl
o Realised natural gas price - $36.66/Mcf
-- The Group's operating netback remained strong for the nine
months ended 30 September 2022 and was $120.13/boe ( 30 September
2021 - $34.13/boe), comprising:
o Romania operating netback - $195.73/boe ( 30 September 2021 -
$37.79/boe)
o Tunisia operating netback - $59.11/boe ( 30 September 2021 -
$26.05/boe)
-- Capital expenditures of $8.6 million for the nine months
ended 30 September 2022 ( 30 September 2021 - $9.3 million),
comprising:
o Romania - $6.9 million
o Tunisia - $1.7 million
-- Working capital surplus increased to $0.8 million (31 December 2021 - $0.6 million)
-- Cash balance as at 30 September 2022 was $8.8 million (31 December 2021 - $8.4 million)
Operational
-- The Canar-1 well was drilled to a total depth of 1,570
metres, targeting three prospective hydrocarbon zones. Well logging
and gas show readings determined that these zones had indications
of gas, but they do not contain sufficient gas resources to justify
proceeding with the testing and completion program for the well.
The Canar-1 well has been completed as a water disposal well and
test injection is ongoing
-- The Moftinu Nord-1 well was drilled to a total depth of 1,000
metres, targeting four prospective hydrocarbon zones. Well logging
and gas show readings determined that these zones had indications
of residual gas, but they do not contain sufficient estimated gas
resources to justify proceeding with the testing and completion
program for the well. The well is now suspended
-- Drilling operations on both the wells (Canar-1 and Moftinu
Nord-1) were performed within budget and without incident
-- The Company has initiated a geological and geophysical review
of the Satu Mare concession to high rank the management-estimated
181 million barrels of oil equivalent prospects
-- In Tunisia, production has remained stable in the first three
quarters of 2022. All material and consumables for the artificial
lift programme at the Sabria W-1 well have been received in-field
and the Company is awaiting mobilisation of the rig. Having
previously defaulted on the rig contract, La Compagnie Tunisienne
de Forage ("CTF"), the Tunisia state-owned drilling company, has
confirmed the availability of its CTF 004 rig to perform the
workover and installation of artificial lift for the W-1 well in
Sabria. The rig is currently being demobilised from another
operator and is expected to be operational at the well site in
December 2022. Workover and installation operations are expected to
take 60 days to complete
-- Workover at the CS-9 well at Chouech Es Saida was completed in August 2022
-- Immediately following the completion of the W-1 workover and
artificial lift installation, the CTF 004 rig will move to the
Sabria N-2 well to perform a workover to recomplete the well
-- The Company anticipates, subject to partner approval,
proceeding with the workover and installation of artificial lift on
the WIN-12bis well in Sabria in 2023
-- Production for the period averaged 938 boe/d, comprising:
o Romania - 421 boe/d
o Tunisia - 517 boe/d
-- In August 2022, the Company performed a lifting of 50,344
bbls of Tunisian crude oil at a price of $99.51/bbl
About Serinus
Serinus is an international upstream oil and gas exploration and
production company that owns and operates projects in Tunisia and
Romania.
For further information, please refer to the Serinus website
(www.serinusenergy.com) or contact the following:
Serinus Energy plc
Jeffrey Auld, Chief Executive Officer
Andrew Fairclough, Chief Financial Officer
Calvin Brackman, Vice President, External
Relations & Strategy +4 4 204 541 7859
Shore Capital (Nominated Adviser & Joint
Broker)
Toby Gibbs
John More +44 207 408 4090
A rden Partners plc (Joint Broker)
Ruari McGirr
Alexandra Campbell-Harris +44 207 614 5900
Camarco (Financial PR - London)
Owen Roberts
Phoebe Pugh +44 203 781 8334
TBT i Wspólnicy (Financial PR - Warsaw)
Katarzyna Terej +48 602 214 353
Forward Looking Statement Disclaimer
This release may contain forward-looking statements made as of
the date of this announcement with respect to future activities
that either are not or may not be historical facts. Although the
Company believes that its expectations reflected in the
forward-looking statements are reasonable as of the date hereof,
any potential results suggested by such statements involve risk and
uncertainties and no assurance can be given that actual results
will be consistent with these forward-looking statements. Various
factors that could impair or prevent the Company from completing
the expected activities on its projects include that the Company's
projects experience technical and mechanical problems, there are
changes in product prices, failure to obtain regulatory approvals,
the state of the national or international monetary, oil and gas,
financial , political and economic markets in the jurisdictions
where the Company operates and other risks not anticipated by the
Company or disclosed in the Company's published material. Since
forward-looking statements address future events and conditions, by
their very nature, they involve inherent risks and uncertainties,
and actual results may vary materially from those expressed in the
forward-looking statement. The Company undertakes no obligation to
revise or update any forward-looking statements in this
announcement to reflect events or circumstances after the date of
this announcement, unless required by law.
Translation : This news release has been translated into Polish
from the English original.
Serinus Energy plc
Third Quarter Report and Accounts 2022
(US dollars)
Third quarter 2022 Highlights
Financial
-- Revenue for the nine months ended 30 September 2022 was $41.8
million (30 September 2021 - $25.7 million)
-- During the period Moftinu Gas Plant surpassed produced
revenues of $87.0 million since first gas in 2019
-- Net income for the nine months ended 30 September 2022 was
$3.4 million (30 September 2021 - $0.8 million)
-- Funds from operations for the nine months ended 30 September
2022 were $ 11.1 million (30 September 2021 - $ 7.8 million)
-- EBITDA for the nine months ended 30 September 2022 was $11.4
million ( 30 September 2021 - $8.9 million)
-- Gross profit for the nine months ended 30 September 2022 was
$11.8 million (30 September 2021 - $4.4 million)
-- The Company realised a net price of $ 162.18 /boe for the
nine months ended 30 September 2022 comprising:
o Realised oil price - $101.04/bbl
o Realised natural gas price - $36.66/Mcf
-- The Group's operating netback remained strong for the nine
months ended 30 September 2022 and was $120.13/boe ( 30 September
2021 - $34.13/boe), comprising:
o Romania operating netback - $195.73/boe ( 30 September 2021 - $37.79/boe)
o Tunisia operating netback - $59.11/boe ( 30 September 2021 - $26.05/boe)
-- Capital expenditures of $8.6 million for the nine months
ended 30 September 2022 ( 30 September 2021 - $9.3 million),
comprising:
o Romania - $6.9 million
o Tunisia - $1.7 million
-- Working capital surplus increased to $0.8 million (31 December 2021 - $0.6 million)
-- Cash balance as at 30 September 2022 was $8.8 million (31 December 2021 - $8.4 million)
Operational
-- The Canar-1 well was drilled to a total depth of 1,570
metres, targeting three prospective hydrocarbon zones. Well logging
and gas show readings determined that these zones had indications
of gas, but they do not contain sufficient gas resources to justify
proceeding with the testing and completion program for the well.
The Canar-1 well has been completed as a water disposal well and
test injection is ongoing
-- The Moftinu Nord-1 well was drilled to a total depth of 1,000
metres, targeting four prospective hydrocarbon zones. Well logging
and gas show readings determined that these zones had indications
of residual gas, but they do not contain sufficient estimated gas
resources to justify proceeding with the testing and completion
program for the well. The well is now suspended
-- Drilling operations on both the wells (Canar-1 and Moftinu
Nord-1) were performed within budget and without incident
-- The Company has initiated a geological and geophysical review
of the Satu Mare concession to high rank the management-estimated
181 million barrels of oil equivalent prospects
-- In Tunisia, production has remained stable in the first three
quarters of 2022. All material and consumables for the artificial
lift programme at the Sabria W-1 well have been received in-field
and the Company is awaiting mobilisation of the rig. Having
previously defaulted on the rig contract, La Compagnie Tunisienne
de Forage ("CTF"), the Tunisia state-owned drilling company, has
confirmed the availability of its CTF 004 rig to perform the
workover and installation of artificial lift for the W-1 well in
Sabria. The rig is currently being demobilised from another
operator and is expected to be operational at the well site in
December 2022. W orkover and installation operations are expected
to take 60 days to complete
-- Workover at the CS-9 well at Chouech Es Saida was completed in August 2022
-- Immediately following the completion of the W-1 workover and
artificial lift installation, the CTF 004 rig will move to the
Sabria N-2 well to perform a workover to recomplete the well
-- The Company anticipates, subject to partner approval,
proceeding with the workover and installation of artificial lift on
the WIN-12bis well in Sabria in 2023
-- Production for the period averaged 938 boe/d, comprising:
o Romania - 421 boe/d
o Tunisia - 517 boe/d
-- In August 2022, the Company performed a lifting of 50,344
bbls of Tunisian crude oil at a price of $99.51/bbl
Operational UPDATE and Outlook
Serinus Energy plc and its subsidiaries ("Serinus", the
"Company" or the "Group") is an oil and gas exploration, appraisal
and development company. The Group is the operator of all its
assets and has operations in two business units: Romania and
Tunisia.
ROMANIA
The Group's Romanian operating subsidiary holds the licence to
the Satu Mare concession area, covering approximately 3,000 km(2)
in the north-west of Romania. The Moftinu Gas Development project
began production in 2019. The development project includes the
Moftinu gas plant, and currently operates four gas wells -
Moftinu-1003, Moftinu-1004, Moftinu-1007 and Moftinu-1008 with a
second compressor installed and commissioned on Moftinu-1007 in
February 2022. During the nine months ended 30 September 2022, the
Company's Romanian operations produced a total of 687 MMcf of gas
and 527 barrels of condensate, equating to an average daily
production of 421 boe/day. Production continues to reflect the
natural decline profile of shallow gas fields. The installation of
compression has stabilised production from those wells. The Company
is reviewing the production performance versus the prognosed
production as determined by the Company's technical staff and the
Company's independent reserve engineers and is considering
additional production wells on the Moftinu structure to maximise
reservoir drainage.
The Company has completed drilling of two exploration wells in
the period in Romania. The Canar-1 well was drilled to a total
depth of 1,570 metres, targeting three prospective hydrocarbon
zones. The Moftinu Nord-1 well was drilled to a total depth of
1,000 metres, targeting four prospective hydrocarbon zones. Well
logging and gas show readings for both wells determined that the
prospective zones in each well had indications of residual gas but
they did not contain sufficient gas resources to justify proceeding
with the testing and completion programs for the wells. Each of the
prospects exhibit several AVO anomalies of a type that strongly
indicates the presence of gas. However, other formation
characteristics may also contribute to such signals, including low
gas saturations. Seal risk is a component of the ongoing bloc-wide
review of exploration potential in the block.
The Canar-1 well underwent initial tests to assess its
suitability for disposal of produced water from the Moftinu field
and has subsequently been completed to enable longer term water
injection which has the potential for substantial savings in
operating cost.
Serinus has also initiated a block-wide geological and
geophysical study to verify and enhance our understanding of the
exploration portfolio beyond the Moftinu area. Management has
estimated the exploration potential of the block to be 181 million
barrels of oil equivalent, on a mean unrisked recoverable resource.
These additional studies will look to high rank future exploration
prospects.
Gas pricing in Romania remained at high levels through the first
nine months of 2022, with an average realised price of $40.54/Mcf.
Gas prices on the Romanian Commodity Exchange continued to remain
strong over the third quarter of 2022.
Tunisia
The Company currently operates two concession areas within
Tunisia, Sabria and Chouech Es Saida, which have discovered oil and
gas reserves and are currently producing. The Ech Chouech licence,
which can only be produced through the Chouech Es Saida facilities,
expired in May 2022. The Company has followed the regulatory
process to seek an extension of this licence with the Tunisian
authorities, but no progress has been forthcoming to date. The
largest asset is the Sabria field ; a large, conventional oilfield
which the Company's independent reservoir engineers have estimated
to have approximately 445 million barrels of
oil-originally-in-place. Of this oil-in-place only 1.0% has been
produced to date due to a low rate of development on the field.
The Sabria W-1 wellsite has been prepared for the intervention
which will install the first submersible pump for the Artificial
Lift programme in the Sabria field. All materials required for this
intervention are in our in-country warehouse. The Company signed a
rig contract for the CTF 006 rig and was awaiting mobilization from
another operator and the workover and pump installation at the
Sabria W-1 well due to commence as soon as the rig was available.
CTF notified the Company that it was unable to deliver the CTF 006
rig as contractually agreed. The Company worked with CTF, its
partner, ETAP, and the Ministry of Energy to procure an alternative
rig as per the terms of the previously agreed CTF rig contract. CTF
has now agreed to provide the CTF 004 rig to perform the well
workovers. This is currently being demobilised from another
operator and will begin workover operations in December 2022. The
completion of the planned operations is expected to take 60
days.
Upon completion of the workover and pump installation at Sabria
W-1, the rig will move to the Sabria N-2 well to perform a workover
to recomplete the well. This well was drilled in 1980 but was
damaged during completion and, although in proximity to producing
wells, was not able to flow oil to surface due to damage during
completion. The workover program will re-complete the well and
remove any wellbore restrictions.
All long-lead items for the Sabria field artificial lift
programme have been delivered to the Sabria field.
Production remained stable in the third quarter of 2022 at the
Chouech Es Saida field as a result of the Company's programme of
pump installation and maintenance.
Financial Review
Liquidity, Debt and Capital Resources
During the nine months ended 30 September 2022, the Company
invested a total of $8.6 million (2021 - $9.3 million) on capital
expenditures before working capital adjustments. In Romania, the
Group invested $6.9 million (2021 - $8.5 million) on the drilling
campaign related to the exploration wells. In Tunisia, the Company
invested $1.6 million (2021 - $0.8 million) for workovers on
wells.
The Company's funds from operations for the nine months ended 30
September 2022 were $11.1 million (2021 - $7.8 million). Including
changes in non-cash working capital, the cash flow generated from
operating activities in 2022 was $8.7 million (2021 - $10.5
million). The Company continues to be in a strong position to
expand and continue growing production within our existing resource
base. The Company is debt-free and has adequate resources available
to deploy capital into both operating segments to deliver growth
and shareholder returns.
($000) 30 September 31 December
Working Capital 2022 2021
--------------------- ------------- ------------
Current assets 20,043 17,625
Current liabilities (19,279) (16,994)
--------------------- ------------- ------------
Working Capital 764 631
--------------------- ------------- ------------
Working capital at 30 September 2022 is relatively stable at
$0.8 million (31 December 2021 - $0.6 million).
Current assets as at 30 September 2022 were $20.0 million (31
December 2021 - $17.6 million), an increase of $2.4 million.
Current assets consist of:
-- Cash and cash equivalents of $8.8 million (31 December 2021 - $8.4 million)
-- Restricted cash of $1.1 million (31 December 2021 - $1.1 million)
-- Trade and other receivables of $9.6 million (31 December 2021 - $7.4 million)
-- Product inventory of $0.5 million (31 December 2021 - $0.6 million)
Current liabilities as at 30 September 2022 were $19.3 million
(31 December 2021 - $17.0 million), an increase of $2.3 million.
Current liabilities consist of:
-- Accounts payable of $11.2 million (31 December 2021 - $9.7 million)
-- Decommissioning provision of $6.6 million (31 December 2021 - $6.6 million)
o Brunei - $1.6 million (31 December 2021 - $1.6 million)
o Canada - $1.0 million (31 December 2021 - $1.0 million) which
is offset by restricted cash in the amount of $1.1 million (31
December 2021 - $1.1 million) in current assets
o Romania - $nil million (31 December 2021 - $0.3 million)
o Tunisia - $4.0 million (31 December 2021 - $3.7 million)
-- Income taxes payable of $1.3 million (31 December 2021 - $0.5 million)
-- Current portion of lease obligations of $0.2 million (31 December 2021 - $0.2 million)
Non-current assets
Property, plant and equipment ("PP&E") decreased to $64.3
million (31 December 2021 - $71.7 million), as a result of
depletion expense in the period of $4.7 million, a change in
decommissioning estimates of $4.6 million and a foreign currency
impact of $3.0 million. The decrease from depletion,
decommissioning estimates and foreign currency was partially offset
by capital expenditures in PP&E of $4.8 million. Exploration
and evaluation assets ("E&E") increased to $8.5 million (31
December 2021 - $5.0 million), primarily due to expenditures
incurred on the 2D seismic acquisition programme and exploration
drilling programme in Romania . Right-of-use assets increased to
$0.5 million (31 December 2021 - $0.3 million) due to expenditures
incurred on corporate assets.
Financial Review - NINE months ended 30 SEPTEMBER 2022
Funds from Operations
The Group uses funds from operations as a key performance
indicator to measure the ability of the Group to generate cash from
operations to fund future exploration and development activities.
The following table is a reconciliation of funds from operations to
cash flow from operating activities:
Nine months ended 30
September
($000) 2022 2021
------------------------------------ ---------------------- ----------
Cash flow from operations 8,713 10,464
Changes in non-cash working capital 2,342 (2,636)
------------------------------------ ---------------------- ----------
Funds from operations 11,055 7,828
------------------------------------ ---------------------- ----------
Funds from operations per share 0.10 0.01
------------------------------------ ---------------------- ----------
Romania generated funds from operations of $8.4 million (2021 -
$5.8 million) and Tunisia generated $7.1 million (2021 - $1.8
million). Funds used at the Corporate level were $4.4 million (2021
- $2.3 million) resulting in net funds from operations of $11.1
million (2021 - $5.3 million). Changes in non-cash working capital
increased by $4.9 million to $2.3 million (2021 - $2.6
million).
Production
Nine months ended 30
September 2022 Tunisia Romania Group %
------------------------ -------- -------- ------ -----
Crude oil (bbl/d) 451 - 451 48%
Natural gas (Mcf/d) 395 2,518 2,913 52%
Condensate (bbl/d) - 2 2 0%
------------------------ -------- -------- ------ -----
Total (boe/d) 517 422 938 100%
------------------------ -------- -------- ------ -----
Nine months ended 30
September 2021
Crude oil (bbl/d) 465 - 465 25%
Natural gas (Mcf/d) 618 7,392 8,010 74%
Condensate (bbl/d) - 10 10 1%
------------------------ -------- -------- ------ -----
Total (boe/d) 568 1,242 1,810 100%
------------------------ -------- -------- ------ -----
During the nine months ended 30 September 2022 production
volumes decreased by 872 boe/d (48%) to 938 boe/d against the
comparative period (2021 - 1,810 boe/d).
Romania's production volumes decreased by 821 boe/d (66%) to 422
boe/d against the comparative period (2021 - 1,242 boe/d).
Production continues to reflect the natural decline profile of
shallow gas fields. In February 2022, a second compressor was
installed and commissioned on Moftinu-1007. The installation of
compression has stabilised production from those wells with
compression.
Tunisia's production volumes decreased by 51 boe/d (9%) to 517
boe/d against the comparative period (2021 - 568 boe/d). Production
remains stable during the nine months of 2022 as a result of the
Company's programme of pump installation and maintenance. The
CTF-004 rig is being demobilised from another operator and workover
operations are due to start in December 2022. Ongoing workover
programmes continue in the Chouech Es Saida field to enhance
production.
Oil and Gas Revenue
($000)
Nine months ended 30 September
2022 Tunisia Romania Group %
Oil revenue 12,569 - 12,569 30%
Natural gas revenue 1,280 27,888 29,168 69%
Condensate revenue - 57 57 1%
--------------------------------- -------- ---------- --------- -------
Total revenue 13,849 27,945 41,794 100%
--------------------------------- -------- ---------- --------- -------
Nine months ended 30 September
2021 Tunisia Romania Group %
------------------------------------- -------- -------- ------------ -------
Oil revenue 7,473 - 7,473 29%
Natural gas revenue 1,482 16,581 18,063 70%
Condensate revenue - 162 162 1%
------------------------------------- -------- -------- ------------ -------
Total revenue 8,955 16,743 25,698 100%
------------------------------------- -------- -------- ------------ -------
Realised Price [1]
Nine months ended 30 September 2022 Tunisia Romania Group
----------------------------------------------- -------- ------------ -------
Oil ($/bbl) 101.04 - 101.04
Natural gas ($/Mcf) 11.88 40.54 36.66
Condensate ($/bbl) - 81.33 81.33
----------------------------------------------- -------- ------------ -------
Average realised price ($/boe) 97.29 242.25 162.18
----------------------------------------------- -------- ------------ -------
Nine months ended 30 September 2021
----------------------------------------------- -------- ------------ -------
Oil ($/bbl) 61.69 - 61.69
Natural gas ($/Mcf) 8.79 8.22 8.26
Condensate ($/bbl) - 57.72 57.72
----------------------------------------------- -------- ------------ -------
Average realised price ($/boe) 60.01 49.37 52.62
----------------------------------------------- -------- ------------ -------
During the nine months ended 30 September 2022 revenue increased
by $16.1 million (63%) to $41.8 million (2021 - $25.7 million) as
the Group saw the average realised price increase by $109.56/boe
(208%) to $162.18/boe (2021 - $52.62/boe).
The Group's average realised oil price increased by $39.35/bbl
(64%) to $101.04/bbl (2021 - $$61.69/bbl), and average realised
natural gas prices increased by $28.40/Mcf (344%) to $36.66/Mcf
(2021 - $$8.26/Mcf).
Under the terms of the Sabria Concession Agreement the Group is
required to sell 20% of its annual crude oil production from the
Sabria concession into the local market, which is sold at an
approximate 10% discount to the price obtained on its other crude
sales. The remaining crude oil production was sold to the
international market.
Royalties
Nine months ended
30 September
($000) 2022 2021
----------------------- ---------- --------
Tunisia 1,714 1,198
Romania 943 1,282
----------------------- ---------- --------
Total 2,657 2,480
Total ($/boe) 10.31 5.08
Tunisia (% of revenue) 12.4 % 13.4%
Romania (% of revenue) 3.5 % 7.7%
----------------------- ---------- --------
Total (% of revenue) 6.4 % 9.7%
----------------------- ---------- --------
During the nine months ended 30 September 2022 royalties
increased by $ 0.2 million (7%) to $2.7 million (2021- $ 2.5
million) while the Group's average royalty rate decreased to 6.4 %
(2021 - 9.7 %).
In Romania, the royalty rate dropped to 3.5% in the nine months
ended 2022 (2021 - 7.7%) as a result of a decrease in the level of
production. In addition to the decrease in production, the Company
saw an increase in the realised price, which exceeded the royalty
reference price in 2022, compared to 2021 where the royalty
reference price exceeded the realised price. The Company incurred a
3.5% royalty for gas (2021 - 7.5%) and 3.5% royalty for condensate
(2021 - 3.5%). The royalty is calculated using a reference price
that is set by the Romanian authorities and not the realised price
to the Company. Romanian royalty rates vary based on the level of
production during the quarter. Natural gas royalty rates range from
3.5% to 13.0% and condensate royalty rates range from 3.5% to
13.5%.
In Tunisia, royalties vary based on individual concession
agreements. Sabria royalty rates vary depending on a calculation of
cumulative revenues, net of taxes, as compared to cumulative
investment in the concession, known as the "R-factor". As the
R-factor increases, so does the royalty percentage to a maximum
rate of 15%.
During the nine months of 2022, the royalty rate remained
unchanged in Sabria at 10% for oil and 8% for gas. Chouech Es Saida
and Ech Chouech royalty rates are flat at 15% for both oil and
gas.
Production Expenses
Nine months ended
30 September
($000) 2022 2021
----------------------------------- --------- ---------
Tunisia 3,720 3,870
Romania 4,424 2,647
Canada 40 34
----------------------------------- --------- ---------
Group 8,184 6,551
Tunisia production expense ($/boe) 26.14 25.93
Romania production expense ($/boe) 38.35 7.80
----------------------------------- --------- ---------
Total production expense ($/boe) 31.74 13.41
----------------------------------- --------- ---------
During the nine months ended 30 September 2022 production
expenses increased by $ 1.6 million ( 25 %) to $8.2 million (2021 -
$6.6 million). Per unit production expenses increased by $ 18.33
/boe ( 137 %) to $ 31.74 (2021 - $ 13.41/boe ).
Tunisia's production expenses decreased by $ 0.2 million ( 4 %)
to $ 3.7 million (2021 - $3.9 million), however per unit production
expenses increased to $26.14/boe (2021 - $25.93/boe) due to lower
production. The decrease in production expenses is due to a lower
number of workover programs initiated in the period and the
inclusion of historic mining taxes of $0.3 million related to
Sanrhar and Zinnia in the comparative period in 2021.
Romania's overall operating costs increased by $ 1.9 million (
67 %) to $ 4.5 million (2021 - $ 2.6 million), with per unit
production expenses increasing by $ 30.55 /boe ( 392 %) to $ 38.35
/boe (2021 - $ 7.80 /boe) due to lower production. The increase in
production costs is primarily a result of higher water disposal
costs and the impact of inflation in Romania.
Canada production expenses relate to the Sturgeon Lake assets,
which are not producing and are incurring minimal operating costs
to maintain the property.
Operating Netback
Serinus uses operating netback as a key performance indicator to
assist management in understanding Serinus' profitability relative
to current market conditions and as an analytical tool to benchmark
changes in operational performance against prior periods. Operating
netback consists of petroleum and natural gas revenues less direct
costs consisting of royalties and production expenses. Netback is
not a standard measure under IFRS and therefore may not be
comparable to similar measures reported by other entities .
($/boe)
Nine months ended 30 September
2022 Tunisia Romania Group
Sales volume (boe/d) 521 422 944
Realised price 97.29 242.25 162.18
Royalties (12.04) (8.17) (10.31)
Production expense (26.14) (38.35) (31.74)
--------------------------------- -------- -------- --------
Operating netback 59.11 195.73 120.13
--------------------------------- -------- -------- --------
Nine months ended 30 September
2021 Tunisia Romania Group
Sales volume (boe/d) 568 1,242 1,810
Realised price 60.01 49.37 52.62
Royalties (8.03) (3.78) (5.08)
Production expense (25.93) (7.80) (13.41)
--------------------------------- -------- -------- --------
Operating netback 26.05 37.79 34.13
--------------------------------- -------- -------- --------
During the nine months ended 30 September 2022 the Group's
operating netback increased by $ 86.00/ boe ( 252% ) to $ 120.13
/boe (2021 - $ 34.13 /boe). The increase is due to increased
realised prices, partially offset by higher royalties and higher
production expenses.
The Company also generated a gross profit of $ 11.8 million
(2021 - $ 4.4 million), largely due to a significant increase in
the Company's netbacks as well as a decrease to depletion as
described below.
Earnings Before Interest, Taxes, Depreciation and Amortization
("ebitda")
Serinus uses EBITDA as a key performance indicator to assist
management in understanding Serinus' cash profitability. EBITDA is
computed as net profit/loss and adding back interest, taxation,
depletion and depreciation, and amortisation expense. EBITDA is not
a standard measure under IFRS and therefore may not be comparable
to similar measures reported by other entities. During the nine
months ended 30 September 2022 , the Group's EBITDA increased by $
2.5 million to $ 11.4 million (2021 - $ 8.9 million).
Nine months ended 30
September
($000) 2022 2021
--------------------------- ------------ ---------
Net income 3,367 836
Interest expense 45 51
Depletion and amortization 4,924 8,066
Tax expense 3,079 (54)
--------------------------- ------------ ---------
EBITDA 11,415 8,899
--------------------------- ------------ ---------
Windfall Tax
Nine months ended 30
September
($000) 2022 2021
----------------------------------- ------------ ---------
Windfall tax 14,233 4,190
Windfall tax ($/Mcf - Romania gas) 20.68 2.08
Windfall tax ($/boe - Romania gas) 124.05 12.46
During the nine months ended 30 September 2022 windfall taxes in
Romania increased by $10.0 million (246%) to $14.2 million (2021 -
$4.2 million). This increase is directly related to higher realised
gas prices in Romania which increased from $8.22/Mcf to
$40.54/Mcf.
In Romania, the Group is subject to a windfall tax on its
natural gas production which is applied to supplemental income once
natural gas prices exceed 47.53 RON/Mwh. This supplemental income
is taxed at a rate of 60% between 47.53 RON/Mwh and 85.00 RON/Mwh
and at a rate of 80% above 85.00 RON/Mwh. Expenses deductible in
the calculation of the windfall tax include royalties and capital
expenditures limited to 30% of the supplemental income below the
85.00 RON/Mwh threshold.
Depletion and Depreciation
Nine months ended
30 September
($000) 2022 2021
---------------- --------- ---------
Tunisia 2,067 2,801
Romania 2,763 5,153
Corporate 94 112
---------------- --------- ---------
Total 4,924 8,066
Tunisia ($/boe) 14.52 18.77
Romania ($/boe) 23.95 15.19
---------------- --------- ---------
Total ($/boe) 19.11 16.52
---------------- --------- ---------
During the nine months ended 30 September 2022 depletion and
depreciation expense decreased by $3.2 million (39%) to $4.9
million (2021 - $8.1 million), primarily due to lower production
during the period. Per boe, depletion and depreciation expense
increased by $2.59/boe (16%) to $19.11/boe (2021 - $16.52/boe),
primarily due to lower reserves in the current period.
General and Administrative ("G&A") Expense
Nine months ended 30
September
($000) 2022 2021
-------------------- ----------- ----------
G&A expense 4,050 3,180
G&A expense ($/boe) 15.72 6.49
During the nine months ended 30 September 2022 G&A costs
increased by $0.9 million (27%) to $4.1 million (2021 - $ 3.2
million), being an increase of $9.23/boe (140%) to $15.72/boe (2021
- $6.49/boe) due to higher compliance expenses and impact of
foreign exchange rates in the current period.
Share-Based Payment
Nine months ended
30 September
($000) 2022 2021
---------------------------- --------- ---------
Share-based payment 59 119
Share-based payment ($/boe) 0.23 0.24
During the nine months ended 30 September 2022 share-based
compensation decreased to $0.06 million (2021 - $0.1 million) due
to lower stock options granted in the preceding 12 months.
Net Finance Expense
Nine months ended
30 September
($000) 2022 2021
--------------------------------------- ---------- --------
Interest on leases 28 41
Accretion on decommissioning provision 753 255
Foreign exchange and other 532 16
--------------------------------------- ---------- --------
1,313 312
--------------------------------------- ---------- --------
During the nine months ended 30 September 2022 net finance
expenses increased by $1.0 million (321%) to $1.3 million (2021 -
$0.3 million). This increase is mainly due to foreign exchange
losses due to the strengthening of the US dollar, as well as higher
accretion on decommissioning provision which increased due to the
higher discount rates applied to the calculation during the
period.
Taxation
During the nine months ended 30 September 2022 income tax
expense was $3.4 million (2021 - $0.1 million). The increase in the
tax expense is directly related to higher taxable income in Tunisia
during the period.
Share Data
As at the date of issuing this report, the following are the
Directors stock options outstanding, LTIP awards, and shares owned
up to the date of this report.
Share Options LTIP Awards Shares
Executive Directors:
Jeffrey Auld 2,580,000 1,656,355 488,875
Andrew Fairclough 175,000 903,631 108,053
Non-Executive Directors:
Jim Causgrove 10,000 - 40,000
Lukasz Redziniak - - 72,000
Jon Kempster [2] - - 60,261
-------------------------- -------------- ------------ --------
2,765,000 2,559,986 769,189
-------------------------- -------------- ------------ --------
As of the date of issuing this report, management is aware of
the following shareholders holding more than 3% of the ordinary
shares of the Group, as reported by the shareholders to the Group:
Richard Sneller 11.59%, CRUX Asset Management 8.41%, Quercus TFI SA
7.26%, Canccord (Marlborough Fund Managers) 4.19%, and Spreadex LTD
3.02%.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information on the Group's website.
Legislation in Jersey governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Foreign Currency Translation
Foreign currency translation occurs from the revaluation from
fluctuations in the foreign exchange rates in entities with a
different functional currency than the reporting currency (USD).
The revaluation of the condensed consolidated interim statement of
financial position to the period-end rates resulted in a loss of
$3.4 million (2021 - loss of $1.8 million) through Other
comprehensive loss.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development and performance are set out
in the Operational Update and Outlook. The financial position of
the Group is described in these condensed consolidated interim
financial statements.
The Directors have given careful consideration to the
appropriateness of the going concern assumption, including cashflow
forecasts through the going concern period and beyond, planned
capital expenditure and the principal risks and uncertainties faced
by the Group. This assessment also considered various downside
scenarios including oil and gas commodity prices and production
rates. Following this review, the Directors are satisfied that the
Group has sufficient resources to operate and meet its commitments
as they come due in the normal course of business for at least 12
months from the date of these condensed consolidated interim
financial statements. Accordingly, the Directors continue to adopt
the going concern basis for the preparation of these condensed
consolidated interim financial statements.
Declarations of the Board of Directors Concerning Accounting
Policies
The Board of Directors of the Company confirms that, to the best
of their knowledge, the condensed consolidated interim financial
statements together with comparative figures have been prepared in
accordance with applicable accounting standards and give a true and
fair view of the state of affairs and the financial result of the
Group for the period ended 30 September 2022.
The Financial Review in this report gives a true and fair view
of the situation on the reporting date and of the developments
during the period ended 30 September 2022 and include a description
of the major risks and uncertainties.
Serinus Energy plc
Consolidated Interim Statement of Comprehensive Loss
(US$ 000s, except per share amounts)
Nine months ended 30
September
------------------------------------------------------ ----- -----------------------
Note 2022 2021
------------------------------------------------------ ----- ----------- ----------
Revenue 41,794 25,698
------------------------------------------------------ ----- ----------- ----------
Cost of sales
Royalties (2,657 ) (2,480)
Windfall tax (14,223) (4,190)
Production expenses (8,184) (6,551)
Depletion and depreciation (4,924) (8,066)
Total cost of sales (29,988) (21,287)
------------------------------------------------------ ----- ----------- ----------
Gross profit 11,806 4,411
Administrative expenses (4,050) (3,180)
Share-based payment expense (59) (119)
Total administrative expenses (4,109) (3,299)
Decommissioning provision recovery (expense) 62 (18)
Operating income 7,759 1,094
Finance expense (1,313) (312)
------------------------------------------------------ ----- ----------- ----------
Net income before tax 6,446 782
Tax (expense) recovery (3,079) 54
------------------------------------------------------ ----- ----------- ----------
Income after taxation attributable to equity
owners of the parent 3,367 836
Other comprehensive loss
Other comprehensive loss to be classified
to profit and loss in subsequent periods:
Foreign currency translation adjustment (3,441) (1,828)
------------------------------------------------------ ----- ----------- ----------
Total comprehensive loss for the period attributable
to equity owners of the parent (74) (992)
------------------------------------------------------ ----- ----------- ----------
Earnings per share:
Basic 4 0.03 0.00
Diluted 4 0.03 0.00
------------------------------------------------------ ----- ----------- ----------
The accompanying notes on pages 15 to 16 form part of the
condensed consolidated interim financial statements
Serinus Energy plc
Condensed Consolidated Interim Statement of Financial
Position
(US$ 000s, except per share amounts)
30 September 31 December
As at 2022 2021
---------------------------------------------- -------------- -------------
Non-current assets
Property, plant and equipment 64,322 71,747
Exploration and evaluation assets 8,453 5,042
Right-of-use assets 483 370
----------------------------------------------- -------------- -------------
Total non-current assets 73,258 77,159
----------------------------------------------- -------------- -------------
Current assets
Restricted cash 1,064 1,144
Trade and other receivables 9,669 7,396
Product inventory 525 656
Cash and cash equivalents 8,785 8,429
----------------------------------------------- -------------- -------------
Total current assets 20,043 17,625
----------------------------------------------- -------------- -------------
Total assets 93,301 94,784
----------------------------------------------- -------------- -------------
Equity
Share capital 401,426 401,426
Share-based payment reserve 25,546 25,487
Treasury shares (323) (121)
Accumulated deficit (384,619) (387,986)
Cumulative translation reserve (4,815) (1,374)
Total equity 37,215 37,432
----------------------------------------------- -------------- -------------
Liabilities
Non-current liabilities
Decommissioning provision 23,866 28,232
Deferred tax liability 11,416 10,516
Lease liabilities 167 252
Other provisions 1,358 1,358
----------------------------------------------- -------------- -------------
Total non-current liabilities 36,802 40,358
----------------------------------------------- -------------- -------------
Current liabilities
Current portion of decommissioning provision 6,572 6,636
Current portion of lease liabilities 167 193
Accounts payable and accrued liabilities 12,540 10,165
----------------------------------------------- -------------- -------------
Total current liabilities 19,279 16,994
----------------------------------------------- -------------- -------------
Total liabilities 56,086 57,352
----------------------------------------------- -------------- -------------
Total liabilities and equity 93,301 94,784
----------------------------------------------- -------------- -------------
The accompanying notes on pages 15 to 16 form part of the
condensed consolidated interim financial statements
Serinus Energy plc
Condensed Consolidated Interim Statement of Changes in
Shareholder's Equity
(US$ 000s, except per share amounts)
Share-based Accumulated
Share payment Treasury Accumulated other comprehensive
capital reserve Shares deficit loss Total
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Balance at 31 December
2020 401,426 25,274 - (396,410) 1,089 31,379
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Loss for the period - - - (660) - (660)
Other comprehensive loss
for the period - - - - (1,076) (1,076)
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Total comprehensive loss
for the period - - - (397,070) 13 29,643
Transactions with equity
owners
Share-based payment expense - 104 - - - 104
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Balance at 30 September
2021 401,426 25,378 - (397,070) 13 29,747
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Balance at 31 December
2021 401,426 25,487 (121) (387,986) (1,374) 37,432
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Comprehensive income for
the period - - - 3,367 - 3,367
Other comprehensive loss
for the period - - - - (3,441) (3,441)
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Total comprehensive (income)
loss for the period - - - 3,367 (3,441) (74)
Transactions with equity
owners
Share-based payment expense - 59 - - - 59
Shares purchased to be
held in Treasury (202) - - (202)
------------------------------ --------- ------------ --------- ------------ --------------------- --------
Balance at 30 September
2022 401,426 25,546 (323) (384,619) (4,815) 37,215
------------------------------ --------- ------------ --------- ------------ --------------------- --------
The accompanying notes on pages 15 to 16 form part of the
condensed consolidated interim financial statements
Serinus Energy plc
Condensed Consolidated Interim Statement of Cash Flows
(US$ 000s, except per share amounts)
Nine months ended 30
September
Note 2022 2021
--------------------------------------------------- ----- ------------ ---------
Operating activities
Income for the period 3,367 836
Items not involving cash:
Depletion and depreciation 4,924 8,066
Share-based payment expense 59 119
Tax expense 3,079 (54)
Accretion expense on decommissioning provision 753 255
Change in other provisions - 70
Foreign exchange loss (gain) 68 (23)
Other income (3) (5)
Decommissioning provision (recovery) expense (62) 18
Income taxes paid (1,130) (1,132)
Funds from operations 11,055 7,828
Changes in non-cash working capital 5 (2,342) 2,636
--------------------------------------------------- ----- ------------ -----------
Cashflows from operating activities 8,713 10,464
--------------------------------------------------- ----- ------------ -----------
Financing activities
Lease payments (355) (217)
Shares purchased to be held in treasury (202) -
Cashflows used in financing activities (557) (217)
--------------------------------------------------- ----- ------------ ---------
Investing activities
Capital expenditures 5 (7,476) (9,865)
Proceeds on disposition of property, plant
and equipment - 8
--------------------------------------------------- ----- ------------ ---------
Cashflows used in investing activities (7,476) (9,857)
--------------------------------------------------- ----- ------------ ---------
Impact of foreign currency translation on
cash (324) (23)
--------------------------------------------------- ----- ------------ ---------
Change in cash and cash equivalents 356 367
Cash and cash equivalents, beginning of period 8,429 6,002
--------------------------------------------------- ----- ------------ ---------
Cash and cash equivalents, end of period 8,785 6,369
--------------------------------------------------- ----- ------------ ---------
The accompanying notes on pages 15 to 16 form part of the
condensed consolidated interim financial statements
1. General information
Serinus Energy plc and its subsidiaries are principally engaged
in the exploration and development of oil and gas properties in
Tunisia and Romania. Serinus is incorporated under the Companies
(Jersey) Law 1991. The Group's head office and registered office is
located at 2(nd) Floor, The Le Gallais Building, 54 Bath Street,
St. Helier, Jersey, JE1 1FW.
Serinus is a publicly listed company whose ordinary shares are
traded under the symbol "SENX" on AIM and "SEN" on the WSE.
2. Basis of presentation
The condensed consolidated interim financial statements have
been prepared in accordance with International Financial Reporting
Standards ("IFRS") and their interpretations issued by the
International Accounting Standards Board ("IASB") as adopted by the
United Kingdom applied in accordance with the provisions of the
Companies (Jersey) Law 1991.
These condensed consolidated interim financial statements are
expressed in U.S. dollars unless otherwise indicated. All
references to US$ are to U.S. dollars. All financial information is
rounded to the nearest thousands, except per share amounts and when
otherwise indicated.
Information about significant areas of estimation uncertainty
and critical judgements in applying accounting policies that have
the most significant effect on the amounts recognised in the
condensed consolidated interim financial statements are described
in Note 5 to the consolidated financial statements for the year
ended 31 December 2021. There has been no change in these areas
during the nine months ended 30 September 2022.
Going concern
The Group's business activities, together with the factors
likely to affect its future development and performance are set out
in the Operational Update and Outlook. The financial position of
the Group is described in these condensed consolidated interim
financial statements and in the Report from the CFO.
The Directors have given careful consideration to the
appropriateness of the going concern assumption, including cashflow
forecasts through the going concern period and beyond, planned
capital expenditure and the principal risks and uncertainties faced
by the Group. This assessment also considered various downside
scenarios including oil and gas commodity prices and production
rates. Following this review, the Directors are satisfied that the
Group has sufficient resources to operate and meet its commitments
as they come due in the normal course of business for at least 12
months from the date of these condensed consolidated interim
financial statements. Accordingly, the Directors continue to adopt
the going concern basis for the preparation of these condensed
consolidated interim financial statements.
3. Significant accounting policies
The condensed consolidated interim financial statements have
been prepared following the same basis of measurement, accounting
policies and methods of computation as described in the notes to
the consolidated financial statements for the year ended 31
December 2021. There has been no change to the accounting policies
or the estimates and judgements which management are required to
make in the period. The business is not subject to seasonal
variations. Information in relation to the operating segments and
material primary statement movements can be found within the
management discussion at the front of this report.
4. Earnings per share
Period ended 30
September
($000's, except per share amounts) 2022 2021
-------------------------------------- ------------ ------------
Income for the period 3,367 836
Weighted average shares outstanding:
Basic 114,714,372 116,316,068
Diluted 114,714,372 117,445,549
-------------------------------------- ------------ ------------
Income per share - Basic and diluted 0.03 0.00
-------------------------------------- ------------ ------------
In determining diluted net loss per share, the Group assumes
that the proceeds received from the exercise of "in-the-money"
stock options are used to repurchase ordinary shares at the average
market price. In calculating the weighted-average number of diluted
ordinary shares outstanding for the period ended 30 September 2022,
the Group excluded 3.4 million stock options (2021 - 3.2 million)
as they were non-dilutive.
5. Supplemental cash flow disclosure
Period ended 30
September
2022 2021
------------------------------------------- -------- ------
Cash provided by (used in):
Trade and other receivables (3,085) 2,466
Product inventory (19) -
Accounts payable and accrued liabilities 764 154
Restricted cash (2) 16
------------------------------------------- -------- ------
Changes in non-cash working capital from
operating activities (2,342) 2,636
------------------------------------------- -------- ------
The following table reconciles capital expenditures to the cash
flow statement:
Period ended 30
September
2022 2021
------------------------------------------ ---------- ------
PP&E additions 4,402 4,604
E&E additions 4,221 4,706
------------------------------------------ ---------- ------
Total capital additions 8,623 9,310
Changes in non-cash working capital from
investing activities (1,147) 555
------------------------------------------ ---------- ------
Total capital expenditures 7,476 9,865
------------------------------------------ ---------- ------
6. Prior year comparatives
The prior year comparatives have been reclassified to align with
the current year disclosure. These reclassifications are
immaterial.
7. Subsequent event
On 5 October 2022, the Company announced that it had the Moftinu
Nord-1 well was drilled to a total depth of 1,000 metres, targeting
four prospective hydrocarbon zones. Well logging and gas show
readings determined that these zones had indications of residual
gas, but they do not contain sufficient gas resources to justify
proceeding with the testing and completion program for the well.
Drilling operations were performed without incident.
[1] For the nine months ended 30 September 2022, Tunisia
realised oil prices are calculated using oil sales volumes of 456
bbl/d (31 December 2021 - 461 bbl/d). As at 30 September 2022 there
were 9,117 bbls of oil in inventory (31 December 2021 - 12,229
bbls).
[2] Shares held by Catherine Kempster (the spouse of Jon
Kempster)
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