TIDMSENX
RNS Number : 9835M
Serinus Energy PLC
15 May 2020
15 May 2020
Press Release
Interim Results for the three months ended 31 March 2020
Jersey, Channel Islands, 15 May 2020 - Serinus Energy plc
("Serinus", "SEN" or the "Company") (AIM:SENX, WSE:SEN) announces
the release of its interim results for the Three Months Ended 31
March 2020.
Highlights
Operational
-- Serinus Energy plc ("Serinus", the "Company", or the
"Group"), has continued to operate safely and effectively through
the COVID-19 crisis, with the successful implementation of
operational and monitoring protocols to ensure the health and
safety of our employees.
-- Medical teams are monitoring our staff in both Tunisia and
Romania and all staff are safe and healthy. The Company continues
to operate effectively whilst working remotely from all our
offices.
-- For the three months ended 31 March 2020, average production
increased by 2,000 boe/d to 2,317 boe/d (2019 - 317 boe/d),
comprised of 1,746 boe/d (2019 - nil) in Romania and 571 boe/d
(2019 - 317 boe/d) in Tunisia.
-- The Group exited March 2020 with a production rate of 2,701
boe/d comprised of 2,064 boe/d in Romania and 637 boe/d in
Tunisia.
-- Successfully drilled, completed and tested M-1004 in Romania
at a rate of 6.0 MMscf/d (approximately 1,000 boe/d) from three
perforated zones and brought onto production in February.
-- Due to the restrictions caused by COVID-19 since mid-March,
mobilization of the contractor to execute the planned 3D seismic
acquisition programme in the Berveni area of Romania was
postponed.
-- The Company has entered cooperative discussions with the
Romanian regulatory authorities regarding the disruptions caused by
the restrictions imposed to address the COVID-19 crisis. Critical
to these discussions are the remedies that the authorities can
provide to allow operating companies in Romania the ability to
fulfil their commitments given the delays imposed by the COVID-19
crisis.
Financial
-- For the three months ended 31 March 2020 the Company
generated $7.9 million (2019 - $1.7 million) in gross revenue or
$7.4 million (2019 - $1.5 million) net of royalties. This was
comprised of $5.8 million (2019 - $nil) in Romania and $2.1 million
(2019 - $1.7 million) in Tunisia.
-- For the three months ended 31 March 2020, funds from
operations amounted to $2.5 million (2019 - $nil).
-- For the three months ended 31 March 2020, realised crude oil
price per barrel ("bbl") averaged $40.80 (2019 - $60.90) and
realised natural gas price per thousand cubic feet ("mcf") averaged
$6.03 (2019 - $9.42).
-- Capital expenditures for the three months ended 31 March 2020
of $2.7 million (2019 - $1.1 million).
-- Production expense per barrel of oil equivalent ("boe") for
the three months ended 31 March 2020 averaged $9.30 (2019 - $22.47)
primarily due to the lower cost production from the Moftinu
field.
-- Given the ongoing uncertainty of the COVID-19 crisis and the
difficulty in moving manpower and equipment during this crisis all
future capital investment plans have been postponed. Minimal
maintenance capital will be allocated to ensure the safe and
continued operation of our production facilities.
-- At the outset of the current crisis, the Group began
discussions with its lender, the European Bank for Reconstruction
and Development ("EBRD"), to assess the options available during
this period of uncertainty. These discussions are progressing, and,
at this time, the directors remain confident that a solution will
be implemented ahead of the 30 June 2020 instalment.
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 +1 403 264 8877
WH Ireland Limited
(Nominated Adviser and Joint Broker)
Katy Mitchell
Harry Ansell (Broker)
Lydia Zychowska +44 (0)20 7220 1666
A rden Partners plc
(Joint Broker)
Paul Shackleton / Dan Gee-Summons (Corporate
Finance)
Fraser Marshall (Equity Sales) +44 (0) 20 7614 5900
Camarco
(Financial PR - London)
Billy Clegg
Owen Roberts +44 (0) 20 3781 8334
TBT i Wspólnicy
(Financial PR - Warsaw)
Katarzyna Terej +48 22 487 53 02
Translation : This news release has been translated into Polish
from the English original.
Forward-looking Statements 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.
Serinus Energy plc
First Quarter Report and Accounts 2020
(US dollars)
First Quarter 2020 Highlights
Operational
-- Serinus Energy plc ("Serinus", the "Company", or the
"Group"), has continued to operate safely and effectively through
the COVID-19 crisis, with the successful implementation of
operational and monitoring protocols to ensure the health and
safety of our employees.
-- Medical teams are monitoring our staff in both Tunisia and
Romania and all staff are safe and healthy. The Company continues
to operate effectively whilst working remotely from all our
offices.
-- For the three months ended 31 March 2020, average production
increased by 2,000 boe/d to 2,317 boe/d (2019 - 317 boe/d),
comprised of 1,746 boe/d (2019 - nil) in Romania and 571 boe/d
(2019 - 317 boe/d) in Tunisia.
-- The Group exited March 2020 with a production rate of 2,701
boe/d comprised of 2,064 boe/d in Romania and 637 boe/d in
Tunisia.
-- Successfully drilled, completed and tested M-1004 in Romania
at a rate of 6.0 MMscf/d (approximately 1,000 boe/d) from three
perforated zones and brought onto production in February.
-- Due to the restrictions caused by COVID-19 since mid-March,
mobilization of the contractor to execute the planned 3D seismic
acquisition programme in the Berveni area of Romania was
postponed.
-- The Company has entered cooperative discussions with the
Romanian regulatory authorities regarding the disruptions caused by
the restrictions imposed to address the COVID-19 crisis. Critical
to these discussions are the remedies that the authorities can
provide to allow operating companies in Romania the ability to
fulfil their commitments given the delays imposed by the COVID-19
crisis.
Financial
-- For the three months ended 31 March 2020 the Company
generated $7.9 million (2019 - $1.7 million) in gross revenue or
$7.4 million (2019 - $1.5 million) net of royalties. This was
comprised of $5.8 million (2019 - $nil) in Romania and $2.1 million
(2019 - $1.7 million) in Tunisia.
-- For the three months ended 31 March 2020, funds from
operations amounted to $2.5 million (2019 - $nil).
-- For the three months ended 31 March 2020, realised crude oil
price per barrel ("bbl") averaged $ 40.80 (2019 - $60.90) and
realised natural gas price per thousand cubic feet ("mcf") averaged
$6.03 (2019 - $9.42).
-- Capital expenditures for the three months ended 31 March 2020
of $2.7 million (2019 - $1.1 million).
-- Production expense per barrel of oil equivalent ("boe") for
the three months ended 31 March 2020 averaged $9.30 (2019 - $22.47)
primarily due to the lower cost production from the Moftinu
field.
-- Given the ongoing uncertainty of the COVID-19 crisis and the
difficulty in moving manpower and equipment during this crisis all
future capital investment plans have been postponed. Minimal
maintenance capital will be allocated to ensure the safe and
continued operation of our production facilities.
-- At the outset of the current crisis, the Group began
discussions with its lender, the European Bank for Reconstruction
and Development ("EBRD"), to assess the options available during
this period of uncertainty. These discussions are progressing, and,
at this time, the directors remain confident that a solution will
be implemented ahead of the 30 June 2020 instalment.
Operational Update
In Romania, the Company successfully drilled, completed and
tested the M-1004 well in February which flowed at 6.0 MMscf/d
(approximately 1,000 boe/d). Subsequent to the production tests the
well was tied in to the Moftinu Gas Plant and began producing gas
into the plant. This well is the third producing well in the
Moftinu field and further increases the utilization of the Moftinu
Gas Plant. The Company has begun the permitting process for the
M-1008 well which is a proposed production well that was
anticipated to be drilled late 2020 or early 2021. Drilling plans
have been postponed for the duration of the COVID-19 crisis. The
Company has permitted a 148 km(2) 3D seismic acquisition programme
in the Berveni area just north of the Moftinu Gas Plant and reached
land access agreements with all landowners within the seismic
acquisition area. The Company had ordered the mobilization of the
seismic equipment and staff to begin the programme, however, due to
uncertainty regarding the COVID-19 pandemic and the impacts on
travel and services in Romania and the Satu Mare County, the
Company and its seismic contractor have postponed the programme.
The Company is in discussions with the Romanian regulatory
authorities to agree an extension to the concession area.
Production has continued to increase in Tunisia. The gradual
increases in production are the result of more efficient running of
subsurface pumps and the steady decrease in water cut. Since
returning the Chouech and Ech Chouech fields to production
following their prolonged shut-in due to social disturbances, the
Company has seen steady improvements in production. The Company has
continued its programme of workovers to replace older pumps and
these workovers have demonstrated the ability to increase
production with low capital outlays. In January the Company
completed a coil-tubing workover on the Win-12bis well in Sabria,
which has gradually increased the well's production.
Outlook
COVID-19
The Company's top priority is the health, safety and wellbeing
of all our staff throughout this difficult time. All Group offices
are temporarily closed as all staff are working remotely, in line
with all local regulations. Operations have not been affected by
the outbreak, as all fields are currently operating as normal. The
fields have had modifications to ensure social distancing and to
ensure safe practices. The Group continues to monitor each
jurisdiction and will implement recommendations and continue to
abide by local rules pertaining to all offices.
Romania
All capital plans in Romania have been postponed as well as the
scheduled maintenance programme at the Moftinu Gas Plant that was
set for May 2020. Our teams have designed an incremental
maintenance programme considering the postponed gas plant
turn-around and does not anticipate this change to have any
negative impacts to the safety or performance of the gas plant.
The Company had previously announced that it had fully permitted
and was preparing to commence a 3D seismic acquisition programme in
the Berveni area. This programme has been delayed by the inability
to move manpower and equipment during this period. The Company has
agreed with its seismic contractor to extend the existing contracts
by one year to allow for the future completion of this programme.
Subject to the ongoing uncertainty regarding the COVID-19 crisis
the Company hopes to recommence this programme in early 2021.
The M-1008 production well has been permitted and was expected
to be drilled in late 2020 or early 2021, however due to the
COVID-19 crisis, it is uncertain when any further work may be
completed for the drilling of this well.
Tunisia
The Company's work in Tunisia has focused on low capital high
return production enhancements. During the period the Company
performed additional work in the Chouech and Ech Chouech fields
focused on pump replacement and pump performance, resulting in a
gradual increase in production. Due to the COVID-19 crisis, there
have been minor disruptions due to the availability of service
providers, delaying further pump enhancement work.
The Company completed a coiled tubing workover on the Win-12bis
well in Sabria, which has provided production increases as
expected. The Company continues to explore and identify other wells
on which similar workovers may provide comparable results. The
Company had plans to complete an artificial lift programme to
introduce the first pumps into the Sabria field. This programme has
been delayed due to the disruptions caused by the COVID-19 crisis
and the resulting disruption in the oil market. The Company
believes these plans can be restarted with minimal costs.
Financial Review
Liquidity, Debt and Capital Resources
In Romania, the Group invested $2.1 million (2019 - $1.1
million) in the three months ended 31 March 2020 primarily to
drill, complete, and tie in the M-1004 well. Romania remained a
significant cash flow generating unit during the period as
production increased from the addition of M-1004. The field
generated a netback per boe of $28.16 (2019 - $nil) for the first
quarter.
In Tunisia, the Group invested $0.6 million (2019 - $nil) for
the three months ended 31 March 2020. The capital was spent in the
Chouech field, related to workovers on the CS-1 and CS-3 wells.
Tunisia continued to see positive production from the Sabria,
Chouech, and Ech Chouech fields during the quarter while realizing
a netback per boe of $16.56 (2019 - $31.87) for the first
quarter.
Funds from operations increased to $2.5 million (2019 - $nil)
for the three months ended 31 March 2020. This increase is mainly
attributable to production from the Moftinu field in 2020.
The Convertible debt with the EBRD is due to be repaid in four
instalments commencing 30 June 2020, when 25% of the principal and
accrued interest at that date will be repayable with the three
remaining repayments made annually on June 30. As at 31 March 2020,
$8.2 million of the Convertible debt is reported as a current
liability.
On 26 March 2020, the Group received a waiver from the EBRD
formally waiving compliance with the financial covenant for the
period ended 31 March 2020.
As at 31 March 31 December
($000) 2020 2019
------------------------- --------- ------------
Current assets 15,802 15,243
Current liabilities 32,566 32,194
------------------------- --------- ------------
Working Capital deficit (16,764) (16,951)
------------------------- --------- ------------
The working capital deficit of the Group at 31 March 2020 was
$16.8 million, an improvement since year end, primarily due to
positive cashflows from operations offset by additional long-term
debt shown as a current liability.
Included in current liabilities at 31 March 2020 was $8.2
million of EBRD debt, accounts payable of $17.3 million (of which
$8.2 million relates to Brunei and dates back to 2012/2013),
decommissioning provision of $6.3 million, income taxes payable of
$0.3 million and lease obligations of $0.4 million.
Going Concern Statement
The Group's ability to settle its obligations as they come due
is dependent on its ability to generate future cash flows from
operations and/or obtain the necessary financing. The Group has
modelled cash flow forecasts in order to identify how available
funds could be managed in order to allow the Group to meet its
obligations as they fall due or identify where additional funding
may be required. Given the above, there are material uncertainties
as to whether the Group can meet all its cash obligations as they
fall due.
The ability to generate sufficient future cash flows from
operations to meet obligations as they fall due and the continued
availability of existing facilities, should loan covenants not be
met, represent material uncertainties that may cast significant
doubt on the ability of the Group to continue as a going concern.
Refer to note 2 below for further information.
Financial Review -First Quarter 2020
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:
Three months ended
31 March
($000) 2020 2019
------------------------------------- --------- ----------
Cash flow from operations 1,509 2,870
Changes in non-cash working capital 950 (2,910)
------------------------------------- --------- ----------
Funds from (used in) operations 2,459 (40)
------------------------------------- --------- ----------
Funds from operations per share 0.01 0.00
------------------------------------- --------- ----------
The increase in funds from operations in 2020 was primarily
attributable to Romania generating cash flows in the first quarter
of 2020. Funds from operations generated in Romania were $3.5
million (2019 - $nil), Tunisia funds used in operations were $0.2
million (2019 - funds from operations were $0.9 million) and funds
used at the corporate level were $0.9 million (2019 - $0.9
million). The increase in Romania is directly attributable to the
startup of the Moftinu field compared to no production in the
comparative period. The decrease in Tunisia is the result of a $1.1
million (2019 - $0.1 million) tax payment related to the fourth
quarter earnings, as tax payments are made one quarter in arrears,
along with a sharp decrease in commodity pricing in the current
period.
Production
Three months ended
31 March
2020 2019
-------------------------------- ------------ -------
Tunisia
Crude oil (bbl/d) 478 230
Natural gas (Mcf/d) 559 522
-------------------------------- ------------ -------
Tunisia (boe/d) 571 317
Romania
Natural gas (Mcf/d) 10,401 -
Condensate (bbl/d) 12 -
-------------------------------- ------------ -------
Romania (boe/d) 1,746 -
Group
Crude oil (bbl/d) 478 230
Natural gas (Mcf/d) 10,960 522
Condensate (bbl/d) 12 -
-------------------------------- ------------ -------
Total Group production (boe/d) 2,317 317
% liquids weighting 21% 73%
% gas weighting 79% 27%
-------------------------------- ------------ -------
100% 100%
-------------------------------- ------------ -------
For the three months ended 31 March 2020 production averaged
2,317 boe/d (2019 - 317 boe/d), an increase of 2,000 boe/d (631%)
due to the addition of Romania, Chouech and Ech Chouech which were
not producing in the comparative period, as well as the successful
M-1004 well that was brought on to production during the
quarter.
Romania production averaged 1,746 boe/d (2019 - nil), with
production only commencing on 25 April 2019, as well as M-1004
coming onto production in February 2020.
Tunisia production was from the Sabria, Chouech and Ech Chouech
fields and averaged 571 boe/d (2019 - 317 boe/d). The increase in
production is due to the Chouech and Ech Chouech fields producing
in the current quarter compared to being shut-in during the first
quarter of 2019, as well as the performance of the wells continuing
to improve as water cuts decrease.
Oil and Gas Revenue
Three months ended
31 March
($000) 2020 2019
---------------------------------------- ---------- ---------
Tunisia
Oil revenue 1,770 1,260
Gas revenue 312 443
---------------------------------------- ---------- ---------
Tunisia revenue 2,082 1,703
Romania
Gas revenue 5,790 -
Condensate revenue 44 -
---------------------------------------- ---------- ---------
Romania revenue 5,834 -
Group
Oil revenue 1,770 1,260
Gas revenue 6,102 443
Condensate revenue 44 -
---------------------------------------- ---------- ---------
Total Group revenue 7,916 1,703
Liquids revenue (%) 23% 74%
Gas revenue (%) 77% 26%
---------------------------------------- ---------- ---------
100% 100%
---------------------------------------- ---------- ---------
Realised Price
---------------------------------------- ---------- ---------
Tunisia
Oil ($/bbl) 40.80 60.90
Gas ($/Mcf) 6.13 9.42
---------------------------------------- ---------- ---------
Tunisia average realised price ($/boe) 40.14 59.70
Romania
Gas ($/Mcf) 6.02 -
Condensate ($/bbl) 41.92 -
---------------------------------------- ---------- ---------
Romania average realised price ($/boe) 36.18 -
Group
Oil ($/bbl) 40.80 60.90
Gas ($/Mcf) 6.03 9.42
Condensate ($/bbl) 41.92 -
---------------------------------------- ---------- ---------
Group average realised price ($/boe) 37.14 59.70
---------------------------------------- ---------- ---------
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 is sold to
the international market, which the Group has a marketing agreement
with Shell International Trading and Shipping Company Limited.
Natural gas prices are nationally regulated and in Sabria are tied
to the current month average of high sulphur heating oil
(benchmarked to Brent).
In Romania, 50% of the natural gas production must be sold on
the open market, and the other 50% of natural gas is sold through a
gas sales agreement with Vitol Gas and Power BV. The sales price
under this agreement is linked to an average of transactions
concluded on the centralized markets of Romania.
Oil and gas revenues for the three months ended 31 March 2020
increased by 365% to $7.9 million (2019 - $1.7 million). The
increase was attributable to the increase in production described
above, partially offset by a 38% decrease in the average realised
price per boe. The average realised price was impacted by the
decrease in the Brent crude price as well as the product mix
consisting of 77% gas (2019 - 26%) which realised a lower price per
boe compared to crude oil.
Royalties
Three months ended
31 March
($000) 2020 2019
------------------------ ----------- --------
Tunisia 277 165
Romania 273 -
------------------------ ----------- --------
Total 550 165
Total ($/boe) 2.61 5.78
Tunisia (% of revenue) 13.3% 9.7%
Romania (% of revenue) 4.7% 0.0%
------------------------ ----------- --------
Total (% of revenue) 6.9% 9.7%
------------------------ ----------- --------
Tunisian royalties are based on individual concession
agreements. In Sabria, the royalty rate varies 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%. The royalty rates for the three months ended
31 March 2020 in the Sabria concession for oil was 10% (2019 - 10%)
and for gas 8% (2019 - 8%). In the Chouech and Ech Chouech
concession, royalty rates were flat at 15% (2019 - 15%).
Romanian natural gas royalties step-up from 3.5% to 13.0% and
condensate from 3.5% to 13.5% based on the level of production in
the quarter. Romanian royalties are calculated using the reference
price set by Romania instead of the realised price to the
Company.
Royalties for the three months ended 31 March 2020 were $0.6
million (2019 - $0.2 million) due to the increased production
discussed above. The realised royalty rate in Tunisia was 13.3%
(2019 - 9.7%). The increase is due to the Chouech and Ech Chouech
fields having a flat royalty rate of 15%, producing during the
quarter compared to being shut-in in the comparative period. In
Romania, the realised royalty rate was 4.7% (2019 - nil).
Production Expenses
Three months ended
31 March
($000) 2020 2019
------------------------------------ ---------- ---------
Tunisia 949 629
Romania 1,000 -
Canada 12 12
------------------------------------ ---------- ---------
Group 1,961 641
Tunisia production expense ($/boe) 18.25 22.05
Romania production expense ($/boe) 6.30 -
------------------------------------ ---------- ---------
Total production expense ($/boe) 9.30 22.47
------------------------------------ ---------- ---------
For the three months ended 31 March 2020, the Group incurred
production expenses of $2.0 million (2019 - $0.6 million). The
overall increase is due to the addition of the Moftinu, Chouech and
Ech Chouech production in 2020. Production expenses per boe were
$9.30 (2019 - $22.47). The decrease per boe is attributable to the
low-cost production costs in Romania along with the significant
increase in overall production.
Tunisian production expenses for the period were $0.9 million
(2019 - $0.6 million). Additional costs are directly attributable
to the addition of producing fields, Chouech and Ech Chouech,
though the incremental production reduced production costs per boe
to $18.25 (2019 - $22.05).
Romanian production expenses for the period were $1.0 million
(2019 - $nil). The comparative period had no production expenses as
production of the Moftinu field commenced production on 25 April
2019.
Canadian production expenses relate to the Sturgeon Lake assets,
which are not producing and are incurring minimal operating costs
to maintain the property.
Operating Netback
Serinus uses operating netback as a key performance indicator to
assist management in understanding Serinus' profitability relative
to current market conditions and as an analytical tool to benchmark
changes in operational performance against prior periods. Operating
netback consists of petroleum and natural gas revenues less direct
costs consisting of royalties and production expenses. Netback is
not a standard measure under IFRS and therefore may not be
comparable to similar measures reported by other entities .
Three months ended
31 March
($/boe) 2020 2019
----------------------------- ---------- ---------
Tunisia
Production volume (boe/d) 571 317
Realised price 40.14 59.70
Royalties (5.33) (5.78)
Production expense (18.25) (22.05)
----------------------------- ---------- ---------
Operating netback - Tunisia 16.56 31.87
----------------------------- ---------- ---------
Romania
Production volume (boe/d) 1,746 -
Realised price 36.18 -
Royalties (1.72) -
Production expense (6.30) -
----------------------------- ---------- ---------
Operating netback - Romania 28.16 -
----------------------------- ---------- ---------
Group
Production volume (boe/d) 2,317 317
Realised price 37.14 59.70
Royalties (2.61) (5.78)
Production expense (9.30) (22.47)
----------------------------- ---------- ---------
Operating netback - Group 25.23 31.45
----------------------------- ---------- ---------
For the three months ended 31 March 2020, the operating netback
per boe for the Group was $25.23 (2019 - $31.45). The decrease was
primarily due to lower realised pricing offset by a decrease in
royalty and production expenses described above.
Windfall Tax
Three months ended
31 March
($000) 2020 2019
----------------------------------- ----------- --------
Windfall tax 1,026 -
Windfall tax ($/Mcf - Romania gas) 1.08 -
Windfall tax ($/boe - Romania gas) 6.50 -
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 (approximately $3.45 per
mcf). 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 are limited to 30% of
the supplemental income.
For the three months ended 31 March 2020, the Group incurred
windfall taxes of $1.0 million (2019 - $nil) which equates to $1.08
per mcf (2019 - $nil) of Romanian gas production volumes.
Depletion and Depreciation
Three months ended
31 March
($000) 2020 2019
----------------- ---------- ---------
Tunisia 830 371
Romania 3,063 25
Corporate 147 166
----------------- ---------- ---------
Total 4,040 562
Tunisia ($/boe) 15.96 13.01
Romania ($/boe) 19.29 -
----------------- ---------- ---------
Total ($/boe) 19.16 13.01
----------------- ---------- ---------
Depletion and depreciation expense are computed on a concession
by concession basis considering the net book value, the future
development costs associated with the reserves as well as the
proved and probable reserves of each concession.
For the three months ended 31 March 2020, depletion and
depreciation expense in Tunisia was $0.8 million (2019 - $0.4
million). This increase in directly attributable to the increased
production from the Chouech and Ech Chouech fields. Depletion and
depreciation expense in Romania were $3.1 million (2019 - $nil).
This increase was due to the Moftinu field being put onto
production 25 April 2019.
General and Administrative Expense ("G&A")
Three months ended
31 March
($000) 2020 2019
--------------------- --------- ----------
G&A expense 839 673
G&A expense ($/boe) 3.98 23.59
G&A costs incurred by the Group are expensed, with certain
costs directly related to exploration and development assets being
capitalised or reported as production costs. The G&A expense
reported is on a net basis, representing gross G&A costs
incurred less recoveries of those costs presented as capital or
production costs.
For the three months ended 31 March 2020, G&A costs were
$0.8 million (2019 - $0.7 million). The increase is primarily
attributable to higher professional fees. On a per boe basis
G&A expenses significantly decreased due to higher production
volumes from the Moftinu, Chouech, and Ech Chouech fields compared
to the prior period.
Share-based Compensation
Three months ended
31 March
($000) 2020 2019
---------------------------------- ---------- ---------
Share-based compensation 43 219
Share-based compensation ($/boe) 0.20 7.68
For the three months ended 31 March 2020, the share-based
compensation expense was $43k (2019 - $219k). The decrease is due
to no additional corporate stock options issued during the
period.
Net Finance Expense
Three months ended
31 March
($000) 2020 2019
---------------------------------------- ---------- ---------
Interest expense on long-term debt 787 658
Amortization of debt costs 22 236
Amortization of debt modification 64 37
Interest of leases 29 30
Accretion on decommissioning provision 168 307
Other interest and foreign exchange (18) 159
---------------------------------------- ---------- ---------
1,052 1,427
---------------------------------------- ---------- ---------
For the three months ended 31 March 2020, the net interest
expense was $1.1 million (2019 - $1.4 million). This decrease is
due to the repayment of the Senior Loan in 2019, lower interest
rates on the convertible loan, lower accretion due to the decreased
ARO provision, offset by a larger principal balance on the
convertible loan on the EBRD debt.
Share Data
As at the date of issuing this report, the following are the
options outstanding and changes to directors' shares owned since 31
March 2020, up to the date of this report.
Options Options Shares held
held at issued subsequent Options at 31 March
31 March to 31 March held at and 15 May
Name of Director 2020 2020 15 May 2020 2020
-------------------------- ---------- ------------------- ------------- -------------
Executive Directors:
Jeffrey Auld 8,000,000 - 8,000,000 22,197
Andrew Fairclough - 1,750,000 1,750,000 -
Non-Executive Directors:
Jim Causgrove 100,000 - 100,000 -
Eleanor Barker 100,000 - 100,000 100,000
8,200,000 1,750,000 9,950,000 122,197
-------------------------- ---------- ------------------- ------------- -------------
As of the date of issuing this report, management is aware of
the following shareholders holding more than 5% of the ordinary
shares of the Group, as reported by the shareholders to the Group:
Kulczyk Investments S.A. 38.09%, Marlborough Fund Managers 9.87%
and JCAM Investments Ltd 7.89%.
The directors are responsible for the maintenance and integrity
of the corporate and financial information on the Group's website.
Legislation in Jersey governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Serinus Energy plc
Condensed Consolidated Interim Statement of Comprehensive
Loss
($US 000s) (unaudited)
Three months ended
31 March
Note 2020 2019
------------------------------------------------ ----- ---------- ---------
Revenue, net of royalties 7,366 1,538
------------------------------------------------ ----- ---------- ---------
Cost of sales
Production expenses (1,961) (641)
Depletion and depreciation (4,040) (562)
Windfall tax (1,026) -
------------------------------------------------ ----- ---------- ---------
Total cost of sales (7,027) (1,203)
------------------------------------------------ ----- ---------- ---------
Gross profit 339 335
Administrative expenses (839) (673)
Share -based payment expense (43) (219)
Total administrative expenses (882) (892)
Gain on disposition 2 -
------------------------------------------------ ----- ---------- ---------
Operating loss (541) (557)
Finance expense (1,052) (1,427)
------------------------------------------------ ----- ---------- ---------
Net loss before tax (1,593) (1,984)
Taxation (170) (347)
------------------------------------------------ ----- ---------- ---------
Net loss for the period (1,763) (2,331)
Other comprehensive loss
Other comprehensive loss to be classified to profit and loss
in subsequent periods:
Foreign currency translation adjustment (1,205) -
------------------------------------------------ ----- ---------- ---------
Comprehensive loss for the period (2,968) (2,331)
------------------------------------------------ ----- ---------- ---------
Loss per share:
Basic 5 (0.01) (0.01)
Diluted 5 (0.01) (0.01)
------------------------------------------------ ----- ---------- ---------
Serinus Energy plc
Condensed Consolidated Interim Statement of Financial
Position
($US 000s) (unaudited)
(audited)
31 March 31 December
As At 2020 2019
----------------------------------------------------- --- ---------- -------------
Non-current assets
Property, plant and equipment 91,553 93,396
Exploration and evaluation assets 733 1,004
Right-of-use assets 688 817
---------------------------------------------------------- ---------- -------------
Total non-current assets 92,974 95,217
---------------------------------------------------------- ---------- -------------
Current assets
Restricted cash 1,033 1,122
Trade and other receivables 11,035 11,341
Cash and cash equivalents 3,734 2,780
---------------------------------------------------------- ---------- -------------
Total current assets 15,802 15,243
---------------------------------------------------------- ---------- -------------
Total assets 108,776 110,460
---------------------------------------------------------- ---------- -------------
Equity
Share capital 377,942 377,942
Warrants 97 97
Share-based payment reserve 23,878 23,835
Cumulative translation reserve (1,448) (243)
Accumulated deficit (388,876) (387,113)
---------------------------------------------------------- ---------- -------------
Total Equity 11,593 14,518
---------------------------------------------------------- ---------- -------------
Liabilities
Non-current liabilities
Decommissioning provision 25,695 25,304
Deferred tax liability 13,562 13,392
Long -term debt 23,723 23,387
Lease liabilities 314 342
Other provisions 1,323 1,323
---------------------------------------------------------- ---------- -------------
Total non-current liabilities 64,617 63,748
---------------------------------------------------------- ---------- -------------
Current liabilities
Current portion of decommissioning provision 6,272 6,334
Current portion of long-term debt 8,246 7,709
Current portion of lease liabilities 402 534
Accounts payable and accrued liabilities 17,646 17,617
---------------------------------------------------------- ---------- -------------
Total current liabilities 32,566 32,194
---------------------------------------------------------- ---------- -------------
Total liabilities 97,183 95,942
---------------------------------------------------------- ---------- -------------
Total liabilities and equity 108,776 110,460
---------------------------------------------------------- ---------- -------------
These condensed consolidated interim financial statements were
approved by the Board of Directors and authorised for issue on 15
May 2020.
Serinus Energy plc
Condensed Consolidated Interim Statement of Shareholder's
Equity
($US 000s) (unaudited)
Share-based Cumulative
Share payment Accumulated translation
capital reserve Warrants deficit reserve Total
----------------------------- --------- ------------ --------- ------------ ------------- --------
Balance at 31 December
2018 375,208 23,307 - (385,173) - 13,342
Comprehensive loss for
the period - - - (2,331) - (2,331)
Transactions with equity
owners
Share issue, net of issue
costs 2,713 - - - - 2,713
Warrants issued - - 97 - - 97
Share-based payment expense - 219 - - - 219
------------------------------ --------- ------------ --------- ------------ ------------- --------
Balance at 31 March 2019 377,921 23,526 97 (387,504) - 14,040
------------------------------ --------- ------------ --------- ------------ ------------- --------
Balance at 31 December
2019 377,942 23,835 97 (387,113) (243) 14,518
Comprehensive loss for
the period - - - (1,763) - (1,763)
Other comprehensive loss
for the period - - - - (1,205) (1,205)
Transactions with equity
owners
Share-based payment expense - 43 - - - 43
------------------------------ --------- ------------ --------- ------------ ------------- --------
Balance at 31 March 2020 377,942 23,878 97 (388,876) (1,448) 11,593
------------------------------ --------- ------------ --------- ------------ ------------- --------
Serinus Energy plc
Condensed Consolidated Interim Statement of Cash Flows
($US 000s) (unaudited)
2020 2019
--------------------------------------------------- -------- --------
Operating activities
Loss for the period (1,763) (2,331)
Items not involving cash:
Depletion and depreciation 4,040 562
Accretion expense 168 307
Gain on disposition (2) -
Share-based payment expense 43 219
Foreign exchange unrealised (gain) loss (12) 40
Current tax expense - 60
Deferred tax recovery 170 287
Interest expense 873 958
Income taxes paid (1,058) (142)
---------------------------------------------------- -------- --------
Funds from operations 2,459 (40)
Changes in non-cash working capital (950) 2,910
---------------------------------------------------- -------- --------
Cashflows from operating activities 1,509 2,870
---------------------------------------------------- -------- --------
Finance activities
Proceeds from equity issuance - 3,000
Share issue costs - (190)
Repayment of long-term debt - (2,700)
Interest and financing fees - (235)
Lease payments (122) (129)
---------------------------------------------------- -------- --------
Cashflows used in financing activities (122) (254)
---------------------------------------------------- -------- --------
Investing activities
Property, plant and equipment expenditures (2,724) (1,101)
Interest earned on restricted cash (5) (5)
Proceeds on disposal 13 -
Changes in non-cash working capital 2,313 (579)
Cashflows used in investing activities (403) (1,685)
---------------------------------------------------- -------- --------
Impact of foreign currency translation
on cash (30) (21)
Change in cash and cash equivalents 954 910
Cash and cash equivalents, beginning
of period 2,780 2,283
---------------------------------------------------- -------- --------
Cash and cash equivalents, end of period 3,734 3,193
---------------------------------------------------- -------- --------
1. General information
Serinus Energy plc ("Serinus", the "Company", or the "Group")
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 28
Esplanade, St. Helier, Jersey, JE1 8SB.
Serinus is a publicly listed company whose ordinary shares are
traded under the symbol "SENX" on AIM and "SEN" on the WSE. Kulczyk
Investments, S.A. ("KI") holds a 38.09% investment in Serinus as of
31 March 2020.
2. Basis of presentation
The condensed consolidated interim financial statements have
been prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards ("IFRS")
and their interpretations issued by the International Accounting
Standards Board ("IASB") as adopted by the European Union ("EU")
but do not include all information required for full annual
financial statements.
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 2019. There has been no change in these areas
during the three months ended 31 March 2020.
Going concern
These condensed consolidated interim financial statements have
been prepared on a going concern basis, which assumes that Serinus
will continue its operations for the foreseeable future and will be
able to realise its assets and discharge its liabilities and
commitments in the normal course of operations.
The Group meets its day-to-day working capital requirements from
net operating cash flows, cash balances, equity, and fully drawn
debt facilities (Convertible loan from the EBRD of $33.0 million).
As at 30 April 2020, the Group had cash balances of $3.0
million.
The Group's Convertible loan accumulates interest to 30 June
2020 at which point the outstanding amount is repayable in four
equal instalments on 30 June 2020, 2021, 2022 and 2023 with
interest after 30 June 2020 to be paid annually on the loan
repayment dates. As at 31 March 2020, the Group was not in
compliance with the debt service coverage ratio, however the Group
sought, and received, a waiver from the EBRD on 26 March 2020,
formally waiving compliance with this covenant for the period ended
31 March 2020.
In the first quarter of 2020, the price of oil has been affected
by the global spread of COVID-19 and the resultant reduction in oil
demand, compounded by the collapse in oil and gas prices. At the
date of this report, there remains significant uncertainty over the
impact of COVID-19 on future global oil demand and the outlook for
commodity prices. The Company has taken effective steps to protect
its staff and maintain the operational integrity of the business,
and management has taken action to reduce cash outflows including
the deferral of capital expenditures and further reductions in
costs and other non-essential expenditures. However, the directors
are mindful of the speed with which circumstances may change, both
positive and negative and the base case cashflow forecast has been
updated to reflect the information currently available, with key
assumptions reflecting the current environment.
The revised base case indicates that the Group will continue its
operations for the foreseeable future and will be able to realise
its assets and discharge its liabilities and commitments in the
normal course of operations. However, the revised base case
cashflow indicates that, under the current assumptions, the Group
will not be able to repay the 30 June 2020 instalment under the
facility. At the outset of the current crisis, the Group began
discussions with the EBRD to assess the options available during
this period of uncertainty. These discussions are progressing, and,
at this time, the directors remain confident that a solution will
be implemented ahead of 30 June 2020.
Should the revised base case forecasts be further impacted by a
downward revision in key assumptions, there is the possibility that
the Group will not be able to meet its obligations as they come
due, including the future repayments of the Convertible loan, and
breach future bank covenants. This represents a material
uncertainty that may cast significant doubt on the ability of the
Group to continue as a going concern. These condensed consolidated
interim financial statements do not reflect the adjustments and
classifications of assets, liabilities, revenues and expenses which
would be necessary if the Group were unable to continue as a going
concern.
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 2019.
4. Segment information
The Group's reportable segments are organised by geographical
areas and consist of the exploration, development and production of
oil and natural gas in Romania and Tunisia. The Corporate segment
includes all corporate activities and items not allocated to
reportable operating segments and therefore includes Brunei.
Romania Tunisia Corporate Total
------------------------------------ -------- -------- ---------- --------
As at 31 March 2020
Total assets 43,149 62,319 3,308 108,776
------------------------------------ -------- -------- ---------- --------
For the three months ended
31 March 2020
Petroleum and natural gas revenues
Crude oil - 1,770 - 1,770
Natural gas 5,790 312 - 6,102
Condensate 44 - - 44
------------------------------------ -------- -------- ---------- --------
5,834 2,082 - 7,916
Royalties (273) (277) - (550)
------------------------------------ -------- -------- ---------- --------
Revenue, net of royalties 5,561 1,805 - 7,366
------------------------------------ -------- -------- ---------- --------
Cost of sales
Production expenses (1,000) (949) (12) (1,961)
Depletion and depreciation (3,063) (830) (147) (4,040)
Windfall tax (1,026) - - (1,026)
Total cost of sales (5,089) (1,779) (159) (7,027)
------------------------------------ -------- -------- ---------- --------
Gross profit (loss) 472 26 (159) 339
Administrative expenses - - (839) (839)
Share-based payment expense - - (43) (43)
Gain on disposition - 2 - 2
Operating profit (loss) 472 28 (1,041) (541)
Finance expense (28) (144) (880) (1,052)
------------------------------------ -------- -------- ---------- --------
Profit (loss) before income
taxes 444 (116) (1,921) (1,593)
Deferred income tax expense - (170) - (170)
------------------------------------ -------- -------- ---------- --------
Profit (loss) for the period 444 (286) (1,921) (1,763)
------------------------------------ -------- -------- ---------- --------
Capital expenditures 2,072 640 12 2,724
------------------------------------ -------- -------- ---------- --------
Romania Tunisia Corporate Total
--------------------------------- -------- -------- ---------- --------
As at 31 March 2019
Total assets 45,409 71,238 3,696 120,343
--------------------------------- -------- -------- ---------- --------
For the three months ended
31 March 2019
Petroleum and natural gas
revenues
Crude oil - 1,260 - 1,260
Natural gas - 443 - 443
--------------------------------- -------- -------- ---------- --------
- 1,703 - 1,703
Royalties - (165) - (165)
--------------------------------- -------- -------- ---------- --------
Revenue, net of royalties - 1,538 - 1,538
--------------------------------- -------- -------- ---------- --------
Cost of sales
Production expenses - (629) (12) (641)
Depletion and depreciation (25) (371) (166) (562)
--------------------------------- -------- -------- ---------- --------
Total cost of sales (25) (1,000) (178) (1,203)
--------------------------------- -------- -------- ---------- --------
Gross (loss) profit (25) 538 (178) 335
Administrative expenses - - (673) (673)
Share-based payment expense - - (219) (219)
Operating profit (loss) (25) 538 (1,070) (557)
Finance income (expense) 27 (361) (1,093) (1,427)
--------------------------------- -------- -------- ---------- --------
Profit (loss) before income
taxes 2 177 (2,163) (1,984)
Current income tax expense - (59) (1) (60)
Deferred income tax expense - (287) - (287)
--------------------------------- -------- -------- ---------- --------
Profit (loss) for the period 2 (169) (2,164) (2,331)
--------------------------------- -------- -------- ---------- --------
Capital expenditures 1,067 34 - 1,101
--------------------------------- -------- -------- ---------- --------
5. Loss per share
Three months ended
31 March
($US 000s, except per share amounts) 2020 2019
------------------------------------------------- ------------------- -------------------
Loss for the period (1,763) (2,331)
Weighted average shares outstanding
Shares outstanding 238,881 220,193
------------------------------------------------- ------------------- -------------------
Loss per share - basic and diluted (0.01) (0.01)
------------------------------------------------- ------------------- -------------------
For the three months ended 31 March 2020, there were 10.7
million (31 March 2019 - 6.1 million) exercisable options and 21.6
million warrants (31 March 2019 - 2.3 million) that were excluded
from the calculation as the impact was anti-dilutive.
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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