Last checked at 29 Mar 2007 13:30
Serica Energy plc29 March 2007 FOR IMMEDIATE RELEASE: 29 March 2007 -------------------------------------------------------------------------------- SERICA ENERGY PLC ("Serica" or "The Company") 2006 FULL YEAR RESULTS Serica today announces its 2006 full year results. A summary of these resultsis included below, and the full 2006 results and management summary areavailable at www.serica-energy.com and www.sedar.com. 2006 Operating Highlights During 2006, Serica: • Drilled two North Sea exploration wells, both discovering natural gas. • Added 8.4 million barrels of oil equivalent ("boe"), on a most likely basis, to its contingent hydrocarbon resources as a result of the Serica operated North Sea Columbus discovery, a new potentially commercial gas-condensate field. • Booked probable reserves of 12.6 million boe in respect of its Kambuna gas-condensate field development in Indonesia. • Increased its acreage portfolio significantly with the award of prospective new licence blocks in the UK, Norway, Indonesia, Ireland and Vietnam. 2006 Financial Highlights Following the 2006 sale of its interest in the Lematang Block, Serica currentlyhas no income from producing operations. During the year, the Company: • Spent a net US$25.9 million on exploration activities, including pre-application costs and overhead, resulting in the addition of new hydrocarbon resources at a cost of US$3.08 per boe. • Acquired an additional 10% interest in the Glagah-Kambuna Block in Indonesia for US$4.5 million. • Disposed of its 10% interest in the producing Lematang Block in Indonesia for US$5 million, booking a profit of US$2.3 million. • Generated a loss of US$14.4 million as the result of write-downs of exploration costs (a loss of US$0.10 per share against a prior year restated loss of US$0.13 per share). • Net current assets of US$84.4 million at 31 December 2006. 2007 Forward Programme Serica has a significant forward investment programme. In 2007, Serica's plansinclude: • Drilling one vertical well and one horizontal well to appraise itsNorth Sea Columbus gas-condensate discovery with the possibility of productionin 2009. • Drilling a development well in its Kambuna gas-condensate field inIndonesia and pressing forward with Phase I of the field development, targetingproduction start-up for 2008. • Drilling an appraisal well to test a possible north-west extension tothe Kambuna field. • Drilling two exploration wells in its Biliton Block in Indonesia, thecosts of which are largely carried by a farminee. • Drilling two exploration/appraisal wells in the Asahan PSC in Indonesiato identify further gas resources if Indonesian government approval isforthcoming. • Commencing exploration work on licence blocks adjacent to the Columbusdiscovery to appraise its upside potential. • Commencing exploration work on licence blocks awarded in Ireland andNorway, including preparations for a 2008 appraisal well to evaluate the Breamdiscovery in Norway. • Commencing work on new production sharing contracts awarded inIndonesia and Vietnam. Serica has contracted the SEDCO 704 drilling rig in the North Sea and theSeadrill 5 drilling rig in Indonesia to achieve this programme. Tony Craven Walker, Non-Executive Chairman, commented: "In 2006, with the Columbus Field discovery, Serica has established its abilityboth to add shareholder value through the drill-bit and to manage operationaland financial risk through farm-outs and asset swaps. The management's strongoperational expertise is also fully demonstrated by the quality of the licenceawards achieved by Serica. 2007 will see extensive exploration, appraisal and development programmes acrossthe Company's diversified portfolio, as we move towards our objective ofachieving first production in 2008." 29 March 2007 Background Notes Serica Energy plc is an international oil and gas exploration company withoperations in the UK, Norway, Spain, Ireland, Indonesia and Vietnam. The Company's ordinary shares are listed in London on AIM and on the CanadianTSX Venture Exchange under the symbol "SQZ". The 2006 Annual Report and Accountscan be obtained from the Company's web-site www.serica-energy.com and atwww.sedar.com. Enquiries: Serica Energy plcPaul Ellis, pellis@serica-energy.com +44 (0)20 7487 7300Chief Executive OfficerChris Hearne, chearne@serica-energy.com +44 (0)20 7487 7300Finance Director JPMorgan CazenoveSteve Baldwin steve.baldwin@jpmorgancazenove.com +44 (0)20 7588 2828 Pelham Public Relations -UKJames Henderson james.henderson@pelhampr.com +44 (0)20 7743 6673Alisdair Haythornthwaite alisdair.haythornthwaite@pelhampr.com +44 (0)20 7743 6676 CHF - CanadaJan Moir jan@chfir.com +1 416 868 1079Heather Colpitts heather@chfir.com +1 416 868 1079 Forward Looking Statements This disclosure contains certain forward looking statements that involvesubstantial known and unknown risks and uncertainties, some of which are beyondSerica Energy plc's control, including: the impact of general economicconditions where Serica Energy plc operates, industry conditions, changes inlaws and regulations including the adoption of new environmental laws andregulations and changes in how they are interpreted and enforced, increasedcompetition, the lack of availability of qualified personnel or management,fluctuations in foreign exchange or interest rates, stock market volatility andmarket valuations of companies with respect to announced transactions and thefinal valuations thereof, and obtaining required approvals of regulatoryauthorities. Serica Energy plc's actual results, performance or achievementcould differ materially from those expressed in, or implied by, these forwardlooking statements and, accordingly, no assurances can be given that any of theevents anticipated by the forward looking statements will transpire or occur, orif any of them do so, what benefits, including the amount of proceeds, thatSerica Energy plc will derive there from. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. To receive Company news releases via email, please contact heather@chfir.com and specify "Serica press releases" in the subject line. CHAIRMAN'S STATEMENT Dear Shareholder Serica started 2006 with a clear forward programme. Our objectives were todemonstrate early drilling success on existing prospects and to increase ouropportunities in both the North Sea and South East Asia with the addition of newprospective acreage. I am delighted to report that success was achieved on both fronts. In the NorthSea, the positive outcome of the Columbus well has more than confirmed the valueand potential of our blocks and has resulted in the discovery of a significantnew gas-condensate field at a time when UK gas production is declining. We were also rewarded in our applications for new acreage. Our portfolioincreased considerably over the year with the addition of new blocks in Ireland,Norway, the UK, Vietnam and Indonesia. The Norwegian award is particularlyencouraging since, in addition to being highly prospective, it includes a 20%interest in the undeveloped Bream oil discovery which we believe is alreadysufficiently well defined to warrant early appraisal and possible development. At Serica, we are very conscious of the need to manage risk and maintain abalance in our portfolio, not only to take account of the large geological andtechnical risks inherent in our business, but also to be aware of our exposureto different operating regimes and how this might change as our businessdevelops. Serica has a significant business in South East Asia but our drillingsuccess in the North Sea and the addition to our portfolio of new offshoreblocks in the UK and Norway over the course of the past year have materiallyincreased the value and importance of the North Sea to the Company. We now havea very attractive position, with fields under appraisal or development in eachof our two core areas, and a highly prospective acreage portfolio. In parallel with our exploration programme we aim to build up our productionbase. As discussed in the Chief Executive Officer's Report the development ofthe Kambuna field in Indonesia has encountered some delay but we still expectproduction to commence in 2008. In the North Sea we are now hopeful thatsuccessful appraisal of Columbus this year will enable us to bring forward anearly North Sea development to add to our forward production profile. Serica's progress in 2006 has been largely due to the skill and commitment ofthe Serica team and illustrates the considerable experience and expertise whichwe now have in the Company. I and my co-directors are appreciative of theefforts that they have made. At director level, Chris Atkinson stood down atthe end of the year in order to be able to spend more time on exploration and isnow acting as Exploration Advisor to the Board. The Company's explorationachievements, particularly in South East Asia, owe much to Chris's expertise andhis contribution in bringing the Company to this point has been immeasurable. In addition, Jim Steel, having helped the Company considerably during its earlystart-up years has also decided to retire as a non-executive director during thecourse of this year and it is our intention to add two new non-executives to theBoard to assist the Company through the next stage of its development. We areextremely grateful and appreciative to Jim for the contribution that he has madeto the Company. In summary, 2006 was a year in which Serica has been able to demonstrate itsability to add shareholder value. We are now the operator of a field in theNorth Sea, Columbus, as well as the Kambuna field in Indonesia and have a highlyprospective acreage bank to explore. Our success in the North Sea makes us verymuch a leading North Sea player amongst the junior companies and complements ourgrowing South East Asia business. 2007 will bring its challenges but I believethat Serica is in a strong position to build on the foundations we have laid in2006. With drilling and development planned for both the UK and Indonesia wehave an active and exciting year ahead of us. Tony Craven Walker Chairman CHIEF EXECUTIVE OFFICER'S REPORT I am pleased to report that much progress has been made in 2006 towardsestablishing Serica as a leading independent oil and gas exploration company.During the course of the year the Company considerably expanded its acreageportfolio, resulting in a substantial improvement in the balance of our holdingsand diversification into new but geographically and technically related areas.We have built a technical team that has demonstrated, through the successfuloutcome to our UK drilling programme and the award of several attractive newlicence blocks, real ability and expertise. This has all been achieved againstthe background of a very competitive market for staff, drilling rigs andoffshore services. The major highlight for the year was the Columbus discovery in North Sea Block23/16f which tested gas at a rate of 17.5 million scfd plus 1,000 bopd ofcondensate. This is a significant discovery and is likely to bring considerablevalue to the Company. The field appears to extend into Block 23/21 to thesouth, operated by BG International Limited ("BG"), and a farm-out and acreageexchange with BG has enabled Serica both to reduce its well costs and to have a25% interest in both the northern and southern parts of the field. Serica isthe operator of Block 23/16f and is in discussions with partners on the mostappropriate appraisal programme, planned to commence this summer, for whichSerica has secured the SEDCO 704 drilling rig. The field lies close to existinginfrastructure and is likely to be developed by subsea tie-back, without theneed for a supporting offshore platform. In addition to Columbus, the Oak well drilled by Serica in North Sea Block 54/1balso flowed hydrocarbon gas on test. During the test, the well flared at a rateof 10 million scfd. However, later analysis indicates that the gas contains amaterial proportion of inert components and, as a result, the discovery isunlikely to be commercial. These were Serica's first wells in the North Sea andthe fact that they were drilled and tested efficiently in severe winter weatherconditions speaks volumes for the ability of Serica's operations team. During the year our applications for new licences were extremely successful. Wewere awarded interests in three new offshore licences in the UK, two licencesoffshore Norway, one offshore Ireland, a PSC offshore Vietnam and a PSC in theprolific Kutai Basin of East Kalimantan, Indonesia, straddling offshore andonshore acreage. All of this new acreage lies close to, or contains, existingdiscoveries. In Norway the Company was subject to an extensive qualificationprocess with the Norwegian authorities to demonstrate technical and financialability. The result was the award of two highly contested blocks, one of whichcontains the undeveloped Bream oil discovery. Our bidding strategy in each case has been very focussed, with applications onlybeing made for a very limited number of targeted blocks. It is extremelygratifying that we were awarded such a high percentage of the blocks for whichwe submitted applications during the year. With the exception of the awards inNorway and Vietnam, Serica is the operator of each of the blocks awarded,enabling us to continue to manage the exploration phase of our licences. In Indonesia, severe rig shortages, coupled with delays in the approval of ourPlan of Development, meant that we were not able to commence drilling operationsto test the small Tanjung Perling gas field, slated for possible development inthe Asahan Offshore PSC, or to drill additional prospects in the block, prior tothe end of the Exploration Period of the PSC in December 2006. As a result weare now in discussions with the Indonesian authorities to agree an appropriateway forward to enable operations to continue into the second phase of the AsahanOffshore PSC. In view of the uncertainty of the outcome of these discussions weare expensing the costs which are associated with the PSC in this year'sfinancial statements. These largely relate to the Togar 1A well drilled in 2005which we announced at the time as a non-commercial gas discovery and which weare therefore unlikely to wish to retain in any forward programme. On the Kambuna gas-condensate field in the neighbouring Glagah Kambuna TAC, adelay in the arrival of the vessel to acquire the 3D seismic survey, necessaryfor full delineation of the field, contributed to slippage in the fielddevelopment programme. Preliminary interpretation of the 3D survey has indicatedthat the field consists of two separate accumulations, the second of which stillrequires appraisal before reserves can be included. This has necessitated arevision to the Kambuna development plan to accommodate full appraisal of thenorth-western extension. We now plan to develop the field in two phases withproduction from the field scheduled to commence in the second half of 2008. At the turn of the year, RPS Energy plc ("RPS") was commissioned by the Companyto review Serica's hydrocarbon resources following the drilling of the Columbuswell. It is our policy not to book hydrocarbon resources as proven reservesuntil we have sanctioned a development plan and, in cases where there is not anexisting defined gas market, until we have signed a Heads of Agreement for gassales with a purchaser. The RPS report has classified the Kambuna field asprobable reserves and estimates that the gross probable reserves of the fieldare 25.7 million boe, of which the Company's net entitlement is 12.6 millionboe. This excludes any additional resources that could result from a successfultest of the north-west extension. RPS has also estimated that, on a most likely basis, the Columbus discovery hasadded 8.4 million boe to Serica's contingent hydrocarbon resources, based onSerica's 25% interests in Block 23/16f and part of Block 23/21. Clearly thisearly estimate will have to be borne out by appraisal drilling planned for thisyear but reserves of this size in the North Sea are very commercial. Theaddition of the Bream oil discovery through our recent Norwegian licence awardalso provides further opportunity for us to increase our reserve base. Withnegotiations at an advanced stage for the sale of Kambuna gas, appraisaldrilling scheduled for Columbus, work expected to start on Bream andconsideration being given to drilling a second well on Chablis, we have a highexpectation of being able to move more contingent resources into the category ofproven and probable hydrocarbon reserves this year. 2006 was a rewarding year for Serica; one in which we saw the Company add realvalue and achieve many of the targets that we set at the beginning of the year.It is our objective this year to demonstrate the potential of the Columbus area,including the evaluation of options for early production, as well as completingthe appraisal of the Kambuna field and moving the Kambuna development forward.Our exploration efforts will be focused on the potential of the new blocks thatwe have been awarded and of the surrounding areas. We are mindful of the fact that, although we are adding value through drillingsuccess, we have no immediate income from which to fund our future growth. Weare therefore very conscious of the need to conserve our cash resources and willcontinue to seek partners for those projects where we consider that thefinancial exposure is too great for Serica notwithstanding the upside potentialof the project. We are fortunate to have high percentage interests in, and tobe the operator of, most of our licences, which gives us a considerableadvantage in attracting partners whilst still retaining a level of participationthat would have a material impact on Serica in the case of success. This was demonstrated in 2006 with the financial contributions received throughfarm-out of both the Oak and Columbus prospects. More recently, we haveannounced the successful farm-out of our interest in the Biliton block inIndonesia, thereby reducing the risk of drilling in this frontier area whilststill retaining a high exposure to a successful outcome. We aim to continuethis strategy in 2007 but will also be keeping a watching brief on otheropportunities to improve the potential for shareholder return which we expect toarise during the year. Paul Ellis Chief Executive Officer REVIEW OF OPERATIONS - OVERVIEW Serica holds exploration, appraisal and development interests in some of themajor oil and gas provinces of Western Europe and South East Asia. In Europe,the Company has licences in the UK North Sea, the East Irish Sea, Norway,Ireland and Spain. In South East Asia, Serica has production sharing contractsin Indonesia and Vietnam. In 2006 Serica continued its run of drilling success with two discovery wells inthe UK North Sea on blocks operated by the Company. One of these wells was theColumbus gas-condensate discovery, drilled in December in a block that Sericaoperates and that had been awarded only twelve months earlier. An independentassessment has estimated that the Columbus field has most likely contingenthydrocarbon resources of 33.5 million boe. Serica intends to commence Columbusappraisal drilling in the summer of 2007. As a result of applications made during 2006, the Company was awarded offshoreexploration licences in the UK, Ireland, Norway, Indonesia and Vietnam.Serica's entry into Norway resulted in the award of a 20% interest in two highlysought after blocks, one of which contains an undeveloped oil discovery, Bream,with gross oil in place estimated by the Company to be in the range of 250 to400 million barrels, of which 40 to 100 million barrels may be recoverable. Shortages of equipment, particularly seismic acquisition boats and drillingrigs, continue to affect the Company's ability to carry out its work programmes. Despite these issues, Serica carried out a 3D seismic survey in Indonesia anddrilled two wells in the UK North Sea during the year and has contracteddrilling rigs to meet its drilling programme for 2007. REVIEW OF OPERATIONS - WESTERN EUROPE United Kingdom In Western Europe Serica holds offshore licence interests in the UK North Seaand East Irish Sea, in Ireland and Norway and has onshore licence interests inSpain. The following table summarises the Company's interests in Western Europe. Block(s) Description Role % Location UK14/15a Exploration Operator 50% Central North Sea23/16e Exploration Operator 50% Central North Sea23/16f * Columbus appraisal Operator 25% Central North Sea23/16g Exploration Operator 50% Central North Sea23/21 (part) * Columbus appraisal Partner 25% Central North Sea23/17b Exploration Operator 50% Central North Sea48/16b Chablis appraisal Operator 100% Southern Gas basin48/17d Chablis appraisal Operator 100% Southern Gas basin54/1b Oak discovery Operator 50% Southern Gas basin113/26b Exploration Operator 100% East Irish Sea113/27b (part) Exploration Operator 100% East Irish Sea Ireland27/4 Exploration Operator 100% Slyne Basin27/5 (part) Exploration Operator 100% Slyne Basin27/9 Exploration Operator 100% Slyne Basin Norway407 Bream appraisal Partner 20% Egersund Basin406 Exploration Partner 20% Egersund Basin SpainAbiego Exploration Operator 100% Pyrenees/Ebro BasinBarbastro Exploration Operator 100% Pyrenees/Ebro BasinBinefar Exploration Operator 100% Pyrenees/Ebro BasinPeraltilla Exploration Operator 100% Pyrenees/Ebro Basin * Percentage interests are subject to completion of the transaction with BGunder which Serica will reduce its 50% interest in Block 23/16f to 25% inexchange for a 25% interest in part Block 23/21. Block 14/15a This block covers an area of approximately 108 square kilometres in the CentralNorth Sea. Serica is the block operator and has a 50% interest. Several leadshave been identified at Upper Jurassic, Lower Cretaceous and Paleocene levelswithin this prospective part of the Outer Moray Firth Basin. The work programmein 2007 includes the reprocessing of available 3D seismic data with theobjective of confirming the identified leads and defining prospects that areready for drilling. Columbus Discovery Area - Blocks 23/16e, 23/16f, 23/16g, 23/17b and 23/21(part) These blocks cover an area of approximately 214 square kilometres in the CentralNorth Sea. Serica holds interests of 25% or 50% in each of these blocks and isthe operator of each block except for Block 23/21. Block 23/16g was recentlyawarded to Serica in the UK 24th Offshore Licensing Round. The blocks are contiguous and form part of Serica's strategy to exploit itsdetailed knowledge of modern 3D seismic processing techniques, particularly inthe Tertiary reservoirs of the Central North Sea, with the aim of increasing thechances of exploration success. In furtherance of this strategy, in October 2006 a well was drilled to test theColumbus prospect in Block 23/16f. Well 23/16f-11 reached a final depth of10,116 feet subsea and encountered a gross gas column of 125 feet in thePaleocene Forties sands. A total of 85 feet of the reservoir was tested and thestabilised average production rates on a 56/64 inch choke during a five hourflow period were 17.5 million scfd and 1,060 bopd of 47.5 degrees APIcondensate. The wellhead flowing pressure was 1,200 pounds per square inch andthe inert gas content was less than 2%. Prior to drilling Columbus, Serica established that the prospect extended intothe adjacent Block 23/21 in which, at that time, Serica held no interest.Consequently, Serica invited the operator of Block 23/21, BG InternationalLimited ("BG"), to enter into a farm-in and cross-assignment under which Sericaexchanged a 25% interest in Block 23/16f for a 25% interest in part of Block 23/21 (excluding the Lomond field) and BG contributed to the costs of the 23/16f-11well. This transaction will enable the field to be appraised and developed farmore expeditiously than if there had been no common interests between the twoblocks. On a most likely basis, an independent engineer's report on Columbus attributescontingent hydrocarbon resources net to Serica of 8.4 million boe, based onSerica's 25% interests in Block 23/16f and part of Block 23/21. Serica plans to drill a vertical well to appraise the Columbus discovery in thesummer of 2007 and expects to follow this up with a horizontal well in order toobtain representative production rate data for development planning. Dependingupon the results achieved, the horizontal well will be completed for use as aproduction well. Serica has secured the SEDCO 704 semi-submersible drilling rigfor Columbus appraisal drilling, commencing in July/August 2007. The Columbus field lies in close proximity to existing productioninfrastructure, providing the potential to commence production as soon asthroughput agreements have been reached and the development wells can betied-in. Serica is currently studying development options for the Columbusfield including a possible tie-in to the producing Lomond gas-condensate field,which lies about six kilometres from the Columbus discovery well. Chablis Discovery Area - Blocks 48/16b and 48/17d These contiguous blocks cover a total area of 88 square kilometres in theSouthern North Sea. Serica is the operator and holds an interest of 100% inboth blocks. Block 48/16b contains the undeveloped Chablis discovery, drilledin 2001 by ConocoPhillips. Block 48/17b was awarded to Serica in the UK 24thOffshore Licensing Round and may potentially contain part of the Chablisaccumulation. During 2006 Serica relinquished Blocks 47/20b and 48/16a as noprospects of material size had been identified in these blocks. There are several environmental and technical issues surrounding the appraisaland potential development of the Chablis field that need to be addressed priorto drilling and a comprehensive feasibility report has therefore beencommissioned that is due to be completed early in 2007. Oak Discovery - Block 54/1b Block 54/1b covers an area of 106 square kilometres in the Southern Gas Basin.Serica is operator of the block and holds a 50% interest. Prior to drilling the 54/1b-6 exploration well to test the Oak prospect, Sericafarmed out half of its original 100% interest to Centrica Resources Limited('Centrica') in order to reduce Serica's cost and risk. Under the terms of thefarm-out agreement, Serica's dry-hole risk relating to the well was largelyborne by Centrica. Serica commenced drilling well 54/1b-6 in October 2006 and the well reached itsfinal depth of 8,318 feet subsea in November. A gas-bearing Leman sandstonereservoir with a gross gas column of 113 feet was encountered and a productiontest was carried out on an interval of 80 feet. A stabilised gas flow rate ofapproximately 10 million scfd was recorded on a 44/64 inch choke. However,subsequent laboratory analysis of gas samples taken during the test indicatesthat a significant proportion of the gas is made up of inert components and theCompany now feels that it is unlikely that the Oak discovery can be producedcommercially in the foreseeable future. East Irish Sea - Blocks 113/26b and 113/27b (part) Serica was awarded these blocks in the UK 24th Offshore Licensing Round. Theblocks cover an area of 145 square kilometres and lie immediately to the northof the Millom field and within 10 kilometres of the Morecambe field - the UK'slargest gas field. Serica has identified a number of leads on these blocks andwill be reprocessing the 3D seismic data in order to define prospects fordrilling. The prospective reservoir is the Sherwood Sandstone of Triassic agethat is also the producing reservoir in the Morecambe field. Ireland - Blocks 27/4, 27/5 (part) and 27/9 In the 2006 Irish Offshore Licensing Round, Serica was awarded Licence PEL 01/6containing Blocks 27/4, 27/5 (part) and 27/9 which cover an area of 611 squarekilometres in the Slyne Basin off the west coast of Ireland. Serica is operatorand holds a 100% interest in the Licence. The blocks are covered by existing modern 3D seismic data and Serica will bereprocessing this data to assess the prospectivity of the blocks. Prospectshave been identified by Serica in the Triassic sands that have proven to be gasbearing and productive in the Corrib gas field, which lies about 40 kilometresto the north and is currently under development by Shell. When Serica'stechnical evaluation of the 3D seismic data is complete, a decision to drill anexploration well will be considered. Norway - Licence 407 and Licence 406 Serica was awarded a 20% interest in both of these offshore licences in Norway's2006 Awards in Predefined Areas ('APA') Licence Round. The licences arecontiguous and lie in the Egersund Basin, about 120 kilometres southwest of theport of Stavanger, Norway's fourth largest city. The southern licence, Licence 406, covers an area of approximately 900 squarekilometres comprising parts of licence blocks 8/3, 9/1, 17/12, 18/10 and 18/11and includes the 18/10-1 oil discovery well drilled in 1980, which was tested at1,800 bopd. The licence contains exploration prospects that appear analogous tothe Bream field in Licence 407. The northern licence, Licence 407, covers an area of approximately 725 squarekilometres comprising parts of licence blocks 17/8, 17/9, 17/11, 17/12, 18/7 and18/10. It includes the 1972 Bream oil discovery and the 1973 Brisling oildiscovery, which were tested at rates up to 1,000 bopd and 2,200 bopdrespectively. These discoveries remain undeveloped since they were notconsidered to be commercial at the time and the area has not been open forlicensing for many years. Serica has carried out an analysis of recently acquired 3D seismic data coveringthe Bream discovery and estimates that, using modern drilling and completiontechnology, including horizontal production wells, the potentially recoverableoil reserves of the Bream field may lie within a range of 40 to 100 millionbarrels, based on an oil in place estimate of 250 to 400 million barrels. Serica expects a Bream appraisal well to be drilled in Licence 407 early in 2008with a view to submitting a development plan to the Norwegian authorities by theend of that year. Spain The Company holds a 100% interest in the Abiego, Barbastro, Binefar andPeraltilla exploration Permits onshore northern Spain, approximately 40kilometres southeast of the Serrablo gas field. The Permits cover an area ofapproximately 1,100 square kilometres between the Ebro Basin and the Pyreneesand could potentially contain significant quantities of gas, which would find aready market in Spain. An initial evaluation of the four Permits has been completed and it has beenconcluded that additional 2D seismic data will need to be acquired in order todelineate prospects for drilling. Serica intends to carry out a short seismicacquisition test programme early in 2007 in order to determine the acquisitionparameters for a full survey. It is the Company's intention to seek a partnerto participate in the exploration of the Permits. REVIEW OF OPERATIONS - SOUTH EAST ASIA In South East Asia, Serica holds interests in Indonesia and in Vietnam. The following table summarises the Company's interests in South East Asia.Percentage interests shown assume the completion of certain farm-out andacquisition agreements which await final government approval. Block(s) Description Role % Location IndonesiaGlagah Kambuna TAC Kambuna Operator 65% Offshore development North SumatraAsahan Offshore PSC * Tanjung Perling Operator 55% Offshore appraisal North SumatraBiliton PSC Exploration Operator 45% Offshore Java SeaKutai PSC Exploration Operator 52.5% Kutai basin VietnamBlock 06/94 Exploration Partner 33.3% Nam Con Son Basin * Serica's interest in the Asahan Offshore PSC is subject to the successfulconclusion of current negotiations with the Indonesian authorities regarding thecommerciality of the PSC. Glagah Kambuna The Glagah Kambuna Technical Assistance Contract ("TAC") covers an area ofapproximately 380 square kilometres and lies offshore North Sumatra adjacent tothe Asahan Offshore PSC. Serica has a 65% working interest and operates theTAC. The TAC contains the undeveloped Glagah #1 and Kambuna #1 discovery wells and asuccessful appraisal well drilled by Serica in 2005, Kambuna #2. Serica isprogressing the development of the gas-condensate bearing Upper Belumai Sandreservoir of the Kambuna field and a Plan of Development was approved by thestate oil and gas company Pertamina in 2006. Acquisition of the 430 squarekilometres 3D survey over the Kambuna field and parts of the Asahan Offshore PSCwas not completed until the end of the year due to the late arrival of theseismic survey vessel. Final processing is now underway and should be completedin the second quarter of 2007. Interpretation by Serica of the preliminary fast-track processing of the 3Dseismic data indicates that some of the field gas and liquid contingentresources, identified by consultants Gaffney Cline & Associates in 2005, may liewithin a Lower Belumai Sand reservoir just to the north-west of the main area ofthe Kambuna field. This upside would be classified as prospective resourcessince no well has yet been drilled in what may prove be a separate accumulation. Serica's interpretation has, to a large extent, been confirmed by anindependent report on the Kambuna field commissioned from consultants RPS Energyplc ("RPS") and has resulted in a revision to the field development plan toenable the north-west area to be appraised and the field to be developed in twophases, with the first phase scheduled to commence production in late 2008. The RPS report estimates that the gross probable reserves of the main area ofthe Kambuna field are 25.7 million boe. Serica has secured the Seadrill 5drilling rig to carry out appraisal and development drilling in the third orfourth quarter of 2007 and is now progressing the final front-end engineeringdesign studies. Gas and liquid sales negotiations are proceeding with severalinterested parties, including Pertamina, the state oil and gas company, whichoperates a refinery and gas liquids plant in the area. Asahan Offshore The Asahan Offshore Production Sharing Contract ("PSC"), offshore North Sumatra,lies immediately adjacent to the Glagah Kambuna TAC. Serica has a 55% interestand is the operator of the PSC. In 2006, Serica submitted a Plan of Development for the Tanjung Perling gasfield, which lies in the south of the PSC. The aim was to develop the field inconjunction with the Kambuna field and thereby achieve economies of scale.However, the Indonesian Executive Agency for Upstream Oil and Gas Business,BPMigas, requested additional data in support of the development plan. Thatdata could only be obtained by drilling a new well in the field and, with nodrilling rigs active in the area, this could not be achieved prior to the end ofthe exploration period on 16th December 2006. Operations in the PSC have therefore been suspended while negotiations with theIndonesian authorities continue regarding the commerciality of the PSC and itsconsequent continuation into the 20 year exploitation period. Assuming asuccessful outcome to these negotiations, Serica intends to carry out a drillingprogramme in the second half of 2007 using the Seadrill 5 rig. Biliton The Biliton PSC covers an original area of approximately 3,940 square kilometresin the Java Sea between the Indonesian islands of Java and Kalimantan. Serica,which operates the PSC, is presently negotiating the area to be relinquishedunder the terms of the PSC. The prospective parts of the PSC will be retainedby Serica within the retained area. Serica has recently entered into a farm-out agreement under the terms of whichNations Petroleum will earn a 45% interest in the Biliton PSC by paying acontribution to Serica's back costs and bearing the majority of the costs ofdrilling two wells in the PSC in 2007. Following the completion of thisagreement, Serica will have a retained 45% interest in the PSC. The Biliton PSC lies in a virtually unexplored Indonesian basin with many of thecharacteristics of analogous basins nearby that have to date producedsubstantial volumes of oil and gas. Only one exploration well has been drilledin the area, the Parang-G1 well drilled by Ashland Petroleum in 1974. Althoughthis well did not find reserves of oil or gas it did encounter oil shows. In1990, British Petroleum carried out a seabed survey that indicated the presenceof nine oil seeps within the current block boundary. Both the shows in the welland the seep information demonstrate that hydrocarbons have been generatedwithin the area. Serica has acquired a total of approximately 4,500 line kilometres of 2D seismicdata in the PSC and has identified several large prospects that could beoil-bearing. Drilling locations in the Biliton PSC have been selected and twoexploration wells will be drilled in the second quarter of 2007 using theSeadrill 5 rig. Kutai In December 2006, Serica was awarded the Kutai PSC, which covers an area ofapproximately 4,700 square kilometres within the prolific Kutai Basin of EastKalimantan. Serica is the operator and holds a 52.5% interest in the PSC. The PSC is divided into several blocks, the majority of which are first phaserelinquishments by the current main operators in the basin, Total, Chevron andVICO. The PSC lies in and around several giant fields, including Tunu (1,600million boe) and Attaka (800 million boe), in the prolific Mahakam River deltaboth onshore and offshore. The adjacent major fields on the shelf were mainlydiscovered in the late 1960s and 1970s. To date the area has produced over twobillion barrels of oil and 20 trillion cubic feet of gas and is currentlyproviding over four bcf of gas per day to the Bontang LNG facility. Serica will be acquiring new seismic data to augment the existing 2D and 3Dseismic data set, in order to assess the prospectivity of the block anddetermine drilling locations. -- Vietnam - Block 06/94 In July 2006, Serica was awarded Block 06/94, in the Nam Con Son Basin offshoreSouth Vietnam. The block covers an area of approximately 4,100 squarekilometres. Serica has a 33.33% interest in the block, which is operated byPearl Energy. The block lies approximately 350 kilometres offshore and is the part of Block 06/1 which British Petroleum was contractually obliged to relinquish in 1994 afterdiscovering the major Lan Tay and Lan Do gas fields. These fields commencedproduction in 2002, following the construction of a new gas and liquids pipelineto the Vietnamese mainland. Block 06/94 is the Company's first expansion of its interests in Southeast Asiaoutside Indonesia. In December 2006, the operator of the adjacent Block 12/E,Premier Oil, announced that its "Blackbird" discovery well had been tested at acombined 5,900 bopd from two sands. Serica expects to be able to identify bothoil and gas prospects within Block 06/94. GLOSSARY bcf billion standard cubic feetboe barrels of oil equivalent (barrels of oil, condensate and LPG plus the heating equivalent of gas converted into barrels at a rate of 6,000 standard cubic feet per barrel)bopd barrels of oil or condensate per dayLNG Liquefied Natural Gas (mainly methane and ethane)LPG Liquefied Petroleum Gas (mainly butane and propane)PSC Production Sharing Contractscfd standard cubic feet per dayTAC Technical Assistance Contract MANAGEMENT'S DISCUSSION AND ANALYSIS The following management's discussion and analysis ("MD&A") of the financial andoperational results of Serica Energy plc and its subsidiaries (the "Group")should be read in conjunction with Serica's consolidated financial statementsfor the year ended 31 December 2006. References to the "Company" include Serica and its subsidiaries where relevant.All figures are reported in US dollars ("US$") unless otherwise stated. Overall Performance Serica's activities are centred on the UK North Sea and Indonesia, with otherinterests in Norway, Spain, Ireland and Vietnam. The Group has no current oiland gas production, following the disposal of its Harimau Field interest, withthe main emphasis placed upon its future exploration drilling programmes andnear term developments. During 2006, work has continued on managing itsportfolio of interests, advancing the Indonesian development and completing asuccessful drilling programme in the UK North Sea. Two operated wells werecompleted in the UK North Sea and both were gas discoveries. Well 23/16f-11, an exploration well drilled on the Columbus prospect in the UKCentral North Sea, encountered a gross gas column of at least 125 feet in thePaleocene Forties sands. Testing of the Columbus well confirmed the presence ofa potentially commercial gas and condensate reservoir. A total of 85 feet of thereservoir was tested and the stabilised average production rates on a 56/64 inchchoke during a five hour flow period were 17.5 million cubic feet of gas per dayand 1,060 barrels per day of 47.5 degrees API condensate. The wellhead flowingpressure was 1,200 pounds per square inch and the inert gas content was lessthan 2%. These good flow rates demonstrated commercial potential and the wellhas been suspended for possible future use in a development programme. Well 54/1b-6, an exploration well drilled on the Oak prospect in the UK SouthernNorth Sea, encountered a gas bearing Leman sandstone reservoir with a gross gascolumn of 113 feet. A production test was carried out on an 80 foot interval anda stabilised gas flow rate of approximately 10 million standard cubic feet perday was recorded on a 44/64 inch choke. Laboratory analysis of the gas indicatesthat it contains material quantities of inert components and the Companybelieves that the accumulation is unlikely to be commercial. The well wasplugged and abandoned. In Indonesia, Serica acquired an additional 10% interest in the Glagah-KambunaTechnical Assistance Contract ("TAC") from PT Gunakarsa Glagah-Kambuna Energisubject to the necessary government approvals. The consideration of US$4,500,000was payable in cash. Following this transaction Serica's interest in the TACand the Kambuna Field will be 65%. Serica also disposed of its 10% interest inthe Lematang Production Sharing Contract, which contains the almost depletedHarimau Field and the undeveloped Singa gas field, to Lundin Petroleum AB for acash consideration of US$5,000,000. In the Asahan Offshore PSC, approval was not received from the Indonesianauthorities for the development of the small Tanjung Perling gas field prior tothe end of the Exploration Period of the PSC on 16 December 2006. Serica is indiscussions with the Indonesian authorities to agree an appropriate way forwardto enable operations to continue into the second phase of the PSC. In view ofthe uncertainty on the outcome of these discussions, costs associated with theAsahan Offshore PSC have been written off in this year's financial statements.These costs largely relate to the Togar 1A well drilled in 2005 which wasannounced at the time as a non-commercial gas discovery, and which we aretherefore unlikely to wish to retain in any forward programme. In 2006, Serica was awarded an exploration licence offshore Ireland, andProduction Sharing Contracts in Indonesia and Vietnam. In the 2006 Irish Offshore Licensing Round, Serica was awarded a licence overBlocks 27/4, 27/5 (part block) and 27/9 which cover an area of approximately 611square kilometres in the Slyne Basin off the west coast of Ireland. Serica isthe operator and will hold a 100% interest in the licence. These blocks arealready covered by modern 3D seismic data and Serica will be reprocessing around300 square kilometres of this data as part of its work programme to assess theprospectivity of the blocks in the first phase of the licence. If Serica electsto proceed to the second phase of the licence it will drill at least oneexploration well. In Indonesia, Serica was awarded the Kutai Production Sharing Contract coveringan area, both onshore and offshore, of approximately 4,729 square kilometreswithin the prolific Kutai Basin of East Kalimantan. Serica is the operator ofthe PSC and will hold a 52.5% interest in the block. Serica's partner, PTEphindo, will hold the remaining 47.5% interest. The PSC contains severalpreviously drilled wells that successfully established the presence ofhydrocarbons. Serica will be acquiring a limited amount of new 2D and 3D seismicto augment the pre-existing seismic data set as part of its work programme toassess the prospectivity of the block which will also include the drilling of upto four exploration wells. In Vietnam, Serica was awarded Block 06/94 in the Nam Con Son Basin offshoresouth Vietnam. Serica and its two partners, Lundin Petroleum and Pearl Energy,each have a 33.33% interest in the Block, which covers an area of around 4,100square kilometers and will be operated by Pearl. Block 06/94 lies approximately350 kilometres offshore and is the part of Block 06/1 which British Petroleumwas obliged to relinquish in 1994 after retaining the Lan Tay and Lan Do gasfields for development. The Lan Do gas field commenced gas production in 2002. Since the year end, Serica has been awarded new licences in both the UK andNorway. In the UK, Serica was awarded Block 23/16g in the Central North Sea,Block 48/17d in the Southern North Sea and Blocks 113/26b and 113/27b (part) inthe East Irish Sea. Serica is the operator of all four blocks and has a 100%interest in each block except 23/16g, where it has a 50% interest. In Norway, Serica was awarded a 20% interest in two large licences in the 2006Awards in Predefined Areas ('APA') Licence Round. The licences are contiguousand cover a total area of approximately 1,625 square kilometres in the EgersundBasin, about 120 kilometres southwest of Stavanger. One of the licences containsthe undeveloped Bream oil discovery. The results of Serica's operations detailed below in this MD&A, and in thefinancial statements, are presented in accordance with International FinancialReporting Standards ("IFRS"). Results of Operations Serica generated a loss of US$14.4 million for 2006 compared to a loss ofUS$10.5 million for 2005. The 2005 figures have been restated to take account ofthe revised accounting treatment for share purchase warrants outstanding at 31December 2005. 2006 2005 (1) US$000 US$000 Sales revenue 61 124 Expenses: Administrative expenses (6,641) (4,877) Foreign exchange gain/(loss) 1,715 (463) Pre-licence costs (4,205) (695) Asset write offs (12,870) - Share-based payments (1,918) (1,013) Change in fair value of share warrants 1,154 (6,405) Depletion, depreciation & amortisation (95) (30) Operating loss before finance revenue and tax (22,799) (13,359) Gain on disposal 2,311 - Finance revenue 4,931 526 Loss before taxation (15,557) (12,833) Taxation credit 1,182 2,309 Loss for the year (14,375) (10,524) Basic and diluted loss per share (US$) (0.10) (0.13) (1) As restated - See note 30 of the financial statements Revenues from oil and gas production are recognised on the basis of theCompany's net working interest in its properties. Revenues throughout eachperiod were generated from Serica's 10% interest in the Harimau producing gasand gas condensate field. These revenues are from discontinued operationsfollowing the disposal of the Lematang PSC interest in 2006. Direct operatingcosts for the field during these periods were carried by Medco Energi Limited. Administrative expenses of US$6.6 million for 2006 increased from US$4.9 millionfor 2005. The general increase from 2005 reflects the growing scale of theCompany's activities over the past twelve months. A significant foreign exchange gain of US$1.7 million was earned in 2006. Thischiefly arose from the increase in US$ equivalent value of those pounds sterlingcash deposits held to cover UK licence commitments and administrativeexpenditures expected in sterling, as the pound continued to strengthen againstthe dollar during the year. Pre-licence costs include direct cost and allocated general administrative costincurred on oil and gas interests prior to the award of licences, concessions orexploration rights. The significant increase in the charge from US$0.7 millionin 2005 to US$4.2 million in 2006 is largely caused by data acquisition costs aspart of the Norway licence applications (US$2.7 million) and a focus on newventures in Vietnam and Indonesia (US$0.5 million). Asset write offs of US$12.9 million comprise US$12.7 million in regard to theAsahan Offshore PSC and the Q3 2006 US$0.2 million charge against relinquishedlicences relating to the non core UK North Sea licence P1180, Blocks 48/16a and47/20b. The Q4 Asahan Offshore PSC asset write offs include charges againstexploration and evaluation assets (US$10.3 million), goodwill (US$0.7 million),inventory (US$0.6 million) and related long term other receivables (US$1.1million). Share-based payment costs of US$1.9 million reflect share option grants madeduring the course of 2004, 2005 and 2006 and compare with a cost of US$1.0million for 2005. The increase from last year is due to share options granted inthe second half of 2005 and early 2006 as the management team was built up. The change in fair value of share warrants in 2005 is a restatement to reflectevolving interpretation of the treatment of such instruments under the recentlyadopted International Financial Reporting Standards. This has arisen due to thedifference in the denominated currency of the warrants compared to Serica'sfunctional currency. The loss in 2005 was created as the fair value of warrantsnot exercised increased due to the rise in share prices over the year and asfurther warrants were issued in the year. In 2006 a gain is recorded, as thefair value of warrants outstanding as at 31 December 2005 fell prior to theirexercise in 2006. This has no cash impact on reported results. More detail isprovided in note 30 of the financial statements. Negligible depletion, depreciation and amortisation charges for 2005 representoffice equipment only. Those costs of petroleum and natural gas propertiesclassified as exploration and evaluation assets are not currently subject tosuch charges pending further evaluation. A profit on disposal of US$2.3 million in Q2 2006 was generated on the sale ofthe 10% interest in the Lematang PSC to Lundin Petroleum AB for US$5 million. Finance revenue, comprising interest income of US$4.9 million for 2006, compareswith US$0.5 million for 2005. The increase from last year is due to thesignificant cash deposit balances held following the AIM listing and associatedfund raising in December 2005. The taxation credit of US$1.2 million in 2006 arose from the release of thedeferred tax liabilities attached to the Lematang PSC (US$0.5 million) andAsahan (US$0.7 million). Expenditures during 2005 and 2006 have reduced anypotential current income tax expense arising for the year to US$ nil. The net loss per share decreased from US$0.13 to US$0.10 with the increase inthe net loss for the year, compared to 2005, being offset by the greaterincrease in the number of shares in issue during 2006. Summary of Quarterly Results Quarter ended: 31 Mar 30 Jun 30 Sep 31 Dec US$000 US$000 US$000 US$0002006Sales revenue 25 36 - -(Loss)/profit for the quarter (1) 1,037 1,839 (3,795) (13,456)Basic and diluted loss per share US$(1) - - (0.03) (0.09)Basic earnings per share US$ (1) 0.01 0.01 - -Diluted earnings per share US$ (1) 0.01 0.01 - - 2005Sales revenue 31 32 36 25(Loss) for the quarter (1) (5,054) (628) (3,976) (866)Basic and diluted loss per share US$ (1) (0.07) (0.01) (0.05) (0.01) (1) As restated - See note 30 of the financial statements The fourth quarter 2006 loss includes asset write offs of US$12.7 million inregard to the Asahan Offshore PSC. The second quarter 2006 profit includes again of US$2.3 million from the disposal of the 10% interest in the LematangBlock. Working Capital, Liquidity and Capital Resources Current Assets and Liabilities An extract of the balance sheet detailing current assets and liabilities isprovided below: 31 December 31 December 2005 (1) 2006 US$000 US$000Current assets: Inventories 6,785 878 Trade and other receivables 30,903 2,106 Cash and cash equivalents 77,306 109,750Total Current assets 114,994 112,734 Less Current liabilities: Trade and other payables (30,619) (7,136) Fair value of warrants - (6,850) Net Current assets 84,375 98,748 (1) As restated - See note 30 of the financial statements At 31 December 2006, the Company had net current assets of US$84.4 million whichcomprised current assets of US$115.0 million less current liabilities of US$30.6million, giving an overall decrease in working capital of US$14.4 million in theyear. The Company raised additional new funds of US$8.5 million through theexercise of warrants and earned interest income of US$4.9 million, but incurredsignificant costs in 2006 from exploration work, principally the Q4 UK drillingprogramme on the Oak and Columbus prospects. Inventories increased significantly from US$0.9 million to US$6.8 million fromthe acquisition in Q3 2006 of steel casing for the forthcoming Indonesiandrilling programme. Trade and other receivables at 31 December 2006 included the US$5.0 millionproceeds due from the Lematang PSC disposal, and significant recoverable amountsfrom partners in Joint Venture operations. Other smaller items includedprepayments and sundry UK and Indonesia working capital balances. Trade and other payables include significant amounts due to thosesub-contractors operating the UK drilling program. They also include tradecreditors and accruals from 3D seismic acquisition in Indonesia, a furtherUS$1.5 million payable for acquisition of an additional 10% interest in theGlagah Kambuna TAC and US$1.9 million payable for Norwegian data costs. The fair value of the Canadian $ warrants outstanding at 31 December 2005 isestimated using a Black Scholes pricing model based upon the warrant exerciseprice, the share price, volatility and the life of the warrant. This created aliability as at 31 December 2005, which was cleared in 2006 upon exercise. Thereis no cash effect of this liability. See note 30 of the financial statements forfurther detail. Long-Term Assets and Liabilities An extract of the balance sheet detailing long-term assets and liabilities isprovided below: 31 December 31 December 2006 2005 US$000 US$000 Exploration and evaluation assets 40,681 23,591Property, plant and equipment 342 26Goodwill 1,200 2,382Long-term other receivables 351 1,758 Long-term other payables - (151)Deferred income tax liabilities (955) (2,137) During 2006, total investments in petroleum and natural gas properties,represented by intangible exploration assets, increased to US$40.7 million. Thenet US$17.1 million increase consists of US$29.7 million of additions, lessUS$2.1 million disposals from Lematang, US$10.3 million of Asahan write offs andUS$0.2 million of relinquished licence costs. Of the 2006 investments, US$17.6million was spent in the UK principally on drilling activity on the Columbus andOak prospects, US$7.1 million in Indonesia on exploration work and 3D Seismic,US$4.5 million on the further 10% interest in the Glagah Kambuna TAC, and afurther US$0.5 million in Spain. Property, plant and equipment includes office fixtures and fittings and computerequipment. Goodwill, representing the difference between the price paid on acquisitions andthe fair value applied to individual assets, fell by US$0.5 million to US$1.9million following the Lematang disposal in Q2 2006, and by US$0.7 million toUS$1.2 million following the write off of costs allocated to the Asahan asset. Long-term other receivables of US$0.3 million represent value added tax ("VAT")on Indonesian capital spend, which is expected to be recovered once the fieldscommence production. Long-term other payables comprised VAT payable in Indonesia. This liability wascleared following the Lematang PSC disposal. Deferred income tax liabilities fell by US$1.2 million to US$1.0 million as theUS$0.5 million liability associated with the Lematang PSC was removed, and afurther US$0.7 million in relation to Asahan released following the write off ofcertain Asahan costs. Shareholders' Equity An extract of the balance sheet detailing shareholders' equity is providedbelow: 31 December 31 December 2006 2005 (1) US$000 US$000 Total share capital 157,283 148,745Other reserves 11,767 4,153Accumulated deficit (43,056) (28,681) (1) As restated - See note 30 of the financial statements Total share capital includes the total net proceeds (both nominal value and anypremium on the issue of equity capital). Issued share capital during 2006 was increased by the exercise of 7,949,376warrants at a price of Cdn$1.20 and 40,000 share options of the Company at aprice of Cdn$1.00. Other reserves include those equity amounts in respect of the movement incumulative expense of share-based payment charges, and the element of the fairvalue liability of share purchase warrants eliminated upon exercise of thosewarrants. Capital Resources At 31 December 2006, Serica had US$84.4 million of net working capital and nosignificant long-term debt. At that date the Company had commitments to futureminimum payments under operating leases in respect of rental office premises,office equipment and motor vehicles for each of the following years as follows: US$00031 December 2007 34431 December 2008 28731 December 2009 26631 December 2010 42 The Company had no long-term debt or capital lease obligations. In Q4 2006 theCompany contracted the Seadrill 5 jack-up drilling rig for 136 days during 2007for Indonesia operations at a gross cost of US$26,286,000. Serica's net share ofthese costs will depend on the exact split of the proposed drilling programmes,but following the farm-out of a 45% interest in Biliton and current payinginterests in the Glagah Kambuna TAC, this is expected to be approximatelyUS$11,100,000. In the absence of revenues generated from oil and gas production, Serica willutilise existing financial resources as required to fund its investmentprogramme and ongoing operations. Off-balance Sheet Arrangements The Company has not entered into any off-balance sheet transactions orarrangements. Critical Accounting Estimates The Company's significant accounting policies are detailed in note 2 to theattached audited 2006 financial statements. International Financial ReportingStandards have been adopted. The cost of exploring for and developing petroleumand natural gas reserves are capitalised. Unproved properties are subject toperiodic impairment tests whilst the costs of proved properties are depletedover the life of such producing fields. In each case, calculations are basedupon management assumptions about future outcomes, product prices andperformance. Financial Instruments The Group's financial instruments comprise cash and cash equivalents, accountspayable and accounts receivable. It is the management's opinion that the Groupis not exposed to significant currency, interest or credit risks arising fromits financial instruments other than as discussed below: Cash and cash equivalents, which comprise short-term cash deposits, aregenerally held within the currency of likely future expenditures to minimise theimpact of currency fluctuations. The majority of funds are currently held in USdollars to match the Group's exploration and appraisal commitments. The holdingof £4.4 million at year-end reflected a proportion of UK licence commitments andadministrative expenditures expected in £ sterling. Serica is holding significant net cash. Whilst this does leave exposure tointerest rate fluctuations, given the level of expenditure plans over 2007/8this is managed in the short-term through selecting treasury deposit periods ofone to six months. Where Serica operates joint ventures on behalf of partners it seeks to recoverthe appropriate share of costs from these third parties. The majority ofpartners in these ventures are well established oil and gas companies. In theevent of non payment, operating agreements typically provide recourse throughincreased venture shares. Cash and treasury credit risks are mitigated throughspreading the placement of funds over a range of institutions each carryingacceptable published credit ratings to minimise counterparty risk. It is the management's opinion that the fair value of its financial instrumentsapproximate to their carrying values, unless otherwise noted. Share Options As at 31 December 2006, the following employee share options were outstanding: - Expiry Date Number Exercise cost Cdn$Share options Aug 2009 500,000 555,000 Feb 2009 817,500 1,635,000 May 2009 100,000 200,000 Dec 2009 325,000 325,000 Jan 2010 600,000 600,000 Jun 2010 1,633,333 2,939,999 Exercise cost £ Nov 2010 671,000 650,870 Jan 2011 1,275,000 1,319,625 May 2011 180,000 172,800 June 2011 270,000 259,200 Nov 2011 120,000 134,400 Business Risk and Uncertainties Serica, like all exploration companies in the oil and gas industry, operates inan environment subject to inherent risks. Many of these risks are beyond theability of a company to control, particularly those associated with theexploring for and developing of economic quantities of hydrocarbons: volatilecommodity prices; governmental regulations; and environmental matters. Disclosure Controls and Procedures and Internal Controls over FinancialReporting Serica's management, including the Chief Executive Officer and Chief FinancialOfficer, has reviewed and evaluated the effectiveness of the Company'sdisclosure controls and procedures (as defined in Multilateral Instrument 52-109of the Canadian Securities Administrators) as of 31 December 2006. Managementhas concluded that, as of 31 December 2006, the disclosure controls andprocedures were effective to provide reasonable assurance that materialinformation relating to the Company and its consolidated subsidiaries would bemade known to them by others within those entities, particularly during theperiod in which this report was being prepared. Management has designed internal controls over financial reporting to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withIFRS. There have been no changes in the Company's internal controls overfinancial reporting during the year that have materially affected, or arereasonably likely to materially affect, the Company's internal controls overfinancial reporting. Nature and Continuance of Operations The principal activity of the Company is to identify, acquire and subsequentlyexploit oil and gas reserves primarily in Asia and Europe. The Company's financial statements have been prepared with the assumption thatthe Company will be able to realise its assets and discharge its liabilities inthe normal course of business rather than through a process of forcedliquidation. The Company currently has relatively minor operating revenues and,during the period ended 31 December 2006 the Company incurred losses of US$14.4million from continuing operations. At 31 December 2006 the Company held cashand cash equivalents of US$77.3 million. Outstanding Share Capital As at 20 March 2007, the Company had 150,537,955 ordinary shares issued andoutstanding. Additional Information Additional information relating to Serica can be found on the Company's websiteat www.serica-energy.com and on SEDAR at www.sedar.com Approved on Behalf of the Board Paul Ellis Christopher HearneChief Executive Officer Finance Director 29 March 2007 Forward Looking Statements This disclosure contains certain forward looking statements that involvesubstantial known and unknown risks and uncertainties, some of which are beyondSerica Energy plc's control, including: the impact of general economicconditions where Serica Energy plc operates, industry conditions, changes inlaws and regulations including the adoption of new environmental laws andregulations and changes in how they are interpreted and enforced, increasedcompetition, the lack of availability of qualified personnel or management,fluctuations in foreign exchange or interest rates, stock market volatility andmarket valuations of companies with respect to announced transactions and thefinal valuations thereof, and obtaining required approvals of regulatoryauthorities. Serica Energy plc's actual results, performance or achievementcould differ materially from those expressed in, or implied by, these forwardlooking statements and, accordingly, no assurances can be given that any of theevents anticipated by the forward looking statements will transpire or occur, orif any of them do so, what benefits, including the amount of proceeds, thatSerica Energy plc will derive therefrom. Serica Energy plc Group Income Statement for the year ended 31 December 2006 2006 2005 (1) Notes US$000 US$000 Sales revenue 3 61 124 Cost of sales - - Gross profit 61 124 Administrative expenses 5 (6,641) (4,877)Foreign exchange gain/(loss) 1,715 (463)Pre-licence costs (4,205) (695)Asset write offs 12,14 (12,870) -Share-based payments (1,918) (1,013)Change in fair value of share warrants 30 1,154 (6,405)Depreciation, depletion and amortisation 6 (95) (30) Operating loss before finance revenue and tax (22,799) (13,359) Profit on disposal 16 2,311 -Finance revenue 9 4,931 526 Loss before taxation (15,557) (12,833) Taxation credit for the year 10 a) 1,182 2,309 Loss for the year (14,375) (10,524) Loss per ordinary share (US$)Basic and diluted LPS 11 (0.10) (0.13) (1) As restated - See note 30 Serica Energy plc Balance Sheet As at 31 December 2006 Group Company 2006 2005(1) 2006 2005(1) Notes US$000 US$000 US$000 US$000Non-current assetsExploration & evaluation assets 12 40,681 23,591 - -Property, plant and equipment 13 342 26 - -Goodwill 14 1,200 2,382 - -Investments in subsidiaries 15 - - 119,682 119,649Other receivables 17 351 1,758 - - 42,574 27,757 119,682 119,649Current assetsInventories 18 6,785 878 - -Trade and other receivables 19 30,903 2,106 76,120 7,491Cash and cash equivalents 20 77,306 109,750 49,098 107,080 114,994 112,734 125,218 114,571 TOTAL ASSETS 157,568 140,491 244,900 234,220 Current liabilitiesTrade and other payables 21 (30,619) (7,136) (1,045) (2,003)Fair value of warrants 30 - (6,850) - (6,850) Non-current liabilitiesOther payables - (151) - -Deferred income tax liabilities 10 (955) (2,137) - - TOTAL LIABILITIES (31,574) (16,274) (1,045) (8,853) NET ASSETS 125,994 124,217 243,855 225,367 Share capital 23 157,283 148,745 122,011 113,473Merger reserve 15 - - 112,174 112,174Other reserves 11,767 4,153 11,767 4,153Accumulated deficit (43,056) (28,681) (2,097) (4,433) TOTAL EQUITY 125,994 124,217 243,855 225,367 (1) As restated - See note 30 Approved by the Board on 29 March 2007 Paul Ellis Chris Hearne Chief Executive Officer Finance Director ________________________________ _____________________________________ Serica Energy plc Statement of Changes in Equity For the year ended 31 December 2006 Group Share capital Other reserves Accum'd Total deficit US$000 US$000 US$000 US$000At 1 January 2005 previously reported 33,047 256 (14,828) 18,475Impact of fair valued warrants (1) - - (3,329) (3,329) At 1 January 2005 as restated (1) 33,047 256 (18,157) 15,146Issue of shares 105,418 - - 105,418Conversion of warrants 10,190 - - 10,190Issue of 'A' share 90 - - 90Share-based payments - 1,013 - 1,013Loss for the year - - (10,524) (10,524)Fair value of warrants converted (1) - 2,884 - 2,884At 1 January 2006 (1) 148,745 4,153 (28,681) 124,217 Conversion of warrants 8,530 - - 8,530Conversion of options 35 - - 35Issue of shares (net) (27) - - (27)Share-based payments - 1,918 - 1,918Loss for the year - - (14,375) (14,375)Fair value of warrants converted - 5,696 - 5,696At 31 December 2006 157,283 11,767 (43,056) 125,994 Company Share Other Accum'd Total capital reserves deficit Merger reserve US$000 US$000 US$000 US$000 US$000 At incorporation - 12 May 2005 - - - - -Share reorganisation (1) 7,475 112,174 3,624 (3,624) 119,649Issue of 'A' share 90 - - - 90Issue of shares (net) 105,418 - - - 105,418Conversion of warrants 490 - - - 490Share-based payments - - 383 - 383Loss for the period - - - (809) (809)Fair value of warrants converted - - 146 - 146At 1 January 2006 (1) 113,473 112,174 4,153 (4,433) 225,367 Conversion of warrants 8,530 - - - 8,530Conversion of options 35 - - - 35Issue of shares (net) (27) - - - (27)Share-based payments - - 1,918 - 1,918Profit for the year - - - 2,336 2,336Fair value of warrants converted - - 5,696 - 5,696 At 31 December 2006 122,011 112,174 11,767 (2,097) 243,855 (1) As restated - See note 30 Serica Energy plc Cash Flow Statement For the year ended 31 December 2006 Group 2005 (1) Company 2005 (1) 2006 US$000 2006 US$000 US$000 US$000Cash flows from operating activities:Operating loss (22,799) (13,359) (1,376) (1,041) Adjustments for:Depreciation, depletion and amortisation 95 30 - -Asset write offs 12,870 - - -Share-based payments 1,918 1,013 1,918 383Change in fair value of share warrants (1) (1,154) 6,405 (1,154) 462Foreign exchange loss on investment - 417 - -Changes in working capital (10,813) 2,184 (122) 326Cash generated from operations (19,883) (3,310) (734) 130 Taxes received 35 179 - - Net cash (out)/inflow from operations (19,848) (3,131) (734) 130 Cash flows from investing activitiesInterest received 4,999 292 3,872 -Purchase of property, plant and equipment (411) (50) - - Purchase of intangible exploration assets (24,190) (14,048) - -Funding provided to group subsidiaries - - (68,126) -Disposals of intangible exploration assets - 1,046 - -Proceeds from disposal of investment - 6,772 - - Net cash used in investing activities (19,602) (5,988) (64,254) - Cash proceeds from financing activities:Net proceeds from issue of shares (1,559) 106,950 (1,559) 106,950Proceeds on exercise of warrants/options 8,565 10,190 8,565 - Net cash from financing activities 7,006 117,140 7,006 106,950 Net (decrease)/increase in cash and 108,021 107,080 cash equivalents (32,444) (57,982)Cash and cash equivalents at 1 January 109,750 1,729 107,080 -Cash and cash equivalents at 31 December 77,306 109,750 49,098 107,080 (1) As restated - See note 30 Serica Energy plc Notes to the Financial Statements 1. Authorisation of the Financial Statements and Statement of Compliancewith IFRS The Group's and Company's financial statements for the year ended 31 December2006 were authorised for issue by the Board of Directors on 29 March 2007 andthe balance sheets were signed on the Board's behalf by Paul Ellis and ChrisHearne. Serica Energy plc is a public limited company incorporated and domiciledin England & Wales. The principal activity of the Company and the Group is toidentify, acquire and subsequently exploit oil and gas reserves primarily inAsia and Europe. The Company's ordinary shares are traded on AIM and the TSXV. The Group's financial statements have been prepared in accordance withInternational Financial Reporting Standards ("IFRS") as adopted by the EU asthey apply to the financial statements of the Group for the year ended 31December 2006. The Company's financial statements have been prepared inaccordance with IFRS as adopted by the EU as they apply to the financialstatements of the Company for the period ended 31 December 2006 and as appliedin accordance with the provisions of the Companies Act 1985. The Group andCompany's financial statements are also consistent with IFRS as issued by theIASB. The principal accounting policies adopted by the Group and by the Companyare set out in note 2. The Company has taken advantage of the exemption provided under section 230 ofthe Companies Act 1985 not to publish its individual income statement andrelated notes. The surplus dealt with in the financial statements of the parentCompany was US$2,336,000. On 1 September 2005, the Company completed a reorganisation (the "Reorganisation"). whereby the common shares of Serica Energy Corporation were automaticallyexchanged on a one-for-one basis for ordinary shares of Serica Energy plc, anewly formed company incorporated under the laws of the United Kingdom. Inaddition, each shareholder of the Corporation received beneficial ownership ofpart of the 'A' share of Serica Energy plc issued to meet the requirements ofpublic companies under the United Kingdom jurisdiction. Under IFRS thisreorganisation was considered to be a reverse takeover by Serica EnergyCorporation and as such the financial statements of the Group represent acontinuation of Serica Energy Corporation. As detailed in Note 30, the Group and the Company have made certain restatementsto the comparative year's balances. All prior year comparatives in affectednotes to the Group and Company accounts have been restated to reflect theserestatements. 2. Accounting Policies Basis of Preparation The accounting policies which follow set out those policies which apply inpreparing the financial statements for the year ended 31 December 2006. The Group and Company financial statements are presented in US dollars and allvalues are rounded to the nearest thousand dollars (US$000) except whenotherwise indicated. Use of Estimates and key sources of estimation uncertainty The preparation of financial statements in conformity with IFRS requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities as well as the disclosure of contingent assets andliabilities at the balance sheet date and the reported amounts of revenues andexpenses during the reporting period. Actual outcomes could differ from thoseestimates. The key sources of estimation uncertainty that has a significant risk of causingmaterial adjustment to the carrying amounts of assets and liabilities within thenext financial year are the estimation of share-based payment costs and theimpairment of intangible exploration assets (E&E assets). The estimation ofshare-based payment costs requires the selection of an appropriate valuationmodel, consideration as to the inputs necessary for the valuation model chosenand the estimation of the number of awards that will ultimately vest, inputs forwhich arise from judgements relating to the continuing participation ofemployees (see note 25). The Group determines whether E&E assets are impaired in cash-generating unitsdefined on a geographical segment basis when facts and circumstances suggestthat the carrying amount of a cash-generating unit may exceed its recoverableamount. As recoverable amounts are determined based upon risked potential, orwhere relevant, discovered oil and gas reserves, this involves estimations andthe selection of a suitable discount rate. The capitalisation and any write offof E&E assets necessarily involve certain judgements with regard to whether theasset will ultimately prove to be recoverable. Basis of Consolidation The consolidated financial statements include the accounts of Serica Energy plc(the "Company") and its wholly owned subsidiaries Serica Energy Corporation,Serica Energy Holdings B.V., Asia Petroleum Development Limited, PetroleumDevelopment Associates (Asia) Limited, Serica Energia Iberica S.L., FirstearlLimited, Serica Energy (UK) Limited, PDA Lematang Limited, APD (Asahan) Limited,APD (Biliton) Limited, APD (Glagah Kambuna) Limited, Serica Energy Pte Limited,Serica Kutei B.V. and Serica Nam Con Son B.V.. Together these comprise the"Group". All significant inter-company balances and transactions have been eliminatedupon consolidation. Foreign Currency Translation The functional and presentational currency of Serica Energy plc and all itssubsidiaries is US dollars. Transactions in foreign currencies are initially recorded at the functionalcurrency rate ruling at the date of the transaction. Monetary assets andliabilities denominated in foreign currencies are retranslated at the foreigncurrency rate of exchange ruling at the balance sheet date and differences aretaken to the income statement. Non-monetary items that are measured in terms ofhistorical cost in a foreign currency are translated using the exchange rate asat the date of initial transaction. Non-monetary items measured at fair value ina foreign currency are translated using the exchange rate at the date when thefair value was determined. Exchange gains and losses arising from translationare charged to the income statement as an operating item. Business Combinations and Goodwill Business combinations are accounted for using the purchase method of accounting.The purchase price of an acquisition is measured as the cash paid plus the fairvalue of other assets given, equity instruments issued and liabilities incurredor assumed at the date of exchange, plus costs directly attributable to theacquisition. Goodwill on acquisition is initially measured at cost being the excess ofpurchase price over the fair market value of identifiable assets, liabilitiesand contingent liabilities acquired. Following initial acquisition it ismeasured at cost less any accumulated impairment losses. Goodwill is notamortised but is subject to an impairment test at least annually and morefrequently if events or changes in circumstances indicate that the carryingvalue may be impaired. At the acquisition date, any goodwill acquired is allocated to each of thecash-generating units (business segments) expected to benefit from thecombination's synergies. Impairment is determined by assessing the recoverableamount of the cash-generating unit to which the goodwill relates. Where therecoverable amount of the cash-generating unit is less than the carrying amount,an impairment loss is recognised. Reverse takeovers Certain acquisitions whereby the substance of the acquisition is that theacquirer is the entity whose equity interests have been acquired, and theissuing entity is the acquiree, are considered to represent a reverse takeover.The legal subsidiary being acquired is the acquirer if it has the power togovern the financial and operating policies of the legal parent so as to obtainbenefits from its activities. Reverse takeovers are treated as a business combination whereby the consolidatedfinancial statements prepared following the takeover represent a continuation ofthe financial statements of the legal subsidiary acquired. Joint Venture Activities The Group conducts petroleum and natural gas exploration and productionactivities jointly with other venturers who each have direct ownership in andjointly control the assets of the ventures. These are classified as jointlycontrolled assets and consequently, these financial statements reflect only theGroup's proportionate interest in such activities. In accordance with industry practice, the Group does not record its share ofcosts that are 'carried' by third parties in relation to its farm-in agreements.Similarly, while the Group has agreed to carry the costs of another party to aJoint Operating Agreement ("JOA") in order to earn additional equity, it recordsits paying interest that incorporates the additional contribution over itsequity share. Full details of Serica's working interests in those petroleum and natural gasexploration and production activities classified as jointly controlled assetsare included the Review of Operations on pages 8 and 12. Upon the successful development of an oil or gas field in a contract area, thecumulative excess of paying interest over working interest in that contract isgenerally repaid out of the field production revenue attributable to the carriedinterest holder. Exploration and Evaluation Assets As allowed under IFRS 6 and in accordance with clarification issued by theInternational Financial Reporting Interpretations Committee, the Group hascontinued to apply its existing accounting policy to exploration and evaluationactivity, subject to the specific requirements of IFRS 6. The Group willcontinue to monitor the application of these policies in light of expectedfuture guidance on accounting for oil and gas activities. Pre-licence Award Costs Costs incurred prior to the award of oil and gas licences, concessions and otherexploration rights are expensed in the income statement. Exploration and Evaluation The costs of exploring for and evaluating oil and gas properties, including thecosts of acquiring rights to explore, geological and geophysical studies,exploratory drilling and directly related overheads, are capitalised andclassified as intangible exploration assets (E&E assets). These costs areallocated to cost pools based upon three geographical segments; Indonesia, UK &North West Europe and Spain. E&E assets are not amortised prior to the conclusion of appraisal activities butare assessed for impairment in cash-generating units defined on a geographicalsegment basis when facts and circumstances suggest that the carrying amount of acash-generating unit may exceed its recoverable amount. Recoverable amounts aredetermined based upon risked potential, and where relevant, discovered oil andgas reserves. When an impairment test indicates an excess of carrying valuecompared to the recoverable amount, the carrying value of the cost pool iswritten down to the recoverable amount in accordance with IAS 36. Such excess isexpensed in the income statement. Costs of relinquished licences are expensed in the income statement. The E&E phase is completed when either the technical feasibility and commercialviability of extracting a mineral resource are demonstrable or no furtherprospectivity is recognised. At that point, if commercial reserves have beendiscovered, the carrying value of the relevant assets, net of any impairmentwrite-down, is classified as a development asset and tested for impairment. Ifcommercial reserves have not been discovered then the costs of such assets willbe retained within the relevant geographical E&E segment until subject toimpairment or relinquishment. Asset Purchases and Disposals When a commercial transaction involves the exchange of E&E assets of similarsize and characteristics, no fair value calculation is performed. Thecapitalised costs of the asset being sold are transferred to the asset beingacquired. Decommissioning Liabilities for decommissioning costs are recognised when the Group has anobligation to dismantle and remove a production, transportation or processingfacility and to restore the site on which it is located. Liabilities may ariseupon construction of such facilities, upon acquisition or through a subsequentchange in legislation or regulations. The amount recognised is the estimatedvalue of future expenditure determined in accordance with local conditions andrequirements. A corresponding tangible item of property, plant and equipmentequivalent to the provision is also created. The Group did not carry anyprovision for decommissioning costs during 2005 or 2006. Any changes in the present value of the estimated expenditure is added to ordeducted from the cost of the assets to which it relates. The adjusteddepreciable amount of the asset is then depreciated prospectively over itsremaining useful life. Property, Plant and Equipment Computer equipment and fixtures, fittings and equipment are recorded at cost astangible assets. The straight-line method of depreciation is used to depreciatethe cost of these assets over their estimated useful lives. Computer equipmentis depreciated over three years and fixtures, fittings and equipment over fouryears. Inventories Inventories are valued at the lower of cost and net realisable value. Cost isdetermined by the first-in first-out method and comprises direct purchase costsand transportation expenses. Investments In its separate financial statements the Company recognises its investments insubsidiaries at cost. Financial instruments Financial instruments comprise financial assets, financial liabilities andequity instruments. Trade and other receivables, which generally have 30-90 day terms, arerecognised and carried at original invoice amount less an allowance for anyuncollectible amounts. Bad debts are written off when identified. Financial assets comprise investments and are initially recognised at fair valueplus transaction costs that are directly attributable to the acquisition orissue of the financial asset or financial liability. Amortised cost iscalculated by taking into account any discount or premium on acquisition overthe period to maturity. For investments carried at amortised cost, gains and losses are recognised inincome when the investments are de-recognised or impaired, as well as throughthe amortisation process. Cash and cash equivalents include balances with banks and short-term investmentswith original maturities of three months or less at the date acquired. Financial liabilities include outstanding share warrants which are carried atfair value. Changes in fair value are recognised in the income statement forthe period. Revenue Recognition Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group and the revenue can be reliably measured.Revenue from oil and natural gas production is recognised on an entitlementbasis for the Group's net working interest. Finance Revenue Finance revenue chiefly comprises interest income from cash deposits on thebasis of the effective interest rate method and is disclosed separately on theface of the income statement. Share-Based Payment Transactions The Company operates equity settled schemes under which employees may be awardedshare options from time-to-time. The fair value of each option at the date ofthe grant is estimated using an appropriate pricing model based upon the optionprice, the share price at the date of issue, volatility and the life of theoption. It is assumed that all performance criteria are met. No expense is recognised for awards that do not ultimately vest, except forawards where vesting is conditional on a market condition. In this case suchawards are treated as vesting provided that all other performance conditions aresatisfied. At each balance sheet date before vesting, the cumulative expense is calculated,representing the extent to which the vesting period has expired and management'sbest estimate of the achievement or otherwise of non-market conditions and ofthe number of equity instruments that will ultimately vest or, in the case of aninstrument subject to a market condition, be treated as vesting as describedabove. The movement in cumulative expense since the previous balance sheet dateis recognised in the income statement, with a corresponding entry in equity.Estimated associated national insurance charges are expensed in the incomestatement on an accruals basis. Share Warrants The fair value of each outstanding warrant is estimated using a Black Scholespricing model based upon the warrant exercise price, the share price, volatilityand the life of the warrant. Equity Equity instruments issued by the Company are recorded at the proceeds received,net of direct issue costs. Income Taxes Deferred tax is provided using the liability method and tax rates and laws thathave been enacted or substantially enacted at the balance sheet date. Provisionis made for temporary differences at the balance sheet date between the taxbases of the assets and liabilities and their carrying amounts for financialreporting purposes. Deferred tax is provided on all temporary differences exceptfor: • temporary differences associated with investments in subsidiaries,where the timing of the reversal of the temporary differences can be controlledby the Group and it is probable that the temporary differences will not reversein the foreseeable future; and • temporary differences arising from the initial recognition of an assetor liability in a transaction that is not a business combination and, at thetime of the transaction, affects neither the income statement nor taxable profitor loss. Deferred tax assets are recognised for all deductible temporary differences, tothe extent that it is probable that taxable profits will be available againstwhich the deductible temporary differences can be utilised. Deferred tax assetand liabilities are presented net only if there is a legally enforceable rightto set off current tax assets against current tax liabilities and if thedeferred tax assets and liabilities relate to income taxes levied by the sametaxation authority. Earnings Per Share Earnings per share is calculated using the weighted average number of ordinaryshares outstanding during the period. Diluted earnings per share is calculatedbased on the weighted average number of ordinary shares outstanding during theperiod plus the weighted average number of shares that would be issued on theconversion of all potentially dilutive shares to ordinary shares. It is assumedthat any proceeds obtained on the exercise of any options and warrants would beused to purchase ordinary shares at the average price during the period. Wherethe impact of converted shares would be anti- dilutive, these are excluded fromthe calculation of diluted earnings. New standards and interpretations not applied IASB and IFRIC have issued the following standards and interpretations with aneffective date after the date of these financial statements: International Accounting Standards (IAS/IFRSs) IFRS 7 'Financial Instruments: Disclosures' - Effective date 1 January 2007 IFRS 8 'Operating Segments' - Effective date 1 January 2009 IAS 1 'Amendment - Presentation of Financial Statements: Capital Disclosures' -Effective date 1 January 2007 International Financial Reporting Interpretations Committee (IFRIC) IFRIC 7 'Applying the restatement Approach under IAS 29 Financial reporting inHyperinflationary Economies' - Effective 1 March 2006 IFRIC 8 'Scope of IFRS 2' - Effective date 1 May 2006 IFRIC 9 'Reassessment of Embedded Derivatives' - Effective date 1 June 2006 IFRIC 10 'Interim Financial Reporting and Impairment' - Effective date 1November 2006 IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions' - Effective 1 March2007 IFRIC 12 ' Service Concession Arrangements' - Effective date 1 January 2008 The Directors do not anticipate that the adoption of these statements andinterpretations will have a material impact on the Group's financial statementsin the period of initial application. Upon adoption of IFRS 7, the Group will have to disclose additional informationabout its financial instruments, their significance and the nature and extent ofrisks that they give rise to. More specifically the Group will need to disclosethe fair value of its financial instruments and its risk exposure in greaterdetail. There will be no effect on reported income or net assets. This information is provided by RNS The company news service from the London Stock Exchange
- Home
- Share Prices
- AQSE Share Prices
- Euronext
- Stock Screeners
- Share Chat
- FX
- News & RNS
- Events
- Media
- Trading Brokers
- Finance Tools
- Members
Latest Share Chat
Serica Energy Regulatory News (SQZ)
SQZ Share
Price
SQZ Share
News
SQZ Share
Chat1
SQZ Share
Trades1,729
SQZ
Live RNS
SQZ Share
Charts
SQZ Level 2
Console
SQZ Live
Share Price
SQZ Broker
Ratings
SQZ Directors
Deals
SQZ Financial
Diary
SQZ
Fundamentals
SQZ Short
Positions
SQZ
Media
Serica Energy Information
Share Price Information for Serica Energy (SQZ)
Share Price is delayed by 15 minutes
Get Live Data
Share Price:
147.30
Bid:
146.80
Ask:
147.80
Change:
2.70 (1.87%)
Spread:
1.00 (0.681%)
Open:
145.80
High:
148.40
Low:
140.00
Prev. Close:
144.60
Last checked at -
Watchlists are a member only feature
Login to your account
Don't have an account? Click here to register.Preliminary Results
Due to London Stock Exchange licensing terms, we stipulate that you must be a private investor. We apologise for the inconvenience.
To access our Live RNS you must confirm you are a private investor by using the button below.