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 license blocks in the UK, Norway, Indonesia, Ireland and Vietnam.
2006 Financial Highlights
Following the 2006 sale of its interest in the Lematang Block, Serica currently has 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 Program
Serica has a significant forward investment program. In 2007, Serica's plans include:
--Drilling one vertical well and one horizontal well to appraise its North Sea Columbus gas-condensate discovery with the possibility of production in 2009. --Drilling a development well in its Kambuna gas-condensate field in Indonesia and pressing forward with Phase I of the field development, targeting production start-up for 2008. --Drilling an appraisal well to test a possible northwest extension to the Kambuna field. --Drilling two exploration wells in its Biliton Block in Indonesia, the costs of which are largely carried by a farminee. --Drilling two exploration/appraisal wells in the Asahan PSC in Indonesia to identify further gas resources if Indonesian government approval is forthcoming. --Commencing exploration work on license blocks adjacent to the Columbus discovery to appraise its upside potential. --Commencing exploration work on license blocks awarded in Ireland and Norway, including preparations for a 2008 appraisal well to evaluate the Bream discovery in Norway. --Commencing work on new production sharing contracts awarded in Indonesia and Vietnam.
Serica has contracted the SEDCO 704 drilling rig in the North Sea and the Seadrill 5 drilling rig in Indonesia to achieve this program.
Tony Craven Walker, Non-Executive Chairman, commented:
"In 2006, with the Columbus Field discovery, Serica has established its ability both to add shareholder value through the drill-bit and to manage operational and financial risk through farm-outs and asset swaps. The management's strong operational expertise is also fully demonstrated by the quality of the license awards achieved by Serica.
"2007 will see extensive exploration, appraisal and development programs across the Company's diversified portfolio, as we move towards our objective of achieving first production in 2008."
Serica Energy plc is an international oil and gas exploration company with operations in the UK, Norway, Spain, Ireland, Indonesia and Vietnam.
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