Q2 2026 Serica Energy PLC Earnings Call

August 6, 2026

Speaker #2: Good morning and welcome to the Serica Energy PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated in the right-hand corner of your screen.

Operator 2: Good morning, welcome to the Serica Energy PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Please just simply type in your questions and press send. Before we begin, I'd like to submit the following poll. I'd like to hand you over to Chris Cox, CEO. Good morning, sir.

Operator: Good morning, welcome to the Serica Energy PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Please just simply type in your questions and press send. Before we begin, I'd like to submit the following poll. I'd like to hand you over to Chris Cox, CEO. Good morning, sir.

Speaker #2: Please simply type in your questions and press send. Before we begin, I'd like to submit the following poll. Now, I'd like to hand you over to Chris Coats, CEO.

Speaker #2: Good morning, sir.

Speaker #3: Good morning. Good morning, everyone, and welcome to Serica's 2026 half-year results presentation. I'm joined, as usual, by Martin Copeland, our CFO, and Andrew Bembo, our Head of Investor Relations.

Chris Cox: Good morning. Good morning, everyone, and welcome to Serica's 2026 H1 results presentation. I'm joined, as usual, by Martin Copeland, CFO, and Andrew Benbow, our Head of Investor Relations. Martin and I will now run through a short presentation, leaving time for Q&A afterwards. I'm pleased to say this has been a very strong period for Serica. We've been working hard across our asset base to increase reliability, and this has driven a material increase in production, with Q2 averaging 50,000 barrels a day. In turn, of course, supported by the stronger than forecast commodity prices, we have generated material cash flows, turning a net debt position of $200 million at the start of the year into net cash of $26 million by the middle of the year. We've also made significant strategic moves to support our growth and deliver value to our shareholders.

Speaker #3: Martin and I will now run through a short presentation, leaving time for Q&A afterwards. I'm pleased to say this has been a very strong period for Serica.

Speaker #3: We’ve been working hard across our asset base to increase reliability, and this has driven a material increase in production, with Q2 averaging 50,000 barrels a day.

Speaker #3: In turn, of course, supported by the stronger-than-forecast commodity prices, we have generated material cash flows, turning a net debt position of $200 million at the start of the year into net cash of $26 million by the middle of the year.

Speaker #3: We've also made significant strategic moves to support our growth and deliver value to our shareholders. We've got our financing and refinancing done, giving us a strong liquidity position and allowing us significant flexibility as we enter the next phase of organic investment and portfolio growth.

Chris Cox: We've got our refinancing done, giving us a strong liquidity position, allowing us significant flexibility as we enter the next phase of organic investment and portfolio growth. We expect very soon to be able to confirm the contracting of a rig to deliver the start of our high-impact and rapid return organic growth projects in the UK North Sea, continue to seek further opportunities to deliver shareholder value via M&A. In the period, we completed the acquisition of non-operated stakes in Catcher and Golden Eagle from ONE-Dyas, prior to that, operated assets west of Shetland from TotalEnergies. We continue to see that as an area with huge potential for Serica, as well as a critical basin in supporting the UK's gas needs well into the next decade.

Speaker #3: We expect to be able to confirm very soon the contracting of a rig to deliver the start of our high-impact and rapid-return organic growth projects in the UK North Sea. We will continue to seek further opportunities to deliver shareholder value via M&A.

Speaker #3: In the period, we completed the acquisition of non-operated stakes in Catcher and Golden Eagle from ONE-Dyas, and prior to that, operated assets West of Shetland from TotalEnergies.

Speaker #3: We continue to see that as an area with huge potential for Serica, as well as a critical basin in supporting the UK's gas needs well into the next decade.

Speaker #3: As we press on with further growth in the UK, we have also taken our first step in building a truly diversified and international portfolio with the recommended acquisition of Faros Energy.

Chris Cox: As we press on with further growth in the UK, we have also made our first step in building a truly diversified and international portfolio with the recommended acquisition of Pharos Energy. Strictly speaking, this represents a re-entry into Southeast Asia for those of you with long enough memories to remember Serica's early history. More on that later. Our success is built on our production, which pleasingly averaged just over 45,000 barrels a day in the period. This is a significant step up from 2025, driven by far higher uptime across the portfolio, as well as the addition of production from new assets. The key driver for change was, of course, our Triton hub. Following a 24-day outage earlier in the year, during which essential safety-critical maintenance work was carried out, production restarted on 9 March.

Speaker #3: Strictly speaking, this represents a re-entry into Southeast Asia, for those of you with long enough memories to remember Serica's early history. More on that later.

Speaker #3: But our success is built on our production, which pleasingly averaged just over 45,000 barrels a day in the period. This is a significant step up from 2025, driven by far higher uptime across the portfolio, as well as the addition of production from new assets.

Speaker #3: The key driver for change was, of course, our Triton Hub. Following a 24-day outage earlier in the year, during which essential safety-critical maintenance work was carried out, production restarted on the 9th of March.

Speaker #3: From that date until the end of the period, Triton produced on all but two days, with uptime of over 95%. The Q2 production of 20,300 barrels a day was a far better signifier of what the asset can deliver.

Chris Cox: From that date until the end of the period, Triton produced on all but two days, with uptime of over 95%. The Q2 production of 20,300 barrels a day was a far better signifier of what the asset can deliver. H1 production was 70% higher than H2 in 2025 and over 800% higher than H1 2025. This doesn't mean that Triton is yet performing to its true capacity. We remain facilities rather than well stock constrained, a genuine rarity in the UKCS today. The focus has been on reliability. We are pleased with the work Dana has been doing and continues to do. We continue to work closely with them. The challenge is now to ensure the good work on better reliability continues whilst also optimizing for a further increase in production to deliver the true potential from the hub.

Speaker #3: And H1 production was 70% higher than H2 in 2025, and over 800% higher than H1 2025. This doesn't mean that Triton is yet performing to its true capacity.

Speaker #3: We remain facilities, rather than well stock, constrained—a genuine rarity in the UKCS today. The focus has been on reliability, and we are pleased with the work Dana has been doing and continues to do. We continue to work closely with them.

Speaker #3: The challenge is now to ensure the good work on better reliability continues, whilst also optimizing for a further increase in production to deliver the true potential from the hub.

Speaker #3: We still have production to come from Belinda, but, having said that, we do not want to take away from the fact that performance in H1 has been encouraging.

Chris Cox: We still have production to come from Belinda. Having said that, we do not want to take away from the fact that performance in H1 has been encouraging. Given the tax loss shelter we have at Triton, strong production here is also highly cash generative to the bottom line. Bruce was steady, with 86% uptime in the period. The Bruce hub can also do more. We have further strengthened the team in H1, including particularly with the arrival of Scott McGinigal as our new Chief Operating Officer. I look forward to introducing him on a future occasion once he has had a chance to get fully up to speed with the portfolio. Teams across all our assets are working hard to deliver optimized performance, especially as we are now very much into the critical turnaround maintenance season.

Speaker #3: Given the tax loss shelter we have at Triton, strong production here is also highly cash-generative to the bottom line. Bruce was steady, with 86% uptime in the period, but the Bruce Hub can also do more.

Speaker #3: We have further strengthened the team in H1, particularly with the arrival of Scott McGinagall as our new Chief Operating Officer. I look forward to introducing him on a future occasion, once he has had a chance to get fully up to speed with the portfolio.

Speaker #3: Teams across all our assets are working hard to deliver optimized performance, especially as we are now very much into the critical turnaround maintenance season.

Speaker #3: At Bruce, we are also working to ensure that the facilities are set up to deliver the expected production uplift from the resumption of drilling next year.

Chris Cox: At Bruce, we are also working to ensure that the facilities are set up to deliver the expected production uplift from the resumption of drilling next year. The addition of production from west of Shetland was notable in H1, with Lancaster producing robustly until production ceased in line with expectations in May due to the FPSO being contracted elsewhere. With the greater Laggan area then contributing well in Q2. With both our key hubs now in their annual maintenance periods, production in Q3 will always be considerably lower than the H1 average. With expectations of a very robust Q4, especially as we bring the Spirit assets into the business from 1 October, we remain firmly on track to deliver rates of over 65,000 barrels a day as we hit our stride in Q4.

Speaker #3: The addition of production from west of Shetland was notable in H1, with Lancaster producing robustly until production ceased, in line with expectations, in May due to the FPSO being contracted elsewhere, and with a greater lagon area then contributing well in Q2.

Speaker #3: With both our key hubs now in their annual maintenance periods, production in Q3 will always be considerably lower than the H1 average. But with expectations of a very robust Q4, especially as we bring the Spirit assets into the business from the 1st of October, we remain firmly on track to deliver rates of over 65,000 barrels per day as we hit our stride in Q4.

Speaker #3: Now I'll hand over to Martin to discuss how this robust H1 performance is translated into cash flow.

Chris Cox: Now I'll hand over to Martin to discuss how this robust H1 performance has translated into cash flow.

Speaker #2: Thanks, Chris. It is indeed good to be presenting today a set of results which show that the confidence we have always had in the core robustness of our business is paying off in a period that combines strong operational performance with stronger commodity prices.

Martin Copeland: Thanks, Chris. It is indeed good to be presenting today a set of results which show that the confidence we have always had in the core robustness of our business is paying off in a period that combines strong operational performance with stronger commodity prices. Revenue in H1 was more than double the prior year period, with the key driver being production up 20,000 barrels of oil equivalent per day on the comparable period last year, as well as the average realized oil price up 33% at $93 a barrel and realized gas prices of GBP 1.01 a therm, roughly 50% up year on year. Insurance price we pay for protecting the downside and as required under our RBL.

Speaker #2: Revenue in H1 was more than double the prior year period, with the key driver being production up 20,000 barrels of oil equivalent per day on the comparable period last year.

Speaker #2: As well as the average realized oil price, up 33% at $93 a barrel, and realized gas prices of 101 pence a therm, roughly 50% up year on year.

Speaker #2: Insurance price we pay for protecting the downside, and as required under our RBL. Despite realized hedging losses of $89 million, or just under $11 per barrel of oil equivalent, we still realized a post-hedging oil price of $73 per barrel and 97 pence per therm for gas.

Martin Copeland: Despite realized hedging losses of $89 million, or just under $11 a barrel of oil equivalent, we still realized a post-hedging oil price of $73 a barrel and GBP 0.97 per therm for gas. As should be apparent from this, the impact of hedging was considerably more skewed to oil than to gas, which is in part because the higher tax exposure we have in our gas assets acts somewhat as a natural hedge. We've included, as usual, our updated hedge position in the appendix of this deck, but what I can say is that we've not added material new hedge positions since early March.

Speaker #2: As should be apparent from this, the impact of hedging was considerably more skewed to oil than to gas, which is in part because the higher tax exposure we have in our gas assets acts somewhat as a natural hedge.

Speaker #2: We've included, as usual, our updated hedge position in the appendix of this deck. What I can say is that we've not added any material new hedge positions since early March.

Speaker #2: Operating and lifting costs in the period were $247 million, as reported, but were inflated by the high cost of Lancaster, which included FPSO lease costs for a vessel sized for considerably more than the 6,000 barrels of oil equivalent per day the field was producing before it ceased production in May.

Martin Copeland: Operating and lifting costs in the period were $247 million as reported, but were inflated by the high cost of Lancaster, which included FPSO lease costs for a vessel sized for considerably more than the 6,000 barrels of oil equivalent per day the field was producing before it ceased production in May, which meant its costs were around $89 per barrel. With those costs now removed, the underlying portfolio has a creditable operating and lifting cost of just under $25 per barrel of oil equivalent, more appropriately representing our relatively low breakeven and material cash generative capacity. The corollary of materially increased business activity and higher prices was a larger than normal working capital outflow of just over $50 million. We still generated a very robust post-tax CFFO of $280 million, which equates to nearly $40 per barrel oil equivalent.

Speaker #2: Which meant its costs were around $89 per barrel. With those costs now removed, the underlying portfolio has a credible operating and lifting cost of just under $25 per barrel of oil equivalent.

Speaker #2: More appropriately representing our relatively low break-even and material cash-generative capacity. The corollary of materially increased business activity and higher prices was a larger-than-normal working capital outflow of just over $50 million.

Speaker #2: But we still generated a very robust post-tax CFFO of $280 million, which equates to nearly $40 per barrel of oil equivalent. This is the KPI against which we peg our refreshed distribution policy, and although we will only apply the 15% to 30% ratio in the context of the full year, it is worth noting the H1 tax position, as the metric is, of course, post-tax.

Martin Copeland: This is the KPI against which we peg our refreshed distribution policy. Although we will only apply the 15% to 30% ratio in the context of the full year, it is worth noting the H1 tax position as the metric is, of course, post-tax. In the H1, we actually received $9 million from a tax rebate due to a slight overpayment of tax in 2025, and no net payment owing in January. The accounting current tax charge for the period was $60 million. We would expect that cash tax payments will of course come in H2 as we make installment tax payments in July and October. For instance, having paid just over $25 million last month.

Speaker #2: In the first half of the year, we actually received $9 million from a tax rebate due to a slight overpayment of tax in 2025, and no net payment owing in January.

Speaker #2: However, the accounting current tax charge for the period was $60 million, and we would expect that cash tax payments will, of course, come in H2.

Speaker #2: As we make installment tax payments in July and October—with, for instance, having paid just over $25 million last month—the phasing of tax payments, together with both dividend payments falling in the second half and the fact that some of our maintenance occurs in Q3 and hence reduces production, are the key reasons why our cash generation is naturally biased towards the first half of the year.

Martin Copeland: The phasing of tax payments, together with both dividend payments falling in the H2, and the fact that summer maintenance occurs in Q3 and hence reduces production, are the key reasons why our cash generation is naturally biased towards the H1. As you can see, the cash build in H1 was impressive, with just under $300 million added to our cash position in the period. As well as the underlying strength of the business, it's worth noting the receipt of $69 million in total on completion of the deals with TotalEnergies and ONE-Dyas, which represented the post-tax interim cash flows from the historic effective dates of those transactions, and which further boosted our cash. These are, of course, not run rate items that we will see in H2.

Speaker #2: And as you can see, the cash build in H1 was impressive, with just under $300 million added to our cash position in the period.

Speaker #2: As well as the underlying strength of the business, it's worth noting the receipt of $69 million in total on completion of the deals with TotalEnergies and 1DS.

Speaker #2: Which represented the post-tax interim cash flows from the historic effective dates of those transactions, and which further boosted our cash. These are, of course, not run-rate items that we will see in H2.

Speaker #2: As we've also announced today, now that we have more specific timing for and details of the completion of the Spirit Energy transaction, due to occur in the early hours of the 1st of October, we also expect just under $40 million to be paid out on completion for this deal after we factor in completion adjustments for the $57 million agreed purchase price, and the offsetting, but fully 78% tax-affected pre-completion cash flows.

Martin Copeland: We've also announced today, now that we have more specific timing for and details of completion of the Spirit Energy transaction due to occur in the early hours of the 1st of October. We also expect just under GBP 40 million to be paid out on completion for this deal after refactoring completion adjustments for the GBP 57 million agreed purchase price, and the offsetting, but fully 78% tax-affected pre-completion cash flows. However, we are seeing considerably stronger gas prices than our acquisition case. The Spirit asset cash flows will be considerably more tax-efficient in our hands post-completion. We announced the Spirit deal. We stated an expectation that the assets would generate around $100 million in free cash flow by the end of 2028. We now expect the free cash flow to be more than double that figure.

Speaker #2: We are, however, seeing considerably stronger gas prices than our acquisition case, and the Spirit asset cash flows will be considerably more tax-efficient in our hands post-completion.

Speaker #2: When we announced the Spirit deal, we stated an expectation that the assets would generate around $100 million in free cash flow by the end of 2028.

Speaker #2: We now expect free cash flow to be more than double that figure. Including these cash flows from the 1st of October, we expect to return to material cash generation in a robust fourth quarter of the year.

Martin Copeland: Including these cash flows from the 1st of October, we expect to return to material cash generation in a robust Q4. Of course, the best time to fix the roof is when the sun is shining. With this in mind, we are very pleased that we took proactive steps to optimize our liquidity position during the H1. To set us up very strongly ahead of the exciting growth investment that we're set to make in our UK portfolio, while also enabling us to remain active and opportunistic in M&A. Firstly, we took advantage of positive market conditions to make our first step into the Nordic bond market, raising $300 million with a term of five years and at a very attractive fixed interest rate.

Speaker #2: And, of course, the best time to fix the roof is when the sun is shining. With this in mind, we are very pleased that we took proactive steps to optimize our liquidity position during the half.

Speaker #2: To set us up very strongly ahead of the exciting growth investment that we're set to make in our UK portfolio, while also enabling us to remain active and opportunistic in M&A.

Speaker #2: Firstly, we took advantage of positive market conditions to make our first step into the Nordic bond market, raising $300 million with a term of five years at a very attractive fixed interest rate.

Speaker #2: The debt under our bond forms the core debt in our capital structure and is complemented by our refinanced RBL facility, which we signed and completed in July.

Martin Copeland: The debt under our bond forms the core debt in our capital structure and is complemented by our refinanced RBL facility, which we signed and completed in July. The new bank facilities are $750 million, split into a $500 million revolving loan facility and a separate $250 million tranche for issuing letters of credit. The initial borrowing base under the RBL is $458 million, and the facility is fully undrawn. This bank-committed funding, combined with the $326 million of cash we had at the end of June, resulted in pro forma liquidity of not far off $800 million. We'd like to thank our counterparties in the fixed income investors and banks who have helped deliver this solid platform of liquidity, which together with continued robust cash generation, will enable us to invest in our organic growth opportunities whilst also remaining nimble and opportunistic for M&A opportunities as they arise.

Speaker #2: The new bank facilities are $750 million, split into a $500 million revolving loan facility and a separate $250 million tranche for issuing letters of credit.

Speaker #2: The initial borrowing base under the RBL is $458 million, and the facility is fully undrawn. This bank-committed funding, combined with the $326 million of cash we had at the end of June, resulted in pro forma liquidity of not far off $800 million.

Speaker #2: We would like to thank our counterparties in the fixed income investors and banks who have helped deliver this solid platform of liquidity, which, together with continued robust cash generation, will enable us to invest in our organic growth opportunities whilst also remaining nimble and opportunistic for M&A opportunities as they arise.

Speaker #2: And we remain committed to predictable and material shareholder returns. We have today declared our interim dividend at 6p per share, the same level as 2025, with our final dividend for the year being calculated in accordance with our policy of 15% to 30% of post-tax CFFO.

Martin Copeland: We remain committed to predictable and material shareholder returns. We have today declared our interim dividend at GBP 0.06 per share, the same level as 2025, with our final dividend for the year being calculated in accordance with our policy of 15% to 30% of post-tax CFFO. The GBP 0.06 interim would correspond to only about 11% of the H1 post-tax CFFO. If we were to maintain the full year at GBP 0.16, that would be comfortably within our payout ratio guardrails at around 18% of the midpoint of our $450 to 475 million post-tax CFFO full-year guidance. We will only determine our overall shareholder distribution based on the full-year audited numbers. We are confident that our financial frame gives us the flexibility to balance healthy distributions to shareholders with investment to maximize value generation through organic growth and acquisitions.

Speaker #2: The 6p interim would correspond to only about 11% of the H1 post-tax CFFO. And if we were to maintain the full year at 16p, that would be comfortably within our payout ratio guardrails, at around 18% of the midpoint of our £450 to £475 million post-tax CFFO full-year guidance.

Speaker #2: We will only determine our overall shareholder distribution based on the full-year audited numbers. But we are confident that our financial framework gives us the flexibility to balance healthy distributions to shareholders with investment to maximize value generation through organic growth and acquisitions.

Speaker #2: And we believe there are great opportunities to create material value for shareholders. Thanks to strong financing partners and the support we enjoy from them, we have the capital available to take advantage of these opportunities and deliver.

Martin Copeland: We believe there are great opportunities to create material value for shareholders. Thanks to strong financing partners and the support we enjoy from them, we have the capital available to take advantage of them and deliver. With that, back to Chris to remind people of some of these opportunities.

Speaker #2: And with that, back to Chris to remind people of some of these opportunities.

Speaker #1: Thanks, Martin. As we detailed at our Capital Markets Day, we have an exciting array of projects. Kyler, Glenn Dronnock, and others have the potential to deliver material production uplifts, totaling a possible incremental 30,000 barrels a day, and delivering rates of return over 40%.

Chris Cox: Thanks, Martin. As we detailed at our Capital Markets Day, we have an exciting array of Kyla, Glendronach, and others have the potential to deliver material production uplifts totaling a possible incremental 30,000 barrels a day and delivering rates of return over 40%. I'm pleased to say that we are now close to signing a contract for a rig to deliver the start of this drilling program. We are looking to obtain a rig for an initial 400-day duration with options to extend. Drilling is expected to begin in Q3 next year, and it is most likely that we will begin at Bruce with the south central east and south central west wells. After 15 years without a well being drilled in the Bruce field, this is a great opportunity to go after, potentially adding 10,000 barrels a day with production starting within a year of drilling commencement.

Speaker #1: I'm pleased to say that we're now close to signing a contract for a rig to deliver the start of this drilling program. We're looking to obtain a rig for an initial 400-day duration, with options to extend.

Speaker #1: Drilling is expected to begin in Q3 next year, and it is most likely that we will begin at Bruce with the South Central East and South Central West wells.

Speaker #1: After 15 years without a well being drilled in the Bruce field, this is a great opportunity to pursue—potentially adding 10,000 barrels a day, with production starting within a year of drilling commencement.

Speaker #1: As a reminder, this drilling would be highly tax-efficient, and it's the logical place to start, as the regulatory approval process is simpler than for other opportunities in the portfolio due to the fact that it's infill drilling in an existing producing field.

Chris Cox: As a reminder, this drilling would be highly tax efficient and is the logical place to start as the regulatory approval process is simpler than for other opportunities in the portfolio due to the fact that it is infill drilling in an existing producing field. After that, there is the potential for the rig to move to Kyla or head west of Shetland for Glendronach. Both opportunities are also looking attractive. While we are focused on our operated program, it is also worth noting the organic growth on our newly acquired and the yet to be acquired assets with drilling set for Catcher and ongoing at Cygnus. We also continue to seek inorganic growth. The key strategic move made in this regard came post-period end with the announced recommended offer for Pharos Energy, a deal consistent with the strategic aims we outlined at the Capital Markets Day.

Speaker #1: After that, there is the potential for the rig to move to Kyler or head west of Shetland for Glenn Dronach. Both opportunities are also looking attractive.

Speaker #1: While we are focused on our operated program, it is also worth noting the organic growth on our newly acquired, and the yet-to-be acquired, assets, with drilling set for Catcher and ongoing at Cygnus.

Speaker #1: And we also continue to seek inorganic growth. The key strategic move made in this regard came post-period end, with the announced recommended offer for Pharos Energy.

Speaker #1: A deal consistent with the strategic aims we outlined at the Capital Markets Day. It provides us with a first step in building an international platform, with room for further growth at an attractive price.

Chris Cox: It provides us with a first step in building an international platform with room for further growth at an attractive price. Pharos is a materially cash generative business, meaning the deal offers rapid payback accretive across all key metrics. The acquisition cost per 2P barrel compares favorably with recent precedent transactions in the relevant countries. Upon completion, the transaction will boost our reserves and resources by 13% and 15% respectively and add materially cash generative production. The acquisition of Pharos adds a highly complementary business to ours. Similar to Serica, the business has a history of being a cash generative dividend payer, aiming to offer both growth and returns. We believe that the assets will continue to generate cash while being part of a company better placed to deliver further growth from the asset base and from further business development opportunities around them.

Speaker #1: Pharos is a materially cash-generative business, meaning the deal offers rapid payback and is accretive across all key metrics. The acquisition cost per 2P barrel compares favorably with recent precedent transactions in the relevant countries, and upon completion, the transaction will boost our reserves and resources by 13% and 15%, respectively, and add materially cash-generative production.

Speaker #1: The acquisition of Pharos adds a highly complementary business to ours. Similar to Serica, the business has a history of being a cash-generative, dividend payer, aiming to offer both growth and returns.

Speaker #1: We believe that the assets will continue to generate cash, while being part of a company better placed to deliver further growth from the asset base and from additional business development opportunities around them.

Speaker #1: This further cash generation and growth potential complements—and does not reduce—our commitment to the UK, and is an ideal springboard for further growth in Southeast Asia.

Chris Cox: This further cash generation and growth potential complements and does not reduce our commitment to the UK and is an ideal springboard for further growth in Southeast Asia. It is, of course, far from complete, but we are hopeful that we will see it added to our portfolio next year. It is not the end of our inorganic growth aims. We have an excellent team and the financial capability to move quickly to take advantage of opportunities. We are certainly not ignoring the UK, although the recent wave of consolidation means that there is inevitably not quite the same number of opportunities available. Our team is also looking overseas at areas which can deliver Serica's strategy, with Southeast Asia standing out as somewhere that we believe growth can be delivered and acquisition opportunities are likely to be available.

Speaker #1: It is, of course, far from complete, but we are hopeful that we will see it added to our portfolio next year. And it is not the end of our inorganic growth aims.

Speaker #1: We have an excellent team and the financial capability to move quickly to take advantage of opportunities. We are certainly not ignoring the UK, although the recent wave of consolidation means that there are inevitably not quite the same number of opportunities available.

Speaker #1: Our team is also looking overseas at areas which can deliver Serica's strategy, with Southeast Asia standing out as somewhere that we believe growth can be delivered and acquisition opportunities are likely to be available.

Speaker #1: This is not at the expense of UK growth, but works alongside it. We continue to build a robust business with an attractive long-term future, delivering material value for our shareholders, and we are working hard to deliver on this ambition.

Chris Cox: This is not at the expense of UK growth, but working alongside it. We are continuing to build a robust business with an attractive long-term future, delivering material value for our shareholders. We are working hard to deliver this ambition. We are on track so far in 2026. Our production expectation post the acquisition of Spirit Energy remains 65,000 barrels a day. That acquisition is now set to complete on 1 October. The fact that this additional production will not now start before Q4 has slightly impacted our guidance for the year. Notwithstanding this, our production is still expected to be over 40,000 barrels a day for 2026, and our post-tax cash flow from operations is expected to be in the range $450 to 475 million.

Speaker #1: And we're on track so far in 2026. Our production expectation post the acquisition of Spirit Energy remains 65,000 barrels a day. That acquisition is now set to complete on the 1st of October.

Speaker #1: The fact that this additional production will not now start before Q4 has slightly impacted our guidance for the year. But notwithstanding this, our production is still expected to be over 40,000 barrels a day for 2026.

Speaker #1: And our post-tax cash flow from operations is expected to be in the range of $450 to $475 million. We are in a strong position and continue to look forward to taking that to the main market later this year.

Chris Cox: We are in a strong position and continue to look forward to taking that to the Main Market later this year. The business has real momentum at present, and we want to get our story to as many potential shareholders as possible. We expect to build on this momentum. We have numerous catalysts ahead, from the signing of the rig contract through the Main Market move, completion of M&A, and further ahead, the drilling program itself. What this slide doesn't show is the value accretive M&A that we hope to deliver along the way. We feel that we're in a great position. We are highly cash generative with the ability to grow further, both through high return organic growth and through rigorous and selective M&A. As we do this, we will continue to deliver material and sustainable dividends.

Speaker #1: The business has real momentum at present, and we want to get our story to as many potential shareholders as possible. We expect to build on this momentum.

Speaker #1: We have numerous catalysts ahead, from the signing of the rig contract, through the main market move, completion of M&A, and, further ahead, the drilling program itself.

Speaker #1: And what this slide doesn't show is the value-accretive M&A that we hope to deliver along the way. We feel that we're in a great position.

Speaker #1: We are highly cash-generative, with the ability to grow further both through high-return organic growth and through rigorous and selective M&A. As we do this, we will continue to deliver material and sustainable dividends.

Speaker #1: We have a fantastic team, scaled up and ready for the growth ahead, and I believe we can deliver for all of our stakeholders. With that, I will hand over to Andrew to run the Q&A.

Chris Cox: We have a fantastic team scaled up and ready for the growth ahead, and I believe we can deliver for all of our stakeholders. With that, I will hand over to Andrew to run the Q&A.

Speaker #2: Thank you very much. First question is about Bruce. You mentioned that Bruce can do more—in what way?

Andrew Benbow: Thank you very much. First question is about Bruce. You mentioned that Bruce can do more. In what way?

Speaker #1: Yeah, we've spoken a bit about this before. So, Bruce produces most days, and as I said during the presentation, it's had decent uptime this year.

Chris Cox: We've spoken a bit about this before. Bruce produces most days. As I said during the presentation, it's had decent uptime this year. On any given day, it doesn't produce the maximum potential of all the wells we have. That's partly due to the complexity of the facilities and some wells that are high pressure back out other wells, and things like that. There's a number of things we can do there. There are individual well interventions that we need to do, to do things like scale squeeze where wells get plugged up, and every now and again, you just got to go in and flush them out. We can optimize the bullheading operation, which is where we pump high-pressure gas into the well to try and kick wells off when they're quite low pressure. We can optimize the way our compression runs.

Speaker #1: But on any given day, it doesn't produce the maximum potential of all the wells we have. And that's partly due to the complexity of the facilities and the fact that some wells that are high-pressure back out other wells, and things like that.

Speaker #1: So there are a number of things we can do. There are individual well interventions that we need to do, things like scale squeeze, where wells get plugged up and every now and again you've just got to go in and flush them out.

Speaker #1: We can optimize the bullheading operation, which is where we pump high-pressure gas into the well to try and kick wells off when they're quite low pressure.

Speaker #1: We can optimize the way our compression runs. We're looking at potential gas lifting, pressure wells, then bullheading. But it does require well interventions. One thing worth noting is, if we drill these new wells starting next year, and they come on at high rates, they're likely to help some of the low-pressure wells to flow.

Chris Cox: We're looking at potential gas lift in pressure wells than bullheading, but it does require well interventions. One thing worth noting is if we drill these new wells, starting next year and they come on at high rates, they're likely to help some of the low-pressure wells to flow. There's a lot of optimization to be done, and it's just one of those things about getting after it every day and each day saying, Have you done the maximum that you could do on that day from all of your wells? Currently the answer is no, but we're getting better.

Speaker #1: So there's a lot of optimization to be done, and it's just one of those things about getting after it every day and each day saying, "Have you done the maximum that you could do on that day from all of your wells?" And currently, the answer is no, but we're getting better.

Speaker #2: Thanks very much. A few questions for Martin now, actually. Does the improved cash flow leave room to consider buybacks as, to me—not me personally, but the person asking the question—the shares must bode?

Andrew Benbow: Thanks very much. Few questions for Martin, I think, now actually. Does the improved cash flow leave room to consider buybacks as to me, not me personally, the person asking the question? The shares must look exceptionally cheap to the board.

Speaker #3: Yeah, I mean, we obviously have got good cash flow, and I think as we said at the CMD, we're going to present a distribution policy based on payout ratio.

Martin Copeland: Yeah. Obviously we have got good cash flow, and I think as we said at the CMD, we're going to implement a distribution policy based on payout ratio. I gave the numbers in my talk there that said that if you kept the dividend at GBP 0.16, it would be 18%, which obviously is comfortably in the range of 15% to 30%. We'll only really know that when we get to the end of the year. We talk about shareholder distributions, so our bias is towards dividends. I have to say that, and that's because in most of the conversations we have with shareholders, that is the preference. We're not ruling out buybacks. They're in our armory, as it were. We got our mandate renewed at the AGM.

Speaker #3: And I gave the numbers in my talk there that said that if you kept the dividend at 16p, it would be 18%, which obviously is comfortably in the range of 15% to 30%.

Speaker #3: But we'll only really know that when we get to the end of the year. I think that when we talk about shareholder distributions, our bias is towards dividends.

Speaker #3: I have to say that, and that's because in most of the conversations we have with shareholders, that is the preference. But we're not ruling out buybacks.

Speaker #3: They're in our armory, as it were. We've got our mandate renewed at the AGM, but I think our bias will probably be more towards potentially paying an additional dividend, if we were to do that.

Martin Copeland: I think our bias will probably be more towards potentially paying an additional dividend if we were to do that. We'll also look at that as against the opportunity set we have in front of us. Chris painted what that picture is and the returns. I think we've indicated that the average return we anticipate is something like a 40% IRR. We'll always weigh that up in terms of delivering the best value for shareholders.

Speaker #3: But we'll also look at that against the opportunity set we have in front of us. And Chris painted what that picture is, and the returns, which I think we've indicated—the average return we anticipate is something like a 40% IRR.

Speaker #3: So, we'll always weigh that up in terms of delivering the best value for shareholders.

Speaker #2: I think that also answers the next question, which is: why have you held the dividend at 6p? That'll be reviewed at the end of the year.

Andrew Benbow: I think that also answers the next question, which is why have you held the dividend at USD 60? That'll be reviewed at the end of the year.

Speaker #3: Yeah, and we tried to make that clear. But it is a new policy, so it's probably just worth reiterating. Our view has always been that we aim to keep the interim kind of flat, and then look at the ratio only at the year end.

Martin Copeland: We tried to make that clear, but it is a new policy, so it's probably just worth reiterating. Our view has always been that we aim to keep the interim kind of flat, then look at the ratio only at the year-end. Partly that's just accounting prudence in the sense that we then have fully audited numbers, and we know exactly how the year's panned out, and we'll be able to apply it at that point.

Speaker #3: And partly, that's just accounting prudence, in the sense that we then have fully audited numbers, and we know exactly how the years panned out, and we'll be able to apply it at that point.

Speaker #2: Another question for you, Martin, is about our tax profit. £6.1 million after-tax profit at a time of high oil and gas prices looks rather underwhelming.

Andrew Benbow: Another question for you, Martin, is about our tax profit. USD 6.1 million after-tax profit at a time of high oil and gas prices looks rather underwhelming. Can you explain how USD 272 million gross profit becomes a USD 76 million pre-tax loss?

Speaker #2: Can you explain how £272 million gross profit becomes a £76 million pre-tax loss?

Speaker #3: Yeah, it's the fun and games of accounting relative to cash. And you'll have seen that as I presented the slides, it was really about the cash delivery.

Martin Copeland: Yeah. It's the fun and games of accounting relative to cash. You'll have seen that as I presented the slides. It was really about the cash delivery, and we certainly think that most of our investors are more focused on what we deliver in terms of cash. The real answer to that is there are two kind of relatively significant non-cash items that obviously weighed on the pre-tax profit. One of them is the mark-to-market value of our hedge book as of 30 June, and that is unrealized hedging losses. It's a point-in-time view as to the potential future value, if you like, or indeed in this instance, cost of our hedge book. It's a point in time. It just happens to be what the price or the forward curve was on 30 June.

Speaker #3: And we certainly think that most of our investors are more focused on what we deliver in terms of cash. The real answer to that is there are two kind of relatively significant non-cash items that obviously weighed on the pre-tax profit.

Speaker #3: And one of them is the mark-to-market value of our hedge book, as of the 30th of June. And that is unrealized hedging losses. So it's a it is a point in time view as to the potential future value, if you like, or indeed this in this instance, cost of our hedge book.

Speaker #3: But it's a point in time. It just happens to be what the price or the forward curve was on the 30th of June. It doesn't mean that it will pan out to be that.

Martin Copeland: It doesn't mean that it will pan out to be that in reality. In fact, we could end up in a position where those hedges are in the money by the time they come around to actually maturing. It's what you're required to do, at least under the method of accounting that we follow. That's the impact that it has on the P&L. That's one of the reasons why we do really focus on cash because that is an artifice. It's not really a fair reality of what the economic outlook is likely to be.

Speaker #3: In reality, we could end up in a position where those hedges are in the money by the time they come around to actually maturing.

Speaker #3: So it is a it's what you're required to do, at least under the method of hedge accounting of accounting that we follow. But that's the impact that it has on the P&L, so that's one of the reasons why we do really focus on cash, because that is an artifice.

Speaker #3: It's not really a fair reflection of what the economic outlook is likely to be. And the second one, I'm afraid, is even more arcane. In the acquisitions that we've done, as people will probably be aware, we are confident that we'll be creating significant value by the fact that we have a good amount of tax losses, and we've acquired tax-paying production into it.

Martin Copeland: The second one, I'm afraid, is even more arcane in the acquisitions that we've done, as people will probably be aware, we are confident that we'll be creating significant value by the fact that we have a good amount of tax losses, and we've acquired tax-paying production into it, and that is the way to realize value from those losses. That is beginning to pay off, and you can see that, at least the beginning of that, through what's coming through in the results from GLA. Remember, we've only had in on the books from completion since 26 March. The way the accounting works is even though obviously from an M&A perspective, we took that value creation into account. The accounting treatment requires you to recognize the notional value of that tax loss in your calculations.

Speaker #3: And that is the way to realize value from those that, at least in the beginning of that, through what's coming through in the results from GLA. Remember, we've only had it on the books from completion since the 26th of March.

Speaker #3: But the way the accounting works is that even though, obviously, from an M&A perspective, we took that value creation into account, the accounting treatment requires you to recognize the notional value of that tax loss in your calculations.

Speaker #3: But as in reality, we discounted it, and we took a time value of that, etc. And the difference between those two things is recognized as goodwill.

Martin Copeland: Whereas in reality, we discounted it, and we took a time value of that, et cetera. The difference between those two things is recognized as goodwill, and we think of it as technical goodwill. Essentially, it has to therefore be expensed through the P&L, and that's another GBP 95 million difference. Both of those two things hit the profit before tax, and that ends up giving us actually a loss before tax, which reverses to a very small, admittedly, net income or profit after tax. You'll actually see that mostly comes from the recognition of deferred tax asset value that creates a positive number in the tax line, so it reverses that loss. Again, though, that really is just testament to the delivery of value from the tax losses beginning to show through, and we'd expect to see more of that come the year-end as well.

Speaker #3: And we think of it as technical goodwill. And essentially, it's not— it has to therefore be expensed through the P&L. And that's another $95 million difference.

Speaker #3: So both of those two things hit the profit before tax, and that ends up giving us actually a loss before tax, which reverses to a very small—admittedly—net income, or profit after tax.

Speaker #3: But you'll actually see that, and that mostly comes from the recognition of deferred tax asset value that creates a positive number in the tax line.

Speaker #3: So it reverses that loss. Again, the delivery of value from the tax losses is beginning to show through, and we’d expect to see more of that come the year end as well.

Speaker #2: Yeah, I'd just say that there's a reason why we give the table that we do at the front of the presentation. That's because we think those are the best metrics on which to judge the strength of the business, rather than some of the technical accounting things that you see further back.

Andrew Benbow: I'd just say that there's a reason why we give the table that we do on the front of the presentation. That's because we think those are the best metrics on which to judge the strength of the business rather than some of the technical accounting things that you see further back. We've had quite a few questions on M&A come in. It's just worth reminding people that because of The Takeover Panel rules, we cannot comment on quite a few things, certainly in relation to the Pharos Energy transaction. We've had people asking about potential cash flows and things like that, and I'm afraid it's just not something we can comment on at this time. Similarly, on something we can comment on a slight tangent, we've had quite a few people who've been asking about BP's process.

Speaker #2: We've had quite a few questions on M&A come in. It's just worth reminding people that, because of Takeover Panel rules, we cannot comment on quite a few things—certainly in relation to the Faroe's Energy transaction.

Speaker #2: We've had people asking about potential cash flows and things like that, and I'm afraid it's just not something we can comment on at this time.

Speaker #2: Similarly, on something we can comment on as a slight tangent, we've had quite a few people who've been asking about BP's process. So I'll just ask one question, which is, effectively, were you surprised by BP's wish to sell its North Sea assets?

Andrew Benbow: I'll just ask one question, which is effectively, were you surprised by BP's wish to sell its North Sea assets? Do you believe there'll be a ready market to procure them?

Speaker #2: Do you believe there will be a ready market to procure them?

Speaker #3: Right. I mean, we were not surprised. Clearly, we've said to people that we track everything that's going on in the UK. And so we look at everything going on in the UK, and we're obviously fully aware of what's happening.

Martin Copeland: I mean, we were not surprised. We've said to people that we track everything that's going on in the UK, we look at everything going in the UK. We're obviously fully aware of what's going on, and it's been known, frankly, that BP's been considering this for some time. The fact that they put out an announcement on the particular day that they did, I guess, was because they had results coming up, et cetera. I guess there'll be people looking at it now, but I suspect this is going to take quite some time to see how it all plays out.

Speaker #3: And it's been known, frankly, that BP has been considering this for some time. The fact that they put out an announcement on the particular day that they did, I guess, was because they had results coming up, etc.

Speaker #3: And I guess there'll be people looking at it now, but I suspect this is going to take quite some time to see how it all plays out.

Andrew Benbow: Accumulated tax losses. When should shareholders expect this to translate into materially higher EPS rather than simply funding further acquisitions?

Speaker #2: Accumulated tax losses—when should shareholders expect this to translate into materially higher EPS, rather than simply funding further acquisitions?

Speaker #3: Well, it is beginning to come through. I mean, as I mentioned, it actually has reversed a loss before tax into a profit before tax.

Martin Copeland: Well, it is beginning to come through. As I mentioned, it actually has reversed a loss before tax into a profit before tax, that is the beginning of it. Remember that was really only seeing that effect over a relatively short period, certainly for GLA. Some of it's coming through also through the Triton results as well, we expect that to continue. We don't typically update the loss balance as it is at H1, but we've got the numbers in there in the accounts, and they're still very sizable, as you will see. As we see healthy production and strong, robust prices, that benefit is going to come through and is coming through the numbers today.

Speaker #3: So that is the beginning of it. But remember that that is really only seeing that effect over a relatively short period. Certainly for GLA, some of it's coming through also through the Triton results as well.

Speaker #3: And we expect that to continue. We don't typically update the loss balance as it is at the half year, but we've got the numbers in the accounts and they're still very sizable, as you will see.

Speaker #3: So, as we see healthy production and strong, robust prices, that benefit is going to come through, and is coming through, in the numbers today.

Speaker #2: Moving on to the politics, we've had a couple of questions. So, which aspects of the current UK tax regime are having the greatest impact on Serica's investment decisions?

Andrew Benbow: Moving on to the politics. We've had a couple of questions. Which aspects of the current UK tax regime are having the greatest impact on Serica's investment decisions? What specific changes would unlock shareholder value? I'll ask a second part of that question because people have asked it a couple of times. Have we seen any evidence of prime ministerial pragmatism as yet?

Speaker #2: What specific changes have unlocked shareholder value? And I'll ask a second part of that question because people have asked it a couple of times.

Speaker #2: Have we seen any evidence of prime ministerial pragmatism as yet?

Speaker #3: Can I maybe try the first one, and then I'll hand it over to Chris? I mean, the specific access—I mean, we actually think our portfolio as a whole is quite nicely set up to be able to manage in all conditions.

Martin Copeland: Shall I maybe try the first one, then I'll hand it over to Chris. The specific actions, we actually think our portfolio as a whole is quite nicely set up to be able to manage in all conditions. We have different parts of the business which have got different attributes. As Chris mentioned, the drilling that we're planning at Bruce is tax efficient because actually we have not got losses in the entities that hold Bruce, so using the benefit of capital allowances there is very attractive. Then in the other part of our business now at, say, Triton, where actually apart from Kyla, which may come in the future, there isn't that much CapEx going on. That will benefit from the losses that we have there. We see the combination of those two things as being quite a nice balance.

Speaker #3: We've got, because we have different parts of the business which have got different attributes—and as Chris mentioned—the drilling that we're planning at Bruce is tax efficient because, actually, we have not got losses in the entities that hold Bruce.

Speaker #3: And so, using the benefit of capital allowances, and those are very attractive. And then, in the other part of our business now, with, say, Triton, where actually, apart from Kyle, which may come in the future, there isn't that much capex going on that will benefit from the losses that we have there.

Speaker #3: So, we see the combination of those two things as being quite a nice balance. Clearly, we would, overall, like to see the Energy Profits Levy removed.

Martin Copeland: Clearly, we would overall like to see the Energy Profits Levy removed. That is more because it's just going to be better for the whole industry, and better for our supply chain. I'm sure the sentiment move that that would entail would be a positive as well. We've got to get on and run the business in the best possible way, and we believe that we are set up for whatever happens. I'll ask Chris maybe to pick up on the wider point about the

Speaker #3: And that is more because it's just going to be better for the whole industry and better for our supply chain, and I'm sure the sentiment.

Speaker #3: Move that that would entail would be a positive as well. So, but we've got to get on and run the business in the best possible way.

Speaker #3: And we believe that we are set up for whatever happens. I'll ask Chris, maybe, to pick up on the wider point about that.

Speaker #2: On the pragmatism point, look, first of all, I’ve got to say it’s very pleasing to hear the government talk about being pragmatic about energy, and the North Sea in particular.

Chris Cox: On the pragmatism point. Look, first of all, I've got to say it's very pleasing to hear the government talk about being pragmatic about energy and the North Sea in particular. That's all we've been asking for, is a bit of pragmatism. I hope that that means a recognition that if we're going to use energy, it might as well be our homegrown energy because it's better for jobs, it's better for the economy, it's better for the environment. What's not to like? We think that's what's meant by pragmatism. Of course, there hasn't been any policy change yet, that's not a surprise. It's very early days, I think if I was in government right now, I would want to take my time to make sure I do it right rather than rush to make decisions.

Speaker #2: That's all we've been asking for—a bit of pragmatism. And I hope that means a recognition that if we're going to use energy, it might as well be our homegrown energy, because it's better for jobs.

Speaker #2: It's better for the economy. It's better for the environment. So what's not to like? So, we think that's what's meant by pragmatism. But, of course, there hasn't been any policy change yet.

Speaker #2: And that's not a surprise. I mean, it's very early days. And I think if I was in government right now, I'd want to take my time to make sure I do it right rather than rush to make decisions.

Speaker #2: So, hopefully in the coming months, we'll start to see policies come out that reflect the good words that we're hearing. Chris, while you have the mic, I think we'll move on to Triton.

Chris Cox: Hopefully in the coming months, we'll start to see policies come out that reflect the good words that we're hearing.

Andrew Benbow: Chris, while you have the mic, I think we'll move on to Triton. What, if any, progress has been made at Triton moving from single to dual compressor operations? The second part of that question, which I think is related to the first, if processing at Triton is rate limiting, do you have any more plans to add processing throughput to the FPSO?

Speaker #2: What, if any, progress has been made at Triton moving from single to dual compressor operations? And the second part of that question, which I think is related to the first.

Speaker #2: If processing at Triton is rate-limiting, do you have any more plans to add processing throughput to the FPSO?

Speaker #3: And there was me thinking we were going to get through one of these without me having a Triton question, because it's been doing really well.

Chris Cox: There was me thinking we were going to get through one of these without me having a Triton question because it's been doing really well. On the two compressor operations, we're not running with two compressors today. We're running on one. We have the second compressor available to us. Actually, in order to run with two compressors, you also need two gas turbines. The second gas turbine has got some repair work that's going to be going on during the turnaround. That should be available to us later. Hopefully, by the end of the year, we'll be able to run with two compressors.

Speaker #3: So, on the two compressor operations, we're not running with two compressors today. We're running on one. We have the second compressor available to us.

Speaker #3: But actually, in order to run with two compressors, you also need two gas turbines. And the second gas turbine has got some repair work that's going to be going on during the turnaround.

Speaker #3: So, that should be available to us later. Hopefully, by the end of the year, we'll be able to run with two compressors. For now, I'm very happy with the kind of uptime we have, and we're getting about 20,000 barrels a day net to Serica out of Triton.

Chris Cox: For now, I'm very happy with the kind of uptime we have, and we're getting about 20,000 barrels a day net to Serica out of Triton, and if we continue like that for the rest of the year, after the shutdown, I'd be delighted. Of course, having that second compressor available gives you a bit of backup, and it should improve our production efficiency. In terms of additional processing capacity, we don't need it. We have what we need on the platform. We just need everything to work. Getting that second gas turbine running after the maintenance shutdown, so we've got two gas turbines and two gas compressors. That's all we need. The limiting factor at the moment is gas export.

Speaker #3: And if we continue like that for the rest of the year after the shutdown, I'd be delighted. And of course, having that second compressor available gives you a bit of backup, and it should improve our production efficiency.

Speaker #3: In terms of additional processing capacity, we don't need it. We have what we need on the platform; we just need everything to work. And so, getting that second gas turbine running after the maintenance shutdown.

Speaker #3: So, we've got two gas turbines and two gas compressors. That's all we need. The limiting factor at the moment is gas export. So, although gas is kind of a byproduct on Triton—because it's essentially a bunch of oil fields producing into there—it's our gas export capacity that's limiting us.

Chris Cox: Although gas is kind of a by-product on Triton because it's essentially a bunch of oil fields producing into there, it's our gas export capacity that's limiting us. Once we get to two compressors running on a consistent basis, we don't have a restriction on the amount of oil that we can produce. We don't actually need more kit. We just need everything we have to be running.

Speaker #3: Once we get to two compressors running on a consistent basis, we don't have a restriction on the amount of oil that we can produce.

Speaker #3: So we don't actually need more kit; we just need everything we have to be running.

Speaker #2: I'm moving on to a personal bugbear of mine—why it takes so long to move from AIM to the main market. Just a revised completion spirit.

Andrew Benbow: I'm moving on to a personal bugbear of mine, why it takes so long to move from AIM to the Main Market. Does the revised completion of Spirit add any complication to the relisting process? Why is the move taking so long?

Speaker #2: Has there been any complication in the relisting process? And why is the move taking so long?

Speaker #3: So, on the first part, the answer is no. The Spirit acquisition we've obviously had in the works for a long time, so it has been one of the reasons, to be fair, why it's taken so long.

Martin Copeland: On the first part, the answer is no. The Spirit acquisition we've obviously had in the works for a long time, it has been one of the reasons, to be fair, why it's taken so long. The answers are kind of linked. Because of the asset acquisitions we did, and Spirit's actually particularly complicated because it's a combination of company and asset acquisitions in both the UK and the Netherlands. From a kind of M&A mechanics, it's more complex. That did require us, both that and the prior acquisitions we did, the GLA and the ONE-Dyas, required us to get a so-called competent persons report, a CPR, produced for those assets. That has been one of the factors. That date moving is not really an issue. We'll either will or will not be successful on Pharos.

Speaker #3: So the answers are kind of linked. Because of the asset acquisitions we did—and spirits is actually particularly complicated because it's a combination of company and asset acquisitions in both the UK and the Netherlands.

Speaker #3: So from a kind of M&A mechanics, it's more complex. But that did require us—both that and the prior acquisitions we did, the GLA and the 1DS—required us to get a so-called Competent Person's Report, a CPR, produced for those assets.

Speaker #3: So that has been one of the factors. That date moving is not really an issue, and we either will or will not be successful on Faros.

Speaker #3: That also won't necessarily cause an issue. We are committed to getting to the Main Market this year, and that is what we said again today.

Martin Copeland: That also won't necessarily pose an issue. We are committed to getting to the Main Market this year, and that is what we said today again. As Andrew said, it's certainly a personal bugbear of his. Some of it is just a lot of process that you have to do, which seems a little bit odd considering as a company we've been listed for 20-plus years now on AIM, and we're just moving from one part of the London Stock Exchange to another part of it. Unfortunately, we don't make the rules. We have to follow them.

Speaker #3: So yeah, as Andrew said, it's certainly a personal bugbear of his, and some of it is just a lot of process that you have to go through, which seems a little bit odd considering, as a company, we've been listed for 20-plus years now on AIM, and we're just moving from one part of the London Stock Exchange to another part of it.

Speaker #3: But unfortunately, we don't make the rules—we have to follow them.

Speaker #2: Yeah, moving away from that, I think. What is the hedging strategy given the oil glut forecast and certain analysts?

Andrew Benbow: Yeah. Moving away from that, I think. What is the hedging strategy given the oil glut forecast from certain analysts?

Speaker #3: Yeah, if I knew exactly what was going to happen with the oil price, it would be really, really easy to get the hedging policy right.

Martin Copeland: Yeah. If I knew exactly what was going to happen with the oil price, it would be really, really easy to get the hedging policy right. Yeah, you can hear stories of oil glut, but you can also see, my goodness, there does seem to have been some funny movements, let's say, going on in the quoted oil price. Which, by the way, for everyone, when you normally hear it's actually the prompt month future price that you're hearing is the price. Our strategy is probably just going to be to say steady as she goes. I made the point that we haven't put on new hedges since March because we are pretty fully hedged at the moment. That was a deliberate policy at the beginning of the year.

Speaker #3: Because, yeah, you can hear stories of an oil glut, but you can also see, my goodness, there does seem to have been some funny movements—let's say—going on in the quoted oil price. Which, by the way, for everyone's information, when you normally hear it, it's actually the prompt month future price that you're hearing as the price.

Speaker #3: So our strategy is probably just going to be to say, steady as she goes. And I made the point that we haven't put on new hedges since March because we are pretty fully hedged at the moment.

Speaker #3: That was a deliberate policy at the beginning of the year. It was hard to imagine, but we were in a pretty bearish mindset generally at the beginning of the year.

Martin Copeland: It's hard to imagine, we were in a pretty bearish mood set generally at the beginning of the year, and we knew we were going to have to refinance the balance sheet. Those two things led to us dialing the hedging up a little bit. We now think we're comfortably in a good place, and obviously, there's a chart in the appendix which shows how that proportion of hedging tails off over the next year and the following year. Equally, we still have an RBL. It's not drawn at the moment, but it does have certain policies within it. The minimum hedging it requires is 25% of the current year and 15% of the following year. I think you could expect to see that as a kind of minimum level.

Speaker #3: And we knew we were going to have to refinance the balance sheet. So those two things led to us dialing the hedging up a little bit.

Speaker #3: So we now think we're in a comfortable, in a good place. And obviously, there's a chart in the appendix which shows how that proportion of hedging tails off over the next year and the following year.

Speaker #3: But equally, we still have an RBL. It's not drawn at the moment, but it does have certain policies within it. The minimum hedging it requires is 25% of the current year and 15% of the following year.

Speaker #3: So I think you could expect to see that as a kind of minimum level. Ultimately, what we're focused on doing is saying we want to protect the cost base in an environment where the oil price and the gas price are not where we've seen them over the last six months, and where they would trend back to $60 a barrel or 60 pence a therm.

Martin Copeland: Ultimately, what we're focused on doing is saying we want to protect the cost base in an environment where the oil price and the gas price are not where we've seen them over the last 6 months and where they would trend back to $60 a barrel or GBP 0.60 a therm. We want to be able to ensure that for shareholders, this business is sustainable and protected even if that eventuality occurs, and that's why we do it. Hopefully that answers the question.

Speaker #3: We want to be able to ensure that, for shareholders, this business is sustainable and protected even if that eventuality occurs. And that's why we do it.

Speaker #3: So, hopefully that answers the question.

Speaker #2: On a slightly related note, can you please confirm the macro deck and what we should see on which the CFFO guidance is set?

Andrew Benbow: On a slightly related note, can you please confirm the macro deck on which the CFFO guidance is set?

Speaker #3: Yeah, well, we did it based on the current forward curve. And just for people's understanding, because of the hedging—and I think I made the point that the hedging is more skewed towards oil than it is towards gas.

Martin Copeland: Yeah. We did it based on the current forward curve. Just to people's understanding, because of the hedging, I think I made the point that the hedging is more skewed towards oil than it is towards gas. Because of the hedging that we have in place, we're actually not that exposed between now and the end of the year on the oil price. Obviously, we are on production, and we had a great H1, and we obviously look forward to having a strong H2. On prices for oil, not that exposed. Really what you're looking at is the gas price forward curve. That's the key variant within that. Even there, it's slightly dampened because the gas business is going to be taxed largely at 78%.

Speaker #3: Because of the hedging that we have in place, we're actually not that exposed between now and the oil price. Obviously, we are on production, so, and we are having a strong second half.

Speaker #3: But on prices for oil, not that exposed. So, really what you're looking at is the gas price forward curve—that's the key variant within that.

Speaker #3: And even there, it's slightly dampened because the gas business is going to be taxed largely at 78%. So, funnily enough, although you'd think there was a massive sensitivity to commodity prices, it's not as big as you would think.

Martin Copeland: Funnily enough, although you'd think there was a massive sensitivity to commodity prices, it's not as big as you would think. The bigger driver is going to be production performance over the course of the next six months.

Speaker #3: The bigger driver is going to be production performance over the course of the next six months.

Speaker #2: Moving on to the last couple of questions now, and apologies to anyone that I've missed. Do you foresee much churn in the shareholder base when moving to the main market?

Andrew Benbow: Moving on to the last couple of questions now. Apologies to any that I've missed. Do you foresee much churn in the shareholder base when moving to the Main Market?

Speaker #3: Well, first of all, churn suggests that people are selling out, etc., and one of the byproducts is—we admit it's been a long time, we've been talking about moving to the main market and we haven't yet done it.

Martin Copeland: Well, first of all, churn suggests that people selling out, et cetera. One of the byproducts of, we admit, it's been a long time, we've been talking about moving to the Main Market, and we haven't yet done it. One of the benefits of that is that anyone who was holding us because we were AIM-only, and they could only hold AIM, has had plenty of time and have, in fact, cycled out. We don't expect to see any material amount of selling pressure. The opposite is what we expect to see, and that probably won't come immediately, although some of it actually comes in because it foresees the action. We will see funds that track only either the FTSE All-Share or, we hope, in due course, as and when we would enter the FTSE 250, that track the FTSE 250 Index.

Speaker #3: But one of the benefits of that is that anyone who was holding us because we were AIM only and they had to hold us only could only hold AIM has had plenty of time and have, in fact, cycled out.

Speaker #3: So we don't expect to see any material amount of selling pressure, but the opposite is what we expect to see. And that probably won't come immediately, although some of it actually comes in because it foresees the action.

Speaker #3: But we will see funds that track only either the FTSE All-Share, or we hope in due course, as and when we would enter the FTSE 250, that track the FTSE 250 index.

Speaker #3: And then we would expect to see index funds basically having to buy into us because they have to buy every component of the index under its weighting.

Martin Copeland: We would expect to see index funds basically having to buy into us because they have to buy every component of the index under its weighting. That will create a degree of churn, if you like, but it'll essentially be a buying component at the outset as index money has to come into our register that isn't there today.

Speaker #3: So that will create a degree of churn, if you like, but it'll essentially be a buying component at the outset, as index money has to come into our register that isn't there today.

Speaker #2: Thank you very much. And as the final question, why do you feel the share price is currently unrepresentative of the true value and expectations of the company?

Andrew Benbow: Thank you very much. As the final question, why do you feel the share price is currently unrepresentative of the true value and expectations of the company?

Speaker #3: We always think that the share price should be higher than it is, and I'm not going to comment on how it represents value, etc.

Martin Copeland: We always think that the share price should be higher than it is, I'm not going to comment on how it represents value, et cetera. There are plenty of analysts that cover us that've got views out there, I know certainly our consensus target price is materially above where our share price is today. The thing that seems to be happening at the moment, not just to us, by the way, but to many of our peers, is the movement of the share price any given day is driven by sentiment and more often than not, by Donald Trump's tweets or Truth Social posts than anything fundamental. That is a frustration, it's not a frustration that we can really do much about other than just deliver. We hope to think that what we've just shown in the last six months is delivery.

Speaker #3: There are plenty of analysts that cover us that have views out there. And I know certainly our consensus target price is materially above where our share price is today.

Speaker #3: The thing that seems to be happening at the moment—not just to us, by the way, but to many of our peers—is that the movement of the share price on any given day is driven by sentiment and, more often than not, by Donald Trump's tweets or Truth Social posts rather than anything fundamental.

Speaker #3: And that is a frustration, but it's not a frustration that we can really do much about other than just deliver. And we hope to think that what we've just shown in the last six months is delivery.

Speaker #3: I know, Chris, you wanted to comment more on that.

Martin Copeland: I know, Chris, you wanted to comment more on?

Speaker #2: No, I completely agree with you. For most of this year, the share price has moved on a daily basis almost entirely based on what Mr. Trump has said.

Chris Cox: No, I completely agree with you. For most of this year, our share price has moved on a daily basis almost based on what Mr. Trump has said. I hope we get back to a place soon where people are looking at the fundamentals of the business rather than politics in a different part of the world. We are where we are.

Speaker #2: And I hope we get back to a place soon where people are looking at the fundamentals of the business, rather than politics in a different part of the world.

Speaker #2: But we are where we are.

Speaker #1: And thanks very much. And with that, Chris, if you’ve got any final comments, please go ahead.

Andrew Benbow: Thanks very much. With that, Chris, if you've got any final comments, please go ahead.

Speaker #2: Well, I'd just like to acknowledge the fact that we've had much better operational performance in the first half of the year, and it's really pleasant to see it.

Chris Cox: Well, I'd just like to acknowledge the fact that we've had much better operational performance in H1 of the year. It's really pleasing to see it. It's been a huge effort by lots of people to get to this place. A lot of that's Dana, let's face it, that's helped with more to come still from both our major hubs. Look, it's pleasing to see a bit of an improvement, at least in H1 of the year. We need that, frankly. I think we have to earn the right to spend money, good production performance gives us the right, I think, to go out and spend money on some of the organic opportunities that we have in our asset base, that's what's coming next.

Speaker #2: It's been a huge effort by lots of people to get to this place. And a lot of that's Dana—let's face it—that's helped with.

Speaker #2: More to come still from both our major hubs. But look, it's pleasing to see a bit of an improvement, at least in the first half of the year.

Speaker #2: And we need that, frankly. I think we have to earn the right to spend money, and good production performance gives us the right, I think, to go out and spend money on some of the organic opportunities that we have in our asset base, and that's what's coming next.

Chris Cox: I think the next time we speak to the market is probably going to be to announce that we've secured a rig, and we'll probably share a bit more about the specifics of the drilling program that we're going to pursue. I look forward to sharing that with everybody soon. Thank you very much.

Speaker #2: And I think the next time we speak to the market is probably going to be to announce that we've secured a rig, and we'll probably share a bit more about the specifics of the drilling program that we're going to pursue.

Speaker #2: I look forward to sharing that with everybody soon, so thank you very much.

Operator 2: Perfect. Thank you guys for your presentation this morning. Could I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations.

Operator: Perfect. Thank you guys for your presentation this morning. Could I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations.

Speaker #1: Perfect. Thank you guys for your presentation this morning. Could please ask investors not to close this session as you now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations.

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Q2 2026 Serica Energy PLC Earnings Call

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