Oilman Jim's Letter - 24 April 2024

88 Energy (88E.AX EEENF 88E.L POQ.F) advised that it has successfully completed a book-build to domestic and international institutional and sophisticated investors to raise A$9.9 million (approx. £5.23 million) before costs. The placement will involve the issue of 3,291,974,839 new shares in the company at an issue price of A$0.003 (£0.0016) per share. Based on the forecast activity schedule the company is now funded for at least the next 12 months, with net proceeds of the placement, together with existing cash reserves (A$17.5 million as at 31 March 2024), directed towards completing post-well testing and analysis at Hickory-1, securing a contingent resource for the SFS and SMD reservoirs, commencing a formal farm-out process to attract a high-quality new partner to fund the next stage of appraisal and development, and advance planning and design of an early stage production system; at PEL 93, Namibia, completion of a 2D Seismic program, generation of a maiden prospective resource report and other studies associated with the Owambo Basin; at Project Leonis, Alaska, securing a farm-out partner to fund a future exploration well to test the proven producing Upper Schrader Bluff reservoir and continue further studies and analysis; plus Alaskan lease rental costs, working capital and assessment of further new venture opportunities. Market capitalisation is £67 million (US$81 million).

Serica Energy (SQZ.L SQZZF A3P.F) announced results for the year ended 31 December 2023. David Latin, Chairman and incoming Interim CEO, described them as strong, despite significantly lower sales prices compared to 2022 and a full year of the UK marginal tax rate being at 75%, something he described as ill-suited to a mature oil and gas basin such as the UK North Sea. The company has maintained the final dividend at 14p per share meaning an increase in the total dividend for 2023 to 23p per share compared to 22p per share in respect of 2022. A £15 million share buyback also has been initiated today. Proforma production from the combined Serica and Tailwind (acquired 23 March 2023) portfolios averaged 40,121 barrels of oil equivalent per day during 2023 as a whole. Production for the year (excluding Tailwind volumes between 1 January and 23 March 2023) averaged 35,167 barrels of oil equivalent per day (Serica net production in 2022 was 26,200 barrels of oil equivalent per day). Serica 2P reserves increased to 140.3 million barrels of oil equivalent at 31 December 2023 (31 December 2022: 76.9 million barrels of oil equivalent) with net upwards reserves revisions of 23.5 million barrels of oil equivalent and a proforma reserves replacement ratio of 179% for the combined Serica and Tailwind portfolio. EBITDAX was £381.4 million (2022: £616.5 million) reflecting an average realised sales price after hedging of $63 per barrel of oil equivalent compared to $104 per barrel of oil equivalent in 2022. Further growth is expected through investment in the company’s assets and what is described as an ambitious, while disciplined, M&A effort. Market capitalisation is £771 million ($964 million).

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