Serica Energy plc ("Serica" or the "Company") - 2008 Annual Report to Shareholders



    LONDON, April 27 /CNW/ - Serica Energy plc (TSX Venture & AIM: SQZ) today
announces its financial results for the three months and twelve months ending
31 December 2008. The results and associated Management Discussion and
Analysis are included below and copies are available at www.serica-energy.com
and www.sedar.com

    2008 Highlights

    Serica has strengthened its financial position and risk profile during
2008 against a challenging market backdrop. Substantial capital has been
raised through an active asset management programme enabling the Company to
pursue its strategy aimed at increasing shareholder value though exploration
and field development. This year marks a significant stage in development of
the Company with first revenues expected from the Company's Indonesian
operations and drilling commencing on material exploration prospects in
Ireland, Vietnam and the UK.

    
    Operational Highlights

    -  48% increase in Serica's Proven and Probable (2P) Reserves

       -  Now 28.5 mmboe (2007 19.3 mmboe) despite partial Kambuna sale

    -  Kambuna development nears production

       -  Gross Kambuna field 2P Reserves increased to 39.3 mmboe with 3P
          assessed as 62.5 mmboe (Serica interest is 50%)
       -  Development wells completed and tested at 114 mmscfd
       -  Platform topsides installed and pipeline laid
       -  Gas contracts finalised
       -  First production scheduled for mid year

    -  Columbus on track for development

       -  Gross Columbus field 2P Reserves assessed as 17.7 mmboe with 3P
          assessed as 42.3 mmboe (Serica interest is 50%)
       -  Field Development Programme submitted for approval
       -  Expected to benefit from UK Chancellor's recent budget

    -  New acreage added to existing core areas

       -  5,864 sq km East Seruway PSC, adjacent to Kambuna, offshore Sumatra
       -  UK North Sea: 3 UK part blocks awarded in 25th Round

    -  2009 exploration drilling has potential to add material value

       -  Bandon prospect in Ireland to be drilled in May
       -  Tuong Vi prospect in Vietnam to be drilled May/June
       -  Conan prospect in the East Irish Sea planned for 2H 2009

    Asset Management

    -  Substantial financial contribution from asset disposal and licence
       farm-out

       -  US$52 million cash received from disposal of 15% of Kambuna TAC
       -  Chablis farm-out raised 56% of well cost (Serica retains 65%)
       -  Vietnam farm-out raised 33% of 3 well programme (Serica retains
          10%)
       -  Bandon farm-out raised 100% of well cost (Serica retains 50%)
       -  Contingent payment on first Bream field production (Norway)

    Financial Highlights

    -  US$36.6 million profit on sale of 15% of Kambuna field

    -  2008 net loss of US$1.0 million (US$13.6 million in 2007) including
       asset impairments of US$24.0 million

    -  Solid net cash position at 31 December 2008 - US$56.8 million of cash
       and US$32.1 million of debt

    -  Bank facility extended by 1 year
    

    Serica's Chief Executive, Paul Ellis, commented:

    "2008 was a year of solid progress, with reserves increased by 48% and
with our finances strengthened with a profitable asset sale and a number of
exploration farm-outs. We now look forward to our first production revenue
from the Kambuna field in Indonesia and to the results of our forthcoming
exploration wells in Ireland and Vietnam."

    The technical information contained in the announcement has been reviewed
and approved by Peter Sadler, Chief Operating Officer of Serica Energy plc.
Peter Sadler is a qualified Petroleum Engineer (MSc Imperial College, London,
1982) and has been a member of the Society of Petroleum Engineers since 1981.

    Forward Looking Statements

    This disclosure contains certain forward looking statements that involve
substantial known and unknown risks and uncertainties, some of which are
beyond Serica Energy plc's control, including: the impact of general economic
conditions where Serica Energy plc operates, industry conditions, changes in
laws and regulations including the adoption of new environmental laws and
regulations and changes in how they are interpreted and enforced, increased
competition, the lack of availability of qualified personnel or management,
fluctuations in foreign exchange or interest rates, stock market volatility
and market valuations of companies with respect to announced transactions and
the final valuations thereof, and obtaining required approvals of regulatory
authorities.  Serica Energy plc's actual results, performance or achievement
could differ materially from those expressed in, or implied by, these forward
looking statements and, accordingly, no assurances can be given that any of
the events anticipated by the forward looking statements will transpire or
occur, or if any of them do so, what benefits, including the amount of
proceeds, that Serica Energy plc will derive therefrom.

    
        The TSX Venture Exchange has not reviewed and does not accept
         responsibility for the adequacy or accuracy of this release.

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    CHAIRMAN'S REPORT

    Dear Shareholder

    2008 can be summed up as a year of extremes. We started the year with oil
and gas prices exceptionally strong and with many of the world economies
continuing to boom. We ended the year with oil prices down 70% from their
mid-year high and with the major economies in recession.
    Managing a business in this environment is difficult to say the least,
particularly for small companies such as Serica. However, I am pleased to say
that the Company reached the year end in a relatively strong position as a
result of the decision made earlier in the year to strengthen the Company's
finances through the sale of part of one of our assets, the Kambuna field in
Indonesia, and to manage the cost and risk of our near term exploration
programme through farm-out. As a result, year-end cash stood at US$56.8
million with net current assets at US$21.8 million.
    In addition to the fall in the oil price and the onset of worldwide
recession, the global credit crunch resulted in a major withdrawal of capital
from both the equity and debt markets and consequential falls in share prices.
These share price falls bear little relationship to core asset values for
companies like Serica, which are focussed more on gas reserves than on oil,
but they do affect the ability of companies to finance their operations.
Serica has met this challenge by reducing its capital requirements through
farm-out and deferral and we have also received strong support from our banks
through the extension of our financing facility for the Kambuna field
development. As a result, we are confident that the value of the business is
protected with prospects for the Company remaining positive.
    Last year I said that we expected gas and condensate sales from the
Kambuna field to commence at the end of 2008. That target was not achieved due
to delays in the government approval process and other operational delays but
the field is now scheduled to start production mid-year, bringing our first
revenues from the sale of gas and condensate and achieving an important
milestone for the Company.
    The sale of a 15% interest in the Kambuna field in the third quarter
realised a profit of US$36.6 million and demonstrated the value of the
Company's retained 50% interest in the field. Serica has also benefitted from
increased Kambuna field reserves. Together with the inclusion for the first
time of reserves in the Columbus field in the North Sea, which is also
expected to benefit from the UK chancellor's recent announcement of tax
incentives to encourage field development, this has resulted in an overall 48%
increase in the Company's booked reserves this year from 19.3 mmboe to 28.5
mmboe, despite the disposal of part of the Kambuna field.
    Notwithstanding the profit from the Kambuna sale, the Company is
reporting a net loss of US$1.0 million for the year, compared to a loss of
US$13.6 million for 2007. This results from the Board's decision to write-off
carrying costs relating to certain of the Company's exploration interests.
These include the Company's interests in Spain, where drilling plans have been
deferred, the costs of the Oak discovery in the North Sea, where development
prospects are uncertain, and the costs to the end of 2008 relating to Chablis
where recent drilling has not been able to resolve commercial uncertainties.
Whilst value has been added from our exploration and appraisal successes the
Board has made provision where there are no current expenditure plans.
    Of course the substantial fall in oil price and the current credit
squeeze bring opportunities that Serica will exploit where possible as Kambuna
revenues commence and Columbus moves closer to production. In 2009 we plan to
drill three wells with the first of these, the Bandon prospect offshore
Ireland, expected to start in May. Success in this well would be material to
the Company.
    During the course of the year we welcomed two new directors to the Board.
Jonathan Cartwright joined Serica in March 2008 as a non-executive director.
Jonathan is Finance Director of Caledonia Investments plc, one of Serica's
major shareholders and I welcome both his support and the additional financial
expertise that he brings to the Board. Peter Sadler was appointed Chief
Operating Officer and joined the Board in November 2008. His extensive
experience as a senior executive with independent oil companies in the UK,
Australasia and the Middle East considerably strengthens our executive team.
    In summary, 2008 has been a year in which Serica has been able to
strengthen both its financial position and its risk profile against a
background which has not been friendly to business. 2009 brings continuing
challenges but also opportunities for which I believe Serica is well placed.

    
    Tony Craven Walker
    Chairman
    

    MANAGEMENT'S DISCUSSION AND ANALYSIS

    The following management's discussion and analysis ("MD&A") of the
financial and operational results of Serica Energy plc and its subsidiaries
(the "Group") should be read in conjunction with Serica's consolidated
financial statements for the year ended 31 December 2008.
    Serica's activities are based in Western Europe and South East Asia, with
interests in the UK, Ireland, Spain, Indonesia and Vietnam. References to the
"Company" include Serica and its subsidiaries where relevant. All figures are
reported in US dollars ("US$") unless otherwise stated.

    CHIEF EXECUTIVE OFFICER'S REPORT - 2008

    Despite the economic extremes of 2008, Serica was able to continue the
development of the Kambuna field towards first revenue, to increase its
reserves significantly, and to improve its financial position by selling a
small stake in the Kambuna field in July. Serica also extended its senior debt
facility for Kambuna by one year through to November 2009, by which time the
field will have been on production for several months. In addition the Company
has negotiated farm-out arrangements that will contain the cost of its
drilling programme and will enable Serica to drill its exploration prospects
in Ireland and Vietnam in 2009 at little cost to the Company.
    Serica made significant progress towards its goals in 2008, especially in
the development of the Kambuna field in the Glagah-Kambuna Technical
Assistance Contract offshore North Sumatra ("the TAC") in which Serica holds a
50% interest. The three Kambuna development wells were completed and tested at
production rates which exceeded expectations. However, it is disappointing to
note that it proved difficult to obtain timely governmental approvals for
construction of the onshore gas facility, contributing to a delay to first gas
production of about six months - to mid 2009.
    Gas sales contracts have been finalised for the sale of a total of 40
mmscfd at an average price of $4.90 per million BTU ("mmbtu") (approximately
$5.85 per mcf), escalating at 3% per year. It is planned to sell a further 10
mmscfd to bring the gross field gas sales to an average of 50 mmscfd. At full
production we expect that the initial average realised gas price will be
around $6 per mcf.
    The condensate produced with the gas is expected to provide an initial
gross liquid production of around 3,000 to 4,000 bpd to be sold at a price
close to that of crude oil. The cost recovery provisions of the TAC provide a
natural hedge against oil prices, because Serica can claim a larger share of
oil production to cover its costs if the oil price falls.
    Following the completion of the development wells, RPS Energy has
estimated that the gross Proved and Probable Reserves of the Kambuna field
have increased to 39.3 million barrels of oil equivalent ("mmboe"). There is
still a considerable upside to these reserves and RPS estimates the gross
Proved, Probable and Possible Reserves of the field to be 62.5 mmboe.
    In July 2008 Serica's sale of a 15% interest in the TAC to Salamander
Energy plc for US$52.7 million implied a value for Serica's retained 50%
interest of US$175 million. On the basis of RPS' forecast of oil price and a
discount factor of 10%, RPS has estimated the post-tax net present value of
Serica's 50% interest in the Kambuna field to be US$160 million at 31 December
2008, indicating the limited impact of the fall in oil price in the second
half of the year.
    This sale also provided the opportunity for Serica to transfer the
Kambuna development operatorship to Salamander, allowing Serica to concentrate
its resources on its core business of exploration where the greater potential
exists for significant increases in shareholder value.
    Progress was made during 2008 with the Columbus gas field and Serica
submitted a Field Development Programme ("FDP") to the UK authorities in
October. Serica completed the drilling of the Columbus appraisal wells
23/16f-12 and its sidetrack well 23/16f-12z in late 2007. From the time that
Serica discovered the Columbus field in December 2006, it had been considered
possible that the field might extend to the south into Block 23/21, operated
by BG Group ("BG"). However, with BG having no apparent plan to drill in Block
23/21 to establish the presence of an extension, the 23/16f partners submitted
the FDP without the involvement of the Block 23/21 group.
    However, late in 2008 BG Group drilled the 23/21-7 well in block 23/21,
approximately three kilometers south of the 23/16f-11 Columbus discovery well.
Well 23/21-7 comprised a total of four penetrations of the Forties sand
reservoir and the data obtained are currently under evaluation.
    Netherland Sewell & Associates ("NSA") has estimated that the gross
Proved and Probable Reserves of the Columbus field located in Block 23/16f are
17.7 mmboe, with gross Proved and Probable and Possible Reserves of 42.3
mmboe, indicating the considerable upside remaining in the block. Serica holds
a 50% interest in Columbus.
    Fundamental to Serica's exploration strategy is its ability to find
prospects of such quality that, even when the industry's exploration budgets
are being curtailed, we are able to find partners to fund a large proportion
of the costs of the wildcat drilling.
    Initially our exploration efforts in 2008 were focused on securing
farm-in partners for the wells to be drilled by Serica on two of its 100%
owned licences: the Block 48/16b Chablis appraisal well in the UK southern
North Sea and the Bandon exploration well in the Slyne Basin Licence PEL 01/06
off the west coast of Ireland. These efforts were successful and the Company
agreed terms with Hansa Hydrocarbons Limited with respect to Chablis and with
RWE-DEA AG with respect to Bandon.
    We commenced drilling the Chablis appraisal well 48/16b-3 in December and
completed the operation in January 2009. Although the well encountered
gas-bearing Rotliegendes sands of good reservoir quality the gas bearing
interval was thin and the well was plugged and abandoned. The commercial
potential of the Chablis accumulation and the remaining adjacent prospects is
still unproven and no reserves can be attributed to the area at this time.
    We planned to drill the Bandon well offshore Ireland in the summer of
2008, but were not able to acquire the required site survey data at the
drilling location early enough for the drilling weather window, due to the
poor Atlantic weather experienced in April. However, the survey was acquired
later in the year and a rig has been contracted to drill the well in May 2009.
    We were also successful in attracting a farminee for the Tuong Vi
prospect in Vietnam, and this well is expected to be spudded in June 2009. In
keeping with our strategy, further farm-outs are planned for the Conan
exploration well in the East Irish Sea and for the wells to be drilled in 2010
in the Kutai PSC.
    Serica continues to develop its exploration portfolio on a selective
basis and during 2008 was awarded a large Production Sharing Contract offshore
Indonesia, the East Seruway PSC, which lies adjacent to the Glagah-Kambuna
TAC. We also added new acreage offshore UK with three licence awards in the
25th Licensing Round.
    Following the recent announcement of the results of the Chablis appraisal
well, we have reviewed the level of costs held in our accounts relating to the
asset. Although there may be commercial potential in Serica's Chablis licence
areas, in the present economic climate we have decided that no further funds
should be committed at this stage. In two other areas no further significant
expenditure is planned: UK Block 54/1b (the Oak discovery) and the Spanish
Permits. In Block 54/1b the presence of inert gases in the test production
from the Oak discovery makes commercial exploitation of this small gas
accumulation unlikely in the short term. In Spain, we have obtained a one year
suspension of the Permits while we seek a farminee to drill one of the gas
prospects identified by Serica following its seismic programme, as the Company
has prioritised other exploration activities. In both of these cases we
currently plan no significant expenditure and have therefore written off the
exploration and evaluation costs incurred to date.
    In Norway, Serica completed the disposal of its 20% interest in Licences
PL406 and PL407 which included the undeveloped Bream oil field, since Serica
considered that due to the high cost of E&P activity in Norway it would not be
possible for it to build a particularly profitable business. The Company
retains the benefit of a contingent cash payment related to the oil price at
the time that the Bream field is brought onto production.
    The achievements of 2008, including a 48% increase in booked Proven and
Probable Reserves to a total of 28.5 mmboe, were made against a challenging
global and industry backdrop and provide a strong testimony for Serica's team
and its business approach.
    Serica's priorities for 2009 are to achieve first production from the
Kambuna field and we plan to drill three exploration prospects which could
result in material value to the Company, without incurring significant cost.
We will also add further exploration acreage in areas where our knowledge and
expertise can add value. In parallel, efforts will be directed towards the
successful refinancing of the Company's debt facility on acceptable terms.
Serica looks forward to the coming year with enthusiasm and anticipation. 2009
will be the year that Serica matures from its formative years as a pure
exploration company and becomes a better balanced company with both
exploration and production assets.

    
    Paul Ellis
    Chief Executive Officer
    

    REVIEW OF OPERATIONS

    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. Certain of the interests shown will change upon the completion of
agreements which await final government approval.

    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Block(s)            Description   Role         %      Location
    -------------------------------------------------------------------------
    Indonesia
    -------------------------------------------------------------------------
    Glagah Kambuna TAC  Kambuna       Partner     50%     Offshore
                        development                       North Sumatra
    -------------------------------------------------------------------------
    Kutai PSC           Exploration   Operator    78%(1)  Kutai basin
    -------------------------------------------------------------------------
    East Seruway PSC    Exploration   Operator   100%     Offshore
                                                          North Sumatra
    -------------------------------------------------------------------------
    Vietnam
    -------------------------------------------------------------------------
    Block 06/94         Exploration   Partner   33.3%(2)  Nam Con Son Basin
    -------------------------------------------------------------------------

    Notes:
    (1) The Company's 78% interest in the Kutai PSC will reduce to 54.6%
    following Indonesian government approval of the disposal of a 23.4%
    interest to Salamander Energy, announced in July 2008.
    (2) The Company's 33.3% interest in Block 06/94 will reduce to 10%
    following required approvals of the disposal of a 23.3% interest to
    Australian Worldwide Exploration Limited, announced in March 2009.


    Indonesia

    Glagah Kambuna TAC
    ------------------
    

    The Glagah Kambuna Technical Assistance Contract ("TAC") covers an area
of approximately 380 square kilometres and lies offshore North Sumatra. The
Company now holds an interest of 50% following the sale of a 15% interest in
the Kambuna TAC to Salamander Energy in August 2008 for a consideration of
US$52.7 million. As planned, Salamander has also assumed the operatorship of
the Kambuna TAC.
    Significant progress was made towards the first production from the
Kambuna field. Early in 2008 the Kambuna field production platform was
installed and three development wells were drilled and tested with very
positive results. The total maximum stabilised gas rate from the three wells
was 114 million standard cubic feet per day ("mmscfd"), together with an
estimated 8,000 barrels per day ("bpd") of condensate, giving a considerable
margin of security for the average planned gas sales of 40 to 50 mmscfd.
    Installation of the onshore and offshore sections of the 14-inch pipeline
and the onshore receiving facilities were all well advanced and the pipeline
was commissioned in 1Q 2009. Final installation of the remaining equipment at
the onshore facility continues including provision for handling the
significant quantities of condensate that the field will produce. It is
expected that production from the field will commence around mid year 2009.
    The quality of the asset has been further demonstrated in a new reserves
report on the Kambuna field carried out by consultants RPS Energy. This report
estimates that the gross Proved plus Probable Reserves of the field are 133
bcf of sales gas and 11.6 mm bbl of condensate, a total of 39.3 mm boe, with
an upside gross Proved plus Probable plus Possible Reserves of 62.5 mm boe.

    
    Kutai PSC
    ---------
    

    Serica is the operator of the Kutai Production Sharing Contract ("PSC")
and, following the announcement in February 2008 that it had acquired an
additional 25.5% working interest, currently holds a 78% interest. This
interest will reduce to 54.6% after completion of the transaction with
Salamander Energy plc for the sale of a 23.4% interest in the PSC, as
announced in July 2008. Completion is subject to certain approvals and
consents, including that of the Indonesian government.
    The PSC is divided into five blocks located in the prolific Mahakam River
delta both onshore and offshore East Kalimantan, adjacent to several giant
fields, including Tunu (1,600 million boe), Attaka (800 million boe) and
Peciko ((greater than)1,000 million boe).
    During 2008, the Company completed the acquisition of new 3D seismic data
which has revealed an attractive amplitude driven prospect previously
unidentified on the old 2D seismic data. The prospect lies in close proximity
to the Peciko field and represents a new candidate for drilling in 2010.
Further prospects have been defined adjacent to the Tunu and Attaka fields and
also in a carbonate reef play fairway in the southern part of the acreage.
    In the onshore part of the PSC, Serica is currently carrying out a 2D
seismic survey to define structural prospects. During the seismic programme a
number of oil seeps have been encountered, demonstrating the existence of a
working petroleum system in the acreage.

    
    East Seruway PSC
    ----------------
    

    In October 2008, Serica was awarded the East Seruway PSC offshore north
Sumatra, Indonesia. Serica is operator and holds a 100% interest in the PSC,
which covers an area of approximately 5,864 sq km (2,264 sq miles) adjacent to
the Glagah-Kambuna TAC and which is largely unexplored.
    Serica has a detailed regional understanding of the offshore North
Sumatra Basin having been a PSC operator there since 2003. The Company will
acquire a new seismic survey to further define the exploration potential prior
to drilling an exploration well in the block.

    
    Biliton PSC
    -----------
    

    Serica's two-well exploration programme in the Biliton PSC in the Java
Sea was completed in January 2008 and unfortunately neither well encountered
hydrocarbons. The cost of the wells was largely carried by a farminee.
    Having completed its post-well evaluation Serica sees little further
potential in the area and withdrew from the Biliton PSC effective 29 December
2008. The Company is no longer carrying any book costs in respect of the PSC.

    
    Vietnam

    Block 06/94 PSC
    ---------------
    

    Serica has a 33.33% interest in the Block 06/94 PSC, which is operated by
Pearl Energy and lies in the Nam Con Son Basin about 350 kilometres offshore
South Vietnam. The block covers an area of approximately 4,100 square
kilometres and is the part of Block 06/1 which British Petroleum (now BP) was
obliged to relinquish in 1994 at the end of its contractual exploration
period, after discovering the major Lan Tay and Lan Do gas fields. These
fields commenced production in 2002 following the construction of a new gas
and liquids pipeline to the Vietnamese mainland.
    A 730 square kilometre 3D seismic survey was acquired in 2007 and a
further 1,000 square kilometre 3D seismic survey was successfully completed in
June 2008. Processing is ongoing to evaluate further the prospectivity of the
acreage. The Ocean General semi-submersible drilling rig was contracted in
2008 and an exploration well on the Tuong Vi prospect, in the south-western
part of the block, is due to be drilled in June 2009.
    On 19 March 2009, the Company reached agreement with Australian Worldwide
Exploration Limited on the terms of a farm-out of part of Serica's interest in
the Block 06/94 PSC offshore Vietnam. The agreement is subject to the approval
of the government of Vietnam. Under the agreement, the farminee will bear
Serica's 33.33% share of the costs of the three well drilling programme in
2009 and 2010, subject to a financial cap, in order to earn an interest of
23.33% in the PSC, with Serica retaining a 10% interest.


    REVIEW OF OPERATIONS - WESTERN EUROPE

    In Western Europe Serica holds offshore licence interests in the UK North
Sea and East Irish Sea, in Ireland and has onshore licence interests in Spain.
    The following table summarises the Company's interests in Western Europe.

    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Block(s)    Description        Role         %      Location
    -------------------------------------------------------------------------
    UK
    -------------------------------------------------------------------------
    23/16f      Columbus field     Operator    50%     Central North Sea
    -------------------------------------------------------------------------
    48/16b      Chablis appraisal  Operator    65%     Southern Gas basin
    -------------------------------------------------------------------------
    48/17d      Chablis appraisal  Operator    65%     Southern Gas basin
    -------------------------------------------------------------------------
    54/1b       Oak discovery      Operator    50%     Southern Gas basin
    -------------------------------------------------------------------------
    113/26b     Exploration        Operator   100%     East Irish Sea
    -------------------------------------------------------------------------
    113/27c     Exploration        Operator   100%     East Irish Sea
    -------------------------------------------------------------------------
    14/15a      Exploration        Operator    50%     Central North Sea
    -------------------------------------------------------------------------
    23/16g      Exploration        Operator    50%     Central North Sea
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Ireland
    -------------------------------------------------------------------------
    27/4        Exploration        Operator    50%     Slyne Basin
    -------------------------------------------------------------------------
    27/5 (part) Exploration        Operator    50%     Slyne Basin
    -------------------------------------------------------------------------
    27/9        Exploration        Operator    50%     Slyne Basin
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Spain
    -------------------------------------------------------------------------
    Abiego      Exploration        Operator    75%     Pyrenees/Ebro Basin
    -------------------------------------------------------------------------
    Barbastro   Exploration        Operator    75%     Pyrenees/Ebro Basin
    -------------------------------------------------------------------------
    Binéfar     Exploration        Operator    75%     Pyrenees/Ebro Basin
    -------------------------------------------------------------------------
    Peraltilla  Exploration        Operator    75%     Pyrenees/Ebro Basin
    -------------------------------------------------------------------------


    United Kingdom

    Columbus Field Area - Blocks 23/16f & 23/16g - Central North Sea
    ----------------------------------------------------------------
    

    Block 23/16f covers an area of approximately 52 square kilometres in the
Central North Sea and contains the undeveloped Columbus field. Serica operates
the block and holds a 50% interest.
    Following Serica's December 2006 Columbus discovery well 23/16f-11 which
tested a Forties Paleocene sand reservoir at rates of up to 17.5 mmscfd of gas
and over 1,000 bpd of condensate, two Columbus appraisal wells, 23/16f-12 and
23/16f-12z, were drilled in the third quarter 2007 and both successfully
encountered gas columns and confirmed that the field had development
potential.
    In October 2008, Serica submitted the Field Development Programme ("FDP")
for the Columbus field to the UK government. Engineering studies have been
carried out in cooperation with neighbouring infrastructure operators and the
FDP currently envisages production via a subsea tie-back to the BP operated
Eastern Trough Area Project ("ETAP"). Other production routes are possible and
work continues on the final gas and condensate transportation arrangements,
which are subject to commercial negotiations. Commencement of development is
subject to the approval of the Columbus FDP by the UK government.
    Two months after filing this plan, Serica learned that in the adjacent
Block 23/21, operator BG Group ("BG") had started to drill a well, about three
kilometres south of the 23/16f-11 Columbus discovery well. BG well 23/21-7
comprised a total of four penetrations of the Forties sand reservoir and the
data obtained are currently under evaluation.
    Independent consultants Netherland, Sewell & Associates have carried out
a reserves report on the Columbus field. This report estimates that the gross
Proved plus Probable Reserves of the field are 77.4 bcf of sales gas and 4.8
mm bbl of condensate, a total of 17.7 mm boe, with an upside gross Proved plus
Probable plus Possible Reserves of 42.3 mm boe. Serica holds a 50% interest in
the Columbus field reserves.
    Immediately to the north of Block 23/16f lies Block 23/16g, which Serica
operates and in which it holds a 50% interest. The block contains a small
Forties sand prospect called Livingstone, but the 3D seismic data here is
inconclusive as to whether the prospect is likely to contain hydrocarbons.

    
    Chablis Discovery Area - Blocks 48/16b and 48/17d - Southern North Sea
    ----------------------------------------------------------------------
    

    These contiguous blocks cover a total area of 88 square kilometres in the
Southern North Sea. Block 48/16b contains the Chablis discovery, drilled in
2001 by ConocoPhillips. Block 48/17b was awarded to Serica in the UK 24th
Offshore Licensing Round and lies immediately east of Block 48/16b.
    In September 2008, Serica (which then held a 100% interest in both
blocks) announced that Hansa Hydrocarbons Limited ("Hansa") would farm-in to
Blocks 48/16b and 48/17d. Under the terms of the agreement, Hansa earned a 35%
working interest in the blocks in return for contributing to past costs and
funding 56% of the majority of the cost of the Chablis appraisal well
48/16b-3. Following completion, Serica remains as operator and retains a 65%
working interest in the blocks.
    During 2008 work focused on the preparations for and drilling of the
appraisal well 48/16b-3 for which Serica contracted the Northern Offshore
Energy Enhancer jack-up rig, which spudded the well in December 2008.
    Well 48/16b-3 was designed to appraise the Chablis gas discovery made in
well 48/16b-2 in 2002 and was targeted to determine the thickness and quality
of the Leman sandstone reservoir two kilometres to the east of the discovery
well, where there was considerable uncertainty concerning the reservoir
quality and thickness. The well had reached a depth of 6,580 ft true vertical
depth below mean sea level ("TVDSS") when operational difficulties required
the lower section of the well to be re-drilled as sidetrack well 48/16b-3z,
which reached the planned total depth of 8,136 ft TVDSS on 12 January 2009,
having encountered gas-bearing Leman sands. Although the results of the well
show that the reservoir quality is markedly better than in the discovery well
and that the wells share a common gas-water contact, the gas-bearing interval
was thinner than in the Chablis discovery well.
    Serica is now assessing the remaining potential in the undrilled areas
east and west of the two wells, where further gas-bearing sands are expected
to be present. The 48/16b-3z well was plugged and abandoned.

    
    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.
    Well 54/1b-6 was drilled in 2006 and encountered a gas-bearing Leman
sandstone reservoir that produced at a stabilized flow rate of approximately
10 mmscfd during a drill-stem test. Subsequent laboratory analysis of gas
samples taken during the test indicated that over 50% of the gas was made up
of carbon dioxide and nitrogen.
    The Oak discovery lies on the median line between the UK and the
Netherlands and other fields with a similarly high inert gas content have been
discovered near to Oak in both the UK and Dutch sectors. An operator in
Holland is investigating the feasibility of joint development of such fields
with export to the Dutch gas market. Serica presently considers that in the
absence of such a joint development it is unlikely that the Oak discovery
could be produced commercially.

    
    East Irish Sea - Blocks 113/26b and 113/27c
    -------------------------------------------
    

    Serica was awarded a 100% interest in Blocks 113/26b and 113/27c in the
UK 24th Offshore Licensing Round in 2007 and is the operator. The blocks cover
an area of approximately 145 square kilometres in the East Irish Sea and lie
immediately to the north of the Millom field and within ten kilometres of the
Morecambe field - one of the UK's largest gas fields.
    Serica has identified two Sherwood sand gas prospects, Conan and Doyle.
The Conan prospect exhibits a seismic amplitude anomaly at top reservoir level
which is of the order of 28 square kilometres in area - making it the largest
undrilled amplitude anomaly in the basin. By analogy with several other gas
fields in the East Irish Sea (e.g. Hamilton and Calder), which also exhibit an
amplitude anomaly, a compelling case can be made that the amplitude seen at
Conan is indicative of gas. The prospective resource potential of Conan could
be as much as one trillion cubic feet of gas and the prospect lies at a depth
of around 5,000 feet. Any discovery here is likely to be economically
attractive, as the prospect lies in shallow water and is close to existing
infrastructure. Serica is currently seeking a farminee to share the costs of
drilling the Conan prospect.

    
    Central North Sea - Block 14/15a
    --------------------------------
    

    This block covers an area of approximately 108 square kilometres in the
Outer Moray Firth in the Central North Sea, adjacent to the Claymore and
Lowlander fields. Serica is the block operator and has a 50% interest.
    Reprocessing of available 3D seismic data was completed in 2008 and
interpretation is underway to mature leads that have been identified at Upper
Jurassic, Lower Cretaceous and Paleocene levels.

    UK Continental Shelf 25th Round

    In the UK 25th Offshore Licensing Round, Serica was offered interests in
three blocks: Block 15/21e (split) in the Central North Sea, Block 48/16a
(part) in the Southern North Sea and Block 110/2d in the East Irish Sea. The
work programmes for these licences include seismic reprocessing but there are
no firm well commitments.
    Block 15/21e (split) lies in the Central North Sea and Serica will have a
30% interest. The block lies immediately west of the Scott field and contains
a potentially significant extension to the existing Jurassic oil discovery in
well 15/21a-38. The licence operator will be a subsidiary of Encore Oil plc.
    Block 48/16a (part) lies in the Southern North Sea and Serica will
operate the licence. The block lies immediately west of Serica's Chablis field
and the field, if proven, may extend into the new licence. Serica will
initially have a 100% interest, but this may be reduced to 65% under the terms
of a farm-out agreement. Serica presently holds a 65% operated interest in the
Chablis field in Blocks 48/16b and 48/17d.
    Block 110/2d lies in the East Irish Sea adjacent to the Morecambe gas
field and five kilometres south of Serica's Blocks 113/26b and 113/27c which
contain the Conan and Doyle prospects. Serica will operate the licence with a
100% interest.

    
    Ireland

    Slyne Basin - Licence PEL 01/06 - Blocks 27/4, 27/5 (west) and 27/9
    -------------------------------------------------------------------
    

    Serica is the operator and holds a 50% interest in Licence PEL 01/06,
which covers an area of 611 square kilometres in the Slyne Basin off the west
coast of Ireland and lies about 40 kilometres south of the Corrib gas field.
The Licence comprises Blocks 27/4, 27/5 (west) and 27/9.
    In September 2008, Serica reached agreement with RWE Dea AG ("RWE") to
farm-out a 50% interest in Licence PEL 01/06 and the transaction completed in
December 2008 following receipt of the required Irish government approvals.
Under the terms of the farm-out agreement, RWE will contribute the bulk of the
cost of drilling the first exploration well, the Bandon prospect, scheduled
for May 2009. Serica will remain as operator and retains a 50% working
interest in the Licence.
    Serica has identified four prospects in the blocks, two of which exhibit
strong seismic amplitude anomalies. The Bandon prospect, the first of these
anomalies to be drilled, has a prospective resource range of 230 billion cubic
feet to 1.7 trillion cubic feet.
    Ireland has immediate and long-term needs for local gas supplies as it
currently imports the bulk of its gas needs. Any sizeable discovery in the
blocks would be a significant and welcome addition to Ireland's energy
supplies.
    Serica has secured the Ocean Guardian semisubmersible drilling rig for
the Bandon exploration well. The well will test the Triassic Sherwood
sandstone reservoir, which is also the gas-bearing reservoir in the Corrib
field.

    Spain

    The Company holds a 75% interest and operatorship in the Abiego,
Barbastro, Binéfar and Peraltilla Exploration Permits onshore northern Spain.
The Permits cover an area of approximately 1,100 square kilometres between the
Ebro Basin and the Pyrenees.
    A 315 kilometre 2D seismic survey was completed in January 2008. The data
from this survey is of high quality and, as a result, several prospects have
been mapped at both shallow and deeper levels. The Spanish gas market would
readily absorb any gas produced from the Permits and there is a main gas trunk
pipeline in close proximity.
    Although the survey has indicated potential drilling prospects, in order
to allow more time to complete environmental and well planning studies, the
government agreed to suspend the Permits for up to a year. A drill or drop
decision must be made prior to November 2009 and Serica is seeking a farm-in
partner.

    Norway

    In June the Company reached agreement with Spring Energy Norway AS for
the sale of Serica's non-core Norwegian business interests, comprising a 20%
working interest in Norwegian offshore licences PL406 and PL407. Following the
receipt of the required Norwegian government approvals, the transaction
completed in November. The consideration included repayment of past costs and
a contingent cash payment to reflect the value of the Bream field at the time
that the field is brought onto production. Under the terms of the transaction
Serica has therefore retained a part of the potential value of the Bream field
without being exposed to further appraisal and development costs or to the
commitment of additional resources.

    
    GLOSSARY

    bbl          barrel of 42 US gallons
    bcf          billion standard cubic feet
    boe          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 or bpd  barrels of oil or condensate per day
    FPSO         Floating Production, Storage and Offtake vessel (often a
                 converted oil tanker)
    LNG          Liquefied Natural Gas (mainly methane and ethane)
    LPG          Liquefied Petroleum Gas (mainly butane and propane)
    mcf          thousand cubic feet
    mm bbl       million barrels
    mmBtu        million British Thermal Units
    mmscfd       million standard cubic feet per day
    PSC          Production Sharing Contract
    Proved       Proved reserves are those Reserves that can be estimated
    Reserves     with a high degree of certainy to be recoverable. It is
                 likely that the actual remaining quantities recovered will
                 exceed the estimated proved reserves.
    Probable     Probable reserves are those additional Reserves that are
    Reserves     less certain to be recovered than proved reserves. It is
                 equally likely that the actual remaining quantities
                 recovered will be greater or less than the sum of the
                 estimated proved + probable reserves.
    Possible     Possible reserves are those additional Reserves that are
    Reserves     less certain to be recovered than probable reserves. It is
                 unlikely that the actual remaining quantities recovered will
                 exceed the sum of the estimated proved + probable + possible
                 reserves
    Reserves     Estimates of discovered recoverable commercial hydrocarbon
                 reserves calculated in accordance with the Canadian National
                 Instrument 51-101
    Contingent   Estimates of discovered recoverable hydrocarbon resources
    Resources    for which commercial production is not yet assured,
                 calculated in accordance with the Canadian National
                 Instrument 51-101
    Prospective  Estimates of the potential recoverable hydrocarbon resources
    Resources    attributable to undrilled prospects, calculated in
                 accordance with the Canadian National Instrument 51-101
    TAC          Technical Assistance Contract
    tcf          trillion standard cubic feet
    

    FINANCIAL REVIEW

    The second half of 2008 saw the onset of worldwide recession, falls in
oil prices and major withdrawals of capital from equity and debt markets.
These events have provided particular challenges in the management of
financial resources, and have also acted as a catalyst for the review and
reconsideration of the underlying value of assets. These items are discussed
in detail below, together with a review of the results of operations and other
financial information.

    Financial Resources and Debt Facility

    Serica's prime focus has been to deliver value through exploration
success. To-date this has given rise to the Kambuna gas field development in
Indonesia, with first production imminent, and the Columbus gas discovery in
the UK North Sea, for which development plans have been submitted. The Company
is soon to enjoy its first significant revenues, complementing its exploration
activities with producing interests.

    2008 financing developments
    During 2008 the Company made significant progress in securing funding to
advance its business prior to first gas revenues and operating cash inflows.
    In January 2008 the Company announced the completion of a placing of
24,770,354 new ordinary shares on the AIM Market and the TSX-V in Canada. The
total amount raised was approximately US$48.6 million after expenses.
    The Company entered into a US$100 million senior secured debt facility
with JPMorgan Chase Bank, N.A. and The Governor and Company of the Bank of
Scotland in November 2007. This facility had an initial term of twelve months,
with the Company having an option to extend for a further six months. During
2008 a third bank, Natixis, joined the consortium of lenders, and in November
the extension option to May 2009 was taken up by the Company. In February 2009
a further extension of the facility until November 2009 was formally agreed.
    Whilst exploration has been equity-financed, Kambuna development costs
have been largely debt-financed. To mitigate the need for equity and to manage
its overall financial exposures the Company's policy has been to farm down
exploration wells prior to drilling. In addition it took the opportunity to
crystallise significant value through the sale of a 15% interest in the
Kambuna field for US$52.7 million in cash in the third quarter of last year,
with Serica retaining a 50% interest in the field. The sale of the Company's
interests in Norway where drilling and development costs had become
prohibitive, whilst retaining upside in the Bream field, marks Serica's
approach to managing the level of its financial exposures.

    2009 and beyond
    In the current business environment, access to new equity and debt
remains uncertain. Consequently the Company has given priority to the careful
management of existing financial resources. The completion of the Kambuna
development and receipt of first field revenues will reweight the balance from
investment to income generation. In addition its position as operator of most
of its exploration interests leaves Serica well-placed where the timing of
expenditure is concerned. Near-term exploration spend is mitigated through
farm-down or deferral.
    As of 24 April 2009, the Company's debt facility was US$45 million drawn
down out of a total of US$100 million resulting in a net debt position of some
US$7 million. In February 2009 the facility was extended until November 2009,
when refinancing will be required. Further draw downs and ongoing expenditure
are planned prior to refinancing. By this time revenues from the Kambuna field
will have commenced putting the Company in a stronger financial position.
Although the refinancing cannot be considered certain in the current
environment, the recent extension of the debt facility demonstrates the strong
relationship that the Company has formed with its major lenders. The option of
further asset sales is also open to the Company.
    Overall, the part disposal of Kambuna for cash, the start of revenues
from the retained Kambuna interest and the control that the Company can exert
over the timing and cost of its exploration programmes both through
operatorship and through successful farm-outs leave it well placed to manage
its commitments through this difficult financial environment. Serica intends
to continue taking a prudent approach to financial management so as to retain
the strength that it has built to-date.

    Asset values and Impairment

    Recent financial and market turmoil has precipitated a world-wide
reconsideration of the underlying value of assets. In Serica's case, its
market capitalisation at 31 December 2008 stood at US$80 million ((pnds
stlg)55 million) based on a share price of 31 pence (as of 24 April 2009 its
share price was 55 pence). As this was significantly exceeded by the net asset
value reflected on the balance sheet date, management has conducted a thorough
review of the carrying value of its assets. The key elements of its asset
values are Property, Plant and Equipment and Exploration and Evaluation assets
plus other assets including cash, and receivables.
    Property, Plant and Equipment represents the cost of developing the
Company's interest in the Kambuna gas field which is due to come on-stream
later this year. The value of future income streams, underpinned by gas sales
contracts, is projected to exceed booked costs by a significant margin and
consequently no impairment indicator has been determined.
    Exploration and Evaluation assets represent activities at an earlier
stage in the investment cycle, for which the estimated value is necessarily
subject to greater uncertainties including drilling risk, development risk and
general commercial factors. These assets include Serica's Columbus gas
discovery for which a development plan has been submitted, plus exploration
and appraisal costs on its other licences. After conducting a review of
Exploration and Evaluation assets, management has decided to write off costs
to-date of US$6.1 million on its Spanish permits, US$6.1 million on its Oak
discovery in the UK, and US$11.4 million of costs on its Chablis interest,
also in the UK.
    Although seismic surveys conducted on the Spanish permits in 2007/8
indicated potential drilling prospects, in the current economic climate Serica
is prioritising other exploration activities. Management has decided to write
off all costs to-date associated with exploration and evaluation of its four
Spanish permits, totaling US$6.1 million, as no significant further
expenditure is planned on the permits at this stage. The Company continues to
seek a farminee to drill one of the gas prospects identified and has obtained
a one year suspension of the permits.
    In the UK North Sea the drilling in 2006 of well 54/1b-6 on the Oak
prospect resulted in a discovery of gas containing significant quantities of
carbon dioxide and nitrogen. Work continues to establish the development
potential for this accumulation which would require substantial offshore
processing facilities and thus would only be economic in conjunction with
other similar discoveries in the area. As progress towards this is not within
Serica's control, the Company has no plans to commit further expenditures on
the block at this stage. Management has therefore decided to write-off all
exploration and evaluation costs to-date on the block, totaling US$6.1
million. Serica's share of expenditures on the discovery well were reduced
through farm down to Centrica, which bore the majority of the dry-hole costs.
    Following the recent announcement of the result of its Chablis appraisal
well, the Company has undertaken a review of the licence area. Although
management considers that the licence continues to offer prospectivity, in
view of the indeterminate outcome of the well and the challenging economic
environment, Serica has decided not to allocate further funds to the
exploration of this area. This will allow the deployment of funds to other
prospects within its portfolio offering better near-term opportunities.
Consequently, US$11.1 million of Exploration and Evaluation ("E&E") costs plus
US$0.3 million of goodwill has been charged to the Income Statement in 2008.
    The Company's other assets primarily comprise cash held with a range of
financial institutions carrying a minimum of A-1 credit ratings, plus other
receivables.
    In summary management has concluded that net assets of US$165.5 million,
after these write-downs, are fully supported and that the shortfall against
its current market value (approximately US$140 million as at 24 April 2009)
reflects the broader financial turmoil and the withdrawal of investors from
the markets. The Company is in a position to tailor the level of its
investments to the funds available and consequently to protect the value of
its assets during this period of turbulence. It also draws comfort from the
healthy forward markets for oil and gas.

    Results of Operations

    The results of Serica's operations detailed below in this MD&A, and in
the financial statements, are presented in accordance with International
Financial Reporting Standards ("IFRS").
    Serica generated a loss of US$1.0 million for 2008 compared to a loss of
US$13.6 million for 2007.

    
                                                            2008        2007
                                                          US$000      US$000

    Sales revenue                                              -            -
                                                         --------    --------

    Expenses:

        Administrative expenses                           (8,628)     (7,813)
        Foreign exchange (loss)/gain                        (370)        394
        Pre-licence costs                                 (1,150)       (287)
        Asset write offs                                 (24,034)     (9,282)
        Share-based payments                              (1,781)     (1,962)
        Depreciation and depletion                          (146)       (149)

                                                         --------    --------
    Operating loss before net finance revenue and tax    (36,109)    (19,099)

        Profit on disposal                                36,620           -
        Finance revenue                                    1,823       2,669
        Finance costs                                     (3,138)       (321)

                                                         --------    --------
    Loss before taxation                                    (804)    (16,751)

        Taxation credit for the year                         228         432
                                                         --------    --------

    Loss for the year from continuing operations            (576)    (16,319)

    Discontinued operations
    (Loss)/profit for the year from discontinued operations (395)      2,690

                                                         --------    --------
    Loss for the year                                       (971)    (13,629)
                                                         --------    --------

    Loss per ordinary share (LPS)
    Basic and diluted LPS - continuing operations (US$)   (0.003)     (0.108)
    Basic and diluted LPS on loss for the year (US$)      (0.006)     (0.090)
    

    Administrative expenses of US$8.6 million for 2008 increased from US$7.8
million for 2007 and reflect the growing scale of the Company's activities
over the past twelve months, albeit a less significant growth than from 2006
to 2007. The Company incurred higher levels of cost on various transactions
and other corporate activity in 2008 which more than offset any US$ equivalent
cost reduction of those general administrative costs incurred in (pnds stlg)
sterling, which fell as the US$ strengthened in the second half of 2008.
    The overall impact of foreign exchange is not significant in 2008 or
2007. Foreign exchange losses were incurred during the second half of 2008
following the strengthening of the US$ against the (pnds stlg) sterling and
the Norwegian Kroner, and its impact on the US$ equivalent of cash deposits
and other recoverables denominated in those currencies. These losses were
partially offset by foreign exchange gains booked on the US$ equivalent of the
(pnds stlg) sterling element of a loan draw-down.
    Pre-licence costs include direct cost and allocated general
administrative cost incurred on oil and gas interests prior to the award of
licences, concessions or exploration rights. During 2008 significant work was
undertaken on the UK 25th Licencing Round from which the Company has been
awarded interests in three licences. This activity has largely caused the
increase in expense of US$0.9 million from US$0.3 million in 2007 to US$1.2
million in 2008. Pre-licence expense has been incurred at similar levels in
South East Asia in 2007 and 2008.
    Asset write offs in 2008 of US$24.0 million related to the Chablis
(US$11.4 million), Oak (US$6.1 million) and Spain (US$6.1 million) assets in
Q4 2008 and Biliton asset (US$0.4 million) in Q1 2008. The aggregate asset
write off was split in respect of E&E assets (US$23.2 million), Goodwill
(US$0.4 million) and other assets (US$0.4 million). The asset write offs of
US$9.3 million during 2007 comprised US$9.0 million of Biliton PSC costs and
US$0.3 million from relinquished licences in the UK.
    Share-based payment costs of US$1.8 million reflect allocations of
charges related to share option grants made during the course of 2005, 2006,
2007 and 2008 and compare with costs of US$2.0 million for 2007. The decline
in the charge for options granted in 2005, 2006 and 2007 has generally offset
the incremental charge generated from further share options granted in March
and November 2008.
    Negligible depletion and depreciation charges in all periods represent
office equipment and fixtures and fittings. Those costs of petroleum and
natural gas properties classified as exploration and evaluation assets are not
currently subject to such charges pending further evaluation. The balance of
Kambuna development costs is held within plant, property and equipment and
will be depleted once production commences.
    In August 2008 the Company completed the sale of a 15% interest in the
Glagah Kambuna TAC to a subsidiary of Salamander Energy plc ('Salamander') for
consideration of US$52.7 million including working capital. This disposal
generated a profit of US$36.6 million after deducting the relevant
proportional element of book development costs.
    Finance revenue, comprising interest income of US$1.8 million for 2008,
compares with US$2.7 million for 2007. The decrease from last year is due to
both a reduction in average cash deposit balances held through the respective
years and reduced average interest rate yields earned in 2008.
    Finance costs consist of interest payable, issue costs spread over the
term of the bank loan facility, and other fees. The first drawdown on the
senior secured debt facility occurred soon after the facility was arranged in
Q4 2007 and a second drawdown occurred in June 2008. The increase of US$2.8
million from US$0.3 million in 2007 to US$3.1 million in 2008 results from a
full year of costs being charged in 2008 following the facility arrangement
late in 2007.
    The net taxation credit from continuing operations was US$0.2 million in
2008 and US$0.4 million in 2007. Expenditures during 2005, 2006, 2007 and 2008
have reduced any potential current income tax expense arising for 2006, 2007
and 2008 to US$ nil.
    The results from discontinued operations arise following the disposal of
the Company's Norwegian activities noted above. The accounting profit in 2007
was largely generated from tax recoveries recognised in the period.
    The net loss per share of US$0.01 for 2008 compares to a net loss per
share of US$0.09 for 2007.

    
    Summary of Quarterly Results

    Quarter ended:             31 Mar       30 Jun       30 Sep       31 Dec
                               US$000       US$000       US$000       US$000
                              -----------------------------------------------
    2008
    Sales revenue                  -           -            -            -
    (Loss)/profit
     for the quarter          (3,326)       (4,275)      33,516      (26,886)
    Basic and diluted
     loss per share US$        (0.02)        (0.02)           -        (0.16)
    Basic earnings
     per share US$                 -             -         0.19            -
    Diluted earnings
     per share US$                 -             -         0.19            -
                              -----------------------------------------------
    2007
    Sales revenue                    -           -            -            -
    (Loss)/profit
     for the quarter            (1,595)     (1,587)       1,237      (11,684)
    Basic and diluted
     loss per share US$          (0.01)      (0.01)           -        (0.08)
    Basic earnings
     per share US$                   -           -         0.01            -
    Diluted earnings
     per share US$                   -           -         0.01            -
                              -----------------------------------------------

    The fourth quarter 2008 loss includes asset write offs of US$23.6 million
in regard to the Chablis, Oak and Spain assets.
    The third quarter 2008 profit includes a profit of US$36.6 million
generated on the disposal of a 15% interest in the Kambuna field.
    The fourth quarter 2007 loss includes asset write offs of US$9.0 million
in regard to the Biliton PSC.

    Working Capital, Liquidity and Capital Resources

    Current Assets and Liabilities
    ------------------------------

    An extract of the balance sheet detailing current assets and liabilities
is provided below:
                                                    31 December  31 December
                                                           2008         2007
                                                         US$000       US$000
                                                    ------------ ------------
    Current assets:
      Inventories                                         4,618        6,991
      Trade and other receivables                         7,069       21,906
      Tax receivable                                          -        3,387
      Cash and cash equivalents                          56,822       22,638
                                                    ------------ ------------
    Total Current assets                                 68,509       54,922

    Less Current liabilities:
      Trade and other payables                          (14,599)     (23,604)
      Financial liabilities                             (32,105)           -
                                                    ------------ ------------
     Net Current assets                                  21,805       31,318
    

    At 31 December 2008, the Company had net current assets of US$21.8
million which comprised current assets of US$68.5 million less current
liabilities of US$46.7 million, giving an overall decrease in working capital
of US$9.5 million in the year.
    Inventories decreased from US$7.0 million to US$4.6 million over the year
as materials were utilised in the Kambuna drilling programme and the Company
reduced its working interest in the joint venture balances held.
    Trade and other receivables at 31 December 2008 totalled US$7.1 million,
and included recoverable amounts from partners in Joint Venture operations in
the UK and Indonesia, prepayments and sundry UK and Indonesian working capital
balances. Significant amounts due as at 30 September 2008 from the Kutai
disposal (US$2.7 million) and Chablis farm-out (US$1.6 million) were recovered
in Q4 2008. The 2007 year end balance of US$21.9 million included a US$9.4
million upfront deposit payment for the Global Santa Fe drilling rig for
Indonesian operations, which was utilised during the 2008 Indonesian drilling
campaign and accounts for a significant proportion of the US$14.8 million
decrease in balance over the year.
    The tax receivable as at 31 December 2007 represented expected recovery
of exploration expenditure from the Norwegian fiscal authorities, which was
received in full in December 2008.
    Cash and cash equivalents increased from US$22.6 million to US$56.8
million in the year. The Company raised additional new funds in Q1 2008 of
US$48.6 million through the issue of shares, received US$25.0 million in
further draw-downs on its loan facility and received US$52.7 million from the
Kambuna disposal in Q3 2008. These cash inflows were partially offset by the
significant capital expenditure on the Kambuna development and appraisal
drilling in the UK on Chablis. Other cost was incurred on exploration work
across the portfolio in South East Asia and the UK and Ireland, together with
ongoing administrative costs, operational expenses and corporate activity.
    Trade and other payables of US$14.6 million at 31 December 2008 chiefly
include significant trade creditors and accruals from the Kambuna development
and Chablis appraisal well drilling. Other smaller items include sundry
creditors and accruals for administrative expenses and other corporate costs.
    Financial liabilities are represented by the first drawdown of
approximately (pnds stlg)5.0 million under the senior secured debt facility,
which occurred in Q4 2007, and second drawdown of US$25.0 million in June
2008. The total is disclosed net of the unamortised portion of allocated issue
costs.

    
    Long-Term Assets and Liabilities
    --------------------------------

    An extract of the balance sheet detailing long-term assets and liabilities
is provided below:
                                                    31 December  31 December
                                                           2008         2007
                                                         US$000       US$000
                                                    ------------ ------------

    Exploration and evaluation assets                    69,711       71,874
    Property, plant and equipment                        68,526       19,543
    Goodwill                                                295          768
    Financial assets                                      1,500        4,680
    Long-term other receivables                           3,945        1,224
    Financial liabilities                                     -       (9,582)
    Deferred income tax liabilities                        (295)      (3,910)
    

    During 2008, total investments in petroleum and natural gas properties,
excluding property, plant and equipment and represented by exploration and
evaluation assets, decreased from US$71.9 million to US$69.7 million. The net
US$2.2 million decrease consists of US$27.2 million of additions (net of
disposal proceeds and back costs received from Kutai and Chablis), less
US$23.3 million of Spain, Chablis and Oak asset write offs and US$6.1 million
of Norwegian assets disposed.

    The US$27.2 million of additions were incurred on the following assets:

    In South East Asia, US$7.2 million was incurred in Vietnam on a seismic
survey and preparations for drilling, US$3.8 million was incurred on seismic,
exploration work and G&A on the Kutai concession in Indonesia and US$1.0
million on East Seruway.
    In the UK & Western Europe, US$8.0 million was spent on the Chablis site
survey and appraisal drilling, US$4.3 million of expenditure was incurred in
other UK and Ireland assets on exploration work and G&A, including the
Columbus FDP. US$1.2 million of expenditure related to Spain and US$1.7
million to Norway in 1H 2008 prior to the announcement of the Norwegian
interest disposal.
    During 2008, total investments included in property, plant and equipment
increased from US$19.6 million to US$68.5 million. The US$48.9 million
increase is caused by US$62.6 million of additions on the Kambuna development
less a deduction of the proportionate share of Kambuna book costs (as at the
effective date of the disposal of the part interest of 15%). The property,
plant and equipment also includes immaterial balances of US$0.3 million for
office fixtures and fittings and computer equipment.
    Goodwill, representing the difference between the price paid on
acquisitions and the fair value applied to individual assets, decreased by
US$0.5 million following the partial disposal of the Kambuna interest (US$0.1
million) and Chablis and Spain write offs of US$0.3 million and US$0.1 million
respectively.
    Financial assets include US$1.5 million of restricted cash deposits. The
US$4.7 million of restricted cash deposits, classified as financial assets as
at Q4 2007, are now included within cash and cash equivalents as during Q3
2008 the applicable restrictions for use were lifted during the quarter.
    Long-term other receivables of US$3.9 million are represented by value
added tax ("VAT") on Indonesian capital spend, which will be recovered from
future production.
    Financial liabilities represented by draw-downs under the senior secured
debt facility are now classified in current liabilities.
    The retained deferred income tax liability of US$0.3 million arises in
respect of certain capitalised assets retained in the group. Liabilities
previously recognised as arising from capitalised Norwegian exploration and
evaluation assets were reclassified at Q2 2008 as part of the disposal group
held for sale. These items were cleared in Q4 2008 following completion of the
Norwegian transaction noted above.

    
    Shareholders' Equity
    --------------------

    An extract of the balance sheet detailing shareholders' equity is provided
below:
                                                    31 December  31 December
                                                           2008         2007
                                                         US$000       US$000
                                                    ------------ ------------
    Total share capital                                 207,633      158,871
    Other reserves                                       15,510       13,729
    Accumulated deficit                                 (57,656)     (56,685)
    

    Total share capital includes the total net proceeds (both nominal value
and any premium on the issue of equity capital).
    Issued share capital during 2008 was increased by the issue of 19,826,954
ordinary shares at (pnds stlg)1.02 and 4,943,400 at Cdn$2.10, and by the issue
of 100,000 ordinary shares at Cdn$1.80 following the exercise of share
options.
    Other reserves mainly include amounts credited in respect of cumulative
share-based payment charges. The increase in other reserves from US$13.7
million to US$15.5 million reflects a credit to equity in respect of
share-based payment charges in 2008.

    
    Capital Resources
    -----------------
    

    Lease commitments

    At 31 December 2008, Serica had US$21.8 million of net working capital,
no long-term debt and no capital lease obligations. At that date, the Company
had commitments to future minimum payments under operating leases in respect
of rental office premises, office equipment and motor vehicles for each of the
following years as follows:

    
                             US$000
    31 December 2009            328
    31 December 2010             72
    

    Capital expenditure commitments, obligations and plans

    The Company's most significant planned capital expenditure commitments
for 2009 are those required to fund the development activity of the Kambuna
field. As at 31 December 2008, the Company's share of expected outstanding
capital costs on the project totalled approximately US$50 million. These
expected costs include amounts contracted for but not provided in 2008. It is
fully expected that these expenditures will be funded from the debt facility
as and when draw-downs are required.
    In the UK and NW Europe, the Chablis appraisal well spudded in December
2008 and drilling completed in January 2009. As at 31 December 2008 the
Company's share of outstanding capital costs in respect of Chablis drilling
totalled approximately US$6 million.
    In addition to the significant planned expenditures noted above, the
Company also has obligations to carry out defined work programmes on its oil
and gas properties, under the terms of the award of rights to these
properties, over the next two years as follows:

    
    Year ending 31 December 2009 US$2,518,000
    Year ending 31 December 2010 US$16,400,000
    

    These obligations reflect the Company's share of interests in the defined
work programmes and were not formally contracted at 31 December 2008. The
Company is not obliged to meet other joint venture partner shares of these
programmes. The most significant obligations are in respect of the Kutai PSC
in South East Asia, and drilling is expected to commence in 2010. Other less
material minimum obligations include G&G, seismic work and ongoing licence
fees in the UK and South East Asia.

    Available financing resources

    Serica expects that it will shortly enjoy its first significant revenues
and operational cash inflows from the Kambuna field which will be important to
the future growth and development of the Company. In the absence of revenues
currently generated from oil and gas production, Serica intends to utilise its
existing cash balances together with the currently available portion of the
US$100 million senior secured debt facility, to fund the immediate needs of
its investment programme and ongoing operations. At 31 December 2008, the
Group had available approximately US$85 million of committed borrowing
facilities for which all conditions precedent had been met, of which US$32
million had been drawn down and US$53 million was undrawn. The most
significant part of the facility, which included a corporate element of US$10
million, was to fund the development expenditures, particularly on the Kambuna
field. The ability to draw down under the facility for development is
determined both by the achievement of milestones on the relevant project and
also by the availability calculated under a projection model. On the Kambuna
field the key milestones for 2008 were gas sales heads of agreement being in
place, compliance with environmental policy, and commercial construction
contracts agreed for the relevant stages of development all of which were
achieved and US$25 million was drawn in June of that year. In March 2009, a
further US$13 million draw down was made and as at 24 April 2009 the total
loan drawn down was US$45 million.
    At 31 December 2008 availability of more than US$85 million under the
facility was dependent on the achievement of relevant conditions precedent and
projections for development assets within the Group's portfolio and forecasts
of commodity prices.

    
    Off-Balance Sheet Arrangements
    ------------------------------

    The Company has not entered into any off-balance sheet transactions or
arrangements.

    Critical Accounting Estimates
    -----------------------------
    

    The Company's significant accounting policies are detailed in note 2 to
the attached audited 2008 financial statements. International Financial
Reporting Standards have been adopted. The costs of exploring for and
developing petroleum and natural gas reserves are capitalised and the
capitalisation and any write off of E&E assets necessarily involve certain
judgments with regard to whether the asset will ultimately prove to be
recoverable. A key source of estimation uncertainty that impacts the Company
relates to the impairment of the Company's assets. Oil and gas properties are
subject to periodic review for impairment whilst goodwill is reviewed at least
annually. Recoverable amounts can be determined based upon risked potential,
or where relevant, discovered oil and gas reserves. In each case, recoverable
amount calculations are based upon estimations and management assumptions
about future outcomes, product prices and performance.

    
    Financial Instruments
    ---------------------
    

    The Group's financial instruments comprise cash and cash equivalents,
bank loans and borrowings, accounts payable and accounts receivable. It is
management's opinion that the Group is not exposed to significant interest or
credit or currency risks arising from its financial instruments other than as
discussed below:

    
           Serica has exposure to interest rate fluctuations on its cash
           deposits and its bank loans; given the level of expenditure plans
           over 2009/10 this is managed in the short-term through selecting
           treasury deposit periods of one to three months. Cash and treasury
           credit risks are mitigated through spreading the placement of
           funds over a range of institutions each carrying acceptable
           published credit ratings to minimise counterparty risk.

           Where Serica operates joint ventures on behalf of partners it
           seeks to recover the appropriate share of costs from these third
           parties. The majority of partners in these ventures are well
           established oil and gas companies. In the event of non payment,
           operating agreements typically provide recourse through increased
           venture shares.

           Serica retains certain cash holdings and other financial
           instruments relating to its operations, limited to the levels
           necessary to support those operations. The US$ reporting currency
           value of these may fluctuate from time to time causing reported
           foreign exchange gains and losses. Serica maintains a broad
           strategy of matching the currency of funds held on deposit with
           the expected expenditures in those currencies. Management believes
           that this mitigates much of any actual potential currency risk
           from financial instruments. Loan funding is available in US
           Dollars and Pounds Sterling and is drawn-down in the currency
           required.

    It is management's opinion that the fair value of its financial
instruments approximate to their carrying values, unless otherwise noted.

    Share Options

    As at 31 December 2008, the following employee share options were
outstanding: -
                                                                    Exercise
                                       Expiry Date       Number         cost
                                                                        Cdn$

    Share options                       Feb 2009(*)     247,500      495,000
                                          May 2009      100,000      200,000
                                          Dec 2009      275,000      275,000
                                          Jan 2010      600,000      600,000
                                          Jun 2010    1,100,000    1,980,000

                                                                    Exercise
                                                                        cost
                                                                  (pnds stlg)

                                          Nov 2010      561,000      544,170
                                          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
                                          Jan 2012    1,056,000    1,077,120
                                          May 2012      405,000      421,200
                                          Aug 2012    1,200,000    1,182,000
                                        March 2013    1,812,000    1,359,000
                                        March 2013      850,000      697,000
                                      October 2013      750,000      300,000

    (*) Note - Expired as at 27 April 2009
    

    In January 2009 750,000 share options were granted to certain employees
other than directors with an exercise cost of (pnds stlg)0.32 and an expiry
date of January 2014.

    Outstanding Share Capital

    As at 24 April 2009, the Company had 176,518,311 ordinary shares issued
and outstanding.

    Business Risk and Uncertainties

    Serica, like all exploration companies in the oil and gas industry,
operates in an environment subject to inherent risks. Many of these risks are
beyond the ability of a company to control, particularly those associated with
the exploring for and developing of economic quantities of hydrocarbons.
Principal risks can be classified into four main categories: operational,
commercial, regulatory and financial.
    Operational risks include drilling complications, delays and cost
over-run on major projects, well blow-outs, failure to encounter hydrocarbons,
construction risks, equipment failure and accidents. Commercial risks include
access to markets, access to infrastructure, volatile commodity prices and
counterparty risks. Regulatory risks include governmental regulations, licence
compliance and environmental risks. Financial risks include access to equity
funding and credit.
    In addition to the principal risks and uncertainties described herein,
the Company is subject to a number of other risk factors generally, a
description of which is set out in our latest Annual Information Form
available on www.sedar.com.

    Key Performance Indicators ("KPIs")

    The Company's main business is the acquisition of interests in
prospective exploration acreage, the discovery of hydrocarbons in commercial
quantities and the crystallisation of value whether through production or
disposal of reserves. The Company tracks its non-financial performance through
the accumulation of licence interests in proven and prospective hydrocarbon
producing regions, the level of success in encountering hydrocarbons and the
development of production facilities. In parallel, the Company tracks its
financial performance through management of expenditures within resources
available, the cost-effective exploitation of reserves and the crystallisation
of value at the optimum point.

    Nature and Continuance of Operations

    The principal activity of the Company is to identify, acquire and
subsequently exploit oil and gas reserves primarily in Asia and Europe.
    The Company's financial statements have been prepared with the assumption
that the Company will be able to realise its assets and discharge its
liabilities in the normal course of business rather than through a process of
forced liquidation. The Company currently has no operating revenues and during
the year ended 31 December 2008 generated a loss of US$0.6 million from
continuing operations, but expects that it will shortly earn its first
revenues from the Kambuna field. At 31 December 2008 the Company held cash and
cash equivalents of US$56.8 million and a financial asset of restricted cash
of US$1.5 million. The Company intends to utilise its existing cash balances
together with the currently available portion of the US$100 million senior
secured debt facility, to fund the immediate needs of its investment programme
and ongoing operations. Further details of the Company's financial resources
and debt facility are given above in the Financial Review in this M,D&A.

    Additional Information

    Additional information relating to Serica, including the Company's annual
information form, can be found on the Company's website at
www.serica-energy.com and on SEDAR at www.sedar.com

    
    Approved on Behalf of the Board

    Paul Ellis                                 Christopher Hearne
    Chief Executive Officer                    Finance Director

    27 April 2009
    

    Forward Looking Statements

    This disclosure contains certain forward looking statements that involve
substantial known and unknown risks and uncertainties, some of which are
beyond Serica Energy plc's control, including: the impact of general economic
conditions where Serica Energy plc operates, industry conditions, changes in
laws and regulations including the adoption of new environmental laws and
regulations and changes in how they are interpreted and enforced, increased
competition, the lack of availability of qualified personnel or management,
fluctuations in foreign exchange or interest rates, stock market volatility
and market valuations of companies with respect to announced transactions and
the final valuations thereof, and obtaining required approvals of regulatory
authorities. Serica Energy plc's actual results, performance or achievement
could differ materially from those expressed in, or implied by, these forward
looking statements and, accordingly, no assurances can be given that any of
the events anticipated by the forward looking statements will transpire or
occur, or if any of them do so, what benefits, including the amount of
proceeds, that Serica Energy plc will derive therefrom.


    
    Serica Energy plc
    Group Income Statement
    for the year ended 31 December

                                                            2008        2007
                                                 Notes    US$000      US$000

    Sales revenue                                              -           -

    Cost of sales                                              -           -
                                                         --------------------

    Gross profit                                               -           -

    Administrative expenses                          4    (8,628)     (7,813)
    Foreign exchange (loss)/gain                            (370)        394
    Pre-licence costs                                     (1,150)       (287)
    Asset write offs                             13,15   (24,034)     (9,282)
    Share-based payments                                  (1,781)     (1,962)
    Depreciation and depletion                       5      (146)       (149)

                                                         --------------------
    Operating loss before
     net finance revenue and tax                         (36,109)    (19,099)

    Profit on disposal                            8 a)    36,620           -
    Finance revenue                                  9     1,823       2,669
    Finance costs                                   10    (3,138)       (321)

                                                         --------------------
    Loss before taxation                                    (804)    (16,751)

    Taxation credit for the year                 11 a)       228         432

                                                         --------------------
    Loss for the year
     from continuing operations                             (576)    (16,319)
                                                        ---------------------

    Discontinued operations

    (Loss)/profit for the year
     from discontinued operations                 8 b)      (395)      2,690

                                                        ---------------------
    Loss for the year                                       (971)    (13,629)
                                                        ---------------------
                                                        ---------------------



    Loss per ordinary share (LPS)

    Basic and diluted LPS
     - continuing operations (US$)                  12    (0.003)     (0.108)
    Basic and diluted LPS
     on loss for the year (US$)                     12    (0.006)     (0.090)



    Serica Energy plc
    Balance Sheet
    As at 31 December
                                   Group                 Company
                                    2008        2007        2008        2007
                         Notes    US$000      US$000      US$000      US$000

    Non-current assets

    Exploration &
     evaluation assets      13    69,711      71,874           -           -
    Property, plant
     and equipment          14    68,526      19,543           -           -
    Goodwill                15       295         768           -           -
    Investments in
     subsidiaries           17         -           -     130,684     130,684
    Financial assets        18     1,500       4,680       1,500       4,680
    Other receivables       18     3,945       1,224           -           -
                                ---------------------------------------------
                                 143,977      98,089     132,184     135,364
                                ---------------------------------------------
    Current assets

    Inventories             19     4,618       6,991           -           -
    Trade and
     other receivables      20     7,069      21,906     157,856     117,373
    Tax receivable          20         -       3,387           -           -
    Cash and
     cash equivalents       21    56,822      22,638      37,758       7,172
                                ---------------------------------------------
                                  68,509      54,922     195,614     124,545
                                ---------------------------------------------

    TOTAL ASSETS                 212,486     153,011     327,798     259,909
                                ---------------------------------------------

    Current liabilities

    Trade and
     other payables         22   (14,599)    (23,604)     (8,366)     (6,376)
    Financial liabilities   23   (32,105)          -     (32,105)          -

    Non-current liabilities
    Financial liabilities   23         -      (9,582)          -      (9,582)
    Deferred income
     tax liabilities      11d)      (295)     (3,910)          -           -

                                ---------------------------------------------
    TOTAL LIABILITIES            (46,999)    (37,096)    (40,471)    (15,958)
                                ---------------------------------------------

    NET ASSETS                   165,487     115,915     287,327     243,951
                                ---------------------------------------------
                                ---------------------------------------------


    Share capital           25   207,633     158,871     172,361     123,599
    Merger reserve          17         -           -     112,174     112,174
    Other reserves                15,510      13,729      15,510      13,729
    Accumulated deficit          (57,656)    (56,685)    (12,718)     (5,551)

                                ---------------------------------------------
    TOTAL EQUITY                 165,487     115,915     287,327     243,951
                                ---------------------------------------------
                                ---------------------------------------------

    Approved by the Board on 27 April 2009

    Paul Ellis                       Chris Hearne
    Chief Executive Officer          Finance Director
    -------------------------------- -------------------------------------



    Serica Energy plc
    Statement of Changes in Equity
    For the year ended 31 December 2008

    Group                          Share       Other     Accum'd
                                 capital    reserves     deficit       Total
                                  US$000      US$000      US$000      US$000

    At 1 January 2007            157,283      11,767     (43,056)    125,994

    Proceeds on
     exercise of options           1,588           -           -       1,588
    Share-based payments               -       1,962           -       1,962
    Loss for the year                  -           -     (13,629)    (13,629)

                                ---------------------------------------------
    At 31 December 2007          158,871      13,729     (56,685)    115,915

    Issue of share capital        51,046           -           -      51,046
    Costs associated
     with shares issued           (2,465)          -           -      (2,465)
    Proceeds on
     exercise of options             181           -           -         181
    Share-based payments               -       1,781           -       1,781
    Loss for the year                  -           -        (971)       (971)

                                ---------------------------------------------
    At 31 December 2008          207,633      15,510     (57,656)    165,487
                                ---------------------------------------------
                                ---------------------------------------------



    Company            Share      Merger       Other     Accum'd
                     capital     reserve    reserves     deficit       Total
                      US$000      US$000      US$000      US$000      US$000

    At 1 January
     2007            122,011     112,174      11,767      (2,097)    243,855

    Proceeds on
     exercise of
     options           1,588           -           -           -       1,588
    Share-based
     payments              -           -       1,962           -       1,962
    Loss for the year      -           -           -      (3,454)     (3,454)

                     --------------------------------------------------------
    At 31 December
     2007            123,599     112,174      13,729      (5,551)    243,951

    Issue of
     share capital    51,046           -           -           -      51,046
    Costs associated
     with shares
     issued           (2,465)          -           -           -      (2,465)
    Proceeds on
     exercise
     of options          181           -           -           -         181
    Share-based
     payments              -           -       1,781           -       1,781
    Loss for the year      -           -           -      (7,167)     (7,167)

                     --------------------------------------------------------
    At 31 December
     2008             172,361    112,174      15,510     (12,718)    287,327
                     --------------------------------------------------------
                     --------------------------------------------------------



    Serica Energy plc
    Cash Flow Statement
    For the year ended 31 December

                                   Group                 Company
                                    2008        2007        2008        2007
                                  US$000      US$000      US$000      US$000
    Cash flows from
     operating activities:
    Operating loss
     (including discontinued)    (36,165)    (19,271)     (5,320)     (5,011)

    Adjustments for:
    Depreciation and depletion       146         149           -           -
    Asset write offs              24,034       9,282           -           -
    Share-based payments           1,781       1,962       1,781       1,962
    Decrease/(increase) in
     trade and other receivables  11,528       8,093         488      (2,230)
    Decrease/(increase)
     in inventories                2,092        (206)          -           -
    (Decrease)/increase in
     trade and other payables    (11,981)    (12,895)      1,643         331
                                ---------------------------------------------
    Cash outflow
     from operations              (8,565)    (12,886)     (1,408)     (4,948)

    Taxes received                 3,227       2,717           -           -

                                ---------------------------------------------
    Net cash outflow
     from operations              (5,338)    (10,169)     (1,408)     (4,948)
                                ---------------------------------------------

    Cash flows from
     investing activities:

    Purchase of property,
     plant and equipment         (62,605)       (185)          -           -

    Purchase of E&E assets       (27,939)    (58,766)          -           -

    Funding provided to
     Group subsidiaries                -           -     (41,697)    (45,054)

    Funding provided
     for work programmes               -      (4,680)          -      (4,680)

    Proceeds from disposals
     of plant, property
     and equipment                52,743           -           -           -

    Proceeds from
     disposals of E&E assets       3,088       5,000           -           -

    Interest received              1,898       2,873       1,354       1,497

                                ---------------------------------------------
    Net cash used in
     investing activities        (32,815)    (55,758)    (40,343)    (48,237)
                                ---------------------------------------------

    Cash proceeds from
     financing activities:
    Net proceeds from
     issue of shares              48,581           -      48,581           -
    Proceeds on
     exercise of options             181       1,588         181       1,588
    Proceeds from loans
     and borrowings (net)         25,000       9,671      25,000       9,671
    Finance costs paid            (1,425)          -      (1,425)          -

                                ---------------------------------------------
    Net cash from
     financing activities         72,337      11,259      72,337      11,259
                                ---------------------------------------------

    Net increase/(decrease) in
     cash and cash equivalents    34,184     (54,668)     30,586     (41,926)

    Cash and cash equivalents
     at 1 January                 22,638      77,306       7,172      49,098

                                ---------------------------------------------
    Cash and cash equivalents
     at 31 December               56,822      22,638      37,758       7,172
                                ---------------------------------------------
                                ---------------------------------------------


    Serica Energy plc

    Notes to the Financial Statements

    1. Authorisation of the Financial Statements and Statement of Compliance
       with IFRS

    The Group's and Company's financial statements for the year ended 31
    December 2008 were authorised for issue by the Board of Directors on 27
    April 2009 and the balance sheets were signed on the Board's behalf by
    Paul Ellis and Chris Hearne. Serica Energy plc is a public limited
    company incorporated and domiciled in England & Wales. The principal
    activity of the Company and the Group is to identify, acquire and
    subsequently exploit oil and gas reserves primarily in Asia and Europe.
    The Company's ordinary shares are traded on AIM and the TSX-V.

    The Group's financial statements have been prepared in accordance with
    International Financial Reporting Standards ("IFRS") as adopted by the EU
    as they apply to the financial statements of the Group for the year ended
    31 December 2008. The Company's financial statements have been prepared
    in accordance with IFRS as adopted by the EU as they apply to the
    financial statements of the Company for the period ended 31 December 2008
    and as applied in accordance with the provisions of the Companies Act
    1985. The Group's financial statements are also prepared in accordance
    with IFRS as issued by the IASB. The principal accounting policies
    adopted by the Group and by the Company are set out in note 2.

    The Company has taken advantage of the exemption provided under section
    230 of the Companies Act 1985 not to publish its individual income
    statement and related notes. The deficit dealt with in the financial
    statements of the parent Company was US$7,167,000 (2007: US$3,454,000).

    On 1 September 2005, the Company completed a reorganisation (the
    "Reorganisation"). whereby the common shares of Serica Energy Corporation
    were automatically exchanged on a one-for-one basis for ordinary shares
    of Serica Energy plc, a newly formed company incorporated under the laws
    of the United Kingdom. In addition, each shareholder of the Corporation
    received beneficial ownership of part of the 'A' share of Serica Energy
    plc issued to meet the requirements of public companies under the United
    Kingdom jurisdiction. Under IFRS this reorganisation was considered to be
    a reverse takeover by Serica Energy Corporation and as such the financial
    statements of the Group represent a continuation of Serica Energy
    Corporation.

    2. Accounting Policies

    Basis of Preparation

    The accounting policies which follow set out those policies which apply
    in preparing the financial statements for the year ended 31 December
    2008.

    The Group and Company financial statements are presented in US dollars
    and all values are rounded to the nearest thousand dollars (US$000)
    except when otherwise indicated.

    Going Concern

    The financial position of the Group, its cash flows and available debt
    facilities are described in the Financial Review above. As at 31 December
    2008 the Group had US$32.1 million of debt and US$56.8 million of
    available cash.

    The Directors are required to consider the availability of resources to
    meet the Group and Company's liabilities for the forseeable future. As
    described in the MD&A, the current business environment is challenging
    and access to new equity and debt remains uncertain. The Group's existing
    debt facility must be refinanced by November 2009. As of 24 April 2009
    the Group's debt facility was US$45 million drawn down resulting in a net
    debt position of some US$7 million. Further draw downs and ongoing
    expenditure are planned prior to refinancing.

    Although the refinancing cannot be considered certain in the current
    environment, management remains confident that it can be achieved on
    acceptable terms. This is based upon the following factors: the Kambuna
    field is expected to commence production in mid 2009; gas sales contracts
    for Kambuna have been finalised at fixed prices and any fluctuations in
    condensate prices will be largely offset by variations in cost recovery
    entitlement; the Company has a record of prudent financial management,
    including the raising of capital through farm down and the sale of part
    of its Kambuna field interest; and, the Company has an established
    relationship with its existing banking syndicate. Discussions are already
    underway on a replacement facility. The option of further asset sales is
    also open to the Company.

    After making enquiries and having taken into consideration the above
    factors, the Directors have a reasonable expectation that the group has
    adequate resources to continue in operational existence for the
    foreseeable future. Accordingly they continue to adopt the going concern
    basis in preparing the financial statements.

    Use of judgement and estimates and key sources of estimation uncertainty

    The preparation of financial statements in conformity with IFRS requires
    management to make estimates and assumptions that affect the reported
    amounts of assets and liabilities as well as the disclosure of contingent
    assets and liabilities at the balance sheet date and the reported amounts
    of revenues and expenses during the reporting period. Estimates and
    judgments are continuously evaluated and are based on management's
    experience and other factors, including expectations of future events
    that are believed to be reasonable under the circumstances. Actual
    outcomes could differ from these estimates.

    The key sources of estimation uncertainty that have a significant risk of
    causing material adjustment to the amounts recognised in the financial
    statements are: the impairment of the Group's assets (including goodwill,
    oil & gas development assets and E&E assets), share-based payment costs
    and contingencies.

    Impairment
    ----------
    The Group monitors internal and external indicators of impairment
    relating to its intangible and tangible assets, which may indicate that
    the carrying value of the assets may not be recoverable. The assessment
    of the existence of indicators of impairment in E&E assets involves
    judgement, which includes whether management expects to fund significant
    further expenditure in respect of a licence and whether the recoverable
    amount may not cover the carrying value of the assets. For development
    assets judgement is involved when determining whether there have been any
    significant changes in the Group's oil and gas reserves.

    The Group determines whether E&E assets are impaired at an asset level
    and in regional cost centres when facts and circumstances suggest that
    the carrying amount of a regional cost centre may exceed its recoverable
    amount. As recoverable amounts are determined based upon risked
    potential, or where relevant, discovered oil and gas reserves, this
    involves estimations and the selection of a suitable pre-tax discount
    rate relevant to the asset in question. The calculation of the
    recoverable amount of oil and gas development properties involves
    estimating the net present value of cash flows expected to be generated
    from the asset in question. Future cash flows are based on assumptions on
    matters such as estimated oil and gas reserve quantities and commodity
    prices. The discount rate applied is a pre-tax rate which reflects the
    specific risks of the country in which the asset is located.

    Share-based payment costs
    -------------------------
    The estimation of share-based payment costs requires the selection of an
    appropriate valuation model, consideration as to the inputs necessary for
    the valuation model chosen and the estimation of the number of awards
    that will ultimately vest, inputs for which arise from judgments relating
    to the continuing participation of employees (see note 27).

    Contingencies
    -------------
    By their nature, contingencies will only be resolved when one or more
    future events occur or fail to occur. The assessment of contingencies
    inherently involves the exercise of significant judgment and estimates of
    the outcome of future events.

    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, Petroleum Development Associates (Asia) Limited,
    Serica Energia Iberica S.L., Serica Holdings UK Limited, Serica Energy
    (UK) Limited, PDA Lematang Limited, APD (Asahan) Limited, APD (Biliton)
    Limited, Serica Energy Pte Limited, Serica Kutei B.V., Serica Nam Con Son
    B.V., Serica Glagah Kambuna B.V. and Serica East Seruway B.V.. Together
    these comprise the "Group".

    All inter-company balances and transactions have been eliminated upon
    consolidation.

    Foreign Currency Translation

    The functional and presentational currency of Serica Energy plc and all
    its subsidiaries is US dollars.

    Transactions in foreign currencies are initially recorded at the
    functional currency rate ruling at the date of the transaction. Monetary
    assets and liabilities denominated in foreign currencies are retranslated
    at the foreign currency rate of exchange ruling at the balance sheet date
    and differences are taken to the income statement. Non-monetary items
    that are measured in terms of historical cost in a foreign currency are
    translated using the exchange rate as at the date of initial transaction.
    Non-monetary items measured at fair value in a foreign currency are
    translated using the exchange rate at the date when the fair value was
    determined. Exchange gains and losses arising from translation are
    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 fair value of other assets given, equity instruments issued
    and liabilities incurred or assumed at the date of exchange, plus costs
    directly attributable to the acquisition.

    Goodwill on acquisition is initially measured at cost being the excess of
    purchase price over the fair market value of identifiable assets,
    liabilities and contingent liabilities acquired. Following initial
    acquisition it is measured at cost less any accumulated impairment
    losses. Goodwill is not amortised but is subject to an impairment test at
    least annually (excluding goodwill recognised as a result of the
    requirement to recognise deferred tax liabilities on acquisitions) and
    more frequently if events or changes in circumstances indicate that the
    carrying value may be impaired.

    At the acquisition date, any goodwill acquired is allocated to each of
    the cash-generating units, or groups of cash generating units expected to
    benefit from the combination's synergies. Impairment is determined by
    assessing the recoverable amount of the cash-generating unit, or groups
    of cash generating units to which the goodwill relates. Where the
    recoverable amount of the cash-generating unit is less than the carrying
    amount, an impairment loss is recognised.

    Joint Venture Activities

    The Group conducts petroleum and natural gas exploration and production
    activities jointly with other venturers who each have direct ownership in
    and jointly control the assets of the ventures. These are classified as
    jointly controlled assets and consequently, these financial statements
    reflect only the Group's proportionate interest in such activities.

    In accordance with industry practice, the Group does not record its share
    of costs 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 a Joint Operating Agreement ("JOA") in order to earn
    additional equity, it records its paying interest that incorporates the
    additional contribution over its equity share.

    Full details of Serica's working interests in those petroleum and natural
    gas exploration and production activities classified as jointly
    controlled assets are included in the Review of Operations.

    Upon the successful development of an oil or gas field in a contract
    area, the cumulative excess of paying interest over working interest in
    that contract is generally repaid out of the field production revenue
    attributable to the carried interest holder.

    Exploration and Evaluation Assets

    As allowed under IFRS 6 and in accordance with clarification issued by
    the International Financial Reporting Interpretations Committee, the
    Group has continued to apply its existing accounting policy to
    exploration and evaluation activity, subject to the specific requirements
    of IFRS 6. The Group will continue to monitor the application of these
    policies in light of expected future 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 other exploration rights are expensed in the income statement.

    Exploration and Evaluation
    --------------------------

    The costs of exploring for and evaluating oil and gas properties,
    including the costs of acquiring rights to explore, geological and
    geophysical studies, exploratory drilling and directly related overheads,
    are capitalised and classified as intangible E&E assets. These costs are
    directly attributed to regional cost centres for the purposes of
    impairment testing; Indonesia, Vietnam, UK & North West Europe and Spain.

    E&E assets are not amortised prior to the conclusion of appraisal
    activities but are assessed for impairment at an asset level and in
    regional cost centres when facts and circumstances suggest that the
    carrying amount of a regional cost centre may exceed its recoverable
    amount. Recoverable amounts are determined based upon risked potential,
    and where relevant, discovered oil and gas reserves. When an impairment
    test indicates an excess of carrying value compared to the recoverable
    amount, the carrying value of the regional cost centre is written down to
    the recoverable amount in accordance with IAS 36. Such excess is expensed
    in the income statement.

    Costs of licences are expensed in the income statement if licences are
    relinquished, or if management do not expect to fund significant future
    expenditure in relation to the licence.

    The E&E phase is completed when either the technical feasibility and
    commercial viability of extracting a mineral resource are demonstrable or
    no further prospectivity is recognised. At that point, if commercial
    reserves have been discovered, the carrying value of the relevant assets,
    net of any impairment write-down, is classified as an oil and gas
    property within property, plant and equipment, and tested for impairment.
    If commercial reserves have not been discovered then the costs of such
    assets will be retained within the relevant geographical E&E segment
    until subject to impairment or relinquishment.

    Asset Purchases and Disposals
    -----------------------------

    When a commercial transaction involves the exchange of E&E assets of
    similar size and characteristics, no fair value calculation is performed.
    The capitalised costs of the asset being sold are transferred to the
    asset being acquired. Proceeds from a part disposal of an E&E asset,
    including back-cost contributions are credited against the capitalised
    cost of the asset.

    Property, Plant and Equipment - Oil and gas properties

    Capitalisation
    --------------

    Oil and gas properties are stated at cost, less any accumulated
    depreciation and accumulated impairment losses. Oil and gas properties
    are accumulated into single field cost centres and represent the cost of
    developing the commercial reserves and bringing them into production
    together with the E&E expenditures incurred in finding commercial
    reserves previously transferred from E&E assets as outlined in the policy
    above. The cost will include, for qualifying assets, borrowing costs.

    Depreciation
    ------------

    Oil and gas properties are not depreciated until production commences.
    Costs relating to each single field cost centre are depleted on a unit of
    production method based on the commercial proven and probable reserves
    for that cost centre. The depletion calculation takes account of the
    estimated future costs of development of recognised proven and probable
    reserves. Changes in reserve quantities and cost estimates are recognised
    prospectively from the last reporting date.

    Impairment
    ----------

    A review is performed for any indication that the value of the Group's
    development and production assets may be impaired.

    For oil and gas properties when there are such indications, an impairment
    test is carried out on the cash generating unit. Each cash generating
    unit is identified in accordance with IAS 36. Serica's cash generating
    units are those assets which generate largely independent cash flows and
    are normally, but not always, single development or production areas. If
    necessary, additional impairment is charged through the income statement
    if the capitalised costs of the cash generating unit exceed the
    associated estimated future discounted cash flows of the related
    commercial oil and gas reserves.

    Asset Disposals
    ---------------

    Proceeds from the entire disposal of a development and production asset,
    or any part thereof, are taken to the income statement together with the
    requisite proportional net book value of the asset, or part thereof,
    being sold.

    Decommissioning
    ---------------

    Liabilities for decommissioning costs are recognised when the Group has
    an obligation to dismantle and remove a production, transportation or
    processing facility and to restore the site on which it is located.
    Liabilities may arise upon construction of such facilities, upon
    acquisition or through a subsequent change in legislation or regulations.
    The amount recognised is the estimated present value of future
    expenditure determined in accordance with local conditions and
    requirements. A corresponding tangible item of property, plant and
    equipment equivalent to the provision is also created. The Group did not
    carry any provision for decommissioning costs during 2007 or 2008.

    Any changes in the present value of the estimated expenditure is added to
    or deducted from the cost of the assets to which it relates. The adjusted
    depreciable amount of the asset is then depreciated prospectively over
    its remaining useful life. The unwinding of the discount on the
    decommissioning provision is included as a finance cost.

    Property, Plant and Equipment - Other

    Computer equipment and fixtures, fittings and equipment are recorded at
    cost as tangible assets. The straight-line method of depreciation is used
    to depreciate the cost of these assets over their estimated useful lives.
    Computer equipment is depreciated over three years and fixtures, fittings
    and equipment over four years.

    Inventories

    Inventories are valued at the lower of cost and net realisable value.
    Cost is determined by the first-in first-out method and comprises direct
    purchase costs and transportation expenses.

    Investments

    In its separate financial statements the Company recognises its
    investments in subsidiaries at cost less any provision for impairment.

    Financial Instruments

    Financial instruments comprise financial assets, cash and cash
    equivalents, financial liabilities and equity instruments.

    Financial assets
    ----------------

    Financial assets within the scope of IAS 39 are classified as either
    financial assets at fair value through profit or loss, or loans and
    receivables, as appropriate. When financial assets are recognised
    initially, they are measured at fair value. Transaction costs that are
    directly attributable to the acquisition or issue of the financial asset
    are capitalised unless they relate to a financial asset classified at
    fair value through profit and loss in which case transaction costs are
    expensed in the income statement.

    The Group determines the classification of its financial assets at
    initial recognition and, where allowed and appropriate, re-evaluates this
    designation at each financial year end.

    Financial assets at fair value through profit or loss include financial
    assets held for trading and derivatives. Financial assets are classified
    as held for trading if they are acquired for the purpose of selling in
    the near term.

    Loans and receivables are non-derivative financial assets with fixed or
    determinable payments that are not quoted in an active market. After
    initial measurement loans and receivables are subsequently carried at
    amortised cost, using the effective interest rate method, less any
    allowance for impairment. Amortised cost is calculated by taking into
    account any discount or premium on acquisition over the period to
    maturity. Gains and losses are recognised in the income statement when
    the loans and receivables are de-recognised or impaired, as well as
    through the amortisation process.

    Cash and cash equivalents
    -------------------------

    Cash and cash equivalents include balances with banks and short-term
    investments with original maturities of three months or less at the date
    acquired.

    Financial liabilities
    ---------------------

    Financial liabilities include interest bearing loans and borrowings, and
    trade and other payables.

    Obligations for loans and borrowings are recognised when the Group
    becomes party to the related contracts and are measured initially at the
    fair value of consideration received less directly attributable
    transaction costs.

    After initial recognition, interest-bearing loans and borrowings are
    subsequently measured at amortised cost using the effective interest
    method.

    Gains and losses are recognised in the income statement when the
    liabilities are derecognised as well as through the amortisation process.

    Equity
    ------

    Equity instruments issued by the Company are recorded in equity at the
    proceeds received, net of direct issue costs.

    Revenue Recognition

    Revenue is recognised to the extent that it is probable that the economic
    benefits will flow to the Group and the revenue can be reliably measured.
    Revenue from oil and natural gas production is recognised on an
    entitlement basis for the Group's net working interest.

    Finance Revenue

    Finance revenue chiefly comprises interest income from cash deposits on
    the basis of the effective interest rate method and is disclosed
    separately on the face of the income statement.

    Finance Costs

    Finance costs of debt are allocated to periods over the term of the
    related debt using the effective interest method. Arrangement fees and
    issue costs are amortised and charged to the income statement as finance
    costs over the term of the debt.

    Borrowing costs

    Borrowing costs directly relating to the acquisition, construction or
    production of a qualifying capital project under construction are
    capitalised and added to the project cost during construction until such
    time the assets are substantially ready for their intended use i.e when
    they are capable of commercial production. Where funds are borrowed
    specifically to finance a project, the amounts capitalised represent the
    actual borrowing costs incurred. All other borrowing costs are recognised
    in the income statement in the period in which they are incurred.

    Share-Based Payment Transactions

    The Company operates equity settled schemes under which employees may be
    awarded share options from time-to-time. The fair value of each option at
    the date of the grant is estimated using an appropriate pricing model
    based upon the option price, the share price at the date of issue, market
    parameters (if any), volatility and the life of the option. It is assumed
    that all performance criteria are met.

    No expense is recognised for awards that do not ultimately vest, except
    for awards where vesting is conditional on a market condition. In this
    case such awards are treated as vesting provided that all other
    performance conditions are satisfied.

    At each balance sheet date before vesting, the cumulative expense is
    calculated, representing the extent to which the vesting period has
    expired and management's best estimate of the achievement or otherwise of
    non-market conditions and of the number of equity instruments that will
    ultimately vest or, in the case of an instrument subject to a market
    condition, be treated as vesting as described above. The movement in
    cumulative expense since the previous balance sheet date is recognised in
    the income statement, with a corresponding entry in equity. Estimated
    associated national insurance charges are expensed in the income
    statement on an accruals basis.

    Income Taxes

    Deferred tax is provided using the liability method and tax rates and
    laws that have been enacted or substantively enacted at the balance sheet
    date. Provision is made for temporary differences at the balance sheet
    date between the tax bases of the assets and liabilities and their
    carrying amounts for financial reporting purposes. Deferred tax is
    provided on all temporary differences except for:

    -  temporary differences associated with investments in subsidiaries,
       where the timing of the reversal of the temporary differences can be
       controlled by the Group and it is probable that the temporary
       differences will not reverse in the foreseeable future; and

    -  temporary differences arising from the initial recognition of an asset
       or liability in a transaction that is not a business combination and,
       at the time of the transaction, affects neither the income statement
       nor taxable profit or loss.

    Deferred tax assets are recognised for all deductible temporary
    differences, to the extent that it is probable that taxable profits will
    be available against which the deductible temporary differences can be
    utilised. Deferred tax assets and liabilities are presented net only if
    there is a legally enforceable right to set off current tax assets
    against current tax liabilities and if the deferred tax assets and
    liabilities relate to income taxes levied by the same taxation authority.

    Earnings Per Share

    Earnings per share is calculated using the weighted average number of
    ordinary shares outstanding during the period. Diluted earnings per share
    is calculated based on the weighted average number of ordinary shares
    outstanding during the period plus the weighted average number of shares
    that would be issued on the conversion of all relevant potentially
    dilutive shares to ordinary shares. It is assumed that any proceeds
    obtained on the exercise of any options and warrants would be used to
    purchase ordinary shares at the average price during the period. Where
    the impact of converted shares would be anti-dilutive, these are excluded
    from the calculation of diluted earnings.

    New standards and interpretations not applied

    At the date of the authorisation of these financial statements, certain
    new Standards, amendments and Interpretations to existing Standards have
    been published but are not yet effective. The Group has not early adopted
    any of these pronouncements. The new Standards, amendments and
    Interpretations that are expected to be relevant to the Group and
    Company's financial statements are as follows:

    International Accounting Standards (IAS / IFRSs)          Effective date

    IFRS 1 and   Cost of an Investment in a Subsidiary,       1 January 2009
    IAS 27       Jointly Controlled Entity or Associate
                 (Amendment)
    IFRS 2       IFRS 2 - Vesting Conditions and              1 January 2009
                 Cancellations (Amendment)
    IFRS 3       Business Combinations (Revised January 2008)    1 July 2009
    IFRS 7       Financial instruments: Disclosures
                 (Amendment)                                  1 January 2009
    IFRS 8       Operating Segments                           1 January 2009
    IAS 1        Presentation of Financial Statements         1 January 2009
                 (Revised September 2007)
    IAS 23       Borrowing Costs (Revised March 2007)         1 January 2009
    IAS 27       Consolidated and Separate Financial             1 July 2009
                 Statements (Amendment)
    IAS 32 and   Puttable Financial Instruments and           1 January 2009
    IAS 1        Obligations Arising on Liquidation
                 (Amendment)
    IAS 39       Eligible Hedged Items (Amendment)               1 July 2009

    International Financial Reporting Interpretations
     Committee (IFRIC)

    IFRIC 15     Agreements for the Construction              1 January 2009
                 of Real Estate
    IFRIC 16     Hedges of a Net Investment in a              1 October 2008
                 Foreign Operation
    IFRIC 17     Distributions of Non-Cash Assets to Owners      1 July 2009
    IFRIC 18     Transfers of Assets from Customers              1 July 2009

    The Directors do not anticipate that the adoption of these statements and
    interpretations will have a material impact on the Group's financial
    statements in the period of initial application.
    

    %SEDAR: 00022686E




For further information:

For further information: Serica Energy plc: Paul Ellis, CEO,
paul.ellis@serica-energy.com, +44 (0)20 7487 7300; Chris Hearne, CFO,
chris.hearne@serica-energy.com, +44 (0)20 7487 7300; JPMorgan Cazenove: Steve
Baldwin, steve.baldwin@jpmorgancazenove.com, +44 (0)20 7588 2828; Tristone
Capital Limited: Majid Shafiq, mshafiq@tristonecapital.com, +44 (0)20 7355
5872; Pelham Public Relations: Philip Dennis, philip.dennis@pelhampr.com, +44
(0)20 7337 1516; Andy Cornelius: andy.cornelius@pelhampr.com, +44 (0)20 7337
1514; CHF - Canada: Cathy Hume, cathy@chfir.com, (416) 868-1079; Catarina
Cerqueira, catarina@chfir.com, (416) 868-1079

Organization Profile

SERICA ENERGY PLC

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