Serica Energy plc ("Serica" or the "Company") - Q1 2009 report to shareholders



    LONDON, May 29 /CNW/ - Serica Energy today announces its financial
results for the three months ending 31 March 2009. The results and associated
Management Discussion and Analysis are included below and copies are available
at www.serica-energy.com and www.sedar.com

    
    Q1 2009 Highlights

    Operational

    -   Kambuna (Indonesia) remains on schedule to commence production mid
        year

        -  3rd gas sales contract agreed for LPG extraction - allowing field
           production to increase by up to 10% in 2010

    -   Farmed out Block 06/94 PSC (Vietnam) - Serica retains a 10% carried
        interest through the three well drilling programme

    -   2D Seismic survey being completed onshore Kutai PSC (Indonesia)

    -   Completed drilling of Chablis appraisal well 48/16b-3 (UK Central
        North Sea)

    Forward Drilling Programme

    -   Further exploration drilling in 2009:

        -  Bandon prospect in Ireland - drilling commenced 11 May

        -  Tuong Vi prospect in Vietnam to be spudded in June

        -  Conan prospect in the East Irish Sea - drilling planned 2H 2009

    Financial Highlights

    -   Cash position at 31 March 2009 - US$41.6 million

    -   Q1 loss before tax of US$9.9 million - including US$7.1 million write
        down relating to Chablis
    

    Serica's Chief Executive, Paul Ellis, commented:

    "While the main focus for the company is to achieve first production from
the Kambuna field in mid 2009, we also plan to drill three exploration
prospects this year without incurring significant cost. Operations on the
first of these, the Bandon prospect in Ireland, are currently ongoing and
results are expected shortly. Drilling on the Tong Vi well in Vietnam is
expected to start in June and we plan to drill the Conan prospect in the East
Irish Sea once a farm-out has been agreed. With first production and revenues
from Kambuna later this year and existing cash resources, Serica remains well
positioned financially and we look forward to the remainder of the year with
confidence."

    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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                             in the subject line.
    

    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") contains information up to and including 27 May 2009 and should
be read in conjunction with the attached unaudited interim consolidated
financial statements for the period ended 31 March 2009. The interim financial
statements for the three months ended 31 March 2009 have been prepared by and
are the responsibility of the Company's management, and the Company's
independent auditors have not performed a review of these financial
statements. Serica's activities are centred on the UK and Indonesia, with
other interests in Vietnam, Ireland and Spain.
    References to the "Company" include Serica and its subsidiaries where
relevant. All figures are reported in US dollars ("US$") unless otherwise
stated.
    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").

    MANAGEMENT OVERVIEW

    During the first quarter 2009 the Company has focused its efforts on
advancing the Kambuna development and on preparations for the second quarter
2009 exploration drilling in Ireland and Vietnam.
    Terms of a third gas sales contract relating to the Kambuna field have
recently been agreed, under which from the end of 2009 it is expected that
field production will be increased by up to 10% to allow for the extraction of
LPG.
    In March, the Company entered into a farm-out agreement with Australian
Worldwide Exploration Limited ("AWE") relating to Serica's interest in the
Block 06/94 PSC, offshore Vietnam. This agreement, together with the farm-out
agreement in Ireland announced in 2008, has significantly reduced the funding
requirement for the 2009 exploration drilling programme and is fundamental to
the Company's operational strategy. 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, Indonesia.

    Field Appraisal and Development

    
    Glagah Kambuna TAC - Kambuna Field, Offshore North Sumatra, Indonesia
    ---------------------------------------------------------------------
    

    The Company holds an interest of 50% in the Kambuna TAC.
    Progress has continued in 2009 to date towards the first production from
the Kambuna field. The 58 kilometre offshore and onshore pipeline has been
laid and tested. The offshore platform topsides were successfully installed in
March and offshore hook-up and commissioning are in progress. Work continues
with the construction of the onshore gas separation and processing facility. A
leased early production facility, utilising some of the permanent facilities
and capable of producing at DCQ rates will be delivered to site in June for
production to begin around mid-year 2009. Over the following six to nine
months the permanent facilities will be completed.
    There are currently three gas sales contracts relating to the Kambuna
field. 28 mmscfd of gas will be sold to the state electricity generator, PT
Perusahaan Listrik Negara ("PLN") and 12 mmscfd to PT Pertiwi Nusantara
Resources ("Pertiwi"). The approximate contract prices for PLN and Pertiwi are
US$5.40 and US$7.00 per mcf respectively, both escalating at 3% per annum. In
addition to these sales contracts, terms of a third contract were agreed in
May 2009 with PT Pertamina (Persero) to allow for LPG extraction from the
sales gas stream. Once LPG extraction begins, around the end of this year,
field production will be increased by up to 10% in order to allow for the
extraction of LPG while maintaining contracted gas sales volumes, enhancing
the project economics. Once production commences, the field partners plan to
enter into a further contract for the sale of at least 10 mmscfd of gas,
taking the total daily contract volume for the field to 50-55 mmscfd in 2010.
    In addition to the gas, the Company is finalising the details of a
condensate sales contract for the expected 4,000-5,000 bpd of condensate to be
separated from the gas. This is expected be sold at a price close to that of
light crude oil.

    
    Columbus Field - Block 23/16f - UK Central North Sea
    ----------------------------------------------------
    

    Block 23/16f contains the undeveloped Columbus field. Serica operates the
block and holds a 50% interest.
    In October 2008, Serica submitted the Field Development Programme ("FDP")
for the Columbus field to the UK government. The FDP currently envisages
production via a subsea tie-back to the BP operated Eastern Trough Area
Project ("ETAP") but other offtake routes are also still under evaluation.
    In the first quarter, in the adjacent Block 23/21, operator BG Group
("BG") completed drilling 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.

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

    Block 48/16b contains the Chablis discovery and Block 48/17b lies
immediately east of Block 48/16b. Serica is operator and holds a 65% interest
in these blocks.
    Serica completed drilling the 48/16b-3z appraisal well to the Chablis
discovery in January 2009, to a total depth of 8,136 ft TVDSS. Although the
well encountered gas-bearing Rotliegendes Leman 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.
    The Company has decided that no further funds will be committed at this
stage and, following the write off of US$11.4 million of its costs on the
Chablis prospect in 2008, management has decided to write off all further
costs incurred on Chablis in 2009 totalling US$7.1 million.

    Exploration

    Indonesia

    Serica is the operator of the Kutai PSC and 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.
    In the onshore part of the Kutai PSC, Serica is currently completing a 2D
seismic survey. While drilling the seismic shot holes a number of oil seeps
were encountered, demonstrating the existence of a working petroleum system in
the onshore part of the acreage.

    Vietnam

    Serica currently holds 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. In March 2009, the Company reached
agreement with AWE on the terms of a farm-out of part of Serica's interest in
the Block 06/94 PSC. Under the agreement, which is subject to government
approval, AWE 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.
    An exploration well on the Tuong Vi prospect, in the south-western part
of the block, is due to be spudded in June 2009, targeting both oil and gas
prospects.

    Ireland

    Serica is the operator and holds a 50% interest in Licence PEL 01/06 in
the Slyne Basin off the west coast of Ireland. The Licence comprises Blocks
27/4, 27/5 (west) and 27/9.
    Under the terms of a farm-out agreement RWE Dea AG will contribute the
bulk of the cost of drilling the first exploration well, the Bandon prospect,
which spudded on 11 May 2009 and where operations are ongoing with results
expected shortly. Serica will retain a 50% working interest in the Licence and
remains the operator.

    United Kingdom

    Serica holds a 100% interest in Blocks 113/26b and 113/27c in the East
Irish Sea.
    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. Serica is currently seeking a
farminee to share the costs of drilling the Conan prospect.

    Spain

    The Company holds a 75% interest and operatorship in four exploration
Permits onshore northern Spain, where several gas prospects have been
identified by Serica. A drill or drop decision must be made prior to November
2009 and Serica is currently seeking a farm-in partner.

    Forward Programme

    Serica continues to manage its financial position and risk profile
against a challenging market backdrop. Further capital was raised in the first
quarter through the farm-out of the Company's drilling commitment in Vietnam
and the first exploration well in this programme will shortly be drilled.
    Serica's main priority for 2009 is to achieve first production from the
Kambuna field. At the same time we plan to drill three exploration prospects
without incurring significant cost. The first of these, the Bandon well in
Ireland, spudded on 11 May and is currently operating with results expected
shortly. The Tuong Vi well in Vietnam is expected to be spudded in early June
and we plan to drill the Conan prospect in the East Irish Sea once a farm-out
has been agreed. We also intend to add further exploration acreage in areas
where our knowledge and expertise can add value.
    Discussions with Serica's lending banks on the refinancing of the
Company's debt facility have already commenced.

    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 which continue into 2009, and also acted as a catalyst for
the review and reconsideration of the underlying value of assets. This is
discussed in detail below, together with a review of the Q1 2009 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 due around mid-year, 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.

    Financing developments - 2008, 2009 and beyond

    During 2008 and 2009 to date the Company has made significant progress in
securing funding to advance its business prior to first gas revenues and
operating cash inflows:

    
    In January 2008 the Company raised approximately US$48.6 million after
    expenses through the placing of 24.77 million shares

    In August 2008 the Company crystallised significant value through the
    sale of a 15% interest in the Kambuna field for US$52.7 million in cash,
    with Serica retaining a 50% interest in the field.

    In February 2009 the Company agreed an extension of its US$100 million
    debt facility until November 2009.
    

    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 27 May 2009, the Company's debt facility was US$45 million drawn
out of a total facility of US$100 million, resulting in a net debt position of
approximately US$20 million. Further drawings and ongoing expenditure are
planned prior to refinancing in November 2009. By this time revenues from the
Kambuna field will put 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 with its major lenders. The option of further asset sales
is also open to the Company.
    Overall, 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

    Financial and market turmoil precipitated a world-wide reconsideration of
the underlying value of assets during the course of 2008. In Serica's case,
its market capitalisation at 31 March 2009 stood at US$110 million ((pnds
stlg)78 million) based on a share price of 44 pence. As this was significantly
exceeded by the net asset value reflected at the balance sheet date,
management conducted a thorough review of the carrying value of its assets
leading to write downs in 2008 of its exploration and evaluation ("E&E")
assets totaling US$23.6 million. Over the past few months energy prices and
world stock markets have improved (as of 27 May 2009 the Company's share price
was 69 pence and market capitalisation approximately US$194 million).
    The key elements of its asset values are Property, Plant and Equipment
and E&E 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 in
mid 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.
    E&E 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. Following the write off of US$11.4 million on the Chablis
prospect in 2008, management has decided to write off all further costs
incurred on Chablis in 2009 totaling US$7.1 million.
    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 the Company's net assets of
US$155.8 million are fully supported and that the temporary shortfall against
its market value at 31 March 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

    Serica generated a loss of US$9.9 million for the three months ended 31
March 2009 ("Q1 2009") compared to a loss of US$3.3 million for the three
months ended 31 March 2008 ("Q1 2008"). The Q1 2009 loss included US$7.1
million of asset write offs as described below.

    
                                2009      2008      2008      2008      2008
                             ------------------------------------------------
                                  Q1        Q4        Q3        Q2        Q1
                              US$000    US$000    US$000    US$000    US$000

    Continuing operations
    Sales revenue                  -         -         -         -         -
                             ------------------------------------------------

    Expenses:

      Administrative
       expenses               (1,624)   (2,404)   (1,832)   (2,447)   (1,945)
      Foreign exchange
       gain/(loss)                21       274      (677)       88       (55)
      Pre-licence costs         (183)     (112)      (65)     (798)     (175)
      Asset write offs        (7,147)  (23,659)        -         -      (375)
      Share-based payments      (298)     (360)     (465)     (581)     (375)
    Depletion and
     depreciation                (29)      (15)      (38)      (35)      (58)
                             ------------------------------------------------
    Operating loss before
     net finance revenue
     and taxation             (9,260)  (26,276)   (3,077)   (3,773)   (2,983)
      Profit on disposal           -        (6)   36,626         -         -
      Finance revenue             27       326       630       298       569
      Finance costs             (707)     (723)     (752)     (785)     (878)

                             ------------------------------------------------
    (Loss)/profit before
     taxation                 (9,940)  (26,679)   33,427    (4,260)   (3,292)

      Taxation credit              -       139        89         -         -
                             ------------------------------------------------

    (Loss)/profit for the
     period - continuing      (9,940)  (26,540)   33,516    (4,260)   (3,292)

    Discontinued operations
    Loss for the period
     - discontinued                -      (346)        -       (15)      (34)

                             ------------------------------------------------
    (Loss)/profit for the
     period                   (9,940)  (26,886)   33,516    (4,275)   (3,326)
                             ------------------------------------------------


    Basic and diluted loss
     per share                 (0.06)    (0.16)      N/A     (0.02)    (0.02)
    Basic earnings per share     N/A       N/A      0.19       N/A       N/A
    Diluted earnings per share   N/A       N/A      0.19       N/A       N/A
    

    Administrative expenses of US$1.6 million for Q1 2009 decreased from
US$1.9 million for the same period last year. The decrease reflects a
reduction in the US$ equivalent of those general administrative costs incurred
in (pnds stlg) sterling, which fell following the strengthening of the US$ in
the second half of 2008. The Company incurred higher levels of cost on various
transactions and other corporate activity in Q2 and Q4 2008 than in other
quarters.
    No significant foreign exchange movements impacted Q1 2009 or Q1 2008
results.
    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. The expense of US$0.2 million for
Q1 2009 remained at a similar level to Q1 2008.
    Asset write offs in Q1 2009 of US$7.1 million related to the costs
incurred in the Q1 2009 period on the completion of the Chablis appraisal
well, which spudded in December 2008. Costs booked in respect of this asset
from 2008 and earlier periods were written off in Q4 2008 following
management's review of the carrying value of assets noted in the Financial
Review above. The Q4 2008 asset write-off charge of US$23.6 million related to
the Chablis (US$11.4 million), Oak (US$6.1 million) and Spanish assets (US$6.1
million). The aggregate total 2008 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).
    Share-based payment charges of US$0.3 million reflect share options
granted and compare with US$0.4 million for Q1 2008 and US$0.4 million for Q4
2008. Whilst further share options have been granted in January 2009, the
incremental charge generated from those options has been offset by the decline
in charges for options granted in prior years.
    Negligible depletion, depreciation and amortisation 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 Kambuna asset costs classified as 'development' costs and held within
plant, property and equipment will be depleted once production commences.
    The profit on disposal of US$36.6 million was generated in August 2008
when the Company completed the sale of a 15% interest in the Glagah Kambuna
TAC for consideration of US$52.7 million including working capital.
    Finance revenue comprising interest income of US$0.03 million for Q1 2009
compares with US$0.6 million for Q1 2008 and US$0.3 million for Q4 2008. The
decrease from Q1 2008 and Q4 2008 is principally due to the significant
reduction in average interest rate yields available in Q1 2009 to negligible
amounts, and a reduction in average cash deposit balances held in Q1 2009
compared to those prior periods.
    Finance costs consist of issue costs and other fees spread over the term
of the bank loan facility, and interest payable.
    Expenditures in prior and current periods have reduced any potential
current income tax expense arising for 2007 and 2008 and Q1 2009 to US$ nil.
The taxation credit from continuing operations of US$0.1 million in Q4 2008
arose from the release of deferred tax liabilities associated with the E&E
assets written off in the quarter.
    The results from discontinued operations arise following the disposal of
the Company's Norwegian activities which completed in Q4 2008.
    The net loss per share of US$0.06 for Q1 2009 compares to a net loss per
share of US$0.02 for Q1 2008.

    Summary of Quarterly Results

    
    Quarter       2009     2008     2008     2008     2008     2007     2007
     ended:     31 Mar   31 Dec   30 Sep   30 Jun   31 Mar   31 Dec   30 Sep
                US$000   US$000   US$000   US$000   US$000   US$000   US$000
              ---------------------------------------------------------------

    Sales
     revenue         -        -        -        -        -        -        -
    (Loss)/profit
     for the
     quarter    (9,940) (26,886)  33,516   (4,275)  (3,326) (11,684)   1,237
    Basic and
     diluted
     loss per
     share US$   (0.06)   (0.16)       -    (0.02)   (0.02)   (0.08)       -
    Basic and
     diluted
     earnings
     per share       -        -     0.19        -        -        -     0.01

              ---------------------------------------------------------------
    

    The first quarter 2009 loss includes asset write offs of US$7.2 million
in regard to the Chablis asset.
    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 March 31 December    31 March
                                              US$000      US$000      US$000
                                          -----------------------------------

    Current assets:
      Inventories                              4,612       4,618       6,051
      Trade and other receivables              8,346       7,069      22,076
      Tax receivable                               -           -       3,387
      Cash and cash equivalents               41,555      56,822      50,931
                                          -----------------------------------
    Total Current assets                      54,513      68,509      82,445

    Less Current liabilities:
      Trade and other payables               (22,513)    (14,599)    (28,979)
      Financial liabilities                  (44,127)    (32,105)          -
                                          -----------------------------------

    Net Current (liabilities)/assets         (12,127)     21,805      53,466
    

    At 31 March 2009, the Company had net current liabilities of US$12.1
million which comprised current assets of US$54.5 million less current
liabilities of US$66.6 million, giving an overall decrease in working capital
of US$33.9 million in the three month period.

    Inventories remained at US$4.6 million over the period.

    Trade and other receivables at 31 March 2009 totalled US$8.3 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. The Q1 2008 period end balance of US$22.0 million included a
significant deposit payment for the Global Santa Fe drilling rig utilised
during the 2008 Indonesian drilling campaign.
    The Q1 2008 tax receivable represented recovery of exploration
expenditure from the Norwegian fiscal authorities, which was received in full
in Q4 2008.
    Cash and cash equivalents decreased from US$56.8 million to US$41.6
million in the quarter. The Company incurred significant capital expenditure
on the Kambuna development in Indonesia and the completion of Chablis
appraisal well in the UK. Other costs were incurred on exploration work across
the portfolio in South East Asia and the UK, together with ongoing
administrative costs, operational expenses and finance facility fees. These
cash outflows were partially offset by a further draw down of US$12.8 million
on the loan facility.
    Trade and other payables of US$22.5 million at 31 March 2009 chiefly
include significant trade creditors and accruals from the Kambuna development
and other creditors and accruals from UK and Indonesia. Other smaller items
include sundry creditors and accruals for administrative expenses and other
corporate costs.
    Financial liabilities are represented by the drawings under the senior
secured debt facility. The gross US$45.0 million total drawn down is disclosed
net of the unamortised portion of allocated issue costs. US$12.8 million of
this was drawn in Q1 2009.

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

    An extract of the balance sheet detailing long-term assets and liabilities
is provided below:

                                            31 March 31 December    31 March
                                                2009        2008        2008
                                              US$000      US$000      US$000
                                          -----------------------------------

    Exploration & evaluation assets           71,816      69,711      75,393
    Property, plant and equipment             88,865      68,526      39,274
    Goodwill                                     295         295         768
    Financial assets                           1,500       1,500       4,680
    Long-term other receivables                5,791       3,945       2,382
    Financial liabilities                          -           -      (9,829)
    Deferred income tax liabilities             (295)       (295)     (4,589)

    During Q1 2009, total investments in exploration and evaluation assets,
increased from US$69.7 million to US$71.8 million. The net US$2.1 million
increase consists of US$10.3 million of additions, less Chablis asset write
offs and back costs received as part of the Vietnam asset farm-out.

    The US$10.3 million of additions were incurred on the following assets:

    In the UK & Western Europe, US$7.1 million was spent on the completion of
    Chablis appraisal drilling, and US$1.0 million of expenditure was
    incurred in UK assets on exploration work and G&A, which included
    US$0.6 million on completion of a site survey in the East Irish Sea.

    In South East Asia, US$2.1 million was incurred on seismic, exploration
    work and G&A on the Kutai concession in Indonesia and US$0.1 million on
    East Seruway.
    

    All Q1 2009 costs incurred in preparation for drilling in Ireland and
Vietnam, were borne by the relevant farminee following the respective farm
outs of the Company's interests announced in Q4 2008 and Q1 2009.
    The US$20.4 million increase in property, plant and equipment from
US$68.5 million to US$88.9 million is entirely caused by expenditure during
the quarter on the Kambuna development. The property, plant and equipment also
includes immaterial balances of US$0.2 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, remained
unchanged at US$0.3 million.
    Financial assets represent US$1.5 million of restricted cash deposits.
    Long-term other receivables of US$5.8 million are represented by value
added tax ("VAT") on Indonesian capital spend, which will be recovered from
future production. The increase of US$1.8 million in Q1 2009 related to the
significant Kambuna expenditure incurred in the quarter.
    Financial liabilities represented by drawings 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 as at Q1 2008 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 March 31 December    31 March
                                                2009        2008        2008
                                              US$000      US$000      US$000
                                          -----------------------------------

    Total share capital                      207,633     207,633     207,452
    Other reserves                            15,808      15,510      14,104
    Accumulated deficit                      (67,596)    (57,656)    (60,011)
    

    Total share capital includes the total net proceeds (both nominal value
and any premium on the issue of equity capital).
    Other reserves include amounts credited in respect of cumulative
share-based payment charges. The increase in other reserves from US$15.5
million to US$15.8 million reflects the amortisation of share-based payment
charges in Q1 2009.

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

    Lease commitments

    At 31 March 2009, Serica had US$12.1 million of net working capital
liabilities, 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 periods/years as follows:

                                      US$000
    31 December 2009                     246
    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 March 2009, the Company's share of expected outstanding
capital costs on the project totalled approximately US$30 million. These
expected costs include amounts contracted for but not provided as at 31 March
2009. It is fully expected that these expenditures will be funded from the
debt facility as and when drawings are required.
    Capital expenditures associated with the ongoing exploration drilling in
Ireland and the forthcoming drilling program in Vietnam, are both
substantially carried by the respective farminees.
    In addition to the significant planned expenditure 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 following periods as follows:

    
    Nine months 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 March 2009. 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 March 2009, the Group
had available approximately US$85 million of committed borrowing facilities
for which all conditions precedent had been met, of which US$45 million had
been drawn and US$40 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 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 drawing
was made and as at 27 May 2009 the total loan drawn was US$45 million.
    At 31 March 2009 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 principal accounting policies are detailed in note 2 to the
attached 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 estimates 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 the
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 potential currency risk from
    financial instruments. Loan funding is available in US Dollars and Pounds
    Sterling and is drawn 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 March 2009, the following director and employee share options
were outstanding: -
                                     Expiry Date       Amount  Exercise cost
                                                                        Cdn$
                                      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      756,000       771,120
                                         May 2012      405,000       421,200
                                      August 2012    1,200,000     1,182,000
                                       March 2013    1,662,000     1,246,500
                                       March 2013      850,000       697,000
                                    November 2013      750,000       300,000
                                     January 2014      750,000       240,000

    (*) Note - Expires as at 30 May 2009
    

    Outstanding Share Capital

    As at 27 May 2009, the Company had 176,518,311 ordinary shares issued and
outstanding.

    Business Risk and Uncertainties

    Serica, like all 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
exploration and development 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.

    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 three month period ended 31 March 2009 generated a loss of US$9.9 million
(including asset write offs of US$7.1 million) from continuing operations, but
expects that it will shortly earn its first revenues from the Kambuna field.
At 31 March 2009 the Company held cash and cash equivalents of US$41.6 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 MD&A.

    Additional Information

    Additional information relating to Serica 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

    29 May 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 there from.

    
    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
           4,800 standard cubic feet per barrel for Kambuna, which has a
           relatively high calorific value, and 6,000 standard cubic feet per
           barrel for Columbus)
    bopd
    or bpd barrels of oil or condensate per day
    DCQ    Daily contract quantity
    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
    TAC    Technical Assistance Contract
    tcf    trillion standard cubic feet
    TVDSS  True vertical depth sub sea



    Serica Energy plc
    Group Income Statement

    For the period ended 31 March

    Unaudited                                               Three      Three
                                                           months     months
                                                            ended      ended
                                                         31 March   31 March
                                                             2009       2008
                                                 Notes     US$000     US$000


    Sales revenue                                               -          -

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

    Gross profit                                                -          -

    Administrative expenses                                (1,624)    (1,945)
    Foreign exchange gain/(loss)                               21        (55)
    Pre-licence costs                                        (183)      (175)
    Asset write offs                                       (7,147)      (375)
    Share-based payments                                     (298)      (375)
    Depreciation & depletion                                  (29)       (58)

                                                        ---------------------

    Operating loss before finance
    revenue and tax                                        (9,260)    (2,983)

    Finance revenue                                            27        569
    Finance costs                                            (707)      (878)

                                                        ---------------------

    Loss before taxation                                   (9,940)    (3,292)

    Taxation credit/(charge) for the period          6          -          -

                                                        ---------------------
    Loss for the period - continuing                       (9,940)    (3,292)
                                                        ---------------------
                                                        ---------------------

    Discontinued operations
    Loss for the period - discontinued                          -        (34)

    Loss for the period                                    (9,940)    (3,326)

    Loss per ordinary share (LPS)
    Basic and diluted LPS - continuing (US$)                (0.06)     (0.02)
    Basic and diluted LPS on loss for the
     period (US$)                                           (0.06)     (0.02)



    Serica Energy plc
    Consolidated Balance Sheet

                                              31 March     31 Dec   31 March
                                                  2009       2008       2008
                                                US$000     US$000     US$000

                                            (Unaudited)  (Audited)(Unaudited)

    Non-current assets
    Exploration & evaluation assets             71,816     69,711     75,393
    Property, plant and equipment               88,865     68,526     39,274
    Goodwill                                       295        295        768
    Financial assets                             1,500      1,500      4,680
    Other receivables                            5,791      3,945      2,382
                                             --------------------------------
                                               168,267    143,977    122,497
                                             --------------------------------
    Current assets
    Inventories                                  4,612      4,618      6,051
    Trade and other receivables                  8,346      7,069     22,076
    Tax receivable                                   -          -      3,387
    Cash and cash equivalents                   41,555     56,822     50,931
                                             --------------------------------
                                                54,513     68,509     82,445
                                             --------------------------------

    TOTAL ASSETS                               222,780    212,486    204,942
                                             --------------------------------

    Current liabilities
    Trade and other payables                   (22,513)   (14,599)   (28,979)
    Financial liabilities                      (44,127)   (32,105)         -

    Non-current liabilities
    Financial liabilities                            -          -     (9,829)
    Deferred income tax liabilities               (295)      (295)    (4,589)

                                             --------------------------------
    TOTAL LIABILITIES                          (66,935)   (46,999)   (43,397)
                                             --------------------------------

    NET ASSETS                                 155,845    165,487    161,545
                                             --------------------------------
                                             --------------------------------


    Share capital                         4    207,633    207,633    207,452
    Other reserves                              15,808     15,510     14,104
    Accumulated deficit                        (67,596)   (57,656)   (60,011)

                                             --------------------------------
    TOTAL EQUITY                               155,845    165,487    161,545
                                             --------------------------------
                                             --------------------------------



    Serica Energy plc
    Statement of Changes in Equity

    For the period ended 31 March 2009

    Group                             Share      Other
                                    capital   reserves    Deficit      Total
                                     US$000     US$000     US$000     US$000

    At 1 January 2009 (audited)     207,633     15,510    (57,656)   165,487

    Share-based payments                  -        298          -        298
    Loss for the period                   -          -     (9,940)    (9,940)

                                  -------------------------------------------
    At 31 March 2009 (unaudited)    207,633     15,808    (67,596)   155,845
                                  -------------------------------------------
                                  -------------------------------------------


    For the year ended 31 December 2008

    Group                             Share      Other
                                    capital   reserves    Deficit      Total
                                     US$000     US$000     US$000     US$000

    At 1 January 2008 (audited)     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)
    Share-based payments                  -        375          -        375
    Loss for the period                   -          -     (3,326)    (3,326)

                                  -------------------------------------------
    At 31 March 2008 (unaudited)    207,452     14,104    (60,011)   161,545

    Conversion of options               181          -          -        181
    Share-based payments                  -        581          -        581
    Loss for the period                   -          -     (4,275)    (4,275)

                                  -------------------------------------------
    At 30 June 2008 (unaudited)     207,633     14,685    (64,286)   158,032

    Share-based payments                  -        465          -        465
    Profit for the period                 -          -     33,516     33,516

                                  -------------------------------------------
    At 30 September 2008
     (unaudited)                    207,633     15,150    (30,770)   192,013

    Share-based payments                  -        360          -        360
    Loss for the period                   -          -    (26,886)   (26,886)

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



    Serica Energy plc
    Consolidated Cash Flow Statement

    For the period ended 31 March

    Unaudited                                               Three      Three
                                                           months     months
                                                            ended      ended
                                                         31 March   31 March
                                                             2009       2008
                                                           US$000     US$000

    Cash flows from operating activities:
    Operating loss (including discontinued)                (9,260)    (3,024)

    Adjustments for:
    Depreciation and depletion                                 29         58
    Asset write offs                                        7,147        375
    Share-based payments                                      298        375
    (Increase) in receivables                              (3,123)    (1,328)
    Decrease in inventories                                     6        940
    Increase in payables                                    6,654      4,938
                                                        ---------------------
    Cash inflow from operations                             1,751      2,344

    Taxes received                                              -          -

                                                        ---------------------
    Net cash inflow from operations                         1,751      2,334
                                                        ---------------------

    Cash flows from investing activities:
    Purchase of property, plant & equipment               (20,380)   (19,679)
    Purchase of E&E assets                                 (9,308)    (3,519)
    Interest received                                          27        576

                                                        ---------------------
    Net cash used in investing                            (29,661)   (22,622)
                                                        ---------------------

    Cash proceeds from financing activities:
    Net proceeds from issue of shares                           -     48,581
    Proceeds from loans and borrowings                     12,821          -
    Finance costs paid                                       (178)         -

                                                        ---------------------
    Net cash from financing activities                     12,643     48,581
                                                        ---------------------

    Cash and cash equivalents
    Net (decrease)/increase in period                     (15,267)    28,293
    Amount at start of period                              56,822     22,638

                                                        ---------------------
    Amount at end of period                                41,555     50,931
                                                        ---------------------
                                                        ---------------------



    Serica Energy plc

    Notes to the Unaudited Consolidated Financial Statements

    1.  Corporate information

    The interim condensed consolidated financial statements of the Group for
    the three months ended 31 March 2009 were authorised for issue in
    accordance with a resolution of the directors on 29 May 2009.

    Serica Energy plc is a public limited company incorporated and domiciled
    in England & Wales. The Company's ordinary shares are traded on AIM and
    the TSX Venture Exchange. The principal activity of the Company is to
    identify, acquire and exploit oil and gas reserves.

    2.  Basis of preparation and accounting policies

    Basis of Preparation

    The interim condensed consolidated financial statements for the three
    months ended 31 March 2009 have been prepared in accordance with IAS 34
    Interim Financial Reporting.

    These unaudited interim consolidated financial statements of the Group
    have been prepared in accordance with International Financial Reporting
    Standards following the same accounting policies and methods of
    computation as the consolidated financial statements for the year ended
    31 December 2008. These unaudited interim consolidated financial
    statements do not include all the information and footnotes required by
    generally accepted accounting principles for annual financial statements
    and therefore should be read in conjunction with the consolidated
    financial statements and the notes thereto in the Serica Energy plc
    annual report for the year ended 31 December 2008.

    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 March
    2009 the Group had US$45 million of debt and US$42 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 27 May 2009 the
    Group's debt facility was US$45 million drawn resulting in a net debt
    position of some US$20 million. Further drawings 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 interim condensed financial statements.

    Significant accounting policies

    The accounting policies adopted in the preparation of the interim
    condensed consolidated financial statements are consistent with those
    followed in the preparation of the Group's annual financial statements
    for the year ended 31 December 2008, except for the adoption of the
    following new standards and interpretations, noted below,

    International Accounting Standards (IAS / IFRSs)          Effective date

    IFRS 1     Cost of an Investment in a Subsidiary,         1 January 2009
    and IAS 27 JointlyControlled Entity or Associate
               (Amendment)
    IFRS 2     IFRS 2 - Vesting Conditions and                1 January 2009
               Cancellations (Amendment)
    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

    The adoption of these did not affect the Group's results of operations or
    financial position.

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

    Basis of Consolidation

    The consolidated financial statements include the accounts of 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 Kutei B.V.,
    Serica Nam Con Son B.V., Serica Glagah Kambuna B.V., Serica East Seruway
    B.V. and Serica Energy Pte Limited. Together, these comprise the "Group".

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

    3.  Segmental Information

    The primary segment reporting format is determined to be geographical
    segments and they are based on the location of the Group's assets. The
    Group has only one business segment, that of oil & gas exploration and
    development.

    The following tables present profit information regarding the Group's
    geographical segments for the three months ended 31 March 2009 and 2008.
    No revenue was earned by the Group in either period.

    Three months ended                             UK & NW
    31 March 2009              Indonesia  Vietnam   Europe    Spain    Total
                                  US$000   US$000   US$000   US$000   US$000

    Continuing
                                                                     --------
    Loss for the period             (473)      (6)  (9,387)     (74)  (9,940)
                                                                     --------


    Three months ended                             UK & NW
    31 March 2008              Indonesia  Vietnam   Europe    Spain    Total
                                  US$000   US$000   US$000   US$000   US$000

    Continuing
    Loss for the period             (618)      (5)  (2,637)     (32)  (3,292)

    Discontinued
    Loss for the period                                (34)              (34)

                                                                     --------
    Loss for the period                                               (3,326)
                                                                     --------

    4.  Equity Share Capital

                              31 March     31 March  31 December  31 December
                                  2009         2009         2008         2008
                                Number       US$000       Number       US$000

    Authorised:
    Ordinary shares
     of US$0.10            250,000,000       25,000  250,000,000       25,000
    Ordinary 'A' share
     of pnds stlg 50,000             1           90            1           90
                          ---------------------------------------------------
                           250,000,001       25,090  250,000,001       25,090
                          ---------------------------------------------------
                          ---------------------------------------------------

    On incorporation, the authorised share capital of the Company was
    pnds stlg 50,000 and US$20,000,000 divided into one 'A' share of
    pnds stlg 50,000 and 200,000,000 ordinary shares of US$0.10 each, two of
    which were issued credited as fully paid to the subscribers to the
    Company's memorandum of association. In January 2008 the authorised
    ordinary share capital was increased from 200,000,000 ordinary shares to
    250,000,000 ordinary shares of US$0.10.

    The balance classified as total share capital includes the total net
    proceeds (both nominal value and share premium) on issue of the Group and
    Company's equity share capital, comprising US$0.10 ordinary shares and
    one 'A' share.

    Allotted, issued and fully paid:
                                                                        Total
                                              Share        Share        Share
                                            capital      premium      capital
    Group                       Number       US$000       US$000       US$000

    At 1 January 2008      151,647,957       15,255      143,616      158,871

    Shares issued (1)       24,770,354        2,477       46,104       48,581
    Options exercised (2)      100,000           10          171          181

                          ---------------------------------------------------
    As at 31 December
     2008 and at           176,518,311       17,742      189,891      207,633
     31 March 2009
                                                                  -----------
                                                                  -----------


    (1) In January 2008 until 31 March 2008, 19,826,954 ordinary shares were
        issued at pnds stlg 1.02 and 4,943,400 at Cdn$2.10. The proceeds net
        of expenses are credited to share capital and share premium.

    (2) In June 2008, 100,000 share options were converted to ordinary shares
        at a price of Cdn$1.80.

    5.  Share-Based Payments

    Share Option Plans
    ------------------

    Following a reorganisation (the "Reorganisation") in 2005, the Company
    established an option plan (the "Serica 2005 Option Plan") to replace the
    Serica Energy Corporation Share Option Plan (the "Serica BVI Option
    Plan").

    Serica Energy Corporation ("Serica BVI") was previously the holding
    company of the Group but, following the Reorganisation, is now a wholly
    owned subsidiary of the Company. Prior to the Reorganisation, Serica BVI
    issued options under the Serica BVI Option Plan and, following the
    Reorganisation, the Company has agreed to issue ordinary shares to
    holders of Serica BVI Options already awarded upon exercise of such
    options in place of the shares in Serica BVI to which they would be
    entitled. There are currently options outstanding under the Serica BVI
    Option Plan entitling holders to acquire up to an aggregate of 2,075,000
    ordinary shares of the Company. No further options will be granted under
    the Serica BVI Option Plan.

    As at 31 March 2009, the Company has granted 9,484,000 options under the
    Serica 2005 Option Plan, 8,779,000 of which are currently outstanding.
    The Serica 2005 Option Plan will govern all future grants of options by
    the Company to Directors, officers, key employees and certain consultants
    of the Group.

    The Serica 2005 Option Plan is comprised of two parts, the basic share
    option plan and a part which constitutes an Enterprise Management
    Incentive Plan ("EMI Plan") under rules set out by the H.M. Revenue &
    Customs in the United Kingdom. Options granted under the Serica 2005
    Option Plan can be granted, at the discretion of the Board, under one or
    other of the two parts but, apart from certain tax benefits which can
    accrue to the Company and its UK employees if options are granted under
    the part relating to the EMI Plan meeting the conditions of that part of
    the Serica 2005 Option Plan, all other terms under which options can be
    awarded under either part are substantially identical.

    The Directors intend that the maximum number of ordinary shares which may
    be utilised pursuant to the Serica 2005 Option Plan will not exceed 10
    per cent. of the issued ordinary shares of the Company from time to time,
    in line with the recommendations of the Association of British Insurers.

    3,020,000 of the 8,779,000 options currently outstanding under the Serica
    2005 Option Plan are exercisable only if certain performance targets
    being met. These include the following options subject to market
    conditions; 220,000 options awarded to executive directors in December
    2005, 1,200,000 options awarded to non-executive directors in August 2007
    and 850,000 options awarded to executive directors in March 2008. In
    October 2008, 750,000 options were awarded to an executive director
    exercisable only if certain operational performance targets are met. The
    Company calculates the value of share-based compensation using a Black-
    Scholes option pricing model (or other appropriate model for those
    Directors' options subject to certain market conditions) to estimate the
    fair value of share options at the date of grant. The estimated fair
    value of options is amortised to expense over the options' vesting
    period. US$298,000 has been charged to the income statement in the three
    month period ended 31 March 2009 (three month period ended 31 March 2008:
    US$375,000) and a similar amount credited to other reserves.

    The assumptions made for the options granted during 2005, 2006, 2007 and
    March 2008 include a weighted average risk-free interest rate of 6%, no
    dividend yield and a weighted average expected life of options of three
    years. The volatility factor of expected market price of 50% used for
    options granted during 2005 and 2006 was reduced to 40% for options
    granted in 2007 and March 2008. The assumptions made for the options
    granted in October 2008 and January 2009 include a weighted average risk-
    free interest rate of 4%, no dividend yield, a weighted average expected
    life of options of three years and a volatility factor of expected market
    price of 50%.

    The following table illustrates the number and weighted average exercise
    prices (WAEP) of, and movements in, share options during the period:


    Serica BVI Option Plan                               Number    WAEP Cdn$

    Outstanding at 31 December 2007                     2,722,500       1.57


    Expired during the year                               (300,000)    (1.80)
    Exercised during the year                             (100,000)    (1.80)

                                                       ----------------------
    Outstanding at 31 December 2008                      2,322,500      1.53

    Expired during the period                             (247,500)    (2.00)

                                                       ----------------------
    Outstanding as at 31 March 2009                      2,075,000      1.47
                                                       ----------------------

    Serica 2005 Option Plan                                        pnds stlg

    Outstanding at 31 December 2007                      5,067,000      1.00

    Granted during the year                              3,412,000      0.69

                                                       ----------------------
    Outstanding at 31 December 2008                      8,479,000      0.87

    Granted during the period                              750,000      0.32
    Cancelled during the period                           (450,000)    (0.93)

                                                       ----------------------
    Outstanding at 31 March 2009                         8,779,000      0.83
                                                       ----------------------

    6. Taxation

    The major components of income tax in the consolidated income statement
    are:

    Three months ended 31 March:                             2009       2008
                                                           US$000     US$000
                                                       ----------------------
    Current income tax credit                                   -        679
    Deferred income tax (charge)/credit                         -       (679)

                                                       ----------------------
    Total tax (charge)/credit                                   -          -
                                                       ----------------------

    In Q1 2008, expected tax recoveries from Norwegian expenditure to date
    were recorded as a current income tax credit and were offset by a
    deferred income tax charge from the timing differences arising from
    capitalised exploration expenditure.
    


    %SEDAR: 00022686E




For further information:

For further information: Enquiries: 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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