Serica Energy plc ("Serica" or the "Company") - Second quarter 2008 report to shareholders



    LONDON, Aug. 5 /CNW/ - Serica Energy plc (TSX Venture & AIM: SQZ) today
announces its financial results for the three months ending 30 June 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

    
    Q2 2008 Highlights

    Operational
    -----------

        -  Significant progress achieved with the Kambuna development,
           Indonesia

           -  Heads of agreement for gas contracts formally signed in May
           -  Kambuna 2, 3 & 4 production wells completed and flow tested,
              exceeding the initial sales gas target of 50 million standard
              cubic feet per day ("mmscfd") by a significant margin
              -  Total maximum stabilised gas rate for the 3 wells was 114
                 mmscfd and estimated 8,000 bpd of condensate
           -  First production on track for the end of 2008

        -  Acquired new 3D seismic survey for the Columbus field in the UK
           North Sea

        -  Site survey of Chablis now completed in preparation for drilling

    Financial & Corporate
    ---------------------

        -  Agreement reached with Spring Energy Norway AS ("Spring") in June
           for the sale of Serica's Norwegian subsidiary, Serica Energy Norge

        -  After the period end, agreement reached for the sale of a 15%
           interest in the Kambuna TAC and a 23.4% interest the Kutai PSC to
           Salamander Energy for a total consideration of US$52.75 million


    Forward Programmes

    South East Asia
    ---------------

        -  Continued progress on Kambuna development
           -  Kambuna field reservoir model being updated to investigate a
              potential increase in planned sales volumes
           -  Onshore and offshore facilities and a 14-inch offshore pipeline
              to be installed later this year
        -  Acquisition of 3D and 2D seismic data on the Kutai PSC later this
           year

    Europe
    ------

        -  Columbus Field Development Plan to be submitted to the UK
           authorities in Q3 2008
        -  Site survey will be completed in the Slyne basin, Offshore Ireland
           in August, ahead of the 2009 drilling programme
        -  Appraisal well planned to be drilled on the Chablis gas field
    

    Serica's Chief Executive, Paul Ellis commented:

    "Over the next 18 months Serica is planning a major exploration,
appraisal and development programme, focusing resources on existing projects
where we see high potential to improve shareholder value. With
US$52.75 million available on completion of the Indonesian transaction in
addition to the cash of US$42.2 million as at 30 June 2008, Serica is well
placed to achieve this programme and to identify new opportunities to enhance
and accelerate shareholder value."

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

    To receive Company news releases via email, please contact
    sasha@chfir.com and specify "Serica press releases" in the
    subject line

    
                              SERICA ENERGY PLC
                 SECOND QUARTER 2008 REPORT TO SHAREHOLDERS
    

    MANAGEMENT OVERVIEW

    Summary

    During the first half of 2008, Serica Energy plc ("Serica" or the
"Company") has focused its efforts on field development and on accelerating
asset return.
    By the end of the second quarter, the development wells for the Kambuna
field in Indonesia were drilled and tested with a very successful outcome,
achieving a combined stabilized flow-rate of 114 million standard cubic feet
per day ("mmscfd") of gas and 8,000 barrels per day ("bpd") of condensate.
This is well in excess of the planned sales volume of 50 mmscfd and fully
demonstrates the producing capability of the field. Initial production from
the field is expected at year end.
    In the North Sea, discussions have been held with UK government Energy
Development Unit with a view to commencing development of the Columbus gas
condensate field in which the Company has a 50% interest and is Operator.
Serica plans to submit a Field Development Plan in the second half of 2008
with the aim of commencing production from Columbus in 2010. With the
prevailing high demand for gas in the UK and strong gas prices, early
production of the Columbus field would add material additional revenue and
production to the Company on top of those expected from the Kambuna field.
    In line with the Company's policy of accelerating return from its assets,
Serica has recently announced the sale of a 15% interest in the Kambuna field
in a package which will increase the Company's cash resources by
US$52.75 million and which values Serica's retained 50% interest in the field
at nearly US$170 million (as at 30th June 2008). These figures, plus net
current assets at the half year which stood at US$14.6 million, amount to
around US$238 million, or US$1.35 per share (68p/share). This does not include
Serica's interests in North Sea fields under development (Columbus) or
appraisal (Chablis) or the Company's portfolio of exploration prospects in the
UK, Ireland, Indonesia and Vietnam, many of which, if successful, have the
potential to add considerable value to the Company.
    The transaction strengthens the Company's balance sheet with additional
cash resources without materially reducing revenues expected from future
production. Given its considerably enhanced financial position, which also
includes a US$100 million Senior Debt facility for development expenditure, of
which only US$35 million has been drawn to date, the Company has the resources
to fully exploit its portfolio of exploration prospects.

    Asset Sales

    Indonesian asset sale

    In July the Company announced that it had reached agreement with
Salamander Energy plc for the sale of a 15% interest in the Glagah-Kambuna
Technical Assistance Contract ("the Kambuna TAC") and a 23.4% interest in the
Kutai Production Sharing Contract ("the Kutai PSC"). The total consideration
due to Serica, based on an effective date of 1 July 2008, is US$52.75 million.
Completion is subject to certain approvals and consents including that of the
Indonesian government.
    The Kambuna TAC, located 40 kilometres offshore northern Sumatra,
Indonesia, contains the Kambuna gas condensate field in which Serica and
Salamander currently hold interests of 65% and 35% respectively (50% each
after completion of the transaction). First gas from the Kambuna field is
expected to be produced by the end of 2008 with production from the field
expected to reach the planned field plateau production rate of 50 mmscfd of
gas plus 4,000 to 5,000 bpd of condensate after fully commissioning the
onshore facilities early in 2009.
    The Kutai PSC, located onshore and offshore East Kalimantan, Indonesia,
is an early stage exploration block operated by Serica with a present interest
of 78% (54.6% after completion of the transaction with Salamander Energy).
Both 2D and 3D seismic surveys are planned this year in preparation for the
commencement of exploratory drilling in 2009.
    The Indonesian asset sale demonstrates the viability of our strategy of
creating and then realising a portion of the shareholder value added through
the drillbit. In addition, from next year we will begin to enjoy significant
cash flow from our retained 50% interest in the Kambuna field.

    Norwegian disposal

    In June, the Company reached agreement with Spring Energy Norway AS
("Spring") for the sale of Serica's Norwegian subsidiary, Serica Energy Norge
AS, which holds all of Serica's interests in Norway, comprising a 20% working
interest in Norwegian offshore licences PL406 and PL407. Completion is subject
to the receipt of the required Norwegian government approvals to the
transaction and to other approvals and consents. The consideration provides
for payment in respect of past costs relating to the blocks and includes a
contingent 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 retains a significant part of the upside value of the Bream field
without being exposed to further appraisal and development costs or to the
commitment of additional resources.

    Field Appraisal and Development

    Kambuna Field, Offshore North Sumatra, Indonesia

    Development drilling and testing

    Significant progress has been made during the first half on development
activities in the Kambuna field. The Kambuna Field production platform has
been installed and three development wells have been drilled and tested with
very positive results.
    In Q2 2008, the Kambuna No. 3 and No. 4 deviated development wells were
drilled from the Kambuna production platform, installed in Q1 2008 at the
location of the Kambuna No. 2 well, the first of the three development wells
drilled in 1H 2008. Kambuna No. 3 was drilled to a total depth of 7,483 ft
true vertical depth below mean sea level ("TVDSS"). The well entered the
target Belumai reservoir at a depth of 7,166 ft TVDSS and encountered
gas-bearing sands over an interval of 107 ft with a net pay of 77 ft (67
vertical ft). Kambuna No. 4 was drilled to a total depth of 7,408 ft TVDSS.
The well entered the Belumai reservoir at 7,140 ft TVDSS and encountered
gas-bearing sands over an interval of 115 ft with a net pay of 107 ft (66
vertical ft). There was no indication of a gas-water contact in any of these
wells.
    By the end of the first half, all three Kambuna production wells had been
successfully completed and tested. The Kambuna-2 well was tested at a
stabilised rate of 33 mmscfd, the Kambuna-3 well was tested at a stabilised
rate of 40 mmscfd and the Kambuna-4 well was tested at a stabilised rate of
approximately 41 mmscfd.
    The total maximum stabilised gas rate from the three wells was 114
mmscfd, together with an estimated 8,000 bpd of condensate. This rate was
considerably higher than previously expected and exceeds the initial sales gas
target of 50 mmscfd by a significant margin.

    Sales contracts

    In Q1 2008 Serica announced the agreement of commercial terms for the
sale of 28 mmscfd to the state electricity generator, PT Perusahaan Listrik
Negara ("PLN") and 12 mmscfd to PT Pertiwi Nusantara Resources ("Pertiwi"). In
May, the heads of agreement of these two contracts were formally signed at the
opening ceremony of the Indonesia Petroleum Congress in Jakarta, Indonesia.
The contract with PLN will realise an initial price of approximately US$5.40
per thousand standard cubic feet ("mcf") escalating at 3% per annum. The
contract with Pertiwi will realise an initial price of approximately US$7 per
mcf, escalating at 3% per annum. In addition to these contracts, the Company
expects to enter into a third contract to bring total contracted gas sales to
50 mmscfd. Serica anticipates that, when the third sales contract has been
completed, the average realisation will be approximately US$6 per mcf. In
addition to the gas, Serica initially expects to be marketing 4,000-5,000 bpd
of condensate at a price close to that of light crude oil.

    Forward plans

    Serica is currently updating its Kambuna field reservoir model to
investigate whether a further increase in planned sales volumes can be
justified, particularly given the strong gas prices now being realised for
domestic gas sales. Onshore and offshore facilities and a 14-inch offshore
pipeline are to be installed later this year, with the pipeline targeted to be
commissioned for production in December 2008.

    Columbus Field, UK Central North Sea

    Serica is the operator of the Columbus field in UK Block 23/16f and holds
a 50% interest. UK gas prices have continued to rise this quarter which adds
further impetus to our plans to develop the Columbus gas-condensate field, in
which the Company drilled the discovery well in 2006 and two appraisal wells
in 2007. A pipeline route survey is planned this summer and Serica expects
shortly to submit the Columbus Field Development Plan to the UK authorities.
The field lies in close proximity to existing production infrastructure, and
negotiations to secure access are in progress, with the expectation that
production could commence in 2010. The development will include the drilling
of horizontal production wells with sub-sea tie-back to the chosen host
production platform.

    Chablis Field, UK Southern North Sea

    Serica operates Block 48/16b, which contains the Chablis gas discovery,
and holds a 100% interest in the block. A site survey over Chablis has now
been completed in preparation for drilling. Serica has secured a jack-up
drilling unit with the objective of drilling the first appraisal well in the
fourth quarter of 2008. The field is in close proximity to existing production
infrastructure and, if successful, would be produced via a sub-sea tie-back to
a host platform to achieve the earliest production from the field.

    Exploration

    Indonesia

    In the Kutai PSC in East Kalimantan, Serica is the operator of the Kutai
Block and currently holds a 78% interest (reducing to 54.6% after completion
of the transaction with Salamander Energy). The Company has contracts in place
to acquire 3D and 2D seismic data this year. The 2D seismic survey crew has
mobilised to East Kalimantan and acquisition of the 280 km onshore survey is
due to commence shortly. The offshore 3D survey contract has been awarded and
the vessel is expected to commence acquisition early in August. Discussions
with rig contractors are underway to secure drilling capability for a multi
well exploration programme in 2009.

    Vietnam

    Serica 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. The Ocean General semi-submersible drilling rig has
been contracted and is now expected to commence drilling the first exploration
well in 1Q09. A second 1,000 square kilometre 3D seismic survey on the Block
was successfully completed in June 2008 and processing has begun to evaluate
further the prospectivity of the acreage.

    Ireland

    Serica is the operator and holds a 100% interest in Blocks 27/4, 27/5
(west) and 27/9 (collectively Licence PEL 01/06), which cover an area of 611
square kilometres in the Slyne Basin off the west coast of Ireland and lie 42
kilometres south of the Corrib gas field, currently being developed by Shell.
Four significant prospects have been identified on the blocks and an offshore
drill site survey will be carried out in August. Serica has begun detailed
well planning in preparation for exploration drilling in the summer of 2009
and a rig contract is currently being negotiated.

    Spain

    Serica holds a 75% interest and operatorship in its four exploration
Permits onshore northern Spain. The 315 kilometre 2D seismic survey, which
commenced in 2007, was completed in the first quarter and the gas prospects
identified on the Permits are being evaluated.

    UKCS 25th Round

    Serica submitted several applications in the UK's 25th Offshore Licensing
Round which closed in May 2008. The focus was to make applications in areas
where the Company has an enhanced technical understanding. Awards are not
expected to be announced much before the end of this year.

    Forward Programme

    For the remainder of 2008 Serica's priority is the completion of the
Kambuna field development programme, which includes laying an offshore and
onshore pipeline and completing the construction of the required onshore gas
and condensate reception facilities. In addition, a field development plan
will be submitted for the Columbus field in the UK North Sea and an appraisal
well is planned to be drilled in the Chablis field in the UK. In 2009 the
Company expects to drill wells in Ireland, the UK, Indonesia and Vietnam. This
programme is intended to bring forward development activity and build revenue
as rapidly as possible.
    Over the next 18 months Serica is planning a major exploration, appraisal
and development programme focusing resources on existing projects where we see
high potential to improve shareholder value. With US$52.75 million available
on completion of the Indonesian transaction in addition to the cash of
US$42.2 million as at 30 June 2008, Serica is well placed to achieve this
programme and to identify new opportunities to enhance and accelerate
shareholder value. At a time when many junior companies are finding it
increasingly difficult to find sources of funds, Serica's strong finances put
it in an excellent position to expand its business by taking advantage of new
opportunities as they arise in the sector.

    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 1 August 2008 and
should be read in conjunction with the attached unaudited interim consolidated
financial statements for the period ended 30 June 2008. The interim financial
statements for the three and six months ended 30 June 2008 have been prepared
by and are the responsibility of the Company's management. The interim
financial statements for the six months ended 30 June 2008 and 2007 have been
reviewed by the Company's independent auditors.
    References to the "Company" include Serica and its subsidiaries where
relevant. All figures are reported in US dollars ("US$") unless otherwise
stated.

    Overview

    Serica's activities are centred on the UK and Indonesia, with other
interests in Vietnam, Ireland, Spain, and Norway. In 2008 to date, work has
continued on furthering the Kambuna development and achieving other strategic
goals through corporate transactions. Further details are noted in the
Management Overview.
    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").

    Results of Operations

    Serica incurred a loss of US$4.3 million for the three months ended
30 June 2008 ("Q2 2008") compared to a loss of US$1.6 million for the three
months ended 30 June 2007 ("Q2 2007").

    
                      2008      2008      2007      2007      2007      2007
    -------------------------------------------------------------------------
                        Q2        Q1        Q4        Q3        Q2        Q1
                    US$000    US$000    US$000    US$000    US$000    US$000

    Sales revenue        -         -         -         -         -         -
    -------------------------------------------------------------------------
    Expenses:

     Administrative
      expenses      (2,447)   (1,973)   (2,665)   (1,658)   (1,728)   (1,846)
     Foreign
      exchange
      gain/(loss)       88       (55)      384        31       (36)       15
     Pre-licence
      costs           (813)     (188)      (74)      (76)     (124)     (101)
     Asset write
      offs               -      (375)   (9,282)        -         -         -
     Share-based
      payments        (581)     (375)     (514)     (485)     (464)     (499)
     Depletion and
      depreciation     (35)      (58)      (63)      (34)      (26)      (26)
                     --------------------------------------------------------
    Operating loss
     before finance
     revenue and
     taxation       (3,788)   (3,024)  (12,214)   (2,222)   (2,378)   (2,457)


     Finance revenue   298       576       498       663       791       862
     Finance costs    (785)     (878)     (321)        -         -         -

                     --------------------------------------------------------
    Loss before
     taxation       (4,275)   (3,326)  (12,037)   (1,559)   (1,587)   (1,595)

     Taxation
      credit/(charge)    -         -       353     2,796         -         -
                     --------------------------------------------------------
    (Loss)/profit
     for the period (4,275)   (3,326)  (11,684)    1,237    (1,587)   (1,595)

    Basic and
     diluted loss
     per share       (0.02)    (0.02)    (0.08)      N/A     (0.01)    (0.01)
    Basic and
     diluted
     earnings per
     share             N/A       N/A       N/A      0.01       N/A       N/A
    

    Administrative expenses of US$2.4 million for Q2 2008 increased from
US$2.0 million in Q1 2008, and US$1.7 million for the same period last year.
The increase of US$0.4 million from the previous quarter can be largely
attributed to various corporate costs (including advisor fees) incurred on the
recently announced asset disposals. The Company's activities and employee
numbers have also increased over the past twelve months, albeit less
significantly than from 2006 to 2007.
    No significant foreign exchange movements impacted Q2 2008 or Q2 2007
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$0.8 million for
Q2 2008 increased from US$0.1 million for the same period last year and is
mainly attributable to significant work undertaken during the recent quarter
on the 25th Licencing Round in the UK North Sea.
    Share-based payment charges of US$0.6 million reflect share option grants
made and compare with US$0.4 million for Q1 2008 and US$0.5 million for Q2
2007. Whilst there has been a decline in the charge of the options granted in
2005, 2006 and 2007, the incremental charge generated from further share
options granted in March 2008 has generated an overall increase.
    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 Kambuna
asset costs classified as 'development' costs and held within plant, property
and equipment will be depleted once production commences.
    Finance revenue comprising interest income of US$0.3 million for Q2 2008
compares with US$0.8 million for Q2 2007 and US$0.6 million for Q1 2008.
Finance revenue fell from Q1 2008 as cash deposit balances raised from the
early January 2008 financing were utilised on Indonesian drilling expenditure.
    The first drawdown on the senior secured debt facility occurred soon
after the facility was arranged in Q4 2007. Finance costs consist of interest
payable, issue costs spread over the term of the bank loan facility, and other
fees. A second drawdown occurred in June 2008.
    The net taxation credit/(charge) was US$nil in Q2 2008 and Q2 2007.
    The net loss per share of US$0.02 for Q2 2008 compares to a net loss per
share of US$0.01 for Q2 2007.

    
    Summary of Quarterly Results

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

    Sales revenue        -         -         -         -         -         -
    (Loss)/profit
     for the
     quarter        (4,275)   (3,326)  (11,684)    1,237    (1,587)   (1,595)
    Basic and
     diluted loss
     per share US$   (0.02)    (0.02)    (0.08)        -     (0.01)    (0.01)
    Basic and
     diluted
     earnings per
     share               -         -         -      0.01         -         -
    -------------------------------------------------------------------------

                         2006      2006
    Quarter            31 Dec    30 Sep
     ended:            US$000    US$000
    ------------------------------------

    Sales revenue           -         -
    (Loss)/profit
     for the
     quarter          (13,456)   (3,795)
    Basic and
     diluted loss
     per share US$      (0.09)    (0.03)
    Basic and
     diluted
     earnings per
     share                  -         -
    ------------------------------------

    The fourth quarter 2007 loss includes asset write offs of US$9.0 million
in regard to the Biliton PSC.
    The fourth quarter 2006 loss includes asset write offs of US$12.7 million
in regard to the Asahan Offshore 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:

                                                 30 June  31 March    31 Dec
                                                    2008      2008      2007
                                                  US$000    US$000    US$000
                                                -----------------------------
    Current assets:
      Inventories                                  4,313     6,051     6,991
      Trade and other receivables                 10,885    22,076    21,906
      Taxation receivable                          3,620     3,387     3,387
      Financial assets                             4,680         -         -
      Cash and cash equivalents                   42,151    50,931    22,638
                                                -----------------------------
    Total Current assets                          65,649    82,445    54,922

    Less Current liabilities:
      Trade and other payables                   (16,349)  (28,979)  (23,604)
      Financial liabilities                      (34,662)        -         -
                                                -----------------------------

    Net Current assets                            14,638    53,466    31,318
                                                -----------------------------

                                                -----------------------------
    Assets held for sale                           7,331         -         -
                                                -----------------------------

                                                -----------------------------
    Liabilities associated with
     assets held for sale                         (4,707)        -         -
                                                -----------------------------
    

    At 30 June 2008, the Company had net current assets of US$14.6 million
which comprised current assets of US$65.6 million less current liabilities of
US$51.0 million, giving an overall decrease in working capital of
US$38.8 million in the three month period.
    Inventories decreased from US$6.1 million to US$4.3 million over the
period as materials were utilised in the Kambuna drilling programme.
    Trade and other receivables at 30 June 2008 totalled US$10.9 million,
which included US$3.4 million upfront deposit payments in respect of the
Kambuna drilling programme and significant recoverable amounts from partners
in Joint Venture operations in the UK and Indonesia. Other smaller items
included prepayments and sundry UK and Indonesian working capital balances.
The tax receivable represents expected recovery of exploration expenditure
from the Norwegian fiscal regime.
    Financial assets represent US$4.7 million of restricted cash deposits,
reclassified as a current asset during Q2 2008.
    Cash and cash equivalents decreased from US$50.9 million to
US$42.2 million in the quarter. The Company received US$25.0 million from the
drawdown on the Kambuna loan, offset by cash outgoings in Q2 2008 covering
significant capital expenditure on the Kambuna development, operational
expenses and other exploration work. In addition cash receipts of
US$0.3 million of interest income were also received in the quarter.
    Trade and other payables of US$16.3 million at 30 June 2008 chiefly
include significant trade creditors and accruals from the Kambuna drilling
programme, and other creditors and accruals from UK and Indonesia. Other
smaller items include sundry creditors and accruals for administrative
expenses and other corporate costs. Amounts payable have fallen by
US$12.6 million from Q1 2008, as significant liabilities in respect of the
Kambuna drilling have been settled, together with final payments on the
Biliton programme.
    Financial liabilities are represented by the first drawdown under the
senior secured debt facility, which occurred in Q4 2007, and second drawdown
of US$25.0 million in June 2008. The total includes accrued interest payable
and is disclosed net of the unamortised portion of allocated issue costs.

    Assets held for sale and associated liabilities
    -----------------------------------------------

    The assets and liabilities recorded as at 30 June 2008 in respect of the
Norwegian Licence interests being sold, are now classified as part of a
disposal group held for sale. Assets held for sale of US$7.3 million chiefly
comprise Norwegian expenditure previously capitalised as exploration and
evaluation assets, and liabilities of US$4.7 million chiefly represent
deferred tax liabilities associated with those assets recognised. These assets
and associated liabilities are disclosed separately on the Balance Sheet.

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

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

                                           30 June     31 March  31 December
                                              2008         2008         2007
                                            US$000       US$000       US$000
                                     ----------------------------------------

    Exploration and evaluation assets       78,285       75,393       71,874
    Property, plant and equipment           58,732       39,274       19,543
    Goodwill                                   768          768          768
    Financial assets                             -        4,680        4,680
    Long-term other receivables              3,508        2,382        1,224
    Financial liabilities                        -       (9,829)      (9,582)
    Deferred income tax liabilities           (523)      (4,589)      (3,910)
    

    During Q2 2008, total investments in petroleum and natural gas
properties, represented by exploration and evaluation assets, increased by
US$2.9 million to US$78.3 million. The US$2.9 million increase comprised
investment of US$9.0 million partially offset by a reclassification of
Norwegian exploration and evaluation assets of US$6.1 million as 'assets held
for sale', effective at the period end date. Of the total Q2 2008 investment
of US$9.0 million, in Southeast Asia, US$4.1 million of cost was incurred in
Vietnam, (principally on the 3D Seismic survey completed in June 2008) and
US$2.5 million was incurred on seismic, exploration work and G&A on the Kutai
concession in Indonesia. In the UK & NW Europe, US$1.6 million of expenditure
was incurred in the UK and Ireland on exploration work and G&A, including site
survey cost on the Chablis discovery. US$0.8 million related to Norway with
negligible spend in Spain.
    The US$19.4 million increase in property, plant and equipment from
US$39.3 million to US$58.7 million is caused by expenditure of US$19.4 million
during the quarter on the Kambuna development. 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, remained
unchanged at US$0.8 million.
    Financial assets represented by US$4.7 million of restricted cash
deposits at 31 December 2007 and 31 March 2008 are now classified in current
assets.
    Long-term other receivables of US$3.5 million represented value added tax
("VAT") on Indonesian capital spend, which would be recovered from future
production.
    Financial liabilities represented by drawdowns under the senior secured
debt facility are now classified in current liabilities.
    The retained deferred income tax liability of US$0.5 million arises in
respect of certain capitalised assets retained in the group. Liabilities
previously recognised as arising from capitalised Norwegian exploration and
evaluation assets have been reclassified as part of the disposal group held
for sale noted above.

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

    An extract of the balance sheet detailing shareholders' equity is
    provided below:

                                           30 June     31 March  31 December
                                              2008         2008         2007
                                            US$000       US$000       US$000
                                     ----------------------------------------

    Total share capital                    207,633      207,452      158,871
    Other reserves                          14,685       14,104       13,729
    Accumulated deficit                    (64,286)     (60,011)     (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
Q1 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 during Q2 2008 increased by the issue
of 100,000 ordinary shares at C$1.80 following the exercise of options.
    Other reserves mainly include amounts credited in respect of cumulative
share-based payment charges. The increase in other reserves from
US$14.1 million to US$14.7 million reflects the amortisation of share-based
payment charges in Q2 2008.

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

    At 30 June 2008, Serica had US$14.6 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 periods/years as follows:

    
                                   US$000
    31 December 2008                  191
    31 December 2009                  389
    31 December 2010                   83
    

    At 30 June 2008, Serica also has amounts contracted but not provided in
the financial statements of US$19.5 million of gross capital expenditure on
the Kambuna development. Serica's net share of these costs is expected to be
approximately 46.4%.
    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 twelve months as follows:

    Twelve months ending 30 June 2009 US$12,572,000

    These obligations reflect the Company's share of interests in the defined
work programmes and were not formally contracted at 30 June 2008. The Company
is not obliged to meet other joint venture partner shares of these programmes.
    In the absence of revenues generated from oil and gas production Serica
intends to utilise its existing cash balances, US$52.8 of proceeds arising
from the Indonesian asset sales together with the remainder of the US$100
million senior secured debt facility, to fund the immediate needs of its
investment programme and ongoing operations.

    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 cost of exploring for and developing petroleum and
natural gas reserves are capitalised. Unproved properties are subject to
periodic impairment tests whilst the costs of proved properties are depleted
over the life of such producing fields. In each case, calculations are based
upon management assumptions about future outcomes, product prices and
performance.

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

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

    
        Serica has exposure to interest rate fluctuations; given the level of
        expenditure plans over 2008/9 this is managed in the short-term
        through selecting treasury deposit periods of one to six 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.

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


    Share Options

    As at 30 June 2008, the following director and employee share options were
outstanding: -

                                 Expiry Date          Amount   Exercise 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
                                 August 2012       1,200,000       1,182,000
                                  March 2013       1,812,000       1,359,000
                                  March 2013         850,000         697,000
    

    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:
volatile commodity prices; governmental regulations; and environmental
matters.

    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 30 June 2008 the Company generated a loss
of US$4.3 million from continuing operations. At 30 June 2008, the Company
held cash and cash equivalents of US$42.2 million and a financial asset of
restricted cash of US$4.7 million.

    Outstanding Share Capital

    As at 1 August 2008, the Company had 176,518,311 ordinary shares issued
and outstanding.

    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

    4 August 2008
    

    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 undertakes no
obligation to publicly update or revise any forward looking statements,
whether as a result of new information, future developments or otherwise,
except as required by applicable laws.

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

         To receive Company news releases via email, please contact
        sasha@chfir.com and specify "Serica press releases" in the
                                subject line.


    Serica Energy plc
    Consolidated Group Income Statement

    Unaudited                   Three        Three          Six          Six
                               months       months       months       months
                                ended        ended        ended        ended
                              30 June      30 June      30 June      30 June
                                 2008         2007         2008         2007
                     Notes     US$000       US$000       US$000       US$000

    Sales revenue                   -            -            -            -

    Cost of sales                   -            -            -            -

                          ---------------------------------------------------
    Gross profit                    -            -            -            -

    Administrative
     expenses                  (2,447)      (1,728)      (4,420)      (3,574)
    Foreign exchange
     gain/(loss)                   88          (36)          33          (21)
    Pre-licence costs            (813)        (124)      (1,001)        (225)
    Asset write offs                -            -         (375)           -
    Share-based payments         (581)        (464)        (956)        (963)
    Depreciation and
     depletion                    (35)         (26)         (93)         (52)
                          ---------------------------------------------------
    Operating loss before
     finance revenue and
     tax                       (3,788)      (2,378)      (6,812)      (4,835)

    Finance revenue               298          791          874        1,653
    Finance costs                (785)           -       (1,663)           -

                          ---------------------------------------------------
    Loss before taxation       (4,275)      (1,587)      (7,601)      (3,182)

    Taxation credit for
     the period                     -            -            -            -

                          ---------------------------------------------------
    Loss for the period        (4,275)      (1,587)      (7,601)      (3,182)
                          ---------------------------------------------------
                          ---------------------------------------------------
    Earnings per ordinary
     share (US$):
    Basic and diluted
     loss per share             (0.02)       (0.01)       (0.04)       (0.02)


    Serica Energy plc
    Consolidated Balance Sheet

                              30 June     31 March       31 Dec      30 June
                                 2008         2008         2007         2007
                     Notes     US$000       US$000       US$000       US$000
                           (Unaudited)  (Unaudited)    (Audited)  (Unaudited)

    Non-current assets
    Exploration and
     evaluation assets         78,285       75,393       71,874       58,470
    Property, plant and
     equipment                 58,732       39,274       19,543          327
    Goodwill                      768          768          768        1,200
    Financial assets                -        4,680        4,680            -
    Other receivables           3,508        2,382        1,224          527
                          ---------------------------------------------------
                              141,293      122,497       98,089       60,524
                          ---------------------------------------------------
    Current assets
    Inventories                 4,313        6,051        6,991        6,438
    Trade and other
     receivables               10,885       22,076       21,906        7,147
    Taxation receivable         3,620        3,387        3,387            -
    Financial assets            4,680            -            -            -
    Cash and cash
     equivalents               42,151       50,931       22,638       56,622
                          ---------------------------------------------------
                               65,649       82,445       54,922       70,207
                          ---------------------------------------------------
    Assets held for
     sale               4       7,331            -            -            -

                          ---------------------------------------------------
    TOTAL ASSETS              214,273      204,942      153,011      130,731
                          ---------------------------------------------------

    Current liabilities
    Trade and other
     payables                 (16,349)     (28,979)     (23,604)      (4,413)
    Financial
     liabilities              (34,662)           -            -            -

    Non-current
     liabilities
    Financial
     liabilities                    -       (9,829)      (9,582)           -
    Deferred income
     tax liabilities             (523)      (4,589)      (3,910)        (955)

    Liabilities
     associated with
     assets held
     for sale           4      (4,707)           -            -            -

                          ---------------------------------------------------
    TOTAL LIABILITIES         (56,241)     (43,397)     (37,096)      (5,368)
                          ---------------------------------------------------

    NET ASSETS                158,032      161,545      115,915      125,363
                          ---------------------------------------------------
                          ---------------------------------------------------

    Share capital       5     207,633      207,452      158,871      158,871
    Other reserves             14,685       14,104       13,729       12,730
    Accumulated
     deficit                  (64,286)     (60,011)     (56,685)     (46,238)

                          ---------------------------------------------------
    TOTAL EQUITY              158,032      161,545      115,915      125,363
                          ---------------------------------------------------
                          ---------------------------------------------------


    Serica Energy plc
    Statement of Changes in Equity

    For the period ended 30 June 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

    New shares issued (net)    48,581            -            -       48,581
    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
                          ---------------------------------------------------
                          ---------------------------------------------------


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

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

    Conversion of options         534            -            -          534
    Share-based payments            -          499            -          499
    Loss for the period             -            -       (1,595)      (1,595)

                          ---------------------------------------------------
    At 31 March 2007
     (unaudited)              157,817       12,266      (44,651)     125,432

    Conversion of options       1,054            -            -        1,054
    Share-based payments            -          464            -          464
    Loss for the period             -            -       (1,587)      (1,587)

                          ---------------------------------------------------
    At 30 June 2007
     (unaudited)              158,871       12,730      (46,238)     125,363
                          ---------------------------------------------------
                          ---------------------------------------------------


    Serica Energy plc
    Consolidated Cash Flow Statement

    Unaudited                   Three        Three          Six          Six
                               months       months       months       months
                                ended        ended        ended        ended
                              30 June      30 June      30 June      30 June
                                 2008         2007         2008         2007
                               US$000       US$000       US$000       US$000
    Cash flows from
     operating activities:
    Operating loss             (3,596)      (2,378)      (6,812)      (4,835)

    Adjustments for:
    Depreciation and
     depletion                     35           26           93           52
    Asset write-offs                -            -          375            -
    Share-based payments          581          470          956          963
    Changes in working
     capital                   (2,277)         (58)       2,465       (5,030)
                          ---------------------------------------------------
    Cash generated from
     operations                (5,257)      (1,940)      (2,923)      (8,850)

    Taxes received                  -            -            -            -

                          ---------------------------------------------------
    Net cash flow from
     operations                (5,257)      (1,940)      (2,923)      (8,850)
                          ---------------------------------------------------
    Cash flows from
     investing activities:
    Interest received             298          811          874        1,673
    Interest paid                (800)           -         (800)           -
    Proceeds from disposals         -            -            -        5,000
    Purchases of property,
     plant & equipment        (18,294)         (37)     (37,973)         (37)
    Purchases of exploration
     and evaluation assets     (9,908)     (14,387)     (13,427)     (19,004)

                          ---------------------------------------------------
    Net cash used in
     investing                (28,704)     (13,613)     (51,326)     (12,368)
                          ---------------------------------------------------

    Cash proceeds from
     financing activities:
    Loan drawdowns             25,000            -       25,000            -
    Issue of shares (net)           -            -       48,581            -
    Proceeds on exercise
     of warrants/options          181            -          181          534

                          ---------------------------------------------------
    Net cash from
     financing activities      25,181            -       73,762          534
                          ---------------------------------------------------

    Cash and cash equivalents

    Net (decrease)/increase
     in period                 (8,780)     (15,553)      19,513      (20,684)
    Amount at start of period  50,931       72,175       22,638       77,306

                          ---------------------------------------------------
    Amount at end of period    42,151       56,622       42,151       56,622
                          ---------------------------------------------------
                          ---------------------------------------------------



    Serica Energy plc

    Notes to the Unaudited Consolidated Financial Statements

    1.  Corporate information

    The interim condensed consolidated financial statements of the Group for
    the six months ended 30 June 2008 were authorised for issue in accordance
    with a resolution of the directors on 4 August 2008.

    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 six
    months ended 30 June 2008 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 2007. 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 2007.

    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 2007, except for the adoption of the
    following new standards and interpretations, noted below,

    IFRIC 11 'IFRS2 - Group and Treasury Share Transactions' - Effective for
    periods starting after 1 March 2007

    IFRIC 12 'Service Concession Arrangements' - Effective date 1 January
    2008

    IFRIC 14 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
    Requirements and their Interaction' - Effective date 1 January 2008

    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, APD (Glagah
    Kambuna) Limited, Serica Energy Pte Limited, Serica Kutei B.V., Serica
    Nam Con Son B.V. and Serica Norge AS. 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.

    The following tables present revenue and profit information regarding the
    Group's geographical segments for the six months ended 30 June 2008 and
    2007.

    Six months ended      Indonesia &      UK & NW        Spain        Total
    30 June 2008              Vietnam       Europe
                               US$000       US$000       US$000       US$000
    Revenue                         -            -            -            -
    Segment and operating
     loss                        (922)      (5,851)         (39)      (6,812)


    Six months ended      Indonesia &      UK & NW        Spain        Total
    30 June 2007              Vietnam       Europe
                               US$000       US$000       US$000       US$000
    Revenue                         -            -            -            -
    Segment and operating
     loss                        (674)      (4,054)        (107)      (4,835)


    4.  Discontinued Operation

    In June, the Company reached agreement with Spring Energy Norway AS
    ("Spring") for the sale of Serica's Norwegian subsidiary, Serica Energy
    Norge AS, which holds all of Serica's interests in Norway, comprising a
    20% working interest in Norwegian offshore licences PL406 and PL407.
    Completion is subject to the receipt of the required Norwegian government
    approvals to the transaction and to other approvals and consents.

    The base consideration provides for payment in respect of past costs
    relating to the blocks. Although the transaction has not yet completed,
    assets and liabilities held as at 30 June 2008 in respect of the
    Norwegian interests being sold, are now classified as part of a disposal
    group held for sale. Assets held for sale of US$7.3 million chiefly
    comprise Norwegian expenditure previously capitalised as exploration and
    evaluation assets, and liabilities of US$4.7 million chiefly represent
    deferred tax liabilities associated with the assets recognised. These
    assets and liabilities are disclosed separately on the Balance Sheet, and
    there is no significant net Income Statement impact arising from
    recognition at fair value less costs to sell.

    There is no significant impact of this disposal group on the Income
    Statement for the six months ended 30 June 2008 or 30 June 2007. Cash
    outflows of the disposal group for the six months ended 30 June 2008
    totalled US$1.7 million (six months ended 30 June 2007: US$2.7 million)
    being expenditure incurred on Norwegian exploration and evaluation
    assets.

    The agreement also includes a contingent 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 retains a significant part of
    the upside value of the Bream field without being exposed to further
    appraisal and development costs or to the commitment of additional
    resources.

    5.  Equity Share Capital

                              30 June      30 June  31 December  31 December
                                 2008         2008         2007         2007
                               Number       US$000       Number       US$000
    Authorised:
    Ordinary shares
     of US$0.10           250,000,000       25,000  200,000,000       20,000
    Ordinary 'A' share
     of (pnds stlg)50,000           1           90            1           90
                          ---------------------------------------------------
                          250,000,001       25,090  200,000,001       20,090
                          ---------------------------------------------------
                          ---------------------------------------------------

    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.


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

    As 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

                          ---------------------------------------------------
    As at 31 March 2008   176,418,311       17,732      189,720      207,452

    Options exercised(2)      100,000           10          171          181

                          ---------------------------------------------------
    As at 30 June 2008    176,518,311       17,742      189,891      207,633
                                                                 ------------
                                                                 ------------

    (1) From 1 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) From 1 April 2008 until 30 June 2008, 100,000 share options were
        converted to ordinary shares at a price of Cdn$1.80.

    6.  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 2,322,500
    ordinary shares of the Company. No further options will be granted under
    the Serica BVI Option Plan.

    The Company has granted 7,984,000 options under the Serica 2005 Option
    Plan, 7,729,000 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.

    In December 2005, 330,000 options were awarded to executive directors
    exercisable only if certain performance targets are met. 110,000 of these
    were cancelled during Q2 2007. In August 2007, 1,200,000 options were
    awarded to non-executive directors exercisable only if certain
    performance targets are met. In March 2008, 850,000 options were awarded
    to executive directors exercisable only if certain 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 performance targets) 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$581,000 has been charged to the income
    statement in the quarter ended 30 June 2008 and a similar amount credited
    to other reserves.

    The assumptions made for the options granted during 2005, 2006, 2007 and
    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 2008.

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

                                                                        WAEP
    Serica BVI Option Plan                               Number         Cdn$

    Outstanding at 31 December 2007 and
     31 March 2008                                    2,722,500         1.57

    Exercised during the period                        (100,000)        1.80
    Cancelled during the period                        (300,000)        1.80

                                                     ------------------------
    Outstanding at 30 June 2008                       2,322,500         1.53


    Serica 2005 Option Plan                                       (pnds stlg)

    Outstanding at 31 December 2007                   5,067,000         1.00

    Granted during the period                         2,662,000         0.77

                                                     ------------------------
    Outstanding at 31 March 2008 and 30 June 2008     7,729,000         0.92


    7.  Taxation

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

                                                For six months ended 30 June
                                                           2008         2007
                                                         US$000       US$000

    Current income tax credit                             1,320            -
    Deferred income tax charge                           (1,320)           -

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

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

    8.  Subsequent Events

    In July 2008 the Company announced that it had reached agreement with
    Salamander Energy plc for the sale of a 15% interest in the Glagah-
    Kambuna Technical Assistance Contract ("the Kambuna TAC") and a 23.4%
    interest in the Kutai Production Sharing Contract ("the Kutai PSC") to a
    subsidiary of Salamander. The total consideration due to Serica, based on
    an effective date of 1 July 2008, is US$52.75 million. Completion is
    subject to the required government and partner consents.

    9.  Publication of Non-Statutory Accounts

    The financial information contained in this interim statement does not
    constitute statutory accounts as defined in section 240 of the Companies
    Act 1985. The financial information for the full preceding year is based
    on the statutory accounts for the financial year ended 31 December 2007.
    Those accounts, upon which the auditors issued an unqualified opinion,
    have been delivered to the Registrar of Companies.

    This interim statement will be made available at the Company's registered
    office at 87-89 Baker Street, London W1U 6RJ and on its website at
    www.serica-energy.com and on SEDAR at www.sedar.com


    INDEPENDENT REVIEW REPORT TO SERICA ENERGY PLC

    Introduction

    We have been engaged by the company to review the condensed interim
    consolidated financial statements in the report to the shareholders for
    the six months ended 30 June 2008 which comprises the consolidated Income
    Statement, the consolidated Balance Sheet, consolidated Statement of
    Changes in Equity, consolidated Cash Flow Statement, and related notes 1
    to 9. We have read the other information contained in the report to
    shareholders and considered whether it contains any apparent
    misstatements or material inconsistencies with the information in the
    condensed interim consolidated financial statements.

    This report is made solely to the company in accordance with guidance
    contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial
    Information Performed by the Independent Auditor of the Entity" issued by
    the Auditing Practices Board. To the fullest extent permitted by law, we
    do not accept or assume responsibility to anyone other than the company,
    for our work, for this report, or for the conclusions we have formed.

    Directors' Responsibilities

    The report to shareholders is the responsibility of, and has been
    approved by, the directors.

    As disclosed in note 2, the annual financial statements of the group are
    prepared in accordance with IFRSs as adopted by the European Union. The
    condensed interim consolidated financial statements included in this
    report to shareholders have been prepared in accordance with
    International Accounting Standard 34, "Interim Financial Reporting", as
    adopted by the European Union.

    Our Responsibility

    Our responsibility is to express to the company a conclusion on the
    condensed interim consolidated financial statements in the report based
    on our review.

    Scope of Review

    We conducted our review in accordance with International Standard on
    Review Engagements (UK and Ireland) 2410, "Review of Interim Financial
    Information Performed by the Independent Auditor of the Entity" issued by
    the Auditing Practices Board for use in the United Kingdom. A review of
    interim financial information consists of making enquiries, primarily of
    persons responsible for financial and accounting matters, and applying
    analytical and other review procedures. A review is substantially less in
    scope than an audit conducted in accordance with International Standards
    on Auditing (UK and Ireland) and consequently does not enable us to
    obtain assurance that we would become aware of all significant matters
    that might be identified in an audit. Accordingly, we do not express an
    audit opinion.

    Conclusion

    Based on our review, nothing has come to our attention that causes us to
    believe that the condensed interim consolidated financial statements in
    the report for the six months ended 30 June 2008 are not prepared, in all
    material respects, in accordance with International Accounting Standard
    34 as adopted by the European Union.

    Ernst & Young LLP
    London
    4 August 2008
    

    %SEDAR: 00022686E




For further information:

For further information: Serica Energy plc: Paul Ellis, Chief Executive
Officer, paul.ellis@serica-energy.com, +44 (0)20 7487 7300; Chris Hearne,
Finance Director, 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 -
UK: James Henderson, james.henderson@pelhampr.com, +44 (0)20 7743 6673;
Alisdair Haythornthwaite, alisdair.haythornthwaite@pelhampr.com, +44 (0)20
7743 6676; CHF - Canada: Sasha Abrams, sasha@chfir.com, (416) 868-1079

Organization Profile

SERICA ENERGY PLC

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890