Serica Energy Plc ("Serica" or the "Company") - Second quarter 2007 report to shareholders



    LONDON, Aug. 7 /CNW/ - Serica Energy plc (TSX Venture & AIM: SQZ) today
announces its financial results for the three and six months ended 30 June
2007. The results and associated Management Discussion and Analysis are
included below and copies are available at www.serica-energy.com and
www.sedar.com.

    
    H1 2007 Highlights

    Operational
    -----------
    -   Construction of the Kambuna Field offshore facilities progresses
        towards 2008 production start-up in Indonesia

    -   Exploration portfolio and prospects increased significantly with new
        prospective licences awarded in the UK, Norway, Indonesia and Vietnam

    -   Farmed-out a percentage of the Company's interest in the Biliton
        Block, in line with a strategy to spread exploration risk and manage
        costs whilst continuing to build the portfolio

    Financial and Corporate
    -----------------------
    -   Net Current Assets at the half year stood at US$66 million

    -   US$100 million debt facility arranged with JP Morgan Chase and Bank
        of Scotland to fund appraisal and development activities in
        Indonesia, UK and Norway

    -   Ian Vann joined the board as a non-executive director, having
        recently retired from BP where he led the global exploration team

    -   Steven Theede joined the board as a non-executive director, having
        held several senior positions in Conoco and most recently served as
        Chief Executive of Yukos Oil Company

    Forward Exploration, Appraisal and Development Programmes

    -   SEDCO 704 drilling rig will drill the first Columbus Field appraisal
        well in September 2007, three kilometres north of the Columbus
        discovery well

    -   In the Biliton PSC, two wildcat exploration wells are scheduled to be
        drilled in the fourth quarter of 2007

    -   The Kambuna Field wellhead support tower under construction in
        Balikpapan, Indonesia is scheduled to be installed in the fourth
        quarter of 2007

    -   Kambuna development drilling from the support tower will commence in
        the fourth quarter of 2007 with the drilling and workover of three
        wells

    -   An appraisal well in the Bream field, Norway, is due to be drilled in
        the second quarter of 2008

    -   In Vietnam the acquisition of a new 3D seismic survey in Block 06/94
        is expected to begin in the third quarter of 2007

    -   In Indonesia a new 3D seismic survey will be acquired in the Kutai
        Block
    

    Serica's Chief Executive, Paul Ellis, commented:

    "The first half of 2007 has been a relatively quiet period for Serica as
we put into place the drilling and contractual arrangements for a significant
increase in activities planned for the second half. Appraisal drilling on the
Columbus field will commence in the next few weeks and we expect to take
delivery of the well-head tower for the Kambuna field in the next quarter,
enabling us to start drilling the field development wells immediately after
installation.
    "Serica also has significant exposure to exploration upside in the second
half of 2007 with a 45 percent interest in two wildcat wells to be drilled by
the Company in the Biliton Block in Indonesia. Serica's costs in these wells
are carried as a result of the farm-out agreement with Nations Petroleum. We
will continue this exploration drilling with further wells planned in the UK
and Norway in early 2008.
    "Serica remains very focused on creating shareholder value through its
exploration drilling and field appraisal and development programmes and I am
very optimistic for the Company's prospects".



    
                              SERICA ENERGY PLC

                 SECOND QUARTER 2007 REPORT TO SHAREHOLDERS
    

    MANAGEMENT OVERVIEW

    Serica has continued to build on its 2006 performance with an active
second quarter of 2007.
    Serica has recently obtained a commitment from JPMorgan Chase Bank, N.A.
and The Governor and Company of the Bank of Scotland to enter into a
US$100 million senior secured debt facility. The facility is subject to legal
documentation and fulfillment of standard terms and conditions for a debt
financing of this nature.
    The facility, which will have a term of twelve months, with the Company
having an option to extend for a further six months, will be used to fund
appraisal and development expenditures for the Kambuna field in Indonesia and
the Columbus field in the UK North Sea as well as for Norwegian appraisal
expenditure and general corporate purposes.
    This facility provides Serica with funds to develop the Company's
interests in the Kambuna and Columbus fields, both of which are operated by
Serica, and contribute to Serica's share of drilling costs for the appraisal
of the Bream oil discovery in Norway.
    In June, Serica announced that Ian Vann would be joining the Board as a
non-executive director with effect from 1 July 2007. Ian was employed by BP
from 1976, and directed and led BP's global exploration efforts from 1996
until his recent retirement in January 2007. He was appointed to the executive
leadership team of the Exploration & Production Division of BP in 2001,
initially as Group Vice President, Technology and later as Group Vice
President, Exploration and Business Development. Ian brings a wealth of
valuable experience in the international oil and gas exploration business to
the Board of Serica.
    Since the period end, Serica announced that Steven Theede has joined the
Board as a non-executive director with effect from 24 July 2007. Steve was
employed by Conoco, later ConocoPhillips, from 1973 until 2003, where he held
numerous management positions in Refining and Marketing, Exploration and
Production as well as in corporate activities, located both in the US and
Europe. In 2000 he was appointed President, Exploration and Production for
Europe, Russia and the Caspian region. In 2003 he joined Yukos Oil Company
located in Russia, as Chief Operating Officer and became Chief Executive
Officer of the Company in July 2004, a position he held until August of 2006.
His industry background complements the talents and experience that already
exist on the Board of Serica.

    Western Europe: United Kingdom, Ireland, Norway and Spain

    United Kingdom
    Serica retained its 50% interest in Block 23/16f, in which it made the
Columbus discovery in December 2006, having agreed with BG International
Limited not to complete a previously announced acreage exchange. As operator
of the block, Serica has contracted the semi-submersible drilling rig SEDCO
704 to drill the first Columbus appraisal well in September 2007, in a
location about three kilometres north of the 23/16f-11 discovery well.
    Discussions have already commenced with nearby infrastructure owners with
a view to reaching a Columbus development decision by the end of the year in
the event of a successful outcome to the appraisal drilling. Serica has
secured a second rig slot on the SEDCO 704 in the summer of 2008, which will
be available for a Columbus development well or for an exploration well in
Serica's adjacent Block 23/16g.
    In its East Irish Sea Blocks 113/26b and 113/27c to the north of the
Morecambe gas field, Serica is carrying out a 3D seismic reprocessing project
in order to confirm future exploration well locations. Serica has a 100%
interest in the licence.

    Ireland
    Serica holds a 100% interest in Blocks 27/4, 27/5 west and 27/9 in the
Slyne Basin off the west coast of Ireland and is carrying out a 3D seismic
reprocessing project in order to confirm exploration well locations on several
large gas prospects that it has already identified. The blocks lie about 40 km
south of the 1 tcf Corrib gas field, currently under development by Shell.

    Norway
    In Serica's Norwegian North Sea licences, the operator of Licence 407,
BG Norge AS, is planning for an appraisal well to be drilled in the Bream
field in the second quarter of 2008 and the operator of Licence 406, Premier
Oil Norge AS, is planning a 3D seismic survey early in 2008. Serica has a 20%
interest in these licences.

    Spain
    In Spain, Serica has just completed a seismic test line in preparation
for a 2D seismic survey on its four onshore licences in Aragon Province, in
the north-eastern part of the country. Serica holds a 100% interest in the
licences.

    Southeast Asia: Indonesia and Vietnam

    Indonesia
    In March, Serica announced the farm-out of a percentage of the Company's
interest in the Biliton PSC, in line with its strategy to spread exploration
risk and manage costs. Under the terms of the agreement and subject to
regulatory approval, Serica will assign a 45% interest in the Biliton PSC to
Nations Petroleum Company Ltd., which will bear the majority of the costs of
the two-well exploration drilling programme, scheduled to commence in the
fourth quarter of 2007. Serica will remain the operator and will retain a 45%
interest in the Biliton PSC. The two prospects to be drilled are located
offshore in a virtually unexplored basin in the central Java Sea.
    In the Glagah-Kambuna PSC offshore North West Sumatra, development of the
Kambuna gas/condensate field is now well underway. Negotiations for the sale
of the gas and condensate are expected to conclude shortly, with the field
destined to supply gas to Medan, Indonesia's third largest city. The field
wellhead support tower is currently under construction in Balikpapan,
Indonesia, and is scheduled for delivery in September and installation in the
fourth quarter of this year. Two new development wells will be drilled from
the tower and the Kambuna No. 2 well will be recompleted in order to develop
the Kambuna field. Later this year the offshore and onshore pipeline route
surveys will be carried out in preparation for issuing invitations to tender
for pipeline supply and installation.
    In the large Kutai PSC, East Kalimantan, an elevation survey has been
completed in preparation for a 2D seismic survey to be carried out in the
onshore part of the PSC early next year. The existing offshore 3D seismic
survey data is to be reprocessed and plans for an additional 3D seismic survey
are being prepared.

    Vietnam
    Serica holds a 33.3% interest in the Block 06/94 PSC in the Con Son Basin
offshore Vietnam. The block lies immediately south of the producing Lan Tay
and Lan Do gas fields and immediately east of the Dua and Blackbird oil
discoveries. Several prospects have already been identified on the block and
acquisition of a new 3D seismic survey is expected to begin in the third
quarter of 2007.

    Forward Programme

    Serica will commence an extensive period of drilling activity in the
second half of the year with two exploration wells and four appraisal or
development wells planned.
    In the third quarter, Serica will commence its UK drilling programme with
a Columbus appraisal well to be drilled in September. Conceptual development
studies for the Columbus field are underway, so that development can be
advanced once the results of the appraisal programme are known. In Indonesia,
two exploration wells will be drilled in the fourth quarter and the Kambuna
development drilling programme will commence.
    Serica remains very focused on creating shareholder value through its
exploration drilling and field development programmes. As the Company
continues to build on the exploration success that it has seen in the North
Sea and Indonesia, our objectives are to bring the benefits of that success
back to shareholders and to lay the foundations for future growth.
    The results of Serica's operations detailed below in the MD&A, and in the
financial statements, are presented in accordance with International Financial
Reporting Standards ("IFRS").

    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 3 August 2007 and
should be read in conjunction with the attached unaudited interim consolidated
financial statements for the period ended 30 June 2007. The interim financial
statements for the three and six months ended 30 June 2007 have been prepared
by and are the responsibility of the Company's management. The interim
financial statements for the six months ended 30 June 2007 and 2006 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.

    Overall Performance

    Serica's activities are centred on the UK and Indonesia, with other
interests in Norway, Spain, Ireland and Vietnam. The Group has no current oil
and gas production, with the main emphasis placed upon its future exploration
drilling programmes. In 2007 to date, work has continued on managing its
portfolio of interests, accelerating the appraisal of Columbus in the North
Sea, advancing the Indonesian development and preparing for the 2007 drilling
programme. 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 generated a loss of US$1.6 million for the three months ended
30 June 2007 ("Q2 2007") compared to a profit of US$1.8 million for the three
months ended 30 June 2006 ("Q2 2006"). The Q2 2006 figures have been restated
to take account of the revised accounting treatment for share purchase
warrants outstanding at 30 June 2006.

    
                                 2007         2007         2006         2006
                          ---------------------------------------------------
                                   Q2           Q1           Q2           Q1
                               US$000       US$000       US$000       US$000

    Sales revenue                   -            -           36           25
                          ---------------------------------------------------

    Expenses:

      Administrative
       expenses                (1,722)      (1,846)      (1,343)      (1,322)
      Foreign exchange
       (loss)/gain                (36)          15          890          (48)
      Pre-licence costs          (124)        (101)        (414)        (160)
      Share-based payments       (470)        (499)        (533)        (436)
      Change in fair value
       of share warrants(1)         -            -         (682)       1,836
      Depletion, depreciation &
       amortisation               (26)         (26)         (18)         (10)
                          ---------------------------------------------------
    Operating loss before
     finance revenue
     and taxation              (2,378)      (2,457)      (2,064)        (115)

      Profit on disposal            -            -        2,187            -
      Finance revenue             791          862        1,210        1,152

                          ---------------------------------------------------
    (Loss)/profit before
     taxation                  (1,587)      (1,595)       1,333        1,037

      Taxation credit/
      (charge)                      -            -          506            -
                          ---------------------------------------------------

    (Loss)/profit for the
     period                    (1,587)      (1,595)       1,839        1,037

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

    (1) As restated - see note 9 of the financial statements.
    

    Revenues from oil and gas production are recognised on the basis of the
Company's net working interest in its properties and, in 2006, were generated
from Serica's 10% interest in the Harimau producing gas and gas condensate
field. The Q1 and Q2 2006 revenues are from discontinued operations following
the disposal of the Lematang PSC interest in 2006 which included the Harimau
field. Direct operating costs for the field during the period of ownership by
the Group were carried by Medco Energi Limited.
    Administrative expenses of US$1.7 million for Q2 2007 remained at a
consistent level with Q1 2007 and increased from US$1.3 million for the same
period last year. The increase reflects the growing scale of the Company's
activities over the past twelve months.
    No significant foreign exchange movements impacted Q2 2007 results. A
large foreign exchange gain of US$0.9 million was earned in Q2 2006. This
chiefly arose from the increase in US$ equivalent value of pounds sterling
cash deposits held, as the pound strengthened against the dollar during the
quarter.
    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$0.1 million for
Q2 2007 decreased from US$0.4 million for the same period last year due to an
increased focus on licence applications in Norway and Ireland in 2006.
    Share-based payment charges of US$0.5 million reflect share option grants
made and compare with US$0.5 million for both Q1 2007 and Q2 2006. Whilst
further share options have been granted in 2007, the incremental charge
generated from those options has been offset by the decline in charge of the
options granted in 2005 and 2006.
    The change in fair value of share warrants in Q1 and Q2 2006 is a
restatement to reflect evolving interpretation of the treatment of such
instruments under the recently adopted IFRS. This has arisen due to the
difference in the denominated currency of the share warrants compared to
Serica's functional currency. The loss in Q2 2006 was created as the fair
value liability of share warrants not exercised increased due to the rise in
share price over the quarter. All warrants were exercised in 2006 and there is
no income statement impact in 2007. This has no cash impact on reported
results. More detail is provided in note 9 of the financial statements.
    Negligible depletion, depreciation and amortisation charges in all
periods represent office equipment and fixtures and fittings. The costs of
petroleum and natural gas properties are not currently subject to such charges
pending further evaluation.
    Finance revenue, comprising interest income of US$0.8 million for Q2 2007
compares with US$0.9 million for Q1 2007 and US$1.2 million for Q2 2006. The
decrease from last year is due to the reduction in cash deposit balances held
during 2006 as expenditure was incurred on the drilling programmes.
    The net loss per share of US$0.01 for Q2 2007 compares to an earnings per
share of US$0.01 for Q2 2006.

    
    Summary of Quarterly Results

                           2007     2007     2006     2006     2006     2006
    Quarter ended:       30 Jun   31 Mar   31 Dec   30 Sep   30 Jun   31 Mar
                         US$000   US$000   US$000   US$000   US$000   US$000
                        -----------------------------------------------------

    Sales revenue             -        -        -        -       36       25
    (Loss)/profit for
     the quarter(1)      (1,587)  (1,595) (13,456)  (3,795)   1,839    1,037
    Basic and diluted
     loss per share US$   (0.01)   (0.01)   (0.09)   (0.03)       -        -
    Basic and diluted
     earnings per
     share(1)                 -        -        -        -     0.01     0.01

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

    (1) As restated for Q1 and Q2 2006 - See note 9 of the financial
        statements.
    

    The fourth quarter 2006 loss includes asset write offs of US$12.7 million
in regard to the Asahan Offshore PSC. The Q2 2006 profit includes a gain of
US$2.3 million from the disposal of the 10% interest in the Lematang Block.

    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 December
                                              2007         2007         2006
                                            US$000       US$000       US$000
                                       --------------------------------------
    Current assets:
      Inventories                            6,438        6,785        6,785
      Trade and other receivables            7,147       11,369       30,903
      Cash and cash equivalents             56,622       72,175       77,306
                                       --------------------------------------
    Total Current assets                    70,207       90,329      114,994

    Less Current liabilities:
      Trade and other payables              (4,413)     (11,864)     (30,619)
                                       --------------------------------------
    Net Current assets                      65,794       78,465       84,375
    

    At 30 June 2007, the Company had net current assets of US$65.8 million
which comprised current assets of US$70.2 million less current liabilities of
US$4.4 million, giving an overall reduction in working capital of
US$12.7 million in the three month period.
    Inventories principally consist of steel casing for the forthcoming
Indonesian drilling programme.
    Trade and other receivables at 30 June 2007 totalled US$7.1 million. This
balance includes 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. A significant debtor balance at
31 March 2007, representing a contribution to exploration costs recoverable
under the BG/Serica cross assignment deal in Blocks 23/16f and 23/21b (see
Management Overview) was no longer receivable, following the announcement in
June of the mutual agreement between Serica and BG not to complete the deal.
This large decrease was partially offset by a general increase in other
balances during Q2 2007, causing an overall reduction in Q2 2007 of US$4.3
million from US$11.4 million.
    Net cash outgoings in Q2 2007 covered operational expenses and
exploration work. These were partially offset by US$0.8 million of interest
income received in the quarter.
    Trade and other payables of US$4.4 million at 30 June 2007 include a
US$1.5 million payable (settled in July 2007) in respect of the Q2 2006
acquisition of an additional 10% interest in the Glagah Kambuna TAC, amounts
due to those sub-contractors operating the UK drilling programme, and
creditors and accruals from Indonesia. Payables arising from the 2006 drilling
campaign were substantially settled in Q1 2007.

    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
                                              2007         2007         2006
                                            US$000       US$000       US$000
                                       --------------------------------------

    Intangible exploration assets           58,470       45,738       40,681
    Property, plant and equipment              327          316          342
    Goodwill                                 1,200        1,200        1,200
    Long-term other receivables                527          668          351
    Deferred income tax liabilities           (955)        (955)        (955)
    

    During Q2 2007, total investments in petroleum and natural gas
properties, represented by intangible exploration assets, increased by
US$12.7 million to US$58.5 million. Following the announcement in June of the
agreement between Serica and BG not to complete the BG/Serica cross assignment
deal, the anticipated recovery credited against intangible exploration assets
has been reversed and Serica's capitalised cost now reflects its 50% share of
costs incurred on the Block 23/16f, rather than the 25% previous interest. Of
the remaining Q2 2007 investments; US$2.3 million was spent in Vietnam
principally on a signature bonus, US$0.9 million in the UK on exploration work
and G&A, US$1.2 million was spent in Indonesia principally on drilling
activity preparation, exploration work and G&A on the Glagah Kambuna and Kutai
concessions, and US$0.3 million in Spain. In Q1 2007, US$1.0 million of back
costs, received as part of the Biliton farm out, have been credited against
the capitalised pool of costs.
    Property, plant and equipment includes 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$1.2 million.
    Long-term other receivables of US$0.5 million represent value added tax
("VAT") on Indonesian capital spend, which would be recovered from future
production.

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

    
                                           30 June     31 March  31 December
                                              2007         2007         2006
                                            US$000       US$000       US$000
                                       --------------------------------------

    Total share capital                    158,871      157,817      157,283
    Other reserves                          12,730       12,226       11,767
    Accumulated deficit                    (46,238)     (44,651)     (43,056)
    

    Total share capital includes the total net proceeds (both nominal value
and any premium on the issue of equity capital).
    Issued share capital during 2007 was increased by the exercise of
1,110,001 share options of the Company at prices ranging from Cdn$1.00 to
Cdn$2.00.
    Other reserves include amounts credited in respect of cumulative
share-based payment charges, and the amount of the fair value liability of
share warrants eliminated upon exercise of those share warrants. The increase
in other reserves from US$12.2 million to US$12.7 million reflects the
amortisation of share-based payment charges in Q2 2007.

    Capital Resources
    -----------------
    At 30 June 2007, Serica had US$65.8 million of net working capital and no
long-term debt. 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 2007                     172
    31 December 2008                     287
    31 December 2009                     266
    31 December 2010                      42
    

    At 30 June 2007, the Company had no long-term debt or capital lease
obligations. In Q4 2006 the Company contracted the SeaDrill 5 jack-up drilling
rig for 136 days during 2007 for Indonesian operations at a gross cost of
US$26,286,000. The gross obligation existed at 30 June 2007 and Serica's net
share of these costs will depend on the exact split of the proposed drilling
programmes but following the farm-out of a 45% interest in Biliton and current
paying interests in the Glagah Kambuna TAC, this is expected to be
approximately US$11,100,000. Although these arrangements have changed post the
period end the obligation to be incurred will be similar to that noted above.
On 12 July 2007, Serica was informed by the rig owners that the SeaDrill 5 had
suffered damage on its previous location and would no longer be available to
drill the Biliton and Kambuna wells as previously planned. Serica immediately
tendered for a replacement jack-up rig and has now issued a Letter of Intent
to Global Santa Fe for the use of either the GSF 136 or the GSF Parameswara to
drill the Biliton and Kambuna wells starting in the fourth quarter of this
year (see Note 7 to the Financial Statements).
    In Q1 2007 the Company contracted the Sedco 704 semi-submersible drilling
rig for UK operations, specifically the Columbus appraisal wells. The gross
obligation under the contract is for 94 days which equates to a value of
US$32,200,000, of which Serica's share is expected to be 50%, depending upon
the work programme finally agreed with the Company's co-venturers.
    In the absence of revenues generated from oil and gas production, Serica
will continue to utilise existing financial resources together with financing
available through the recently arranged US$100 million senior secured debt
facility, to fund its investment programme and ongoing operations.
    This facility provides Serica with funds to develop the Company's
interests in the Kambuna and Columbus fields, both of which are operated by
Serica, and contribute to Serica's share of drilling costs for appraisal of
the Bream oil discovery in the Norwegian North Sea, planned for early 2008.

    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,
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 2007/8 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 2007, the following director and employee share options
were outstanding: -

    
                                       Expiry Date       Amount     Exercise
                                                                        cost
                                                                        Cdn$
    Share options                         Jun 2008      400,000      720,000
                                          Feb 2009      247,499      494,998
                                          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
    

    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.

    Disclosure Controls and Procedures and Internal Controls over Financial
    Reporting

    Serica's management, including the Chief Executive Officer and Chief
Financial Officer, has reviewed and evaluated the effectiveness of the
Company's disclosure controls and procedures in accordance with Multilateral
Instrument 52-109 and Canadian securities regulations as of 30 June 2007.
Management has concluded that, as of 30 June 2007, the disclosure controls and
procedures were effective to provide reasonable assurance that material
information relating to the Company and its consolidated subsidiaries would be
made known to them by others within those entities, particularly during the
period in which this report was being prepared.
    Management has designed internal controls over financial reporting to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with IFRS. There have been no changes in the Company's internal
controls over financial reporting during the period that have materially
affected, or are reasonably likely to materially affect, the Company's
internal controls over financial reporting.

    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 2007, the Company incurred losses
of US$1.6 million from continuing operations. At 30 June 2007, the Company
held cash and cash equivalents of US$56.6 million.

    Outstanding Share Capital

    As at 3 August 2007, the Company had 151,647,657 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

    7 August 2007
    

    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.

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



    Serica Energy plc
    Group Income Statement

    Unaudited                      Three       Three         Six         Six
                                  months      months      months      months
                                   ended       ended       ended       ended
                                 30 June     30 June     30 June     30 June
                                    2007     2006 (1)       2007     2006 (1)
                       Notes      US$000      US$000      US$000      US$000

    Sales revenue                      -          36           -          61

    Cost of sales                      -           -           -           -

                              -----------------------------------------------
    Gross profit                       -          36           -          61

    Administrative
     expenses                     (1,722)     (1,343)     (3,568)     (2,665)
    Foreign exchange
     (loss)/gain                     (36)        890         (21)        842
    Pre-licence costs               (124)       (414)       (225)       (574)
    Share-based
     payments                       (470)       (533)       (969)       (969)
    Change in fair
     value of share
     warrants                          -        (682)          -       1,154
    Depreciation,
     depletion &
     amortisation                    (26)        (18)        (52)        (28)

                              -----------------------------------------------
    Operating loss
     before finance
     revenue and tax              (2,378)     (2,064)     (4,835)     (2,179)

    Profit on disposal     7           -       2,187           -       2,187
    Finance revenue                  791       1,210       1,653       2,362
                              -----------------------------------------------
    (Loss)/profit
     before taxation              (1,587)      1,333      (3,182)      2,370

    Taxation credit for
     the period                        -         506           -         506
                              -----------------------------------------------
    (Loss)/profit for
     the period                   (1,587)      1,839      (3,182)      2,876
                              -----------------------------------------------
                              -----------------------------------------------
    Earnings per
     ordinary share
     (US$):
    Basic and diluted
     loss per share                (0.01)          -       (0.02)          -
    Basic earnings per
     ordinary share                    -        0.01           -        0.02
    Diluted earnings per
     ordinary share                    -        0.01           -        0.02

    (1) As restated - See note 9



    Serica Energy plc
    Consolidated Balance Sheet

                                 30 June    31 March      31 Dec     30 June
                                    2007        2007        2006     2006 (1)
                                  US$000      US$000      US$000      US$000
                       Notes  (Unaudited) (Unaudited)   (Audited) (Unaudited)

    Non-current assets
    Intangible
     exploration assets           58,470      45,738      40,681      28,102
    Property, plant and
     equipment                       327         316         342         304
    Goodwill                       1,200       1,200       1,200       1,877
    Other receivables                527         668         351       2,003
                              -----------------------------------------------
                                  60,524      47,922      42,574      32,286
                              -----------------------------------------------
    Current assets
    Inventories                    6,438       6,785       6,785         681
    Trade and other
     receivables                   7,147      11,369      30,903       6,241
    Cash and cash
     equivalents                  56,622      72,175      77,306     102,430
                              -----------------------------------------------
                                  70,207      90,329     114,994     109,352
                              -----------------------------------------------

    TOTAL ASSETS                 130,731     138,251     157,568     141,638
                              -----------------------------------------------

    Current liabilities
    Trade and other
     payables                     (4,413)    (11,864)    (30,619)     (8,164)

    Non-current
     liabilities
    Deferred income tax
     liabilities                    (955)       (955)       (955)     (1,631)

                              -----------------------------------------------
    TOTAL LIABILITIES             (5,368)    (12,819)    (31,574)     (9,795)
                              -----------------------------------------------

    NET ASSETS                   125,363     125,432     125,994     131,843
                              -----------------------------------------------
                              -----------------------------------------------

    Share capital          4     158,871     157,817     157,283     151,119
    Other reserves                12,730      12,266      11,767       6,529
    Accumulated deficit          (46,238)    (44,651)    (43,056)    (25,805)

                              -----------------------------------------------
    TOTAL EQUITY                 125,363     125,432     125,994     131,843
                              -----------------------------------------------
                              -----------------------------------------------
    (1) As restated - See note 9



    Serica Energy plc
    Statement of Changes in Equity
    For the period ended 30 June 2007

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



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

    At 1 January 2006 (audited)  148,745       4,153     (28,681)    124,217

    Conversion of warrants           119           -           -         119
    Share-based payments               -         436           -         436
    Profit for the period              -           -       1,037       1,037
    Fair value of warrants
     converted                         -          70           -          70

                                ---------------------------------------------
    At 31 March 2006 (unaudited) 148,864       4,659     (27,644)    125,879

    Conversion of warrants         2,282           -           -       2,282
    Share issue costs                (27)          -           -         (27)
    Share-based payments               -         533           -         533
    Profit for the period              -           -       1,839       1,839
    Fair value of warrants
     converted                         -       1,337           -       1,337

                                ---------------------------------------------
    At 30 June 2006
     (unaudited) (1)             151,119       6,529     (25,805)    131,843
                                ---------------------------------------------
                                ---------------------------------------------
    (1) As restated - See note 9 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
                                    2007        2006        2007        2006
                                  US$000      US$000      US$000      US$000

    Cash flows from operating
     activities:
    Operating loss                (2,378)     (2,064)     (4,835)     (2,179)

    Adjustments for:
    Depreciation, depletion and
     amortisation                     26          18          52          28
    Fair value of share warrants       -         682           -      (1,154)
    Share-based payments             470         533         969         969
    Changes in working capital       (58)     (1,011)     (5,036)     (4,334)
                                ---------------------------------------------
    Cash generated from
     operations                   (1,940)     (1,842)     (8,850)     (6,670)

    Taxes received                     -           -           -          34

                                ---------------------------------------------
    Net cash flow from
     operations                   (1,940)     (1,842)     (8,850)     (6,636)
                                ---------------------------------------------

    Cash flows from investing
     activities:
    Disposals - Cash disposed          -         (51)          -         (51)
    Interest received                811       1,210       1,673       2,362
    Proceeds from disposals            -           -       5,000           -
    Purchases of property,
     plant & equipment               (37)         (8)        (37)       (306)
    Purchase of intangible
     exploration assets          (14,387)     (4,235)    (19,004)     (5,063)

                                ---------------------------------------------
    Net cash used in investing   (13,613)     (3,084)    (12,368)     (3,058)
                                ---------------------------------------------

    Cash proceeds from
     financing activities:
    Proceeds on exercise of
     warrants/options                  -       2,255         534       2,374

                                ---------------------------------------------
    Net cash from financing
     activities                        -       2,255         534       2,374
                                ---------------------------------------------

    Cash and cash equivalents
    Net decrease in period       (15,553)     (2,671)    (20,684)     (7,320)
    Amount at start of period     72,175     105,101      77,306     109,750

                                ---------------------------------------------
    Amount at end of period       56,622     102,430      56,622     102,430
                                ---------------------------------------------
                                ---------------------------------------------
    



    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 2007 were authorised for issue in accordance
    with a resolution of the directors on 7 August 2007.

    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 2007 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 2006. 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 2006.

    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 2006, except for the adoption of the
    following new standards and interpretations, noted below,

    IFRIC 9 'Reassessment of Embedded Derivatives';

    IFRIC 10 'Interim Financial reporting and Impairment'.

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

    The financial statements are unaudited but have been reviewed by Ernst &
    Young LLP and their report is set out below.

    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.,
    Firstearl Limited, Serica Energy (UK) Limited, PDA Lematang Limited, APD
    (Asahan) Limited, APD (Biliton) Limited, APD (Glagah Kambuna) Limited and
    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 2007 and
    2006.

    
    Six months ended        Indonesia           UK        Spain        Total
     30 June 2007              US$000       US$000       US$000       US$000
    Revenue                         -            -            -            -
    Net income/(loss)            (674)      (2,401)        (107)      (3,182)



    Six months ended        Indonesia           UK        Spain        Total
     30 June 2006              US$000       US$000       US$000       US$000
    Revenue                        61            -            -           61
    Net income/(loss)           2,433          499          (56)       2,876



    4. Equity Share Capital

                              30 June      30 June  31 December  31 December
                                 2007         2007         2006         2006
                               Number       US$000       Number       US$000
    Authorised:
    Ordinary shares of
     US$0.10              200,000,000       20,000  200,000,000       20,000
    Ordinary 'A' share
     of (pnds stlg)50,000           1           90            1           90
                          ---------------------------------------------------
                          200,000,001       20,090  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.

    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

    At 1 January 2007     150,537,956       15,144      142,139      157,283

    Options exercised (1)     493,334           49          485          534

                          ---------------------------------------------------
    As at 31 March 2007   151,031,290       15,193      142,624      157,817

    Options exercised (2)     616,667           62          992        1,054

                          ---------------------------------------------------
    As at 30 June 2007    151,647,957       15,255      143,616      158,871
                                                                 ------------
                                                                 ------------

    (1) From 1 January 2007 until 31 March 2007, 493,334 share options were
    converted to ordinary shares at prices ranging from Cdn$1.11 to Cdn$2.00.

    (2) From 1 April 2007 until 30 June 2007, 616,667 share options were
    converted to ordinary shares at prices ranging from Cdn$1.00 to Cdn$2.00.
    

    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 "SEC Share 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 its option plan (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 2,722,499
    ordinary shares of the Company. No further options will be granted under
    the Serica BVI Option Plan.

    The Company has granted 4,122,000 options under the Serica 2005 Option
    Plan, 3,867,000 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. 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$470,000 has been charged to the income
    statement in the period ended 30 June 2007 and a similar amount credited
    to other reserves.

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

    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 2006                   3,975,833         1.57

    Exercised during the period                        (493,334)        1.26
    Cancelled during the period                         (60,000)        2.00

                                                    -------------------------
    Outstanding at 31 March 2007                      3,422,499         1.61

    Exercised during the period                        (616,667)        1.83
    Cancelled during the period                         (83,333)        1.36

                                                    -------------------------
    Outstanding at 30 June 2007                       2,722,499         1.57


    Serica 2005 Option Plan                                       (pnds stlg)

    Outstanding at 31 December 2006                   2,516,000         1.01

    Granted during the period                         1,056,000         1.02

                                                    -------------------------
    Outstanding at 31 March 2007                      3,572,000         1.01

    Granted during the period                           405,000         1.04
    Cancelled during the period                        (110,000)       (0.97)

                                                    -------------------------
    Outstanding at 30 June 2007                       3,867,000         1.01


    6. Taxation

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

    -------------------------------------------------------------------------
                                            For the six months ended 30 June
    -------------------------------------------------------------------------
                                                           2007         2006
                                                         US$000       US$000
    -------------------------------------------------------------------------
    Current income tax charge                               Nil          Nil
    -------------------------------------------------------------------------
    Deferred income tax credit                              Nil          506
    -------------------------------------------------------------------------
    

    In 2006, the book gain on sale of the Lematang PSC is sheltered from tax
    by historic costs not reflected in the book value, indexation, and
    current UK tax losses elsewhere in the group. The 2006 deferred tax
    credit arises from the release of the deferred tax liability attached to
    the Lematang PSC.

    7. Subsequent Events

    On 18 July 2007, Serica obtained a commitment from JPMorgan Chase Bank,
    N.A. and The Governor and Company of the Bank of Scotland to enter into a
    US$100 million senior secured debt facility. The facility is subject to
    legal documentation and fulfillment of standard terms and conditions for
    a debt financing of this nature, including the approval of gas sales
    arrangements.

    The facility, which will have a term of twelve months, with the Company
    having an option to extend for a further six months, will be used to fund
    appraisal and development expenditures for the Kambuna field in Indonesia
    and the Columbus field in the UK North Sea as well as for Norwegian
    appraisal expenditure and general corporate purposes.

    On 12 July 2007, Serica was informed by the rig owners that the
    SeaDrill 5 had suffered damage on its previous location and would no
    longer be available to drill the Biliton and Kambuna wells as previously
    planned. Serica immediately tendered for a replacement jack-up rig and
    has now issued a Letter of Intent to Global Santa Fe for the use of
    either the GSF 136 or the GSF Parameswara to drill the Biliton and
    Kambuna wells starting in the fourth quarter of this year.

    8. 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 2006.
    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 52 Bedford Row, London WC1R 4LR and on its website at
    www.serica-energy.com and on SEDAR at www.sedar.com

    9. Retrospective Restatement

    In the 2006 Annual Report, the prior year income statement and balance
    sheet have been adjusted to reflect differences in accounting for share
    warrants that were outstanding at 31 December 2005 as a liability,
    carried at fair value. Previously the warrants were considered to qualify
    for treatment as equity under IAS 32 Financial Instruments: Presentation.
    However, precedents now available indicate that, because the conversion
    proceeds were denominated in Can$, and the company's functional currency
    is US$, these instruments should have been treated more appropriately as
    a liability for the period the warrants remained outstanding, with an
    income statement charge/credit made to reflect the movement in the fair
    value of the warrants in each relevant period. All warrants were
    exercised during 2006. The effect of this non cash adjustment on the
    Group Income statement, Loss per Ordinary Share, Group and Company
    Balance Sheets, and Group and Company Statements of Changes in Equity is
    detailed in Note 30 of the 2006 Annual Report.

    The impact of this retrospective restatement on the Q1 and Q2 2006
    comparatives in this Q2 2007 Report is set out below:

    Effect on Group Income Statement and Summary of Quarterly Results in
    Managements Discussion and Analysis

    
    (Loss)/profit for the quarter
    Quarter ended:                                       31 Mar       30 Jun
                                                    -------------------------

    2006
    (Loss)/profit for the quarter previously
     reported (US$000)                                     (799)       2,521
    Change in fair value of warrants (US$000)             1,836         (682)
                                                    -------------------------
    Profit for the quarter restated (US$000)              1,037        1,839
                                                    -------------------------
    (Loss)/earnings per share
    2006                                            -------------------------
    Basic and diluted loss per share previously
     reported (US$)                                       (0.01)           -
    Basic and diluted earnings per share previously
     reported (US$)                                           -         0.02

    Change in fair value of warrants (US$)                 0.02        (0.01)

                                                    -------------------------
    Basic and diluted earnings per share as
     restated (US$)                                        0.01         0.01


    Effect on Group Balance Sheet                                    30 June
                                                                        2006
                                                                      US$000

    Total liabilities as previously reported                          (5,506)
    Fair value of warrants                                            (4,289)
                                                                 ------------
    Total liabilities as restated                                     (9,795)
                                                                 ------------
                                                                 ------------


    Effect on Statement of Changes in Equity

                                             Other  Accumulated
                                          Reserves      Deficit        Total
                                            US$000       US$000       US$000

    Group

    As at 30 June 2006 previously
     reported                                2,238      (17,225)     (14,987)
    Fair value of warrants                   4,291       (8,580)      (4,289)
                                       --------------------------------------
    As at 30 June 2006 as restated           6,529      (25,805)     (19,276)
                                       --------------------------------------
                                       --------------------------------------
    


    Independent Review Report to Serica Energy plc

    Introduction

    We have been instructed by the Company to review the financial
information for the six months ended 30 June 2007 which comprises the
Consolidated Income Statement, Consolidated Balance Sheet, Consolidated
Statement of Changes in Equity, Consolidated Cash Flow Statement, and the
related notes 1 to 9. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
    This report is made solely to the Company having regard to guidance
contained in Bulletin 1999/4 'Review of interim financial information' issued
by the Auditing Practices Board. To the fullest extent permitted by the 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 interim report, including the financial information contained
therein, is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim report as required by
the AIM Rules issued by the London Stock Exchange.

    Review work performed

    We conducted our review having regard to the guidance contained in
Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board for use in the United Kingdom. A review consists
principally of making enquiries of group management and applying analytical
procedures to the financial information and underlying financial data, and
based thereon, assessing whether the accounting policies and presentation have
been consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with International Standards on Auditing (UK and Ireland) and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.

    Review conclusion

    On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the
six months ended 30 June 2007.

    Ernst & Young LLP
    London

    7 August 2007

    %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; 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:
Kelly Cody, kelly@chfir.com, (416) 868-1079

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