Raport

Serinus Energy plc

2021 Annual Report and Accounts

(US dollars)

2021 HIGHLIGHTS

FINANCIAL

• Revenue for the year ended 31 December 2021 was $40.0 million (31 December 2020 - $24.0 million)

• The Company generated net income of $8.4 million (31 December 2020 – loss of $9.3 million)

• EBITDA for the year ended 31 December 2021 was $12.3 million (31 December 2020 - $6.6 million)

• The Company realised a net price of $66.82/boe for the year ended 31 December 2021, comprising:

o Realised oil price - $65.19/bbl

o Realised natural gas price - $11.25/Mcf

• The Group’s operating netback remained strong for the year ended 31 December 2021 and was $44.60/boe

(31 December 2020 - $14.55/boe), comprising:

o Romania operating netback - $52.44/boe (31 December 2020 - $16.44/boe)

o Tunisia operating netback - $29.77/boe (31 December 2020 - $8.71/boe)

• Capital expenditures of $10.7 million (31 December 2020 - $5.5 million), comprising:

o Romania - $9.5 million

o Tunisia - $1.2 million

• Cash balance as at 31 December 2021 was $8.4 million

OPERATIONAL

• Successfully drilled two wells in Romania in 2021, bringing the Moftinu-1008 well into production in February

2021 and discovering gas at the Sancrai-1 well, which has subsequently been suspended

• The first of two compressors at the Moftinu field was commissioned in the fourth quarter of 2021 with the

second installed and commissioned in February 2022. It is expected that compression on the wells will

stabilise production and extend overall field life

• A new 2D seismic acquisition programme has been completed and interpretation work to support the drilling

of up to three prospects adjacent to the Moftinu field, is underway

• Subject to well permitting approvals, the Company intends to begin a multi-well drilling programme in the latter

half of 2022 in Romania

• In Tunisia, the first submersible pump for the Artificial Lift programme has been delivered to the Sabria field.

The Company is awaiting rig mobilization for the workover and pump installation at the Sabria W-1 well to

commence. Plans for additional pumps in the Sabria field are being progressed

• Workovers in the Chouech Es Saida field has resulted in increased production from wells CS-3 and CS-1

• Production for the year averaged 1,649 boe/d, comprising:

o Romania – 1,078 boe/d

o Tunisia - 571 boe/d

• Serinus has continued to operate safely and effectively through the COVID-19 pandemic, with the successful

implementation of operational and monitoring protocols to ensure the health and safety of our employees and

achieved 1,000 accident-free days of continuous operation at the Moftinu gas plant

SERINUS AT A GLANCE

Serinus is an oil and gas exploration, appraisal and development company. The Group acts as the operator for all

of its assets and has operations in two business units: Romania and Tunisia.

ROMANIA

In Romania the Company currently holds one large concession area, Satu Mare, approximately 3,000km

, located

in a highly sought-after hydrocarbon province. The Moftinu Gas Project was brought on production in April 2019

and has produced approximately 8.4 Bcf to the end of 2021. The Company has identified numerous additional

shallow gas prospects near the Moftinu field that it hopes to discover and develop in the near-term. The concession

is extensively covered by legacy 2D seismic, augmented by the Company’s own 3D and 2D acquisition programs

that have further refined the identified prospects.

TUNISIA

The Company’s Tunisian operations are comprised of three concession areas. The Company’s Tunisian

concessions all have discovered oil and gas reserves and all are currently producing. The largest asset in the

Tunisian portfolio is the Sabria field, which is a large oilfield play with an estimated original oil in place of 445 million

barrels-of-oil-equivalent of which 1.0% of this volume has been produced to date. Serinus considers this historically

under-developed field to be an excellent asset for development work to significantly increase production in the near-

term. The Chouech Es Saida and Ech Chouech concessions in southern Tunisia have significant gas prospectivity

that can be developed in the medium term, with the ability to access near-by under-utilised gas transmission

capacity.

OPERATIONAL SUMMARY AND OUTLOOK

CORPORATE

The elimination of the Company’s legacy debt in 2020 allows Serinus to focus its operating cashflow on high-return

investments that position the Company for significant near-term growth. For the year to 31 December 2021, the

Company generated cashflow from operating activities of $14.1 million and invested $10.7 million of capital

expenditure. It has also eliminated its working capital deficit.

The Company has proactively managed its production, stabilising natural declines in Romania and adding

incremental production in Tunisia through workovers on its Chouech assets. The Company is well-advanced on

the implementation of its artificial lift programme in the Sabria field in Tunisia, beginning with the Sabria-W1 well.

In 2021, the Company’s capital programme was concentrated on the two wells drilled in Romania, the installation

of the first of two compressors onto the Moftinu field, and the acceleration of the design and permitting of a new 2D

seismic programme. The new 2D seismic will complement legacy 2D seismic and tie to existing 3D seismic data

to refine the high-rank prospects adjacent to the Moftinu gas field.

The Company, under the authority granted by the shareholders at the 2020 Annual General Meeting, executed the

purchase of its own shares. The Board believes that the share price at the time of its purchases did not reflect the

intrinsic value of the business and will continue to evaluate the investment return of share buybacks as part of its

allocation of capital across the Group (note 17).

ROMANIA

The Group’s Romanian operating subsidiary holds the licence to the Satu Mare concession area, covering

approximately 3,000 km

in the north-west of Romania. The Moftinu Gas Development project began production in

2019. The development project includes the Moftinu gas plant, and currently produces gas from four wells - Moftinu

-1003, Moftinu-1004, Moftinu-1007 and Moftinu-1008. During 2021, the Company's Romanian operations produced

a total of 2.3 Bcf of gas and 3,311 barrels of condensate, equating to an average daily production of 1,078 boe/day.

The Company has completed all of its commitments under the third exploration phase of the Satu Mare Concession

Agreement, and in October 2021, received an additional two-year evaluation phase on the Satu Mare Concession

until 27 October 2023. The Company has agreed to the following work commitments over the term of this evaluation

phase:

• Phase 1: From 28 October 2021 to 27 October 2022, the Company is required to reprocess 160.9 km 2D

seismic in the Madaras area at an estimated cost of $100,000; and

• Phase 2: From 28 October 2022 to 27 October 2023, the Company is required to reprocess 30.1 km 2D

seismic in the Santau-Nusfalau area at an estimated cost of $50,000.

During the year the Company successfully drilled two wells, a production well on the Moftinu gas field (Moftinu-

1008) and the first exploration well on the Satu Mare concession since 2015, the Sancrai-1 exploration well. The

Moftinu-1008 well, was drilled to a total depth of 1,000 metres, completed and tied into the Moftinu gas plant with

an initial flow rate of 4.0 MMscf/d (approximately 667 boe/d) in February. The Sancrai-1 exploration well was

originally budgeted to be drilled towards the end of 2021 but as a result of the Company's unlevered balance sheet

and strong cash generation, it was able to accelerate this project and commenced drilling on 29 June 2021. Sancrai-

1 was drilled to a depth of 1,600 metres and discovered gas, however the testing programme was unable to record

the flow of gas in the selected zones and the well was suspended pending further technical evaluation. The

technical review identified a range of potential factors preventing the flow of gas; however, it was determined that

the additional capital expenditure required to re-enter the well and pursue further investigation, would be better

allocated to new wells.

Serinus conducted a thorough review of the Satu Mare exploration portfolio and high-graded the area and prospects

to the immediate north and east of the Moftinu field. In February 2022, a new 105km 2D seismic acquisition

programme over high-ranked prospects was executed over this area and will complement reprocessed legacy 2D

seismic and the existing Moftinu 3D data-set. The programme objective is to further de-risk the prospects, confirm

their extent and potential gas volumes in place, and determine the optimal drilling locations for a near-term multi-

well drilling programme expected to commence in the latter half of 2022. Additional interpretation work is also being

conducted on the Santau 3D area with a view to confirming drilling locations on prospects that will form the basis

for future multi-well drilling campaigns.

The first compressor was installed and commissioned onto the Moftinu-1003 gas well in November 2021. The first

compressor installation occurred at the same time as the routine gas plant maintenance to minimise the impact on

production. The second compressor was successfully installed and commissioned in February 2022.

The Company incorporated a new gas trading subsidiary, Serinus Energy Romania Trading S.r.l. in October 2021,

which has commenced trading the Company's Romanian gas production not committed under its marketing

agreement into the Romanian market. Serinus Energy Romania Trading S.r.l was created to allow our licensed gas

traders to directly access the Romanian gas market and to capture the full value of gas prices in Romania through

the ability to access all available types of contracts of various durations and respond accordingly to the price signals

of these contracts that are not available under the formulaic-determined pricing of the marketing agreement. Gas

pricing in Romania has recovered significantly since a low realised price in July 2020 of $2.77/mcf to an average

realised price of $11.45/mcf for 2021, with an average realised gas price of $31.58/mcf in the fourth quarter of 2021.

Gas prices on the Romanian Commodity Exchange ("BRM") remains strong over the first quarter of 2022.

Serinus has continued to operate safely and effectively in Romania throughout the period and despite local COVID-

19 restrictions which have during periods of high case rates impacted the movement of goods and personnel

internally and across national borders. Subsequent to the year-end, the Company announced that the Moftinu gas

project had achieved 1,000 accident-free days of continuous operation which was a testament to the

professionalism and hard work of our team in Romania.

The Company has a deemed 100% working interest in the concession as its partner has defaulted on its obligations

under the Joint Operating Agreement. The Company has filed a Request for Arbitration with the Secretariat of the

International Court of Arbitration of the International Chamber of Commerce seeking a declaration affirming the

Company's rightful claim of ownership of its defaulted partner's 40% participating interest and to compel transfer of

that interest to the Company.

TUNISIA

The Company currently holds three concession areas within Tunisia. During the course of 2021 the Zinnia and the

Sanrhar, non-producing concession areas, expired and were relinquished by the Company. All of the remaining

Tunisian licence areas have discovered oil and gas reserves and are currently producing; Sabria, Chouech Es

Saida, and Ech Chouech. The largest asset is the Sabria field. Sabria is a large, conventional oilfield which the

Company’s independent reservoir engineers have estimated to have approximately 445 million barrels of oil

originally in place. Of this oil in place only 1.0% has been produced to date due to a low rate of development on

the field. Serinus has spent extensive time studying the best means of further developing this field and considers

this to be an excellent asset for remedial work to increase production and, on completion of ongoing reservoir

studies, to conduct further development operations.

A major project for the operations in Tunisia in 2022 is the introduction of the first Artificial Lift programme to be

implemented on the W-1 well in the Sabria field. The W-1 is a currently suspended well that was identified as a

candidate to benefit from the installation of a pump. Long lead items have been ordered and the first submersible

pump has been delivered. This is a significant achievement by our procurement team who have had to work hard

given the effects of COVID-19 on supply chains and workplace restrictions. The Company is now awaiting the

mobilization of the rig to commence the workover and pump installation in the second quarter 2022. Following this,

the Company will follow a programme to install artificial lift in the remaining candidate wells in Sabria.

The Company has also accelerated the re-entry workover of the N-2 well in Sabria. This well was drilled in 1980

but was damaged during completion and, although in proximity to producing wells, was not able to flow oil to surface

due to damage during completion. The workover program will re-complete the well and remove any wellbore

restrictions. The Company anticipates that the N-2 well will be on-production in mid-2022.

During the year, the Company conducted further workover operations in the Chouech Es Saida area to replace and

standardise pumps in order to increase production and efficiency. This was completed despite a difficult operating

environment in Tunisia due to the impact of COVID-19 which, as a result of travel restrictions for extended periods,

delayed our vendor’s technical personnel entering the country to work on our workover programmes. Further

workovers are planned in 2022.

COVID-19

The Company continues to place the health, safety and wellbeing of all our staff as our top priority. The Company

continues to follow government recommendations such as enhanced sanitation of work sites, social distancing and

wearing masks. Where government advice has required, the Company has closed or reduced the presence of staff

in our Head Office, Administration Office and our Business Unit Offices. Our field operations continue to modify

daily tasks and routines to ensure safe practices for all staff. Existing operations have remained in production and

our producing assets have seen no significant operational setbacks resulting from the COVID-19 pandemic.

SERINUS INVESTMENT THESIS

Investment in Serinus offers shareholders an ability to access international oil and gas upstream operations with

strong cash flow generation through the oil and gas commodity cycle. Our low-cost onshore asset base provides

significant near-term production growth opportunities. The size of the existing asset base allows for significant

organic growth without incremental asset acquisition cost in areas where our technical knowledge has been refined

over the years that Serinus has operated these concession areas. Serinus offers a compelling growth opportunity

where risks are mitigated by our extensive experience in our operating areas and the low-cost nature of our assets.

The Company’s existing assets also include large exploration prospects within close proximity of existing

infrastructure. The Company allocates capital to these exploration prospects which if successful can add

meaningful production and cash flow to the Group.

Serinus’ operations in Romania are focused on the large Satu Mare Concession Area. The Satu Mare Concession

Area is located in the north west of Romania along-side the Hungarian border. This large block contains the Moftinu

gas field, and the Company believes that numerous shallow gas opportunities with similar characteristics to the

Moftinu field are present in the immediate surrounding area. In addition, the southern portion of the concession

offers excellent exploration opportunities for large oil prospects as across the southern boundary of the Satu Mare

concession is the Suplacu de Barcau oil field (held by OMV Petrom). This is a significant oilfield estimated to have

produced in excess of 100 million barrels.

In Tunisia, the Company’s operations are focused on the Sabria, Chouech Es Saida (“Chouech”) and Ech Chouech

fields. Sabria is a very large conventional oilfield where our independent reservoir engineers have accessed a field

with 445 million barrels of oil equivalent originally in place. Of that number approximately 1.0% has been recovered

to date. This is a very low recovery factor for a conventional oilfield and the Company expects to increase that

recovery factor materially. The Chouech and Ech Chouech fields in southern Tunisia offer excellent opportunities

to increase production from existing oilfields through the application of standard oilfield practices. Serinus’ Tunisian

assets can be typified as existing discovered and producing oilfields where field optimisation provides the path to

production, revenue and cash flow growth with no exploration risk.

In addition to the strong asset base Serinus has a strong and experienced management team. Within each

jurisdiction, we have local professionals managing the operations. Within the Company we have significant

technical and commercial experience and are able to apply that experience across our business units.

SERINUS’ STRATEGY

VISION

The Group’s goal is to transform the potential of its extensive land base in Romania and Tunisia into enhanced

shareholder value through the efficient allocation of capital.

STRATEGY

Serinus is focused on significant growth potential within its existing concession and license holdings in Romania

and Tunisia through the development of low cost, high return projects, as follows:

1. Leverage Land Position:

• One concession in Romania with two work commitments remaining in the current evaluation phase

• Three exploration and production concessions in Tunisia with all work commitments completed

• Extensive oil and natural gas exploration and development potential within multiple play horizons

2. Commitment to Shareholders:

• Cohesive management team with a commitment to enhancing shareholder value

• Abide by the highest thresholds of disclosure for an AIM-listed Company

• Extensive experience and a proven track record of the allocation of shareholder capital

3. Manage Risks:

• Managing surface and subsurface risks through constant evaluation and introduction of new technologies

• Allocate capital to projects with attractive returns at relatively low risk profiles

• Operator of all concessions allows for cost control

4. Focus on Growth:

• Leverage cash flow to grow through expanded exploration and development of the existing asset base

• Seek acquisitions that will provide synergies at a cost that is accretive to shareholders

CHAIRMAN’S LETTER

Dear shareholders,

I hope to find you in good health.

It is again my pleasure to address our valued shareholders on the achievements and challenges of the Company

in 2021 and to highlight the significant activities that will help direct it onto a sustainable path of growth in 2022 and

beyond. This past year saw the Company recover from the pandemic-induced difficulties it faced in 2020. The

Company’s successful restructuring of its legacy debt in December 2020 provided us with the ability to allocate the

Company’s cash flow to capital investments that can grow production and, in consequence, shareholder value.

While Covid-related disruptions continued to impact us in all our locations, particularly with respect to global logistics

and the supply chain, the Company successfully drilled two wells in Romania, the Moftinu-1008 development well

and Sancrai-1 exploration well. The Moftinu-1008 well was a success and began producing in March 2021, the

Sancrai-1 well discovered gas but it failed to flow it to the surface. While the Sancrai-1 result was not what we were

hoping for, we were able to drill this well six months ahead of schedule due to the performance of our assets and

the strong commodity prices. It is important to remember that this is the first discovered gas field outside of Moftinu

and validates the view that there are significant gas resources on the Satu Mare concession.

Our ability to generate significant cash flow in 2021 has continued into 2022 and has allowed the Company to initiate

an intensive capital investment program for 2022, including a multi-well drilling program in Romania and the artificial

lift and well workover programs in Tunisia. We expect these programs to increase the Company’s production by

the end of 2022. Further opportunities to invest capital and increase production exist beyond 2022.

With the anticipated production growth and expected continuing strong commodity prices in the years to come, the

Company can further exploit its sizable land acreage. I have full confidence in the strategy and plans being

proposed by management and the ability of our Romanian and Tunisian teams to execute and deliver for

shareholders.

We are very disappointed in our share price performance over the past year, as I am sure you are as well. It defies

logic as to how we saw no transfer of value to equity when we completed the debt restructuring and no response to

our strong growth in cash flow. However, I firmly believe that this value will soon be recognised by investors as we

firmly continue with our growth strategy this coming year and beyond. I hope all our patience is duly rewarded.

ESG is an increasingly important factor to consider in all our investment decisions. Given our historic banking

arrangements we have complied with the most stringent of ESG reporting and compliance requirements for over a

decade. We have continued and enhanced our monitoring programs and formalised ESG oversight through the

creation of our ESG committee. Over the past year, the board and management carried out a comprehensive

review of our ESG compliance outputs with the intention to enhance our already significant ESG disclosures.

In closing, I wish to pass on my sincere appreciation of the senior management team and all employees of the

Company. I have witnessed first-hand the hard work they have put in over the last year, often under trying and

demanding circumstances. Through their dedication and focus on excellence, the Company is positioned for

significant growth that equity markets will soon be unable to ignore.

Yours sincerely,

Lukasz Rędziniak, Chairman of the Board of Directors

18 March 2021

LETTER FROM THE CEO

Dear fellow shareholders,

2021 has been a busy year for your Company. The year began on an optimistic note with the expectations of a

waning pandemic and the Company newly re-energised through the redemption of debt held by the European Bank

for Reconstruction and Development. 2021 also marked the first year in more than ten years where the cash flow

generated by the successful developments of the Company could be fully and freely applied to future growth

opportunities. A capital plan to reflect the ability to apply our operating cash flow to growth reflected that new

opportunity. Key capital plans included the receipt of partner approvals and the initiation of workflows to install the

first pumps into the Sabria field in Tunisia. The drilling of another production well in Romania and the drilling of the

Company’s first exploration well since 2015, the Sancrai-1 well in Romania.

Critical to the execution of these plans was the Company’s goal of matching its operational and capital spending

with its operating cash flow generation. As the year progressed and commodity prices strengthened, especially in

Romania where gas prices reached record highs, the Company was able to accelerate its capital plans. Most

critically the plans to drill the Sancrai-1 well were accelerated by approximately six months and drilling commenced

on this target in July of 2021. The Sancrai-1 well was drilled on time and under budget. The well discovered gas

but disappointingly the Company has not been able to get the discovered gas to flow to surface. This is clearly not

the result that was desired, but it is important to recognise that the Sancrai-1 well is by no means a failure. The well

discovered gas. This is the first gas discovered outside of the Moftinu gas field and validates our view that there

are many gas fields surrounding Moftinu. The Company sought to determine why the well would not flow and whilst

there are many plausible technical explanations no one explanation was certain, and this meant that further work

on the well was not certain to resolve the issues. The decision was made to keep the well suspended for potential

re-entry in the future and continue to explore our extensive and attractive prospect inventory.

Whilst the operating cash flow allowed the acceleration of capital plans the Company continued to be impacted by

the effects of the Covid pandemic on global supply chains. In the planning of any project, it is imperative to identify

and manage the procurement of long lead items which act as gating items to the execution of the programme. This

has been increasingly difficult as supply chains around the world became disrupted. Critically, for example, items

that would normally have taken four weeks to procure began to have procurement times of many months. Equally

the approvals of the results of tendering were drawn out as the pandemic affected the ability of procurement and

tendering audits to occur in person. The effect of these disruptions meant that the pumps for the W1 well in Sabria

were delayed from the fourth quarter of 2021 to the first quarter of 2022.

It has been frustrating to have the Company move to a position where it is free to allocate its operating cash flow to

its growth projects only to have procurement, partner approvals and supply chain issues delay these projects, but

it has been encouraging to see the dynamism of our teams as they have implemented creative solutions to solve

the issues caused by these unprecedented operating hurdles. As an example, our Tunisian teams have cut the

procurement time for a tubing hanger in half by working with our Romanian colleagues and using the facilities and

relationships in Romanian to expedite the procurement process.

In the face of a challenging year, Serinus has advanced the business. This year marks the first full year of positive

earnings in the Company’s history. The Company is generating strong cash flow, has a deep portfolio of exploration

and development opportunities, and is excited for the future.

In closing I would like to thank our shareholders for their continued support. Serinus looks forward to growing the

business by investing prudently in our high return projects.

Yours sincerely,

Jeffery Auld, Chief Executive Officer

18 March 2021

REPORT FROM THE CFO

LIQUIDITY, DEBT AND CAPITAL RESOURCES

During the year the Company invested a total of $10.7 million (2020 - $5.5 million) on capital expenditures before

working capital adjustments. In Romania, the Group invested $9.5 million (2020 - $4.2 million) on the drilling,

completion and tie-in of the Moftinu-1008 well and the drilling and completing of the Sancrai-1 exploration well. In

Tunisia, the Company invested $1.2 million (2020 - $1.3 million) completing workovers on wells to enhance

production.

The Company’s funds from operations for the year ended 31 December 2021 were $10.2 million (2020 - $7.3

million). Including changes in non-cash working capital, the cash flow generated from operating activities in 2021

was $14.1 million (2020 – $6.8 million). The Company continues to be in a strong position to expand and continue

growing production within our existing resource base. The Company is debt-free and has adequate resources

available to deploy capital into both operating segments to deliver growth and shareholder returns.

($000)

Year ended 31 December

Working Capital

202

2020

Current assets

17,625

16,037

Current liabilities

22,236

Working Capital (deficit)

631

(6,199)

The working capital at 31 December 2021 was $0.6 million (2020 – deficit of $6.2 million). The increase in working

capital is primarily a result of strong cash flows and the release of provisions relating to historic liabilities.

Current assets as at 31 December 2021 were $17.6 million (31 December 2020 - $16.0 million), an increase of $1.6

million. Current assets consist of:

• Cash and cash equivalents of $8.4 million (2020 - $6.0 million).

• Restricted cash of $1.1 million (2020 - $1.2 million).

• Trade and other receivables of $7.4 million (2020 - $8.9 million).

• Product inventory of $0.7 million (2020 - $nil)

Current liabilities as at 31 December 2021 were $17.0 million (2020 – $22.2 million), a decrease of $5.2 million.

Current liabilities consist of:

• Accounts payable and accrued liabilities of $9.7 million (2020 - $14.3 million).

• Decommissioning provision of $6.6 million (2020 - $7.1 million).

o Brunei - $1.6 million (2020 - $1.8 million).

o Canada - $1.0 million (2020 - $1.0 million) which are offset by restricted cash in the amount of

$1.1 million (2020 - $1.2 million) in current assets.

o Romania - $0.3 million (2020 - $0.6 million).

o Tunisia - $3.7 million (2020 - $3.7 million).

• Income taxes payable of $0.5 million (2020- $0.6 million).

• Current portion of lease obligations of $0.2 million (2020 - $0.2 million).

NON-CURRENT ASSETS

Property, plant and equipment (“PPE”) decreased to $71.7 million (2020 - $77.8 million), primarily due to depletion

expense of $10.1 million, which was partially offset by capital expenditures in PPE of $5.8 million. Exploration and

evaluation assets (“E&E”) increased to $4.9 million (2020 - $0.01 million), primarily due to expenditures incurred on

the Sancrai-1 well.

FINANCIAL REVIEW – YEAR ENDED 31 DECEMBER 2021

FUNDS FROM OPERATIONS

The Group uses funds from operations as a key performance indicator to measure the ability of the Group to

generate cash from operations to fund future exploration and development activities. The following table is a

reconciliation of funds from operations to cash flow from operating activities:

Year ended 31 December

($000)

202

Cash flow from operations

6,781

Changes in non-cash working capital

(

866

)

536

Funds from operations

10,

233

7,317

Funds from operations per share

0.0

0.03

Romania generated funds from operations of $10.9 million (2020 – $10.7 million) and Tunisia generated $3.9 million

(2020 - $0.5 million). Funds used at the Corporate level were $4.6 million (2020 - $3.9 million) resulting in a net

funds from operations of $10.2 million (2020 – $7.3 million).

PRODUCTION

Year ended 31 December 202

Tunisia

Romania

Group

Crude oil (bbl/d) 471 - 471 28%

Natural gas (Mcf/d) 597 6,419 7,016 71%

Condensate (bbl/d) - 9 9 1%

Total (boe/d) 571 1,078 1,649 100%

Year ended 31 December 20

Crude oil (bbl/d) 443

- 443

19%

Natural gas (Mcf/d) 654

10,643 11,297

80%

Condensate (bbl/d) - 14 14 1%

Total (boe/d) 552

1,788 2,340

100%

During the year, production volumes decreased 691 boe/d (29%) to 1,649 boe/d (2020 – 2,340 boe/d). The

Company’s production volume reduced through natural well declines as well as COVID-related workover delays.

Romania’s production volumes decreased by 710 boe/d (40%) to 1,078 boe/d (2020 – 1,788 boe/d). The

introduction of the first compressor onto the Moftinu gas field in the fourth quarter is expected to stabilise production

and, together with further compressors to be introduced, extend the life of the field.

Tunisia’s production volume increased by 19 boe/d (3%) to 571 (2019 – 552 boe/d). The Company completed

workovers on the Chouech field during the year, despite COVID-related delays and is underway with the first

Artificial Lift programme which will be implemented on the W-1 well in the Sabria field. The first submersible pump

has been delivered to the field and the Company is awaiting the rig to be mobilized to commence with the well

workover and pump installation.

OIL AND GAS REVENUE

($000)

Year ended 31 December 202

Tunisia

Romania

Group

Oil revenue 10,984 - 10,984 27%

Gas revenue 1,993 26,809 28,802 72%

Condensate revenue - 198 198 1%

Total revenue 12,977 27,007 39,984 100%

Year ended 31 December 20

Oil revenue 5,762

- 5,762

24%

Gas revenue 1,361

16,740

18,101

75%

Condensate revenue -

167

Total revenue 7,123 16,907 24,030

100%

REALISED PRICE

Year ended 31 December 202

Tunisia

Romania

Group

Oil ($/bbl) 65.19 - 65.19

Gas ($/Mcf) 9.18 11.45 11.25

Condensate ($/bbl) - 59.75 59.75

Average realised price ($/boe) 63.40 68.61 66.82

Year ended 31 December 20

Oil ($/bbl) 35.56 - 35.56

Gas ($/Mcf) 5.68 4.30 4.38

Condensate ($/bbl) - 32.85 32.85

Average realised price ($/boe) 35.28 25.84 28.06

Revenue during the year increased to $40.0 million (2020 – $24.0 million) as the Group saw the average realised

price increase by $38.76/boe (138%) to $66.82/boe (2020 - $28.06/boe).

The Group’s average realised oil price increased by $29.63/bbl (83%) to $65.19/bbl (2020 – $35.56/bbl), and

average realised natural gas prices increased by $6.87/Mcf (157%) to $11.25/Mcf (2020 - $4.38/Mcf). Pricing

remains strong with the December average realised gas price in Romania at $35.59/Mcf and the December realised

oil prices in Tunisia at $74.27/bbl.

Under the terms of the Sabria Concession Agreement the Group is required to sell 20% of its annual crude oil

production from the Sabria concession into the local market, which is sold at an approximate 10% discount to the

price obtained on its other crude sales. The remaining crude oil production is sold to the international market

through periodic liftings. In 2021, the Group completed four liftings (2020 – two liftings).

For the year ended 31 December 2021, Tunisia realised oil prices are calculated using oil sales volumes of 461 bbl/d (2020 –

443 bbl/d). As at 31 December 2021 there were 12,229 bbls of oil in inventory (2020 – nil).

ROYALTIES

Year ended 31 December

($000)

2021

2020

Tunisia

715

844

Romania

1,605

960

Total

320

1,804

Total ($/boe)

2.11

Tunisia (% of revenue)

3.2

11.9%

Romania (% of revenue)

5.9

5.7%

Total (% of revenue)

7.5%

Royalties increased for the full year to $3.3 million (2020 - $1.8 million) while the Group’s average royalty rate

increased to 8.3% (2020 – 7.5%). The Romanian royalty rate increased as a result of the royalty reference price

exceeding the realised price, compared to the comparative period when the realised price exceeded the reference

price; this was partially offset by the statutory royalty rate decreasing to 3.5% in the fourth quarter of 2021 due to

lower production. Within the Tunisian royalties is a historic penalty for delayed gas royalty payments of $0.1 million

(2020 - $nil).

In Romania, the Company incurred a royalty rate of 7.5% for gas revenues and a rate of 3.5% for condensate during

the first three quarters of 2021; in the fourth quarter royalties on gas revenues decreased to 3.5%. The royalty is

calculated using a reference price that is set by the Romanian authorities and not the realised price to the Company.

Romanian royalty rates vary based on the level of production during a quarter. Natural gas royalty rates range from

3.5% to 13.0% and condensate royalty rates from 3.5% to 13.5%.

In Tunisia royalties vary based on individual concession agreements. Sabria royalty rates vary depending on a

calculation of cumulative revenues, net of taxes, as compared to cumulative investment in the concession, known

as the “R factor”. As the R factor increases, so does the royalty percentage to a maximum rate of 15%. During

2021, the royalty rate remained unchanged in Sabria at 10% for oil and 8% for gas. Chouech and Ech Chouech

royalty rates are flat at 15% for both oil and gas.

PRODUCTION EXPENSES

Year ended 31 December

($000)

202

2020

Tunisia

5,174

4,520

Romania

3,706

Canada

Group

976

8,280

Tunisia production expense ($/boe)

25.

22.33

Romania production expense ($/boe)

12.

5.67

Total production expense ($/boe)

16.

9.67

During the year production expenses increased by $1.7 million (20%) to $10.0 million (2020 - $8.3 million), being

an increase of $7.00/boe (73%) to $16.67 (2020 - $9.67). The increase in costs is the result of additional workovers

being completed in Tunisia and $0.3 million (2020 - $nil) of historic mining taxes related to Sanrhar and Zinnia. On

a per barrel basis, the increase is due to lower comparative production.

Tunisia’s production expenses increased by $0.7 million (16%), to $5.2 million (2020 - $4.5 million), being an

increase of $2.93/boe (13%) to $25.26/boe (2020 - $22.33/boe). The increase is due to the workover programs

and included historic mining taxes of $0.3 million related to Sanrhar and Zinnia.

Romania’s overall operating costs increased by $1.0 million (28%) to $4.7 million (2020 – $3.7 million), being an

increase of $6.42/boe (113%) to $12.09/boe (2020 - $5.67/boe) during the year. The change in production costs

are the result of operating additional wells and additional workovers in the current year. The Company continues

to focus on cost control measures within Romania.

Canada production expenses relate to the Sturgeon Lake assets, which are not producing and are incurring minimal

operating costs to maintain the property.

OPERATING NETBACK

Serinus uses operating netback as a key performance indicator to assist management in understanding Serinus’

profitability relative to current market conditions and as an analytical tool to benchmark changes in operational

performance against prior periods. Operating netback consists of petroleum and natural gas revenues less direct

costs consisting of royalties and production expenses. Netback is not a standard measure under IFRS and therefore

may not be comparable to similar measures reported by other entities.

Year ended 31 December 2021

($/boe)

Tunisia

Romania

Group

Sales volume (boe/d) 561 1,078 1,639

Realised price 63.40 68.61 66.82

Royalties (8.37) (4.08) (5.55)

Production expense (25.26) (12.09) (16.67)

Operating netback 29.77 52.44 44.60

Year ended 31 December 2020

($/boe)

Tunisia

Romania

Group

Sales volume (boe/d) 552 1,788 2,340

Realised price 35.28 25.84 28.06

Royalties (4.17) (1.47) (2.11)

Production expense (22.33) (5.67) (9.67)

Operating netback 8.78 18.70 16.28

The Group operating netback increased by $28.32/boe (174%) to $44.60/boe (2020 - $16.28/boe). The increase is

due to increased realised prices, partially offset by higher royalties and higher production expenses.

The Company also generated a gross profit of $7.2 million (2020 – gross loss of $2.8 million), largely due to a

significant increase in the Company’s netbacks as well as a decrease to depletion as described below.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION (“EBITDA”)

Serinus uses EBITDA as a key performance indicator to assist management in understanding Serinus’ cash

profitability. EBITDA is computed as net profit/loss and adding back interest, taxation, depletion and depreciation,

and amortisation expense. EBITDA is not a standard measure under IFRS and therefore may not be comparable

to similar measures reported by other entities. During the 12 months ended 31 December, the Group’s EBITDA

increased by $5.7 million to $12.3 million (2020 - $6.6 million).

WINDFALL TAX

Year ended 31 December

($000)

202

2020

Windfall tax

9,432

1,486

Windfall tax ($/Mcf - Romania gas)

3.99

0.38

Windfall tax ($/boe - Romania gas)

23.96

2.29

During 2021, the Group incurred windfall taxes in Romania of $9.4 million (2020 - $1.5 million). This increase is

directly related to higher realised gas prices which increased from $4.30/Mcf in 2020 to $11.45/Mcf in 2021.

In Romania, the Group is subject to a windfall tax on its natural gas production which is applied to supplemental

income once natural gas prices exceed 47.53 RON/Mwh. This supplemental income is taxed at a rate of 60%

between 47.53 RON/Mwh and 85.00 RON/Mwh and at a rate of 80% above 85.00 RON/Mwh. Expenses

deductible in the calculation of the windfall tax include royalties and capital expenditures limited to 30% of the

supplemental income below the 85.00 RON/Mwh threshold.

DEPLETION AND DEPRECIATION

Year ended 31

December

($000)

202

2020

Tunisia

3,256

2,912

Romania

6,650

11,739

Corporate

644

Total

10,

055

15,295

Tunisia ($/boe)

5.89

14.39

Romania ($/boe)

6.89

17.95

Total ($/boe)

6.80

17.86

Depletion and depreciation expense decreased by $5.2 million (34%) to $10.1 million (2020 - $15.3 million), being

a decrease of $1.06/boe (5%) to $16.80/boe (2020 - $17.86/boe). The decrease is primarily due to a lower

depletable base on the Group’s assets and lower production during the year.

GENERAL AND ADMINISTRATIVE (“G&A”) EXPENSE

Year ended 31 December

($000)

202

2020

G&A expense

4,4

3,944

G&A expense ($/boe)

4.61

G&A costs increased during the year by $0.6 million (14%) to $4.5 million (2020 - $3.9 million), being an increase

of $2.86/boe (62%) to $7.47/boe (2020 - $4.61/boe), due to higher compliance expenses and the impact of foreign

exchange rates in the current year.

SHARE-BASED PAYMENT

Year

ended 31 December

($000)

202

2020

Share-based payment

213

1,418

Share-based payment ($/boe)

0.36

1.66

Share-based compensation decreased by $1.2 million or 85% to $0.2 million (2020 – $1.4 million). This decrease

is due to only 1.8 million share options being granted in the current year. In 2020, the Group awarded 22.5 million

ordinary shares under the Long-Term Incentive Plan (“LTIP”) and a further 22.4 million share options as well as

shares issued in lieu of salary as part of the Group’s cost savings initiatives in response to the uncertainties created

by the COVID-19 pandemic and collapse in commodity prices during that period.

NET FINANCE EXPENSE

Year ended 31 December

($000)

202

2020

Interest expense on long-term debt

2,890

Amortisation of debt costs

Amortisation of debt modification

249

Interest on leases

Accretion on decommissioning provision

460

Foreign exchange and other

3,807

Net finance expense for 2021 decreased by $3.4 million (88%) to $0.4 million (2020 – $3.8 million). This decrease

is a result of extinguishing the European Bank for Reconstruction and Development (“EBRD”) Convertible Loan in

December 2020 and the Company becoming debt-free. Accretion on decommissioning provision also decreased

by $0.1 million due to foreign exchange differences

RELEASE OF PROVISION

Year ended 31 December

2021

2020

Release of provision 6,636 1,905

In 2021, the Company reversed a provision of $6.0 million related to an exploration penalty due to the passage of

statute of limitations. Management deemed that a previously uncollectable VAT receivable of $0.6 million, as

collectible due to changing circumstances during the year.

The release of provision in 2020 was the elimination of a long-standing disputed payable for $1.9 million related to

drilling costs on Block L in Brunei, which has passed the relevant statute of limitation period

IMPAIRMENT

At 31 December 2021, the Company completed an impairment assessment on its PP&E to determine if there were

any indicators of impairment or impairment reversals. In South Tunisia and Sabria, no indicators of impairment or

impairment reversals were identified. In Moftinu, the Company determined that there was an indicator of

impairment, and an impairment test was conducted on the Moftinu cash generating unit (“CGU”). No impairment

was recorded following the completion of the impairment test.

At 30 June 2020, due to the COVID-19 pandemic, the Company was faced with a commodity price collapse that

resulted in the Company testing for impairment. At 30 June 2020, the Company recorded an impairment expense

on both operating assets totalling $9.6 million (Romania $6.2 million and Tunisia $3.4 million). In the second half

of 2020, commodity prices began to recover to pre COVID-19 levels.

At 31 December 2020, the preliminary costs spent on a seismic program in Romania, which was cancelled due to

the COVID-19 pandemic, were impaired and $0.7 million was recorded as additional impairment at 31 December

2020.

TAXATION

During the year ended 31 December 2021 income tax expense was $0.4 million (31 December 2020 - $0.8 million).

The change in income tax expense is due to the recovery of tax basis in Tunisia during the year.

FOREIGN CURRENCY TRANSLATION

Foreign currency translation occurs from the revaluation from fluctuations in the foreign exchange rates in entities

with a different functional currency than the reporting currency (USD). The Romanian business unit has a functional

currency in Romanian Leu which has realised a fluctuation of approximately 9% from 0.252 to 0.229 USD:RON.

The revaluation of the balance sheet to the year-end rate resulted in a $2.5 million loss through other comprehensive

income (loss).

GOING CONCERN

The Directors have considered the going concern of the Group and are satisfied that the Group has sufficient

resources to operate and to meet its commitments in the normal course of business for not less than 12 months

from the date of these consolidated financial statements. On that basis, the Directors consider it appropriate to

prepare the consolidated financial statements on a going concern basis.

As at 28 February 2022, the Group had cash balances of $6.4 million.

Andrew Fairclough, Chief Financial Officer

18 March 2021

REVIEW OF OPERATIONS

ROMANIA

• Satu Mare Block – 2,949 km

of onshore land.

• Located within the Pannonian Basin (Hajdusag sub-Basin) on trend with discovered and producing oil and

gas fields and close to infrastructure.

• Multiple play types that have produced or are producing along the same trend, including shallow amplitude-

supported gas reservoirs; conventional siliciclastic oil reservoirs; and fractured-basement oil and gas

reservoirs.

• Serinus operates with a 100% deemed working interest which is owned and operated through the wholly

owned subsidiary Serinus Energy Romania S.A. The Company has completed all of its commitments

under the third exploration phase of the Satu Mare Concession Agreement, and in October 2021, received

an additional two-year evaluation phase on the Satu Mare Concession until 27 October 2023. The

Company has agreed to the following work commitments over the term of this evaluation phase:

o Phase 1: From 28 October 2021 to 27 October 2022, the Company is required to reprocess 160.9

km 2D seismic in the Madaras area at an estimated cost of $100,000; and

o Phase 2: From 28 October 2022 to 27 October 2023, the Company is required to reprocess 30.1 km

2D seismic in the Santau-Nusfalau area at an estimated cost of $50,000.

SATU MARE CONCESSION – HISTORY

• Serinus farmed-in to the Satu Mare Concession in 2008 and earned 60% working interest by funding 100%

of work commitments for Exploration Phases 1 and 2.

• The Company has a deemed 100% working interest in the concession as its partner has defaulted on its

obligations under the Joint Operating Agreement. The Company has filed a Request for Arbitration with

the Secretariat of the International Court of Arbitration of the International Chamber of Commerce seeking

a declaration affirming the Company’s rightful claim of ownership of its defaulted partners’ 40%

participating interest and to compel transfer of that interest to the Company.

• Serinus has completed all the phase 1 and 2 work commitments, as follows:

o Acquired two 3D seismic surveys covering a total of 260 km

(80 km

Moftinu & 180 km

Santau

Surveys).

o Drilled four wells resulting in Moftinu gas discovery (Madaras-109, Moftinu 1000, 1001 & 1002bis

wells).

• Completion of Phase 2 entitled Serinus to enter Exploration Phase 3.

• The Phase 3 work program included the following commitments:

o To drill two wells: one well to a depth of 1,000m and one well to a depth of 1,600m.

 Serinus drilled Moftinu-1007 (a re-drill of Moftinu-1001) and Moftinu-1003 (1600m).

o Renegotiated commitment - to drill two exploration wells: one well to a depth of 1,000m and one well

to a depth of 1,600m. These wells replaced the previous commitment of 120 km

of 3D seismic.

 The Moftinu-1008 well was drilled in February 2021 and will qualify as the 1,000m commitment

well.

• The Company has completed all of its commitments under the third exploration phase of the Satu Mare

Concession Agreement, and in October 2021, received an additional two-year evaluation phase on the

Satu Mare Concession until 27 October 2023. The Company has agreed to the following work

commitments over the term of this evaluation phase:

o Phase 1: From 28 October 2021 to 27 October 2022, the Company is required to reprocess 160.9

km 2D seismic in the Madaras area at an estimated cost of $100,000; and

o Phase 2: From 28 October 2022 to 27 October 2023, the Company is required to reprocess 30.1 km

2D seismic in the Santau-Nusfalau area at an estimated cost of $50,000.

Serinus generated the first gas production in the region in April 2019, after the successful completion of the Moftinu

Gas Plant. The Moftinu Gas Project is the development of the shallow (800-1,000m), multi-zone Moftinu gas field.

The field has relatively low drilling and completion costs, with strong initial well production rates. Serinus also built

a three-kilometre sales line that ties-in the Moftinu Gas Plant into the Transgaz pipeline, Abramut. The infrastructure

created by Serinus in the Satu Mare area represents a very important addition and investment which has established

the Group as one of the most significant investors in the area.

The Moftinu gas plant was designed at a capacity of 15 MMscf/d and can accommodate up to six flowlines. During

2021, production was predominantly comprised from four wells (Moftinu-1003, Moftinu-1004, Moftinu-1007, and

Moftinu-1008) and averaged 6.4 MMscf/d (2020 – 10.6 MMscf/d). The Company continues to explore future drilling

locations both within the existing field of Moftinu, and throughout the rest of the Satu Mare concession. The

Company believes there are similar shallow gas fields to the Moftinu gas field, providing Serinus with additional low-

cost shallow gas reserves to tie into the gas plant. The Group drilled two wells in 2021, Moftinu-1008 in Q1 2021

within the Moftinu gas field, and a prospect well in Sancrai in the second half of 2021.

Subsequent to the year-end, the Company has completed a 105 km 2D seismic acquisition programme. The

programme objective is to further de-risk the prospects, confirm their extent and potential gas volumes in place, and

determine the optimal drilling locations for a near-term multi-well drilling programme expected to commence in the

latter half of 2022.

TUNISIA

The Group currently holds three Tunisia concessions, each of which currently produces oil and gas (Sabria,

Chouech and Ech Chouech). This production has been sustained with a low-cost, low-risk development program,

but has significant growth opportunities over the medium to long-term. The Group has no outstanding work

commitments.

License

Serinus

Working Interest

Approximate Gross

Area (acres)

Expiry

Sabria 45% (ETAP 55%) 26,196 November 2028

Chouech Es Saida 100% 42,526 December 2027

Ech Chouech 100% 35,139 June 2022

Sanrhar 100% 36,879 Relinquished 2021

Zinnia 100% 17,471 Relinquished 2021

The Company has previously held the non-producing Zinnia and Sanrhar concessions, but these were relinquished

in 2021.

Sabria

• Produced over 6.7 million boe (gross) to date.

• Large Ordovician light oil field with stable production from its large reserve base and long reserves life

index.

• The Ordovician reservoir at Sabria contains 445 million bbl OIIP (P50), into which only eight wells (12

including re-entries) have been drilled. The reservoir comprises a large stratigraphic trap with a continuous

oil column that spans the Upper Hamra, Lower Hamra and the El Atchane formations.

• The Group has received delivery of the first artificial lift pump for the W-1 well in the Sabria field. The

Company is now awaiting the mobilization of the rig to commence the workover and pump installation.

Plans for additional pumps in the Sabria field are being progressed.

Chouech Es Saida

• Produced over 3.8 million boe to date from the TAGI Formation in the Triassic reservoir.

• The deeper Silurian Acacus Sands and the Tannezuft fan, which have been penetrated successfully and

produced hydrocarbons from two wells in the concession, hold enormous growth potential for Serinus.

The Silurian Acacus sands, which are hydrocarbon-charged in the Chouech block, are emerging in

Southern Tunisia as a major new oil, condensate and gas play with exploration success rates of nearly

100%.

• The Company conducted workover operations in the Chouech Es Saida wells in 2021 to replace and

standardise pumps in order to increase production and efficiency.

Ech Chouech

• Produced oil intermittently from the TAGI formation, dating back to the discovery of the field in 1970.

• Adjacent to the Chouech block, the concession similarly carries significant upside potential in Silurian

exploration targets that are not yet drilled but are defined on 3D seismic (acquired in 2008).

• The Group is looking to install artificial lift in the well in 2022.

RESERVES

COMPANY GROSS 1P & 2P RESERVES – USING FORECAST PRICES

202

2020

Oil &

Liquids

Gas

Boe

Oil &

Liquids

Gas

Boe

Change

(Mbbl)

(MMcf)

(Mboe)

(Mbbl)

(MMcf)

(Mboe)

Tunisia

Proved (1P)

2,840

5,670

3,785

3,510

6,220

4,547

(17%)

Probable 2,810

7,030

3,982

2,150

7,390

3,381

18%

Proved & Probable (2P)

5,650

12,700

7,767

5,660

13,610

7,928

(2%)

Romania

Proved (1P)

3,110

522

7,650

1,291

(60%)

Probable 6

1,990

338

2,460

415

(19%)

Proved & Probable (2P)

5,100

860

10,110

1,706

(50%)

Group

Proved (1P)

2,844

8,780

4,307

3,526

13,870

5,838

(26%)

Probable 2,816

9,020

4,320

2,155

9,850

3,796

14%

Proved &

Probable (2P)

5,660

17,800

8,627

5,681

23,720

9,634

(10%)

The downward revision in Group reserves was attributable to 2021 production and a reduction in reserve volumes

in Romania associated with water encroachment in the A1 zone.

NET PRESENT VALUE OF FUTURE NET REVENUES – AFTER TAX, USING FORECAST PRICING

202

2020

Discount rates

PV 10%

(US$ millions)

10%

15%

10%

15%

Change

Tunisia

Proved (1P)

54.3 28.9 27.1 62.2 26.7 18.3 8%

Probable 69.9 42.2 30.1 57.2 29.5 23.7 43%

Proved & Probable (2P)

124.2 71.1 57.2 119.4 56.2 42.0 27%

Romania

Proved (1P)

10.3 10.2 10.0 13.4 12.0 11.4 (15%)

Probable 9.0 7.9 7.5 6.5 5.4 5.0 47%

Proved &

Probable (2P)

19.3 18.1 17.5 19.9 17.4 16.4 4%

Group

Proved (1P)

64.6 39.1 37.1 75.6 38.7 29.7 1%

Probable 78.8 50.1 37.6 63.7 34.9 28.7 44%

Proved & Probable (2P)

143.4 89.2 74.7 139.3 73.6 58.4 21%

The Group’s net present values at 10% increased by 1% for 1P reserves, whilst the 2P reserves increased by 21%.

CONTINGENT RESOURCES

The Tunisian contingent resources are related to two further potential development wells. Currently the specific

contingency which would convert these contingent resources to reserves is the Company committing to the

development program and setting out a development plan.

The Romanian contingent resources consist of the resources in two specific reservoir sand layers which are

expected to be recovered from existing wells but which will require additional completion work or future recompletion

prior to the start of production. The specific contingency which would convert these resources to reserves is the

Source: 2021 and 2020 results from Gaffney Cline & Associates Limited Reserves audit at 31 December 2021 and 31 December

2020, respectively.

Group’s decision to recomplete the producing wells to access recovery of the gas resources from these sands,

which is forecast to occur once production from the current producing sands have become depleted.

COMPANY GROSS UNRISKED CONTINGENT RESOURCES – USING FORECAST PRICES

202

2020

Oil &

Liquids

Gas

Boe

Oil &

Liquids

Gas

Boe

Change

(Mbbl) (MMcf) (Mboe) (Mbbl) (MMcf) (Mboe)

Tunisia

1C Contingent Resources 400 1,000 567 400 1,000 567 0%

2C Contingent Resources 1,000 2,900

1,483

1,000 2,900

1,483

3C Contingent Resources 1,900

5,300

2,783 1,900

5,300

2,783 0%

Romania

1C Contingent Resources - 2,500 417 - 2,500 417 0%

2C Contingent Resources - 4,300 717 - 4,300 717 0%

3C Contingent Resources - 7,000 1,167 - 7,000 1,167 0%

Group

1C Contingent Resources 400 3,500 984 400 3,500 984 0%

2C Contingent Resources 1,000 7,200 2,200 1,000 7,200 2,200 0%

3C Contingent Resources 1,900 12,300 3,950 1,900 12,300 3,950 0%

PRICE FORECASTS

The commodity price forecast used in preparing the evaluation of the 2021 reserves and resources is as follows:

Brent

Sabria Gas

South Tunisia

Gas

Romania Gas

Year

(US$/bbl) (US$/Mcf) (US$/Mcf) (US$/Mcf)

2022

75.92 9.49 8.35 20.35

2023

71.00 8.88 7.81 11.60

2024

70.00 8.75 7.70 8.99

2025

71.40 8.93 7.85 8.28

2026

72.82 9.10 8.01 8.45

2027

74.27 9.29 8.17 8.61

+2% inflation per year on commodity prices for 2028 and beyond

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Serinus is an oil and gas exploration, development and production company whose strategic purpose is to develop

and produce natural resources. These business activities provide the energy essential to many of the processes

and materials that support our daily lives but ultimately contribute to many of the environmental issues which are of

concern to us today and in the future.

Climate change is an increasingly prominent issue, both globally and for our industry. The majority of our production

is natural gas which we view as a transition fuel towards a low-carbon economy. Our gas production is primarily

utilised in the generation of electricity and as such displaces coal in that energy mix. In all net-zero carbon scenarios

oil and gas will remain essential elements of energy supplies for decades to come, our role in this process is to

deliver our operations as cleanly and efficiently as possible.

Whilst extractive industries are essential to our modern way of life we are strongly aware of the wider range of

responsibilities that industries such as ours have. In addition to the management and protection of the environment

in those countries in which we operate we also have a clear responsibility to the welfare and the safety of our

employees, our investors and stakeholders, local communities that may be impacted by our business, host

governments and all of our business partners.

The COVID-19 pandemic reminds us that risk management needs to be dynamic and able to adapt to new threats

and the Group quickly implemented stringent and effective protocols to protect our workforce from the risk of

infection across all of its offices and operations, which included, amongst other measures, testing, on-site care and

support, amended shift patterns and alternate working days. Safety of our staff and contractors remains a key

concern.

Therefore, a long-term goal of the Group is to be a positive influence in the regions in which we operate through

good corporate stewardship of our assets, our people and their communities. It is a key component of the ethos of

Serinus that we maintain responsible and sustainable development while adhering to the highest operating

standards and financial discipline. We carry out our operations in full compliance with relevant regulations and

comply with all safety and environmental requirements and aim to conduct our business in an environmentally

responsible manner. The Group has established an Environmental, Social and Governance (“ESG”) Committee,

led by the Chief Executive Officer, supported by other key personnel, and overseen by the Board, which reviews

the policies and metrics under which we operate and measure ourselves and also evaluates the environmental

framework being adopted and recommended, such as that of the Taskforce on Climate-Related Financial Disclosure

(“TCFD”), in order to determine how we may best comply with these evolving disclosures.

Whilst the TCFD is currently voluntary for smaller companies, we are applying governance, risk management and

strategy processes to manage climate-related financial risks and develop this within our ESG strategy and integrate

into the corporate strategy, growth plans, capital allocation, operations and executive management key performance

indicators.

The Sustainable Development Goals (“SDGs”) as set out by the United Nations, particularly SDG 13 (Climate

Action), are often referenced as reporting criteria for many energy companies. Serinus will continually evaluate at

the Board level, through our ESG Committee, how this may be incorporated into our ESG reporting in an appropriate

and relevant manner in the future.

ENVIRONMENT

Serinus has existing concession and licence holdings in Romania and Tunisia. Both asset portfolios cover extensive

acreage but in vastly different topographic settings with the Satu Mare licence covering 2,949 km

in the north-west

of Romania, across primarily agricultural farmland, while the three Tunisian concessions are located in the north,

central and southern regions of the country in both remote desert and populated, agricultural environments.

Serinus’ goal is to manage the distinct local environmental requirements of its operations in full compliance with the

relevant regulations and to reduce our carbon footprint by minimising emissions and waste and mitigate the potential

impact of our operations on the environment.

ROMANIA

Serinus Energy Romania S.A. has continued to present an excellent HSE track record through 2021, with a zero-

frequency rate (per one million man hours worked) for Total Recordable Injuries across all sites (2020 - zero for

Serinus Romania employees) and in January 2022, the Moftinu Gas Plant reached 1,000 accident-free days of

continuous operation. There have been no spills or environmental incidents at the Moftinu Gas Plant since its

commissioning in 2019. Serinus Romania has maintained full compliance with all of its regulatory and

environmental obligations.

Serinus Energy Romania S.A. completed its annual certification inspection and is certified for ISO 14001:2015

(Environmental Management Systems) and ISO 9001:2015 (Quality Management).

Romanian operations currently produce gas through the Moftinu Gas Plant which was brought onstream in April

2019 and is currently supplied by four producing gas wells. The Moftinu-1004 well was drilled and brought into

production in February 2020, and the most recent well, Moftinu-1008, was completed in February 2021. The

process to plan and permit the drilling of these wells involved extensive engagement with a wide range of

stakeholders from local landowners, regional agencies and national regulators. This process included gaining

permission from each local landowner impacted by the drilling location; receiving local environmental permits which

required environmental impact studies and a Natura 2000 study to assess the impact on local environmental

protection zones (Natura 2000 is a network of protected habitats across the European Union); an archaeological

assessment and studies to ensure the preservation of the local area; agricultural approvals, which required soil

sampling before and after operations to demonstrate the absence of soil contamination; the development and

approval of a flaring strategy; and regulatory permits from local and national authorities. There were no incidents

of spillage or pollution at the Moftinu Gas Plant in 2021 (no incidents in 2020).

During 2021, energy use from grid electricity at the Moftinu Gas Plant was 314 MWh, 0.042% of the annual

production of 749.980 MWh, compared with 254 MWh in 2020, which was 0.021% of that year’s annual production

of 1,223,200 MWh. A trial project to install solar panels to provide electricity to power water pumps for the firefighting

system and provide fresh water for the accommodation units was completed during the year and produced 2.7 MWh

of electricity to date, offsetting the equivalent of 5,761 kg of CO

emissions. This coming year, the intent is to utilise

further available space within the Moftinu Gas Plant and install additional solar panels to increase the contribution

of solar generated electricity. The aim is to install sufficient numbers of solar panels so as to generate up to 70%

of the gas plant’s electricity consumption, during the summer months.

In 2021, 9.6 MMscf of gas was flared from the four wells in production, being less than 0.4% of annual production,

and equivalent to flared gas of 0.20 MMscf per month per being 14.3% lower on a month per well basis than in 2020

when 8.4 MMscf of gas flared from three wells in production, being the equivalent to flared gas of 0.23 MMscf per

month per well. 3,292 m

of produced water was generated from the four wells in 2021, compared with 736 m

produced water from three wells during 2020.

Flue gas emissions tests are performed annually, in accordance with the requirements specified in the

environmental permit. The most recent test was undertaken in September 2021 which monitored an average CO

emission level of 2.04% of total flue gas.

A Fugitive Emissions Monitoring Report was undertaken by a European accredited emission monitoring and pipeline

integrity organisation, The Sniffers (www.the-sniffers.com), for the Moftinu Gas Plant in February 2021. The

company collected data and presented its report in accordance with the Environmental Protection Agency of the

United States (“US EPA”) “Method 21” EPA-453/R-95-017. The Sniffers has been accredited ISO 17025 by BELAC

(the Belgian accreditation body) on 17 December 2017 for the Method: “EPA 21 Protocol for equipment leak

emission estimates, 1995, EPA-453/R-95-017”. All data and calculations were generated by proprietary software

values are converted to emission loss (kg/year). These calculations are based on US EPA “Correlation factors for

Petroleum Industry”. This method uses conversion factors depending on the source type and the measured value.

The monitoring exercise completed a Leak Detection and Repair programme through which it identified a total of

2,468 potential emission sources, of which 26 were not accessible (a source of emission that cannot be measured

as it cannot be reached physically or safely without additional tools and is recalculated to be representative of all

sources) and 2,442 were accessible.

Of the 2,442 accessible potential emission sources identified, there were only eight registered leaks, being 0.33%

of accessible sources and resulted in an emission loss of 275 kg/year. One leak was detected above the Repair

Definition threshold (the threshold concentration indicating obligatory repair of leaking sources which under the US

EPA definition is 10,000 parts per million volume), amounting to 264 kg/year. The report concluded that a successful

repair of the leak above Repair Definition could reduce the emission loss by 264 kg/year, equating to 69.96% of the

total emission. The leak has been repaired.

TUNISIA

Serinus Tunisia B.V. maintained a strong HSE track record through 2021, with a zero-frequency rate (per one million

man hours worked) for Total Recordable Injuries across all sites (2020 – zero for Serinus Tunisia employees).

There were no environmental incidents at Sabria and six minor incidents at Chouech which were addressed and

repaired. Serinus Tunisia has maintained full compliance with all of its regulatory and environmental obligations.

Environmental monitoring has been undertaken across all of our Tunisian fields since 2014 in compliance with legal

requirements and the Company’s responsibilities to the local environment. The annual environmental report for

2020 was submitted to the Agence Nationale de Protection de l’Environnement (“ANPE”) in June 2021 and the

report for 2021 will be filed during 2022, as required.

During 2021, annual environmental monitoring was undertaken by Le Centre Mediterraneen d’Analyses (“CMA”) at

the Sabria and Chouech fields, assessing: air emissions from stacks at both fields; air quality monitoring;

groundwater monitoring; produced water; fresh water; soil sampling and noise pollution.

Stack air emission analysis and air quality monitoring was conducted at Sabria and Oum Chiah in August 2021.

Analysis of the results demonstrated that most pollutants are compliant with limits, except for some excess carbon

monoxide levels from a number of older compressors, heaters and generators. Mitigation measures have been

investigated, a short- and medium-term action plan with an enhanced preventative maintenance programme has

been implemented to address this, including the refurbishment and overhaul of affected equipment. Ground water

monitoring is conducted on a yearly basis from existing water wells drilled at Sabria. No evidence of pollution has

been reported. Five piezometer wells were drilled at Sabria to monitor the ground water table in 2014 which continue

to be monitored.

The water disposal project manages produced water production at Sabria. This formation water has high salinity

(360 grams/litre) with traces of heavy metals. Until 2015, disposal at Sabria was conducted by discharge into lined

surface pits for natural evaporation of fluids. The low efficiency of natural evaporation together with the ongoing

need to construct additional lined pits led to the introduction of automated fracturing evaporator technology in 2015

and which has enabled the acceleration of evaporation of produced water through an automated and a more efficient

process. At Sabria, 45,598 m

of produced water was disposed of in 2021 (2020 – 38,322 m

) and at Chouech

193,400 m

of produced water was evaporated from lined surface pits in 2021 (2020 – 193,929 m

). The Company

is investigating alternative environmentally-responsible produced water disposal solutions.

Further environmental analysis was conducted by First North African Consultancy for the Environment (“FNAC”

www.fnac-environment.com), an engineering consultancy, in September 2020, to review the environmental

management of the Sabria fields, compliance with Tunisian environmental regulations and analyse underground

water and soil pollution in proximity to the water disposal project. The scope of work included: recovering, analysing

and assessing environmental and technical documents and reports related to the evaporation ponds; analysing all

previous waste pit treatment operations and related reports; analysing existing red register (hazardous waste) and

blue register (domestic waste); carry out coring and sampling investigations of the potential impacted areas (soil

and underground water) within the Sabria field; undertake water sampling and laboratory analysis from existing

piezometers and production water discharge; and perform an environmental monitoring program of the potential

impacted areas within Sabria field. The program was conducted in conjunction with representatives of ANPE and

the environmental reports were submitted to ANPE. Results from the assessment showed below threshold levels

of potential pollutants set under Tunisian regulations and equivalency with both groundwater and soil control

samples. These demonstrated the efficacy of the water disposal project and the process of produced water storage

in evaporation pits, with no evidence of leakage or overflow from the pits into the soil or groundwater.

Recommendations from the report are being implemented.

The environmental monitoring programme for remote locations has been reviewed by management and has been

implemented at all sites. The Company purchased a portable stack gas analyser in 2014 and it is used at Sabria

and Chouech for ongoing air emissions monitoring (started in August 2015). In addition the Company has engaged

the services of FNAC and CMA to conduct an annual environmental monitoring programme at Sabria and Chouech.

In September 2021 an annual review was conducted at Sabria and at the pumping facility at Oum Chiah. The

Company was in compliance with approved thresholds of groundwater and soil contaminants and required solid

waste management. The Company’s own review of air emissions showed compliance in all areas except for carbon

monoxide (“CO”) emissions from older fixed equipment. The Company has enhanced its maintenance of the older

machinery to reduce emissions. In November 2021, the most recent annual review conducted at Chouech found

that in accordance with the air quality limits set by Decree No. 2018-447 of 18 May 2018 and Decree No.2010-2519

of 28 September 2010 the Company complied with all measurements except for those relating to CO and CO

vapour. The report made recommendations for remedial actions and the Company is addressing these. The annual

review also determined that the Company’s operations were within the limits for soil quality for industrial use and

that groundwater was free of any contamination as a result of the activities of the central processing facility.

Greenhouse Gas (“GHG”) emissions were calculated for the years 2012-2016 for the Sabria, Chouech and Sanrhar

fields. During the years 2017-2019 GHG emissions were calculated for Sabria only, as a result of the shutdown of

the Chouech and Sanrhar fields:

1. Field gas consumption: CO

- N

O - CH

2. Flaring: CO

- N

O - CH

3. Venting: CH

4. Diesel consumption: CO

- N

O - CH

5. Vehicle transport: CO

- N

Guidelines followed for the calculation of GHG emissions were the Decree No. 2010-2519 dated 28 September

2010, fixing the limit of air pollution caused by fixed sources, and Decree No. 2018-447 dated 18 May 2018, fixing

the limit and alert level of ambient air quality.

Waste management procedures have been implemented in all locations in Tunisia and monitor a comprehensive

range of waste products including industrial waste (dry cell batteries, lead acid batteries, empty gas cylinders, oil

filters, used oil, contaminated waste, used fluorescent lighting), resource waste (diesel consumption), hazardous

waste (sewage, medical waste), domestic waste (food waste, plastic bottles, cooking oil, paper) and office waste

(plastic bottles, paper, printer cartridges, batteries). For example, 757 kg of paper and plastic bottles were recycled

in the Tunis office in 2020, which increased to 822 kg of paper and plastic bottles being recycled in 2021, as a result

of training and greater awareness of wastage. Electricity consumption at the Tunis office in 2021 was 57,066 kWh,

a further decline in consumption in 2020 from 59,336 kWh as the impact of COVID-19 related stay at home

measures continued through that period. At Sabria electricity consumption remained consistent with prior years at

717,836 kWh (2020 – 714,056). Chouech is not connected to the electricity grid and power at Chouech is provided

by on site gas generators. Fresh water consumption in 2021 at Sabria was 14,949 m

(2020 - 14,214 m

) and at

Chouech, 65,558 m

(2020 - 54,925 m

). Diesel consumption across all operational locations was 160 m

increase over 2020 - (114 m

) but remains a significant reduction from 2019 (305 m

) reinforced by a combination

of greater awareness of wastage, training, optimisation and more efficient transport management.

SOCIAL

Serinus seeks to ensure the health, safety, security and welfare of our employees and those with whom we work

and to ensure that we have a workforce that is performing at its best and to contribute to the economic and social

development of the countries in which we operate. Serinus Energy Romania S.A. has been certified for ISO

45001:2018 (Occupational Health and Safety).

The safety, security and welfare of all of our colleagues is a key priority for the Group and governs the manner in

which we aim to conduct our business. Serinus has emergency response plans in place for all projects and assets.

These plans are reviewed for relevance and updated by senior management annually. The plans are communicated

to the workforce and personnel receive training to ensure they are competent to carry out their emergency roles.

This is supplemented by periodic refresher training. Drills and training exercises are routinely carried out. Where

relevant, the Group monitors the security situation at a local level and ensures that personnel are aware and

appropriate measures are taken and updated as required. In Tunisia the HSSE team ensures the effective

implementation of the Emergency Preparedness and Response Procedures and maintains and updates the Security

Emergency Response Plan on a regular basis.

We undertake a range of activities to continuously improve our HSE Management Plan to ensure that the

Company’s policy commitments are applied. Routine monitoring is undertaken to assess and improve performance

and periodic audits are conducted. Our procedures are set out as corporate standards that define the company

expected practices within the whole organisation. The standards have been shared across the organisation and

employees and contractors are trained as required at country level. In 2021, a total of 53 HSSE training drills and

asset protection drills took place in Tunisia and 288 HSSE training sessions took place in Romania. Regular HSSE

audits are undertaken to review policies and procedures with 25 internal HSSE audits completed in Tunisia in 2021

(2020 - 25) and an annual audit was undertaken by Lloyds Register for ISO certifications in Romania.

Serinus has an Emergency Response Plan in place for all projects and assets. This plan is reviewed annually with

consultation from the Business Units. The plans are communicated to the workforce and response personnel

receive training to ensure they are competent to carry out their emergency roles. The plan is recirculated to the

Serinus team involved, prior to the launch of any major works campaign. These circulations are further

supplemented by periodic refresher training, with drills and training exercises regularly carried out. In Romania,

there have been no accidents since commencing production in 2019. There had been 981 days without accidents

as at 31 December 2021 and the Company passed the 1,000-day milestone on 19 January 2022. In Tunisia, there

were 2,218 days with no accidents as at 31 December 2021. In 2021, there were no Lost Time Injuries recorded

across both Tunisia and Romania operations and we maintain a continuous focus on providing a safe working

environment for our workforce. Our goal is to maintain this high level of safety and efficiency.

A key health and safety issue for the Group in 2021 has continued to be dominated by measures implemented to

protect its workforce from COVID-19 which included amended shift patterns and working from home schedules as

required by local regulations, additional operational protocols to minimise the risk of infection, the provision of

protective equipment, regular disinfection of facilities and testing of personnel, as well as on-site access to medical

staff.

Our Code and Policies commit us to providing a workplace free of discrimination where all employees can fulfil their

potential based on merit and ability. We value a diverse workforce and are committed to providing a fully inclusive

workplace, which ensures we recruit and retain the highest calibre candidates while providing the right development

opportunities to ensure existing staff have rewarding careers. Both the Romanian and Tunisian business units are

led and managed by Romanian and Tunisian nationals respectively, and we currently have no expatriates in either

of the business units. Our Romanian business is led by Ms. Alexandra Damascan and 50% of the staff in Romania

are women, while in Tunisia 32% of the local head office are female. We value a diverse and equal opportunities

workforce and we aim to recruit locally in all jurisdictions as we believe in the quality of our staff and the available

pool of talent in each local market.

Serinus’ Anti-Slavery and Human Trafficking Policy commits the Group to act ethically and with integrity in all our

business dealings and relationships and to implement and enforce effective systems and controls to ensure modern

slavery is not taking place anywhere in our own business or in any of our supply chains. The Group is also

committed to ensuring there is transparency in our own business and in our approach to tackling modern slavery

throughout our supply chains, consistent with our disclosure obligations under the UK Modern Slavery Act 2015.

We expect the same high standards from all our contractors, suppliers and other business partners, and as part of

our contracting processes, we include specific prohibitions against the use of forced, compulsory or trafficked labour,

or anyone held in slavery or servitude, whether adults or children, and we expect that our suppliers will hold their

own suppliers to the same high standards. The prevention, detection and reporting of slavery in any part of our

business or supply chains is the responsibility of all those working for the Group or under our control and they are

encouraged to raise concerns about any issue or suspicion of slavery in accordance with our Whistleblowing policy.

Serinus Tunisia developed its CSR program in conjunction with local communities and stakeholders to identify those

areas which would make a significant impact to those groups, focussing on support for healthcare, education and

culture in the local areas within which it operates. It has managed a program since 2013 to undertake this, with

support and contributions for providing medical equipment to hospitals, repairing classrooms and school facilities,

providing books for school libraries, improving nurseries and sponsoring local cultural events. Serinus Tunisia also

participated in projects with local and regional authorities and other oil and gas companies operating in its areas,

such as the Kébili CSR Consortium with which it has been involved with since 2015 and which promotes the regional

development of the Governorate of Kebili, in collaboration with the regional authorities, the Ministry of Industry,

Energy and Mines, ETAP and the oil and gas companies operating in the region (the “Kebili CSR Consortium”).

Since 2015 the Kebili CSR Consortium has supported education programs, restoring schools and providing facilities

and infrastructure, health initiatives, purchasing medical equipment and renovations, and other social projects. The

CSR program for Kébili also includes a cultural component with a specific focus on encouraging women to preserve

the local handicraft traditions amongst others by setting up and equipping a handicraft centre for women in Kébili.

This project has a training and development component and will ensure the economic empowerment of women.

Social tensions and political instability in Tunisia, particularly in the southern regions, over the past few years has

impacted the ability to execute many of these initiatives and CSR programs, but these initiatives have been an

important part of maintaining the company’s relationships with local stakeholders throughout this period and it is

expected that with renewed stability it will become possible to resume such support in the coming years.

GOVERNANCE

The Group recognises the importance of good corporate governance and is managed under the direction and

supervision of the Board of Directors. As required under the AIM Rules, we have adopted and comply with a

recognised corporate governance code, being the Quoted Companies Alliance Corporate Governance Code (the

“Code”) and set out a summary of how we comply with it on pages 30 to 33 of the Annual Report.

Serinus currently operates in Romania and Tunisia. Romania is allocated a mid-score on Transparency

International’s most recently published Corruption Perception Index (“CPI”) and is ranked number 66 out of 180

countries in the 2021 CPI. Tunisia is ranked number 70 on the same CPI. Neither country is designated as high

risk, Romania is within the European Union and both have well-evolved legal systems in place, however the Group’s

policies, procedures and working practices need to remain fit for purpose and be regularly reviewed and updated

as required. The Group maintains internal control systems to guide and ensures that our ethical business standards

for relationships with others are achieved.

Bribery is prohibited throughout the organisation, both by our employees and by those performing work on our

behalf. Our Anti-Bribery and Corruption (“ABC”) programme is designed to prevent corruption and ensure systems

are in place to detect, remediate and learn from any potential violations. This includes due diligence on new

vendors, annual training for all personnel, requisite compliance declarations from all associated persons, Gifts and

Hospitality declaration and comprehensive ‘whistleblowing’ arrangements.

RISK MANAGEMENT STATEMENT

The Group is subject to several potential risks and uncertainties, which could have a material impact on the long-

term performance of the Group and could cause actual results to differ materially from expectation. The

management of risk is the responsibility of the Board of Directors and the Group has developed a range of internal

controls and procedures in order to manage the risks. The following list outlines the Group’s key risks and

uncertainties and provides details as to how these are managed.

POLITICAL AND REGULATORY RISK

Operating in multiple jurisdictions poses a variety of political, regulatory and social environments, and risks, such

as social unrest, political violence, corruption, expropriation and non-compliance with laws and regulations.

Currently the Company is doing the following in order to mitigate this risk:

• Actively monitors political developments and maintains relationships with government, authorities and

industry bodies, as well as with other stakeholders.

• Weekly reports assessing security, social unrest and political developments are provided to the Executive

management team to allow for real time reaction to dynamic situations.

• Manages compliance with laws, regulations, and contractual obligations by employing the requisite skills

or engaging consultants to supplement internal knowledge.

• Internal policies and procedures, as well as monitoring of performance, help mitigate risks of non-

compliance.

• Actively involved with the regulatory bodies of both operating units to ensure commitments are agreed

upon and concessions may be extended as required.

OPERATIONAL AND DEVELOPMENT RISK

The nature of oil and gas operations brings risks such as equipment failure, well blow-outs, fire, pollution,

performance of partners/contractors, delays in installing property, plant or equipment, unknown geological

conditions and failure to achieve capital costs, operating costs, production or reserves. Staff recruitment,

development and retention is also key to managing operational risk. Currently the Company is doing the following

in order to mitigate this risk:

• Has extensive monitoring and review of HSE and crisis management policies and procedures.

• Strict tendering protocols, physical inspection of all contractor fabrication facilities and extensive financial

due diligence of counterparties is designed to minimise contractor performance and counterparty credit

risk.

• Carries adequate levels of insurance.

• Rigorous review processes when selecting vendors and contractors. Once engaged as a contractor the

Company monitors contractor performance to ensure contractor compliance with Company policies.

• Rigorously monitors costs, actual to budget trends and adjusting forecasts on a frequent basis.

• Employs geological and technical experts to review data and work programs, and undertakes an annual

reserves audit with external technical expert.

• Training and development opportunities are considered for all staff.

• Executive directors and senior staff have notice periods of between six and twelve months to ensure

sufficient time to transfer responsibilities in the event of departure.

• Succession planning is considered regularly at board level.

• The Remuneration Committee meets quarterly and as additionally required to evaluate compensation and

incentivisation plans to ensure they remain competitive.

AVAILABILITY OF FINANCING

The risk that the Company will not be able to raise funds through debt or equity if required. Currently the Company

is doing the following in order to mitigate this risk:

• Monitor the cash position by producing monthly cash projections to determine future cash flow

requirements.

• Publicly listed on the AIM equity market to access capital, if required, with its most recent fundraise in

December 2020.

• The Company is currently debt-free, with a low operating cost base and has continued to generate positive

cashflows during 2021.

• The Board considers the structure and differing capital costs of a variety of possible sources of funds as

well as the timing and access to the various capital markets.

FINANCIAL RISK

The Group is subject to commodity price volatility, interest rates, foreign exchange rate volatility and credit risk of

counterparties. Currently the Company is doing the following in order to mitigate this risk:

• Actively monitoring the business, preparing monthly forecasts with various sensitivities (commodity prices,

interest rates, foreign exchange rates) to ensure the Company can sustain all macroeconomic changes.

• Careful cost management to preserve financial flexibility in the event of economic or commodity price

downturns.

• The Company has restructured its balance sheet and is now debt-free to create greater financial flexibility.

• Exposure to both oil and gas pricing diversifies commodity price risk.

• The Group’s financial risk policies are set out in Note 4 to the financial statements.

ENVIRONMENTAL

Investor and lender sentiment may become adverse towards the oil and gas sector. Longer term reduction in

demand for oil and gas may result in lower oil and gas prices. Currently the Company is doing the following in order

to mitigate this risk:

• 70% of the Company’s production is gas, providing exposure to a cleaner, transition fuel.

• The company’s main source of production is a modern energy, emission efficient and highly automated

gas plant limiting the environmental impact of the Company’s production.

• The company has in place strict emissions and environmental monitoring. Routine monitoring and third-

party inspections for emissions, ground water contamination, solid waste management and soil protection

are routinely performed in excess of all local government guidance.

• The Company’s strategy is to maintain a low operating cost base in order to maintain operational flexibility

in the event of lower commodity prices.

COVID-19

The Global pandemic may impact timing of operational performance, with delays in receiving equipment and delays

in bringing international contractors out to the field to complete workovers. Currently the Company is doing the

following in order to mitigate this risk:

• All office locations have adapted to work from home conditions when required by local health regulations,

which include moving all IT services, data storage and software to cloud based solutions. This has allowed

enhanced access for staff when working remotely, increased the security from cyberattacks and reduced

physical maintenance requirements.

• The Company has increased the cleaning and sanitisation of all office locations.

• Operating fields in both Romania and Tunisia have adapted to ensure all staff are wearing face coverings

and maintain social distance. Both fields have also implemented a sanitisation process to ensure that the

field is sanitised on a frequent basis. Third party access to field locations has been restricted and enhanced

access monitoring has been implemented.

BOARD OF DIRECTORS AND MANAGEMENT TEAM

BOARD OF DIRECTORS

Lukasz Rędziniak

Chairman, Non-Independent Director, Chair of Remuneration Committee, Chair of the Nomination Committee,

Board Member and General Counsel of Kulczyk Investments SA, the 4

largest shareholder of Serinus

Appointed March 2016

Mr. Rędziniak is a graduate of the Faculty of Law and Administration of the Jagiellonian University.

Mr. Redziniak is an Attorney and member of the District Bar Association in Warsaw. Between 1990 and 1991 he

worked as an Assistant at the Faculty of Law and Administration of the Jagiellonian University. During the years

1991-1992 he was an in-house Lawyer at Consoft Consulting sp. z o.o. From 1997 to 2000 he worked as an

Attorney - individual practice closely co-operating with Dewey Ballantine sp. z o.o. In the years 1993-2007 he

worked in the law firm Dewey and LeBoeuf LLP and in 2001 he was appointed as a partner. Then, in the years

2007-2009 he was Undersecretary of State in the Ministry of Justice of the Republic of Poland. Since 2009 he was

a Partner and Managing Partner at the Warsaw office at Studnicki, Płeszka, Ćwiąkalski, Górski sp. k. In 2013, he

became a Member of the Board at Kulczyk Investments S.A. He was also appointed as a member of the

Supervisory Board at Firma Oponiarska Dębica S.A. and a member of the Supervisory Board at Ciech S.A. He is

also a member of the Supervisory Board of Autostrada Wielkopolska SA and A2 Route Sp. z o.o..

Jim Causgrove

Independent Director, Chair of the Reserves Committee, Member of the Audit Committee, Member of the

Remuneration Committee, Member of the Nomination Committee

Appointed September 2017

Mr. Causgrove is an experienced Oil and Gas executive with over 35 years’ experience. On November 14, 2017,

Mr. Causgrove was appointed Chief Operating Officer of Harvest Operation Corporation. He offers both excellent

technical engineering and business experience along with a strong track record in management and leadership.

Since 1979, working for first Chevron Corporation and then Pengrowth Energy Corporation, Jim has gained

experience and skills in virtually all facets of the oil and gas business; with a particular technical focus on drilling,

production, operations and midstream. Jim gained excellent field and technical experience with Chevron working

in both the Canadian head office as well as many field offices and field sites. As well as his technical roles Jim

spent time working in Joint Ventures, Human Resources, Strategic and Business Planning and in the Midstream

business. Jim gained valuable business insights as first a technical leader, then as a middle manager, and finally

as an executive for Chevron and Pengrowth. In his role as Vice President at Pengrowth, Jim worked as part of the

senior leadership team and also worked closely with the Board of Directors.

Mr. Causgrove graduated with a Chemical Engineering degree from the University of Alberta and has earned his P.

Eng designation in Alberta.

Natalie Fortescue

Independent Director, Chair of the Environmental, Social, & Governance Committee, Member of the Audit

Committee, Member of the Reserves Committee

Appointed March 2021

Ms. Fortescue has extensive capital markets and investor relations experience, including in the international oil and

gas sector. She has spent over 20 years working in and advising companies on corporate finance transactions,

fundraisings, strategy, debt refinancing and restructurings, investor relations and the impact of corporate

transactions on stakeholders. After qualifying as a Chartered Accountant, Natalie had a long investment banking

career at both Investec Investment Bank and Oriel Securities Limited. On leaving the City Natalie joined Genel

Energy PLC to establish and lead an Investor Relations function and in recent years has worked with Premier Oil

Plc on a number of capital markets transactions and debt refinancing, including the recent merger with Chrysaor

Energy Limited. Current directorships/partnerships: FUTH Consulting Limited, Hot Penny Properties Limited, Clean

Power Hydrogen plc.

Ms. Fortescue has an undergraduate degree in Accounting and Finance from Kingston University.

Jonathan Kempster

Independent Director, Chair of the Audit Committee, Member of the Remuneration Committee

Appointed March 2021

Mr. Kempster has held CFO board positions at Delta plc, Fii Group plc, Frasers Group plc, Linden plc, Low & Bonar

plc, Utilitywise plc and Wincanton plc. Mr. Kempster was recently appointed as a Non-Executive Director and Audit

Committee Chair of Bonhill Group plc and is a Non-Executive Director and Audit Committee Chair at Redcentric plc

and Ted Baker plc. Mr. Kempster is currently a Non-Executive Director at FireAngel Safety Technology plc and a

Trustee of the Delta plc pension scheme. Current directorships/partnerships: Portcentric Solutions Limited.

Mr. Kempster qualified as a Chartered Accountant with Price Waterhouse in 1990 and has a BA (Hons) in Business

Studies from the University of Liverpool.

Jeffrey Auld

Chief Executive Officer, Executive Director

Appointed September 2016

Mr. Auld has been involved with the international oil and gas business for over 30 years. In that time he has

managed companies and acted as an advisor to companies operating in the emerging markets oil and gas business.

Mr. Auld has a depth of experience in corporate finance, mergers and acquisitions and strategic management.

Mr. Auld began his career in Canada and moved to the United Kingdom in 1995. He was the Commercial Manager

for New Ventures for Premier Oil plc. Mr. Auld left Premier Oil and joined the Energy and Power team within the

Mergers and Strategic Advisory group of Goldman, Sachs and Co. When Mr. Auld left Goldman Sachs he joined

PetroKazakhstan, a NYSE listed company with assets in Kazakhstan, as a Senior Vice-President. After his time at

PetroKazakhstan Mr. Auld became the Head of European Energy for Canaccord Genuity in London. Prior to joining

Serinus Mr. Auld was the Head of EMEA Oil and Gas at Macquarie Capital in London.

Mr. Auld has an undergraduate degree in Economics and Political Sciences from the University of Calgary and a

Masters of Business Administration with Distinction from Imperial College, London.

Andrew Fairclough

Chief Financial Officer, Executive Director

Appointed February 2020

Mr. Fairclough has held corporate finance, capital markets and management roles for nearly 30 years, through

which he has gained a wide range of experience, including corporate strategy, debt and equity structuring and

capital raising, M&A, capital management, financial planning, budgeting and financial reporting. Mr. Fairclough has

over 17 years of investment banking experience after leaving the Army, at a number of financial institutions including

Flemings, Rothschild and Merrill Lynch. Mr. Fairclough transitioned into the oil and gas sector in 2012, joining Xcite

Energy Limited and subsequently was Chief Financial Officer of Whalsay Energy Limited prior to joining the

Company

Mr. Fairclough has an undergraduate degree in Law from University College London.

SENIOR MANAGEMENT

Stuart Morrison

Chief Operating Officer, Serinus Energy plc

Mr. Morrison has over 34 years of oil and gas industry operational experience in numerous senior management

roles. Early in his career he worked as a Petroleum and Reservoir Engineer with BP Research, British Gas, Sun

Oil and Oryx Energy UK prior to joining Premier Oil in 1997. At Premier, Mr. Morrison assumed a variety of technical

and management positions such as Chief Petroleum Engineer, Business Development Manager and Exploration

Manager in corporate roles and business units such as the Middle East and Falkland Islands.

Mr. Morrison has a Masters Degree in Petroleum Engineering and a Bachelor’s Degree in Chemical Engineering,

both from Heriot-Watt University (Edinburgh).

Calvin Brackman

Vice President, External Relations & Strategy

Mr. Brackman has more than 25 years’ experience in the oil & gas industry, both in the public and private sector.

He started his career working for the Department of Natural Resources of the Government of Canada, before moving

to a senior position in the Minerals, Oil & Gas Division of the Government of the Northwest Territories. In 2003, Mr.

Brackman moved to London, UK, to join PetroKazakhstan Inc. as Director of Government Relations. In this position

he developed and implemented strategies to reduce the company’s surface risk. Following the sale of

PetroKazakhstan to CNPC in 2005, Mr. Brackman moved back to Canada and started a successful consulting

practice, providing expert advice to various international companies and governments. In December 2016, he joined

Serinus in his current role, working with the company’s management team and business units to develop and

implement the Group’s exploration and development strategies and oversee government and stakeholder relations.

Mr. Brackman has a Masters Degree in Economics from the University of Waterloo and a Bachelor’s Degree in

Economics from the University of Calgary.

Alexandra Damascan

President, Serinus Energy Romania S.A.

Ms. Damascan has been with Serinus Energy Romania since 2008 and as a senior executive with expertise in all

areas of the global oil and gas industry. Ms. Damascan has been an integral piece to bringing the Romanian assets

from the exploration phase to production in 2019. Prior to joining Serinus, Ms. Damascan was a partner in a medium

size Romanian company which handled technical and legal translations and language interpretation for different

journals and professional magazines.

Ms. Damascan graduated from the Oil and Gas Institute as a Petroleum Engineer. Ms. Damascan also has a

degree in Political Economics, an MBA in Business Transactions from the Academy of Economic Studies, a Law

Degree and LLM in International Arbitration from the Romanian-American University and an MBA in Oil & Gas from

the Oil and Gas Institute in Ploiesti, Romania.

Haithem Ben Hassen

President, Serinus Energy Tunisia B.V.

Mr. Ben Hassen joined Serinus Energy Tunisia B.V. in November 2014 as a Senior Project Engineer and was then

promoted to Project Manager in May 2015. In January 2018, he was promoted to President of Serinus Energy

Tunisia B.V. He has been responsible for the completion of numerous capital projects undertaken by Serinus

Energy Tunisia B.V. He was also appointed to handle the technical aspect of the Moftinu Development Project in

Romania.

Mr. Ben Hassen has over 15 years of experience in the oil and gas industry, as well as power plants and renewable

energies. He has a very well-rounded breadth of knowledge including; project management, engineering,

construction, completions, handover and closeout and operating, contract review, business plan development and

budgeting and forecasting.

Mr. Ben Hassen has a degree in Mechanical Engineering from the École Polytechnique of Montréal in Canada.

CORPORATE GOVERNANCE STATEMENT

CHAIRMAN’S INTRODUCTION

The Group is managed under the direction and supervision of the Board of Directors. Among other things, the

Board sets the vision and strategy for the Group in order to effectively implement the business model which is the

exploration and production of hydrocarbon resources from its current concessions in Romania and Tunisia.

Good corporate governance creates shareholder value by improving performance while reducing or mitigating risks

that the Group faces as we seek to create sustainable growth over the medium to long-term. It is the role as

Chairman to lead the Board effectively and to oversee the adoption, delivery and communication of the Group’s

corporate governance model. The Board has adopted the Quoted Companies Alliance Corporate Governance

Code (the “Code”).

The report that follows sets out in summary terms how we comply with the Code to be read in conjunction with the

Statement of Compliance with QCA Corporate Governance Code available on our website at

http://serinusenergy.com/shareholder-information/

As an issuer listed on the Warsaw Stock Exchange, Poland (“WSE”), the Company was subject and followed the

recommendations and rules contained within the “Code of Best Practice for WSE Listed Companies 2016”. These

rules were adopted by the WSE Supervisory Board on 13 October 2015 (Annex to the Resolution No. 27/1414/2015)

and are accessible at:

https://www.gpw.pl/best-practice

https://www.gpw.pl/pub/GPW/o-nas/DPSN2016_EN.pdf

PRINCIPLE 1: ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTES THE LONG-TERM

VALUE FOR SHAREHOLDERS

• The Group’s strategy is defined in the “Serinus Strategy” section of this Annual Report.

• The objective is to grow the hydrocarbon production of the Group through efficient allocation of shareholder

capital to produce long-term return on investments for shareholders.

• In order to capitalise on the available opportunities and to mitigate the key challenges facing the Group,

the Group has assembled a high-quality Board of Directors, and set of advisers with relative experience in

the upstream oil & gas environment. The Group has been structured to give the Board the necessary

oversight of all investment decisions of the Group.

• The long-term commercial success of the Group, meaning the capability to generate positive net revenues

on a sustainable basis, will depend on its ability to find, acquire, develop, and commercially produce oil

and natural gas reserves.

PRINCIPLE 2: SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS AND EXPECTATIONS

The Group is committed to listening and communicating openly with its shareholders to ensure that its strategy,

business model, and performance are clearly understood. Providing an open environment with investors and

analysts allows us to build our relationships with these audiences, while providing the opportunity to further share

our business model and allows us to drive our business forward. The initiatives taken by the Company to keep

investors and analysts informed are as follows:

• Investor roadshows

• Attending investor conferences

• Hosting capital markets days

• Timely disclosure of material information

• Regular reporting

Due to the COVID-19 pandemic, the Company was unable to make physical appearances at shareholder meetings,

roadshows, investor conferences, or other Company informational events. The Company explored alternatives in

order to stay connected with current shareholders, and potential investors. The Company held virtual conferences,

participated in online interviews, and continued updating shareholder presentations.

The Directors understand the importance of building relationships with institutional shareholders and will make

presentations when appropriate. The Directors welcome all feedback and concerns from shareholders and will

implement the appropriate action as required. The Board is in active communication with the management team to

ensure they are up to date on all recent corporate activities.

The Annual General Meeting (“AGM”) is one forum for dialogue with shareholders and the Board. The results of

the AGM are subsequently published on the Company’s website.

PRINCIPLE 3: TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL RESPONSIBILITIES AND THEIR

IMPLICATIONS FOR LONG TERM SUCCESS

Key stakeholders are as follows:

• Shareholders.

• Employees.

• Communities in which we operate (landowners, local authorities and local citizens).

Engaging with all stakeholders strengthens our relationships and allows for better business decisions to ensure the

Company delivers on our commitments to all parties.

The Company also actively engages stakeholders near our operations as follows:

• Regular meetings with local authorities and governments providing progress updates as required.

• Town hall meetings are held with local citizens as required to discuss development plans.

• We seek the input of the communities in identifying the funding needs of different community initiatives.

PRINCIPLE 4: EMBED EFFECTIVE RISK MANAGEMENT, CONSIDERING BOTH OPPORTUNITIES AND

THREATS, THROUGHOUT THE ORGANISATION

• The Company has a risk register that outlines the key financial and operational risks which has been

circulated to all management and Board members. A summary of these risks is included in the Risk

Management Statement of this annual report.

• The Audit Committee monitors the integrity of the financial statements.

• The Audit Committee focuses particularly on compliance with legal requirements, accounting standards

and the relevant rules for the listings the Company resides (AIM and Warsaw).

• The Board acknowledges that the Group’s international operations may give rise to possible claims of

bribery and corruption. The Board has adopted a zero-tolerance policy toward bribery and has reiterated

its commitment to carry out business fairly, honestly, and openly.

• The Group has also adopted a share dealing code, in conformity with the requirements of Rule 21 of the

AIM Rules for Companies.

• All material contracts are required to be reviewed and signed by a Director and reviewed by our external

counsel.

PRINCIPLE 5: MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED BY THE CHAIR

The Board comprises of a non-executive, independent Chairman, two Executive Directors and three non-executive

independent Directors. The Board is satisfied that it has a well-diversified and balanced team with varying levels of

expertise in different facets of the business. This allows the Board to act effectively and efficiently in the best

interests of the Company.

Directors’ attendance at Board and Committee meetings during 2021 was as follows:

Director

Board

Audit

Committee

Remuneration

Committee

Nomination

Committee

Reserves

Committee

Total Meetings

Lukasz Redziniak

7 - 2 1 -

Jeffrey Auld 8 4 - - 1

Andrew Fairclough 8 4 - - 1

Jim Causgrove 6 4 2 1 1

Eleanor Barker

3 2 2 1 1

Dawid Jakubowicz

1 1 - - -

Natalie Fortescue

5 2 - 1 -

Jon Kempster

5 3 - - -

Eleanor Barker retired from the board on 13 May 2021

Dawid Jakubowicz resigned on 26 March 2021

Nathalie Fortescue and Jon Kempster were appointed on 27 March 2021

Key Board activities this year included:

• Continued an open dialogue with the investment community.

• Discussed and evaluated strategic priorities and shareholder growth opportunities.

• Discussed internal governance processes.

• Reviewed the performance of the Company’s advisers.

• Reviewed the Group’s risk profile.

• Reviewed feedback from shareholders post quarterly and full year results.

The Company has effective procedures in place to monitor and deal with conflicts of interest. Since the non-

executive Directors perform their duties on a part-time basis, the Board is aware of the other commitments and

interests of its Directors, and changes to these commitments and interests must be reported to and, where

appropriate, agreed with the rest of the Board. The two executive directors are full time with the Company.

The Company’s Board has a broad range of relevant experience suitable for issues pertaining to the oversight of a

publicly listed Oil & Gas Company. These include financial, legal, capital markets and technical. The Board of

Directors and Management team section of this annual report contains the biographies and experience of each of

the Directors and key management personnel.

PRINCIPLE 6: ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY UP-TO-DATE

EXPERIENCE, SKILLS AND CAPABILITIES

Members of the Board are listed in the Board of Directors section of this Annual Report which also details their

experience, skills and personal qualities. The Corporate Secretary of the Company during 2020 was JTC Group.

As announced 15 March 2021, the Company’s Corporate Secretary is now Fairway Trust Limited. The Board is

satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience, including

financial, legal, capital markets and technical skill sets. As the Board is a strong believer in diversity, the Board has

one female director, Natalie Fortescue, and the President of the Romanian operations is Alexandra Damascan.

All Directors receive regular and timely information on the Group’s operational and financial performance. Board

members are provided with agendas and related materials in advance of all meetings. The Group’s management

provides the Board with a Monthly Directors’ Report that contains share price performance, key financial and

operating indices, cash flow forecast, capital expenditures, budget variance reports and commentary on the

opportunities and risks facing the Group.

New Directors have access to the entire management team and other Directors to further develop their

understanding of the business operations and risks. The Directors are encouraged to seek independent advice to

ensure they are able to fulfil their duties at the expense of the Company.

PRINCIPLE 7: EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT OBJECTIVES,

SEEKING CONTINUOUS IMPROVEMENT

The Company is constantly assessing the individual contributions of all Board members to ensure each member:

• Is actively contributing to the success of the Company.

• Is fully committed.

• Is maintaining their independence.

Periodically the non-Executive Directors discuss relevant succession planning with the CEO. These discussions

focus on key individual risk as well as broader succession issues.

PRINCIPLE 8: PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND

BEHAVIOURS

The Board believes that the promotion of a corporate culture based on sound ethical values and behaviours is

essential to maximise shareholder value. The Group maintains and annually reviews a handbook that includes

clear guidance on what is expected of every employee. Adherence to these standards is a key factor in the

evaluation of performance within the Group.

PRINCIPLE 9: MAINTAIN GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT FOR PURPOSE

AND SUPPORT GOOD DECISION-MAKING BY THE BOARD

The Board meets at least four times annually in accordance with its scheduled quarterly meeting calendar. This

may be supplemented by additional meetings if, and when required. During the year ended 31 December 2021,

the Board met for its four scheduled meetings plus an additional four times.

The Board and the Committees are provided with the agenda and other appropriate material on a timely basis in

order to prepare for each meeting. Any Director may challenge Group proposals and after all relevant discussions,

proposals are voted on. Any Director who feels that any concern remains unresolved after discussion may ask for

that concern to be noted in the minutes of the meeting, which are then circulated to all Directors. Any specific

actions arising from such meetings are agreed by the Board or relevant committee and then followed up by the

Company’s management.

The Board is responsible for the long-term success of the Group. There is a formal schedule of matters reserved

for the Board. It is responsible for overall group strategy, approval of major investments, approval of the annual

and interim results, annual budgets, and Board structure. It monitors the exposure to key business risks and reviews

the annual budgets and their performance in relation to those budgets. There is a clear division of responsibility at

the head of the Company.

The Chairman is responsible for running the business of the Board and for ensuring appropriate strategic focus and

direction. The CEO is responsible for proposing the strategic focus to the Board and implementing and overseeing

the projects as they are approved by the Board. The terms of reference for the Chairman and CEO are on the

Group’s website at http://serinusenergy.com/shareholder-information.

The Board is supported by the audit, remuneration, ESG and reserves committees:

• The Audit Committee is responsible for the financial reporting and internal control principals of the Group,

oversight of the CFO and the finance team and maintaining a relationship with the Group’s auditors.

• The Remuneration Committee is responsible for the consideration, development and implementation of

policy on executive remuneration and fixing remuneration packages of individual directors, so that no

director shall be involved in deciding his or her own remuneration. The committee ensures remuneration

is aligned to the implementation of the Group strategy and effective risk management, considering the

views of shareholders, and is also assisted by executive pay consultants as and when required.

• The ESG Committee ensures the Company maintains the highest standards in environmental, social, and

governance. The Committee is responsible for the composition of the Board of Directors and that the

Board maintains proper levels of governance suitable to the size and activities of the Company.

• The Reserves Committee is responsible for overseeing the evaluation of the Group's petroleum and natural

gas reserves, including retaining an “independent” engineering firm which is a “Competent Person” (as

such term is defined in “Note for Mining and Oil & Gas Companies” issued by AIM) to prepare a report (the

“Report”) of an evaluation of the Group’s petroleum and natural gas reserves, and meeting with

representatives of the Engineering Firm and management to discuss the Report’s preparation results.

PRINCIPLE 10: COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY

MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS

The Company communicates with shareholders through the Annual Report and Accounts, full-year and quarterly

announcements and the AGM. Corporate announcements, results and presentations are available on the

Company’s corporate website, www.serinusenergy.com. The Board receives regular updates on the views of

shareholders through briefings and reports from the CEO and the Company’s brokers. The Company

communicates with institutional investors frequently through briefings with management. In addition, analysts’

notes, and brokers’ briefings are reviewed to achieve a wide understanding of investors’ views.

For the Company’s shareholder meetings, any resolutions voted by shareholders that have a significant number of

dissenting votes the Company will provide, on a timely basis, an explanation of what actions it intends to take to

understand the reasons behind that vote result, and, where appropriate, any different action it has taken, or will

take, as a result of the vote.

REMUNERATION COMMITTEE REPORT

This remuneration report has been prepared by the Remuneration Committee and approved by the Board. This

report sets out the details of the remuneration policy for the Directors and discloses the amounts paid during the

year.

MEMBERSHIP

• Lukasz Redziniak – Chairman

• Jim Causgrove

• Jon Kempster

RESPONSIBILITIES

The aim of the Remuneration Committee is to:

• Attract, retain and motivate the executive management of the Company.

• To offer the opportunity for employees to participate in share option schemes to incentivise employees to

enhance shareholder value and to retain employees.

To achieve the above, the Committee considers the following categories of remuneration:

• Annual salary and associated benefits.

• Share option plan and long-term share-based incentive plan.

• Performance based annual bonuses.

The terms of reference of the Remuneration Committee are set out below:

• To determine and agree with the Board the overall remuneration policy of the Chairman of the Board, the

executive directors and other members of the executive management as designated by the Board to

consider.

• Review the ongoing appropriateness and relevance of the remuneration policy.

• Approve the design and targets for, any performance related pay schemes and approve the total annual

payments made under such schemes.

• Review the design of all share incentive plans for approval by the Board and determine whether awards

will be made under the share incentive plans, including the number of awards to each individual and the

performance targets to be used.

• To review and approve any, and all, termination payments.

• To review and monitor the remuneration trends across the Group and if required undertake a

benchmarking exercise to compare against a peer group, obtaining reliable, up to date third party

remuneration.

2021 ACTIVITY

The Committee met twice (2020 – eight times) throughout the year.

EXECUTIVE DIRECTORS’ REMUNERATION

Compensation for the executive Directors is shown in US dollars

in the table below.

Director

Salaries

Benefits

2021 Total

2020 Total

Jeffrey Auld 481,828 61,583 543,411 461,664

Andrew Fairclough 344,163 42,966 387,129 295,548

825,991 104,549 930,540 757,212

The 2021 compensation package above for the executive Directors included salaries and benefits, and are short-

term in nature. During 2021 the executive Directors received shares in lieu of a 20% salary reduction.

EXECUTIVE DIRECTORS’ SHARE CAPITAL

The following tables outline the share options outstanding and shares owned as at 31 December 2021 for the

executive Directors. There have been no changes between 31 December 2021 and 18 March 2022.

Director

Share Options

LTIP

Awards

Jeffrey Auld 26,800,000

13,000,000

3,506,752

Andrew Fairclough 1,750,000 7,000,000 1,080,533

28,550,000

20,000,000

4,587,285

Stock Options

Director

Grant date

Strike Price

Share Options

Jeffrey Auld

22 Dec 2020 £0.02 18,800,000

Jeffrey Auld 27 May 2019 £0.02 1,000,000

Jeffrey Auld 03 Dec 2018 £0.02 2,500,000

Jeffrey Auld 31 May 2017 £0.02 1,000,000

Jeffrey Auld 22 Sep 2016 £0.02 3,500,000

Andrew Fairclough 02 Apr 2020 £0.02 1,750,000

28,550,000

LTIP Awards

Director

Grant date

LTIP Awards

Jeffrey Auld

24 Dec 2020 13,000,000

Andrew Fairclough 24 Dec 2020 7,000,000

20,000,000

The average GBP:USD rate for the year was 0.7264 (2020 – 0.7786).

Benefits include medical insurance and UK pension scheme contributions.

2020 shares and options consists of share options, shares issued in lieu of salary, and LTIP awards. Share options are priced

at the fair value on the grant date, calculated using Black Scholes, and amortised over the vesting period. Shares issued in lieu of

salary, were issued at the average share price over the period related to the salary forgone. The LTIP awards were priced using

the closing share price on the issuance date and have no vesting conditions. Both the shares issued in lieu and LTIP awards are

fully expensed at date of issuance.

Each LTIP award represents a right to acquire a share of the Company at $nil consideration.

NON-EXECUTIVE DIRECTORS’ REMUNERATION

Non-executive Director’s receive a £30,000 annual fee, with each Chair receiving an additional £10,000 fee.

During the second and third quarter of 2020 as an effort to preserve capital, all non-executive directors agreed to a

25% reduction of their fees.

Director

Fees

Share Options

202

Total

2020

Total

Jim Causgrove 55,066 - 55,066 46,713

Eleanor Barker 27,533 - 27,533 45,591

Lukasz Redziniak 68,833 - 68,833 44,952

Dawid Jakubowicz 10,325 - 10,325 33,714

Natalie Fortescue 41,300 - 41,300 -

Jon Kempster 37,858 - 37,858 -

240,915 - 240,915 170,970

NON-EXECUTIVE DIRECTORS’ SHARE CAPITAL

The following tables outline the share options outstanding and shares owned as at 31 December 2021 for the non-

executive Directors. There have been no changes between 31 December 2021 and 18 March 2022.

Director

Options held at

31 December 202

Shares held at

31 December 202

Jim Causgrove 100,000

400,000

Lukasz Redziniak -

720,000

Jon Kempster

- 602,607

100,000

1,722,607

Director

Grant date

Strike Price

Share Options

Jim Causgrove 20 Nov 2017 C$0.36 100,000

100,000

Lukasz Redziniak, Chairman of the Remuneration Committee

18 March 2022

Translated using the average exchange rate for the year GBP:USD 0.7264 (2020 – GBP:USD 0.7786).

Share options are priced at the fair value on the grant date, calculated using Black Scholes, and amortised over the vesting

period.

Shares held by Catherine Kempster (the spouse of Jon Kempster)

AUDIT COMMITTEE REPORT

This report addresses the responsibilities, the membership and the activities of the Audit Committee in 2021 up to

the approval of the 2021 Annual Report and 2021 year-end Financial Statements.

MEMBERSHIP

• Jon Kempster – Chairman

• Jim Causgrove

• Natalie Fortescue

RESPONSIBILITIES

The main responsibilities of the Audit Committee are the following:

• Monitor the integrity of the annual and interim financial statements.

• Review the effectiveness of financial and related internal controls and associated risk management.

• Manage the relationship with our external auditors including plans and findings, independence and

assessment regarding reappointment.

2021 ACTIVITY

The Committee met four (2020 – four) times throughout the year.

The Committee, together with the CFO, is responsible for the relationship with the external auditor. The Committee

recommended the appointment of PKF Littlejohn LLP as the auditor for the 2021 fiscal year-end, which was

approved.

For the 2021 fiscal year-end, the Committee has reviewed the following significant financial reporting issues:

1. Carrying value of E&E and PP&E Assets.

2. Decommissioning provisions.

3. Going concern (see page 15 of this Annual Report or Note 2 of the Financial Statements).

4. Cash flow forecasts.

INTERNAL CONTROLS AND RISK MANAGEMENT, WHISTLEBLOWING AND FRAUD

The Committee is vigilant regarding internal financial controls and risk management. During 2021, the Committee

has undertaken anti-bribery and anti-corruption exercises and has reviewed whistle blowing arrangements.

Jon Kempster, Chairman of the Audit Committee

18 March 2022

REPORT OF THE DIRECTORS

The Directors’ present their report, together with the audited consolidated financial statements of Group for the year

ended 31 December 2021. During 2021 and 2020 the following changes have been made to the Group’s directors:

• In February 2020, Andrew Fairclough was appointed CFO and was appointed a Director.

• In March 2021, Dawid Jakubowicz resigned as a Director

• In March 2021, Jon Kempster and Natalie Fortescue were appointed as Directors

• In May 2021, Eleanor Barker did not stand for re-election as a Director

PRINCIPAL ACTIVITIES

The principal activity of the Group is oil and gas exploration and development.

DIRECTORS AND DIRECTORS’ INTERESTS

Directors who held office during the year, their remuneration and interests held in the Company are detailed in the

Remuneration Report. Directors’ biographies for those holding office at the end of the year are detailed in the Board

and Management Team section of this annual report.

SUBSTANTIAL SHAREHOLDERS

As of the date of issuing this report, management is aware of the following shareholders holding more than 5% of

the ordinary shares of the Company, as reported by the shareholders to the Company:

Richard Sneller 11.42%

Crux Asset Management 8.30%

Quercus TFI SA 7.16%

RESULTS AND DIVIDENDS

The results for the year are set out in the Consolidated Statement of Comprehensive Loss. The results are further

discussed in the CFO Report on pages 9 to 15 of this Annual Report.

The Directors do not recommend payment of a dividend in respect of these financial statements (2020 - $nil).

STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The directors are responsible for preparing the annual report and the financial statements in accordance with

applicable law and regulations.

Companies (Jersey) Law 1991 requires the directors to prepare financial statements for each financial year. Under

that law the directors have elected to prepare the group financial statements in accordance with International

Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. Under company law the directors must

not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs

of the group and company and of the profit or loss of the group for that period. The directors are also required to

prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading

securities on AIM.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently

• make judgements and accounting estimates that are reasonable and prudent

• state whether they have been prepared in accordance with IFRSs as adopted by the United Kingdom, subject

to any material departures disclosed and explained in the financial statements

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

company will continue in business (note 2).

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company’s transactions and disclose with reasonable accuracy at any time the financial position of the company

and enable them to ensure that the financial statements comply with the requirements of Companies (Jersey) Law

1991. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps

for the prevention and detection of fraud and other irregularities.

WEBSITE PUBLICATION

The Directors are responsible for ensuring the annual report and the financial statements are made available on a

website. Financial statements are published on the company’s website in accordance with legislation in the United

Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in

other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors.

The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

STATEMENT OF DISCLOSURE TO AUDITORS

As far as the Directors are aware, there is no relevant audit information of which the Group’s auditor is unaware and

each Director has taken all the steps that they ought to have undertaken as a Director in order to make themselves

aware of any relevant audit information and to establish that the Group’s auditor is aware of that information.

AUDITORS

PKF Littlejohn LLP has indicated its willingness to continue in office, and a resolution that they are appointed will

be proposed at the next annual general meeting.

On behalf of the Board

Jeffrey Auld, Chief Executive Officer

18 March 2022

PKF Littlejohn LLP

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SERINUS ENERGY plc

Opinion

We have audited the financial statements of Serinus Energy plc (the ‘group’) for the year ended 31 December 2021

which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial

Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes

to the financial statements, including significant accounting policies. The financial reporting framework that has been

applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)(UK).

In our opinion, the group financial statements:

• give a true and fair view of the state of the group’s affairs as at 31 December 2021 and of its profit for the

year then ended;

• have been properly prepared in accordance with IFRS (UK) and

• have been prepared in accordance with the requirements of The Companies (Jersey) Law 1991.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable

law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of

the financial statements section of our report. We are independent of the group in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard

as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment

of the group’s ability to continue to adopt the going concern basis of accounting included:

• Assessing and key cost and income streams included in the group cash flow forecast which has been

prepared by the directors for a period of no less than twelve months from the date of approval of these

financial statements. We reviewed management’s sensitised versions of the cash flow forecast to assess

whether a downturn could lead to future concerns.

• Challenging and critiquing the directors’ assumptions included in the cash flow forecast and agreeing the

inputs to evidence obtained during the course of the audit and the understanding of the business obtained

during the course of the audit.

• Assessing management’s price forecasts for oil and gas respectively to obtain an understanding of the

appropriateness of these price inputs.

• Reviewing and considering the adequacy of the disclosure within the financial statements relating to the

directors’ assessment of the going concern basis of preparation

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the group's ability to continue as a going

concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the

relevant sections of this report.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of

misstatements. At the planning stage, materiality is used to determine the financial statement areas that are included

within the scope of our audit and the extent of sample sizes during the audit. No significant changes have come to

light through the audit fieldwork which has required a revision of our materiality figure.

We calculated group materiality at 1% of gross assets which gives a figure of $900,000. Gross assets were

determined as an appropriate basis for materiality because the principal focus of the group remains on the

development of its oil and gas assets in Tunisia and Romania.

Materiality for the significant components of the group ranged from $400,000 to $600,000, based on 1% of gross

assets for each component.

Group performance materiality was set at $540,000.

We agreed to report to those charged with governance all corrected and uncorrected misstatements we identified

through our audit with a value in excess of $45,000. We also agreed to report any other audit misstatements below

that threshold that we believe warranted reporting on qualitative grounds.

Our approach to the audit

In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial

statements. In particular we looked at areas involving significant accounting estimates and judgements by the

directors and considered future events that are inherently uncertain. These included, but were not limited to the

carrying value of both the production assets and exploration & evaluation assets, and the completeness and

accuracy of the decommissioning provision. We also addressed the risk of management override of internal controls,

including among other matters consideration of whether there was evidence of bias that represented a risk of

material misstatement due to fraud.

Our group audit scope focused on the principal areas of operation, being Romania and Tunisia. Each component

was assessed as to whether they were significant or not significant to the group by either their size or risk. The

parent Company and two operating subsidiaries were considered to be significant due to identified risk and size.

We have performed the audit of the Parent Company that is registered in Jersey. However, the two remaining

components are located in Romania and Tunisia and have been subject to full scope audits by component auditors.

As group auditors we maintained oversight and regular contact with the component auditor throughout all stages of

the audit and we were responsible for the scope and direction of their work.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit

strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters

were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

Key Audit Matter How our scope addressed this matter

Carrying value of development and production

assets (see note 11)

The group’s total development and production

assets are highly material and are key to the

group’s operations.

Management are required to assess at the end of

the reporting period as to whether there are any

indications of impairment in line with IAS 36. If

such indicators are identified, the entity is required

to estimate the recoverable amount.

The assessments undertaken by management in

undertaking these impairment reviews include

significant judgements and estimates.

The audit team obtained a detailed understanding of

the business of Serinus Energy plc, to ensure that

appropriate audit procedures were performed. As part

of the audit work performed, the audit team specifically:

• Held meetings with operational management in

order to be able to assess the operating activity

and development of the assets undertaken during

the year and to be undertaken;

• Ensuring ownership of licences;

• Examining license concession agreements and

supporting documentation in order to assess that

appropriate legal and beneficial ownership

percentages had been considered;

• Reviewing management’s impairment indicators

assessment for each cash generating unit (CGU)

There is the risk that the group’s development and

production assets are impaired and that the

judgements and estimates made in the

calculations are inappropriate.

against the criteria in the accounting standard to

determine whether their assessment was complete

and in accordance with the requirements of the

accounting standard;

• Challenging managements’ reserve stress testing

analysis which was performed to determine the

point at which there would be working capital

issues. Our testing considered whether such

scenarios, including significant reductions in

commodity prices and production levels, would

have a material impact on the carrying value of the

development and production assets;

• Checking the arithmetical accuracy and integrity of

the impairment model;

• Reviewing the reasonableness of key inputs,

including discount rates, oil prices, production

estimations, capex and opex; and

• Assessing the competence and independence of

the group’s reserve expert and reviewing the latest

reserves report provided and comparing key model

inputs to data obtained elsewhere during the

course of the audit, and to third party publicly

available data

Based on the testing performed and the challenge of

management, we agreed with management’s decision

that an impairment for the group was not required

however it should be noted that should licences not be

renewed in accordance with expectation this may result

in an impairment.

Other information

The other information comprises the information included in the annual report, other than the financial statements

and our auditor’s report thereon. The directors are responsible for the other information contained within the annual

report. Our opinion on the group financial statements does not cover the other information and, we do not express

any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material

inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a

material misstatement in the financial statements themselves. If, based on the work we have performed, we

conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the regulations of the Warsaw Stock Exchange

In our opinion, the information contained in the Directors’ Report on the Group’s activities complies with the

requirements of the regulations of the Warsaw Stock Exchange issuers and is consistent with the information

presented in the accompanying consolidated financial statements.

Based on our knowledge obtained during the audit about the Group and its environment we have identified no

material misstatements in the Directors’ Report on the Group’s activities.

The Company’s Management and members of its Audit Committee are responsible for the preparation of a

declaration on the application of corporate governance in accordance with regulations of the Warsaw Stock

Exchange.

In connection with our audit of the consolidated financial statements it was our responsibility to read the declaration

on the application of corporate governance, constituting a separate section of the Annual Report.

In our opinion, the declaration on the application of corporate governance contains all information specified in

paragraph 70 section 6 point 5 of the Minister’s of Finance Decree of 29 March 2018 on the current and periodic

information provided by the issuers of securities and on the conditions for recognising as equally valid the

information required by the regulations of a state that is not a member state (2018 Journal of Laws, item 757).

Information provided in paragraph 70 section 6 point 5 letters c-f, h and i of the regulations contained in the statement

on the application of corporate governance are in accordance with the applicable regulations and information

contained in the annual consolidated financial statements.

We draw the users attention to the fact that ESEF requirements related to the Warsaw Stock Exchange

requirements have not been met.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and their environment obtained in the course of the

audit, we have not identified material misstatements in the strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which The Companies (Jersey) Law 1991

requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received

from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Report of the Directors, the directors are responsible for the preparation of the group

financial statements and for being satisfied that they give a true and fair view, and for such internal control as the

directors determine is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the group financial statements, the directors are responsible for assessing the group’s ability to continue

as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis

of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic

alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance

with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in

line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including

fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

• We obtained an understanding of the group and the industry in which it operates to identify laws and

regulations that could reasonably be expected to have a direct effect on the financial statements. We

obtained our understanding in this regard through discussions with management, application of cumulative

audit knowledge and experience of the industry sector.

• We determined the principal laws and regulations relevant to the group in this regard to be those arising

from AIM Rules for Companies July 2016, The Companies (Jersey) Law 1991, IFRSs, Health and Safety

Regulations and License requirements and local laws and regulations applicable in the jurisdictions where

the Group has operations. The team remained alert to instances of non-compliance with laws and

regulations throughout the audit.

• We designed our audit procedures to ensure the audit team considered whether there were any indications

of non-compliance by the group with those laws and regulations. These procedures included, but were not

limited to: enquiries of management; review of minutes of board meetings; review of Regulatory News

Service announcements and correspondence.

• We have also discussed among the engagement how and where fraud might occur and any potential

indicators of fraud. We then challenged the key assumptions made by management in respect of their

significant accounting estimates (see key audit matter).

• As in all of our audits, we addressed the risk of fraud arising from management override of controls by

performing audit procedures which included, but were not limited to: the testing of journals; reviewing

accounting estimates for evidence of bias; and evaluating the business rationale of any significant

transactions that are unusual or outside the normal course of business.

• The component auditors performed audit procedures for each of the components, based on the instructions

issued to them by us. This included reviewing journal entries for evidence of material misstatement due to

fraud; reviewing accounting estimates, judgements and assumptions for evidence of management bias;

and performing a review of the bank transactions to ensure appropriate authorisation.

• The audit team was in constant communication with the component auditors during the component audits,

including regular discussions on those areas that were of concern to the component auditors.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those

leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases

the more that compliance with a law or regulation is removed from the events and transactions reflected in the

financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also

greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment,

forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.

This description forms part of our auditor’s

report.

Use of our report

This report is made solely to the group’s members, as a body, in accordance with our engagement letter dated 16

December 2021. Our audit work has been undertaken so that we might state to the group’s members those matters

we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by

law, we do not accept or assume responsibility to anyone, other than the group and the group's members as a body,

for our audit work, for this report, or for the opinions we have formed.

Joseph Archer 15 Westferry Circus

For and on behalf of PKF Littlejohn LLP Canary Wharf

Chartered Accountants London E14 4HD

18 March 2022

Serinus Energy plc

Consolidated Statement of Comprehensive Income (Loss) for the year ended 31 December 2021

(US$ 000s, except per share amounts)

Note

202

2020

Revenue 6

39,9

24,030

Cost of sales

Royalties

(

)

(1,804)

Windfall tax

(9,432)

(1,486)

Production expenses

(

)

(8,280)

Depletion and depreciation 11, 13

(

10,

055

)

(15,295)

Total cost of sales

(

2,7

)

(26,865)

Gross profit (loss)

7,2

(2,835)

Administrative expenses

(4,

479

)

(3,944)

Share-based payment expense 7

(213)

(1,418)

Total administrative expenses

(4,

692

)

(5,362)

Impairment expense 11, 12

(10,348)

Release of provision 23

636

1,905

Decommissioning provision recovery 18

142

Operating income (loss)

9,287

(16,640)

Gain on extinguishment of debt

11,985

Finance expense 8

(

444

)

(3,807)

Net income (loss) before tax

843

(8,462)

Tax expense 9

(

419

)

(835)

Income (loss) after taxation attributable to equity owners of the parent

8,424

(9,297)

Other comprehensive income (loss)

Other comprehensive income (loss) to be classified to profit and loss in subsequent

periods:

Foreign currency translation adjustment

(2,46

)

1,332

Total comprehensive income (loss) for the year attributable to equity owners of the

parent

961

(7,965)

Earnings (loss) per share:

Basic 10

0.0

(0.03)

Diluted 10

0.01

(0.03)

The accompanying notes on pages 49 to 73 form part of the consolidated financial statements

Serinus Energy plc

Consolidated Statement of Financial Position as at 31 December 2021

(US$ 000s, except per share amounts)

As at

Note

31 December

2020

Non

current assets

Property, plant and equipment 11

71,

77,799

Exploration and evaluation assets 12

5,0

Right-of-use assets 13

370

512

Total non-current assets

77,

78,325

Current assets

Restricted cash 14

1,144

1,159

Trade and other receivables 15

7,396

8,876

Product inventory 16

656

Cash and cash equivalents 14

8,429

6,002

Total current assets

17,625

16,037

Total assets

94,

784

94,362

Equity

Share capital 17

401,

426

401,426

Share-based payment reserve 7

25,

487

25,274

Treasury shares 17

(

121

)

Accumulated deficit

(

387,986

)

(396,410)

Cumulative translation reserve

(1,37

)

1,089

Total

quity

7,432

31,379

Liabilities

Non

current liabilities

Decommissioning provision 18

28,

26,950

Deferred tax liability 19

10,

11,976

Lease liabilities 20

422

Other provisions 21

1,399

Total non-current liabilities

40,

40,747

Current liabilities

Current portion of decommissioning provision 18

636

7,124

Current portion of lease liabilities 20

193

164

Accounts payable and accrued liabilities 22

10,

165

14,948

Total current liabilities

16,

994

22,236

Total liabilities

57,

62,983

Total liabilities and equity

94,

784

94,362

The accompanying notes on pages 49 to 73 form part of the consolidated financial statements

These consolidated financial statements were approved by the Board of Directors and authorised for issue on 18 March 2022 and

were signed on its behalf by:

JON KEMPSTER

DIRECTOR, CHAIR OF THE AUDIT COMMITTEE

ANDREW FAIRCLOUGH

DIRECTOR AND CFO

Serinus Energy plc

Consolidated Statement of Shareholder’s Equity for the year ended 31 December 2021

(US$ 000s, except per share amounts)

Note

capital

Share-

based

payment

reserve

Treasury

Accumulated

deficit

Accumulated

other

comprehensive

loss

Total

Balance at 31 December 2019

377,942

23,932

(387,113)

(243)

14,518

Loss for the year

(9,297)

Other comprehensive loss for the year -

1,332

Total comprehensive loss for the year -

(9,297)

1,332

(7,965)

Transactions with equity owners

Shares issued 17 21,315

21,315

Share issue costs 17 (1,573)

(1,573)

Share-based payment expense 7 76

1,342

1,418

Shares issued to retire Convertible Loan 17 3,666

3,666

Balance at 31 December 2020

401,426

25,274

(396,410)

1,089

31,379

Income for the year

8,424

Other comprehensive loss for the year -

(2,463)

Total comprehensive income for the year

8,424

(2,463)

5,961

Transactions with equity owners

Share-based payment expense 7 -

213

Shares purchased to be held in

Treasury 17 -

(121)

Balance at 31 December 2021

401,426

25,487

(121)

(387,986)

(1,374)

37,432

The accompanying notes on pages 49 to 73 form part of the consolidated financial statements

Serinus Energy plc

Consolidated Statement of Cash Flows for the year ended 31 December 2021

(US$ 000s, except per share amounts)

Note

2020

Operating activities

Income (loss) for the year

8,424

(9,297)

Items not involving cash:

Depletion and depreciation 11, 13

10,

055

15,295

Impairment expense 11, 12

10,348

Interest expense 8

3,222

Share-based payment expense 7

213

1,418

Tax expense 9

835

Accretion expense on decommissioning provision 18

460

Change in other provisions 21

(

)

Foreign exchange (gain) / loss

)

Decommissioning provision recovery

(14

)

Other income

(

)

(4)

Release of provision 23

(6,

636

)

(1,905)

Gain on extinguishment of debt

(11,985)

Income taxes paid

(2,08

)

(1,166)

Expenditures on decommissioning liabilities

(332)

Funds from operations

10,

233

7,317

Changes in non-cash working capital 26

866

(536)

Cashflows from operating activities

14,

6,781

Financing activities

Proceeds from equity issuance 17

21,315

Share issue costs 17

(1,573)

Repayment of long-term debt

(18,500)

Lease payments 20

(23

)

(537)

Shares purchased to be held in treasury 17

(121)

Cashflows (used in) generated from financing activities

(35

)

705

Investing activities

Capital expenditures 26

(11,2

)

(4,360)

Proceeds on disposition of property, plant and equipment

Cashflows used in investing activities

(11,2

)

(4,311)

Impact of foreign currency translation on cash

(

)

Change in cash and cash equivalents

2,42

3,222

Cash and cash equivalents, beginning of year

6,002

2,780

Cash and cash equivalents, end of year

8,4

6,002

The accompanying notes on pages 49 to 73 form part of the consolidated financial statements

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

1. GENERAL INFORMATION

Serinus Energy plc and its subsidiaries are principally engaged in the exploration and development of oil and

gas properties in Tunisia and Romania. Serinus is incorporated under the Companies (Jersey) Law 1991. The

Group’s head office and registered office is located at 2

Floor, The Le Gallais Building, 54 Bath Street, St.

Helier, Jersey, JE1 1FW.

Serinus is a publicly listed company whose ordinary shares are traded under the symbol “SENX” on AIM and

“SEN” on the WSE.

The consolidated financial statements for Serinus include the accounts of the Group and its subsidiaries for the

years ended 31 December 2021 and 2020.

2. BASIS OF PRESENTATION

The principal accounting policies adopted in the preparation of the consolidated financial statements are set

out below. The policies have been consistently applied to all years presented, unless otherwise stated. The

consolidated financial statements have been prepared on a historical cost basis except as noted in the

accompanying accounting policies.

The consolidated financial statements of the Group for the 12 months ended 31 December 2021 have been

prepared in accordance with International Financial Reporting Standards (“IFRS”) and their interpretations

issued by the International Accounting Standards Board (“IASB”) as adopted by the United Kingdom applied in

accordance with the provisions of the Companies (Jersey) Law 1991.

These consolidated financial statements are expressed in U.S. dollars unless otherwise indicated. All

references to US$ are to U.S. dollars. All financial information is rounded to the nearest thousands, except per

share amounts and when otherwise indicated.

GOING CONCERN

The Group’s business activities, together with the factors likely to affect its future development and performance

are set out in the Operational Summary, the Chairman’s Letter and the Letter from the CEO. The financial

position of the Group is described in these consolidated financial statements and in the Report from the CFO.

The Directors have given careful consideration to the appropriateness of the going concern assumption,

including cashflow forecasts through the going concern period and beyond, planned capital expenditure and

the principal risks and uncertainties faced by the Group. This assessment also considered various downside

scenarios including oil and gas commodity prices and production rates. Following this review, the Directors are

satisfied that the Group has sufficient resources to operate and meet its commitments as they come due in the

normal course of business for at least 12 months from the date of these consolidated financial statements.

Accordingly, the Directors continue to adopt the going concern basis for the preparation of these consolidated

financial statements.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of consolidation

The consolidated financial statements include the results of the Group and all subsidiaries. Subsidiaries

are entities over which the Group has control. All intercompany balances and transactions, and any

recognised gains or losses arising from intercompany transactions are eliminated upon consolidation.

Serinus has four directly held subsidiaries, Serinus Energy Canada Inc., Serinus Holdings Limited, Serinus

Petroleum Consultants Limited and Serinus B.V. Through Serinus Holdings Limited, the Group has the

following indirect wholly-owned subsidiaries: Serinus Energy Romania Trading S.r.l, Serinus Energy

Romania S.A., SE Brunei Limited, AED South East Asia Ltd., KOV Borneo Limited, and Serinus Tunisia

B.V. 99.999996% of Serinus Energy Romania S.A. is also held by Serinus Holdings Limited, with Serinus

Tunisia B.V. owning the remaining 0.000004% of Serinus Romania S.A. On 21 December 2021, the Group

completed a reorganisation whereby by the interests in Serinus Tunisia B.V. and Serinus Energy Romania

S.A. were transferred from Serinus B.V. to Serinus Holdings Limited.

Some of the Group’s activities are conducted through jointly controlled assets. The consolidated financial

statements therefore include the Group’s share of these assets, associated liabilities and cashflows in

accordance with the term of the arrangement. The Group’s associated share of revenue, cost of sales and

operating costs are recorded within the Statement of Comprehensive Income (Loss).

Basis of consolidation

Where the Group has control over an investee, it is classified as a subsidiary. The Group controls an

investee if all three of the following elements are present: power over the investee, exposure to variable

returns from the investee and the ability of the investor to use its power to affect those variable returns.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

Control is reassessed whenever facts and circumstances indicate that there may be a change in any of

these elements of control.

De-facto control exists in situations where the Group has the practical ability to direct the relevant activities

of the investee without holding the majority of the voting rights. In determining whether de-facto control

exists the Group considers all relevant facts and circumstances, including:

• The size of the Group’s voting rights relative to both the size and dispersion of other parties.

• Substantive potential voting rights held by the Group and by other parties.

• Other contractual arrangements.

• Historic patterns in voting attendance.

The consolidated financial statements present the results of the Group as if they formed a single entity.

Intercompany transactions and balances between group companies are eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the

acquisition method. In the statement of financial position, the acquiree’s identifiable assets, liabilities and

contingent liabilities are initially recognised at their fair values at the acquisition date. The results of

acquired operations are included in the consolidated statement of comprehensive loss from the date on

which control is obtained. They are deconsolidated from the date on which control ceases.

(b) Segment information

Operating segments have been determined based on the nature of the Group’s activities and the

geographic locations in which the Group operates and are consistent with the level of information regularly

provided to and reviewed by the Group’s chief operating decision makers.

i. Foreign currency transactions

Transactions in foreign currencies are translated to the Group’s functional currency at exchange rates

at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies

are translated to the functional currency at the year-end exchange rate. Non-monetary assets and

liabilities denominated in foreign currencies that are measured at fair value are translated to the

functional currency at the exchange rate at the date that the fair value was determined. Foreign

currency differences arising on translation are recognised in profit or loss.

ii. Foreign currency translation

In preparing the Group’s consolidated financial statements, the financial statements of each entity

are translated into U.S. dollars, the presentational currency of the Group. The assets and liabilities

of foreign operations that do not have a functional currency of US dollars are translated into US dollars

using exchange rates at the reporting date. Revenues and expenses of foreign operations are

translated into US dollars using foreign exchange rates that approximate those on the date of the

underlying transaction. Significant foreign exchange differences are recognised in Other

Comprehensive Income (Loss).

(d) Revenue recognition

The Group earns revenue from the sale of crude oil, natural gas and natural gas liquids. Royalties are

recorded at the time of production.

Revenue from the sale of crude oil, natural gas and natural gas liquids is recorded when performance

obligations are satisfied. Performance obligations associated with the sale of crude oil are satisfied at the

point in time when the products are delivered to the loading terminal and the volumes and prices have

been agreed upon with the customer, which is considered to be the point at which the Group transfers

control of the product. Performance obligations associated with the sale of natural gas and natural gas

liquids are satisfied upon delivery to the respective concession delivery points, which is where the Group

transfers control.

(e) Windfall tax

Within the Romanian operating segment, the Company incurs a windfall tax if the realised price of gas

exceeds a price set by the Romanian authorities. The windfall tax is recognised on a production basis and

is shown as a cost of sale.

(f) Share-based compensation

The Group reflects the economic cost of awarding share options to employees and Directors by recording

an expense in the Consolidated Statement of Comprehensive Income equal to the fair value of the benefit

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

awarded. The expense is recognised in the Consolidated Statement of Comprehensive Income or Loss

over the vesting period of the award. Fair value is measured by use of a Black-Scholes model which takes

into account conditions attached to the vesting and exercise of the equity instruments. The expected life

used in the model is adjusted, based on management’s best estimate, for the effects of non-transferability,

exercise restrictions and behavioural considerations.

Share awards issued under the Company’s LTIP comprise of a right to acquire a share of the Company at

no cost and are valued at the closing price on the date of issuance. There are no vesting conditions for

these awards, therefore the full value of the awards are expensed upon issuance and carried within the

Company’s share-based payment reserve.

Shares issued in lieu of salary are issued to the equivalent amount of salary forfeited. In determining the

number of shares awarded, the Company uses the volume weighted average share price for the equivalent

period of the salary forfeited. As there are no vesting conditions for these shares, they are fully expensed

during the period the salary was forfeited and are recorded within Share Capital.

When a share option modification is completed, the Company compares the original fair-value of the share

option on the modification date, to the modified fair-value on the modification date. If the fair-value of the

modified share option is lower than the original fair-value, no adjustment is required as the original fair-

value is the minimum the Company is required to expense. The increase in incremental fair-value is

expensed over the remaining vesting period. If the share option is fully vested, the incremental fair-value

is expensed immediately through profit and loss and carried under the share-based payment reserve.

(g) Taxes

Current and deferred income taxes are recognised in profit or loss, except when they relate to items that

are recognised directly in equity or other comprehensive income, in which case the current and deferred

taxes are also recognised directly in equity or other comprehensive loss, respectively. When current

income tax or deferred income tax arises from the initial accounting for a business combination, the tax

effect is included in the accounting for the business combination.

Current income taxes are measured at the amount expected to be paid to or recoverable from the taxation

authorities based on the income tax rates and laws that have been enacted at the end of the reporting

period.

The Group follows the balance sheet method of accounting for deferred income taxes, where deferred

income taxes are recorded for the effect of any temporary difference between the accounting and income

tax basis of an asset or liability, using the substantively enacted income tax rates expected to apply when

the assets are realised, or the liabilities are settled. Deferred income tax balances are adjusted for any

changes in the enacted or substantively enacted tax rates and the adjustment is recognised in the period

that the rate change occurs.

Deferred income tax liabilities are generally recognised for all taxable temporary differences. Deferred

income tax assets are recognised to the extent that it is probable future taxable profits will be available

against which the temporary differences can be utilised. The carrying amount of deferred income tax

assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable

that sufficient taxable income will be available to allow all or part of the asset to be recovered. Deferred

income tax assets and liabilities are only offset where they arise within the same entity and tax jurisdiction.

Deferred income tax assets and liabilities are presented as non-current.

Taxes in Tunisia are prepaid based on the prior year tax balance, and are used to reduce future taxes

payable, and may not be refunded. The Company classifies these as prepaid taxes when they are paid.

The Company reassesses the likelihood that these prepaid taxes will result in a benefit to the Company,

and to the extent that these are deemed to have no value, the Company includes this through profit and

loss as a tax expense.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

(h) Cash and cash equivalents and restricted cash

Cash and cash equivalents include short-term investments such as term deposits held with banks or similar

type instruments with a maturity of three months or less. Restricted cash is comprised of cash held in trust

by a financial institution for the benefit of a third party as a guarantee that certain work commitments will

be met. Once the work commitments are met, the restricted cash is released from the trust and returned

to cash.

(i) Financial instruments

Financial instruments are recognised when the Group becomes a party to the contractual provisions of the

instrument and are subsequently measured at amortised cost.

Classification and measurement of financial assets

The initial classification of a financial asset depends upon the Group’s business model for managing its

financial assets and the contractual terms of the cash flows. There are three measurement categories into

which the Group classified its financial assets:

i. Amortised costs: includes assets that are held within a business model whose objective is to hold

assets to collect contractual cash flows and its contractual terms give rise on specified dates to

cashflows that represent solely payments of principal and interest;

ii. Fair value through other comprehensive income (“FVOCI”): includes assets that are held within a

business model whose objective is achieved by both collecting contractual cash flows and selling

the financial assets, where its contractual terms give rise on specified dates to cash flows that

represent solely payments of principal and interest; or

iii. Fair value through profit or loss (“FVTPL”): includes assets that do not meet the criteria for

amortised cost or FVOCI and are measured at fair value through profit or loss.

The Group’s cash and cash equivalents, restricted cash and trade receivables and other receivables are

measured at amortised cost.

Trade receivables and other receivables are initially measured at fair value. The Group holds trade

receivables and other receivables with the objective to collect the contractual cash flows and therefore

measures them subsequently at amortised cost. Trade receivables and other receivables are presented

as current assets as collection is expected within 12 months after the reporting period.

The Group has no financial assets measured at FVOCI or FVTPL.

Impairment of financial assets

The Group recognised loss allowances for expected credit losses (“ECLs”) on its financial assets measured

at amortised cost. Due to the nature of its financial assets, the Group measures loss allowances at an

amount equal to the lifetime ECLs. Lifetime ECLs are the anticipated ECLs from all possible default events

over the expected life of a financial asset. ECLs are a probability-weighted estimate of credit losses.

Classification and measurement of financial liabilities

A financial liability is initially measured at amortised cost or FVTPL. A financial liability is classified and

measured at FVTPL if it is held-for-trading, a derivative or designated as FVTPL on initial recognition.

The Group’s accounts payable and accrued liabilities, lease liabilities and long-term debt are measured at

amortised cost. Accounts payable and accrued liabilities are initially measured at fair value and

subsequently measured at amortised cost. Accounts payable and accrued liabilities are presented as

current liabilities unless payment is not due within 12 months after the reporting period.

Long-term debt is initially measured at fair value, net of transaction costs incurred. The contractual cash

flows of the long-term debt are subsequently measured at amortised cost. Long-term debt is classified as

current when payment is due within 12 months after the reporting period.

The Group has no financial liabilities measured at FVTPL.

The Group characterises its fair value measurements into a three-level hierarchy depending on the degree

to which the inputs are observable, as follows:

Level 1: inputs are quoted prices in active markets for identical assets and liabilities;

Level 2: inputs are inputs, other than quoted prices included within Level 1, that are observable for the

asset or liability either directly or indirectly; and

Level 3: inputs are unobservable inputs for the asset or liability.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

(j) Exploration and evaluation (“E&E”) and Property, plant and equipment (“PP&E”)

i. Exploration and evaluation expenditures

Pre-license costs are costs incurred before the legal rights to explore a specific area have been

obtained. These costs are expensed in the period in which they are incurred.

E&E costs, including the costs of acquiring licenses and directly attributable general and

administrative costs, are capitalised as E&E assets. The costs are accumulated in cost centres by

well, field or exploration area pending determination of technical feasibility and commercial viability.

E&E assets are assessed for impairment when (i) facts and circumstances suggest that the carrying

amount exceeds the recoverable amount, or (ii) sufficient data exists to determine technical feasibility

and commercial viability, and the assets are to be reclassified.

The technical feasibility and commercial viability of extracting a resource is considered to be

determinable based on several factors including the assignment of proved or probable reserves. A

review of each exploration license or field is carried out, at least annually, to ascertain whether the

project is technically feasible and commercially viable. Upon determination of technical feasibility

and commercial viability, exploration and evaluation assets attributable to those reserves are first

tested for impairment and then reclassified from E&E assets to a separate category within PP&E

referred to as oil and natural gas interests.

ii. Development and production costs

Items of PP&E, which include oil and gas development and production assets, are measured at cost

less accumulated depletion and depreciation and accumulated impairment losses. Development and

production assets are grouped into cash generating units (“CGU”) for impairment testing and

categorised within property and equipment as oil and natural gas interests. PP&E is comprised of

drilling and well servicing assets, office equipment and other corporate assets. When significant parts

of an item of PP&E, including oil and natural gas interests, have different useful lives, they are

accounted for as separate items (major components).

Gains and losses on disposal of an item of PP&E, including oil and natural gas interests, are

determined by comparing the proceeds from disposal with the carrying amount of PP&E and are

recognised within profit or loss.

iii. Subsequent costs

Costs incurred subsequent to the determination of technical feasibility and commercial viability and

the costs of replacing parts of PP&E are capitalised only when they increase the future economic

benefits embodied in the specific asset to which they relate. All other expenditures are recognised

in profit or loss as incurred. Such capitalised costs generally represent costs incurred in developing

proved and/or probable reserves and bringing in or enhancing production from such reserves and

are accumulated on a field or geotechnical area basis. The carrying amount of any replaced or sold

component is recognised. The costs of the day-to-day servicing of PP&E are recognised in profit or

loss as incurred.

iv. Depletion and depreciation

The net carrying value of development or production assets is depleted using the unit-of-production

method based on estimated proved and probable reserves, taking into account future development

costs, which are estimated costs to bring those reserves into production. For purposes of the

depletion assessment, petroleum and natural gas reserves are converted to a common unit of

measurement on the basis of their relative energy content where six thousand cubic feet (“Mcf”) of

natural gas equates to one barrel of oil.

Certain of the Group’s assets are not depleted based on the unit of production method as they relate

to infrastructure, corporate and other assets. Such plant and equipment items are recorded at cost

and are depreciated over the estimated useful lives of the asset using the declining balance basis at

rates ranging from 20% to 45%. The expected lives of other PP&E are reviewed on an annual basis

and, if necessary, changes in expected useful lives are accounting for prospectively.

v. Impairment

The carrying amounts of the Group’s PP&E are reviewed whenever events or changes in

circumstances indicate that that the carrying value of an asset may not be recoverable and at a

minimum at each reporting date. For the purpose of impairment testing, assets are grouped together

into the smallest group of assets that generates cash inflows from continuing use that are largely

independent of the cash inflows of other assets or groups of assets (CGUs). The recoverable amount

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

is then estimated. The recoverable amount of an asset or a CGU is the greater of its value in use

and its fair value less costs to sell.

Value-in-use is generally computed as the present value of the future cash flows, discounted to

present value using a pre-tax discount rate that reflects current market assessments of the time value

of money and the risks specific to the asset, expected to be derived from production of proved and

probable reserves.

An impairment loss is recognised if the carrying amount of an asset or a CGU exceeds its estimated

recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses

recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill

allocated to the unit and then to reduce the carrying amounts of the other assets in the unit on a pro

rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment

losses recognised in prior years are assessed at each reporting date for any indications that the loss

has decreased or no longer exists. An impairment loss is reversed if there has been a change in the

estimates used to determine the recoverable amount. An impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying amount that would have been

determined, net of depletion and depreciation if no impairment loss had been recognised.

vi. Corporate assets

Corporate assets consist primarily of office equipment and computer hardware. Depreciation of office

equipment and computer hardware is provided over the useful life of the assets on the declining

balance basis between 20% and 45% per year.

(k) ROU asset and lease liabilities

Serinus does not act as a lessor, and therefore this policy solely reflects Serinus acting in the manor of a

lessee. Serinus recognises a right-of-use asset and an offsetting lease obligation on the date the asset is

available to the Company for use. The asset and lease obligation are initially measured at the present

value of the future lease payments, using the implicit interest rate stated in the agreement, if available. If

no interest rate is defined in the contract, the Company uses the weighted average cost of capital of the

business unit the lease is incurred within. Over the life of the lease, the Company incurs interest expense

which is added to the lease obligation, which is reduced by each future lease payment.

Modifications to lease contracts results in remeasuring the lease asset and obligation as of the effective

date, with the resulting change reflected through an addition to the underlying right-of-use asset and

corresponding lease obligation.

Short-term leases and leases of low-value are not recognised on the balance sheet. Instead, these lease

payments are recognised through profit and loss as incurred.

(l) Product inventory

Product inventory consists of the Company’s unsold Tunisia crude oil barrels, valued at the lower of cost,

using the first-in, first-out method, or net realisable value. Cost includes royalties, operating expenses and

depletion associated with the barrels as determined on a country-by-country basis.

(m) Provisions

i. General

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive

obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will

be required to settle the obligation. Provisions are determined by discounting the expected future

cash flows at a pre-tax rate that reflects current market assessments of the time value of money and

the risks specific to the liability. Provisions are not recognised for future operating losses.

Management uses its best judgement in determining the likelihood that the provision will be settled

within one year; provisions that are settled within one year are classified as a current provision.

ii. Decommissioning provisions

Decommissioning provisions include legal or constructive obligations where the Group will be

required to retire tangible long-lived assets such as well sites and processing facilities. The amount

recognised is the present value of estimated future expenditures required to settle the obligation using

the risk-free interest rate associated with the type of expenditure and respective jurisdiction. A

corresponding asset equal to the initial estimate of the liability is capitalised as part of the related

asset and depleted to expense over its useful life. The obligation is accreted until the date of expected

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

settlement of the retirement obligation and is recognised within financial costs in the statement of

comprehensive loss.

Changes in the estimated liability resulting from revisions to the estimated timing or amount of

undiscounted cash flows or the discount rates are recognised as changes in the decommissioning

provision and related asset. Actual expenditures incurred are charged against the provision to the

extent the provision was established. Downward revisions to the liability in cases when the full

decommissioning asset has been impaired, the resulting change in estimate will flow through the

Statement of Comprehensive Income (Loss).

(n) Long-term debt

Long-term debt is classified as a financial liability or equity instrument in accordance with the substance of

the contractual arrangement. In determining whether a financial instrument is a financial liability rather

than an equity instrument, the following conditions must both be met:

i. The instrument includes a contractual obligation to deliver cash or another financial asset, or to

exchange financial assets and financial liabilities under conditions that are potentially unfavourable.

ii. If the instrument will or may be settled in equity instruments it is a non-derivative that includes a

contractual obligation to deliver a variable number of equity instruments, or a derivative that will be

settled by exchanging a fixed amount of cash or another financial asset for a fixed number of equity

instruments.

Long-term debt that contains a conversion feature is assessed using the criteria above. If the conversion

feature fails to meet the definition of an equity instrument it is classified as a derivative liability. Derivative

liabilities are recorded at their fair value each reporting period with changes recognised in profit or loss.

During the retirement of any debt obligation, differences between the carrying value and the amount settled

(cash and equity) will be recognised through profit and loss. If equity is issued during the extinguishment

of debt, the shares will be valued at the fair value on the date of issuance.

(o) Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary

shares and share options are recognised as a deduction from equity, net of any tax effects.

(p) Treasury shares

The Group also from time to time acquires own shares to be held as treasury shares. Treasury shares are

held at cost and shown as a deduction from total equity in the Consolidated Statement of Financial Position.

Consideration received for the sale of such shares is also recognised in equity, with any difference between

the proceeds from sale and the original cost being taken to reserves. No gain or loss is recognised in the

profit or loss on the purchase, sale, issue or cancellation of treasury shares.

(q) Warrants

Warrants are classified as equity. Incremental costs directly attributable to the issuance of warrants are

recognised as a deduction from equity, net of any tax effects. Fair value is measured by use of a Black-

Scholes model which takes into account conditions attached to the vesting and exercise of the equity

instruments.

(r) Dividends

To date the Group has not paid a dividend and does not anticipate paying dividends in the foreseeable

future. Should the Group decide to pay dividends in the future, it would need to satisfy certain liquidity

tests as established in the Companies (Jersey) Law 1991.

(s) Changes and amendments to accounting policies

During the year, there were no new standards or amendments to standards adopted that had a material

effect to the Group.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

(t) Accounting standards issued but not yet adopted

The following standards have been published and are mandatory for accounting periods beginning after 1

January 2022 but have not been early adopted by the Group and could have an impact on the Group

financial statements:

i. Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current

or Non-current and Amendments to IAS 1: Classification of Liabilities as Current or Non-current –

Deferral of Effective Date – effective 1 January 2023

ii. Amendments to IFRS 3: Business Combinations – Reference to the Conceptual Framework –

effective 1 January 2022

iii. Amendments to IAS 16: Property, Plant and Equipment – effective 1 January 2022

iv. Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets – effective 1

January 2022

v. Annual Improvements to IFRS Standards 2018-2020 Cycle – 1 January 2022

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The fair values of cash and cash equivalents, restricted cash, trade receivables and other receivables and

accounts payable and accrued liabilities approximate their carrying amounts due to their short-term maturities.

The fair value of the lease liabilities and long-term debt approximates its carrying value as it is at a market rate

of interest and accordingly the fair market value approximates the carrying value (level 2).

RISK MANAGEMENT

The Directors have overall responsibility for identifying the principal risks of the Group and ensuring the policies

and procedures are in place to appropriately manage these risks. Serinus’ management identifies, analyses

and monitors risks and considers the implication of the market condition in relation to the Group’s activities.

Market risk is the risk that the fair value of future cash flows of financial assets or financial liabilities will fluctuate

due to movements in market prices. Market risk is comprised of commodity price risk, foreign currency risk and

interest rate risk, as well as credit and liquidity risks.

COMMODITY PRICE RISK

The Group is exposed to commodity price risk in fluctuations in the price of oil, natural gas and natural gas

liquids. In Tunisia, the Company enters into lifting agreements with trading counterparties based on the market

price of Brent crude oil. In Romania, the Company enters into contracts with customers for a stated gas price

based on the Romanian gas trading activity.

The Group has no commodity hedge program in place which could limit exposure to price risk. For the year

ended 31 December 2021, a 10% change in the price of crude oil per bbl would have impacted revenue, net of

royalties by $1.0 million (2020 - $0.6 million) and a 10% change in the price of gas per mcf would have impacted

revenue, net of royalties by $2.7 million (2020 - $1.8 million).

FOREIGN CURRENCY EXCHANGE RISK

The Group is exposed to risks arising from fluctuations in various currency exchange rates. Gas prices are

based in Romanian LEU (“LEU”) or Tunisian dinar (“TND”), while condensate and oil prices are based in USD.

The Company has payables that originate in GBP, CAD, LEU and TND. As such the Company is affected by

changes in the USD exchange rate compared to the following currencies; GBP, CAD, LEU and TND.

The Company’s day to day operations will often generate invoices in other currencies, but these are not

sensitive to the foreign exchange practice of the business.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

As at 31 December 202

GBP

CAD

TND

Cash and cash equivalents 57 212 3,320 1,469

Restricted cash - 1,449 30 -

Accounts receivable - 4 15,731 1,909

Accounts payable (369) (72) (19,526) (3,306)

Lease liabilities (70) (258) - (431)

Net foreign exchange exposure (382) 1,335 (445) (359)

Translation to USD 1.3477 0.7851 0.2288 0.3464

USD equivalent (515) 1,048 (102) (124)

As at 31 December

2020

GBP

CAD

TND

Cash and cash equivalents 388 24 1,454 218

Restricted cash - 1,441 109 -

Accounts receivable - 6 16,456 2,334

Accounts payable (474) (79) (5,559) (1,405)

Lease liabilities (93) (242) - (537)

Net foreign exchange exposure (179) 1,150 12,460 610

Translation to USD 1.3649 0.7854 0.2521 0.3697

USD equivalent (244) 903 3,142 226

For the year ended 31 December 2021, a 1% change in foreign exchange rates would have impacted net

income by $3,000 (2020 - $40,300).

CREDIT RISK

The Group’s cash and cash equivalents and restricted cash are held with major financial institutions. The Group

monitors credit risk by reviewing the credit quality of the financial institutions that hold the cash and cash

equivalents and restricted cash. The Group’s trade receivables consist of receivables for revenue in Tunisia

and Romania, along with receivables from joint venture partners in Tunisia.

Management believes that the Group’s exposure to credit risk is manageable, as commodities sold are under

contract or payment within 30 days. Commodities are sold with reputable parties and collection is prompted

based on the individual terms with the parties. For the year ended 31 December 2021, Tunisia’s revenue was

generated from five customers (2020 – three), with a 28%, 22%, 18%, 17% and 15% weighting (2020 – 62%,

19% and 19%). Romania’s sales were made primarily to three customers (2020 – three), with a 58%, 38% and

4% weighting (2020 – 70%, 15% and 4%). At 31 December 2021, the Group had $nil (2020 - $0.8 million) of

revenue receivables that were considered past due (over 90 days outstanding).

The Company applied the simplified model for assessing the ECLs under IFRS 9. This approach uses a lifetime

expected loss allowance based on the days past due criteria. Upon reviewing the historical transactions with

the Company’s vendors, it was determined that the ECL was insignificant as there is no history of default or

unpaid invoices. As a result the Company has determined the ECL percentage to be nominal and has not

recorded any allowance for doubtful accounts as at 31 December 2021 and 31 December 2020.

The Company manages its current VAT receivables by submitting VAT returns on a monthly basis. This allows

the Company to receive the VAT in a timely matter while any amounts that may come under scrutiny, only

delays one month’s refund. Management has no formal credit policy in place for customers and the exposure

to credit risk is approved and monitored on an ongoing basis individually for all significant customers. The

maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement

of financial position. The Group does not require collateral in respect of financial assets.

LIQUIDITY RISK

Liquidity risk is the risk that Serinus will not be able to pay financial obligations when due. There are inherent

liquidity risks, including the possibility that additional financing may not be available to the Group, or that actual

capital expenditures may exceed those planned. The Group mitigates this risk through monitoring its liquidity

position regularly to assess whether it has the resources necessary to fund working capital, development costs

and planned exploration commitments on its petroleum and natural gas properties or that viable options are

available to fund such commitments. Alternatives available to the Group to manage its liquidity risk include

deferring planned capital expenditures that exceed amounts required to retain concession licenses, farm-out

arrangements and securing new equity or debt capital.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

As a

31 Decem

ber 202

1 year

years

3+ years

Total

Accounts payable and accrued liabilities 10,165 - - 10,165

Lease liabilities 193 183 69 445

Total 10,358 183 69 10,610

As at 31 December

2020

1 year

3 years

3+ years

Total

Accounts payable and accrued liabilities 14,948 - - 14,948

Lease liabilities 236 224 218 678

Total 15,184 224 218 15,626

The Directors have considered the circumstances, current status and practical realisations of $5.3 million of

current liabilities that relate to long-term historic liabilities and based on this assessment do not believe that

these will become due in the next 12 months.

INTEREST RATE RISK

During the prior year, the Company fully repaid its long-term debt, and no longer has an interest rate risk. In

the prior year the Group’s interest rate risk arose from the floating rate on the Convertible Loan. The Convertible

Loan’s interest rate was based on LIBOR and incremental revenue with a floor of 8% and ceiling of 17%. In

the prior year, if interest rates applicable to the long-term debt increased by 1%, assuming the debt remain

unchanged, the impact to net loss before income taxes would have been $0.3 million.

5. USE OF ESTIMATES AND JUDGMENTS

The preparation of financial statements in conformity with IFRS requires management to make significant

estimates and judgements based on currently available information. Management uses their professional

judgement along with the most up to date information in making these estimates and judgements, however

actual results could differ. By their very nature, these estimates are subject to measurement uncertainty and

the effect on the financial statements of future periods could be material. Estimates and underlying assumptions

are reviewed on an ongoing basis and any changes are recognised in the period that the estimates and

judgements have changed. The significant estimates and judgements made by management in the statements

are described below:

(a) Cash generating units

The determination of CGUs requires judgment in defining a group of assets that generate independent

cash inflows from other assets. CGUs are determined by similar geological structure, shared infrastructure,

geographical proximity, commodity type, similar exposure to market risks and materiality.

(b) Oil and gas reserves

The process of determining oil and gas reserves is complex and involves many different assumptions. The

Company conducts a reserve audit at the end of each fiscal year, which is completed by independent

qualified reserves engineers. The Company’s reserve estimates are based on current production

forecasts, commodity price forecasts, licences being renewed as and when required, and other economic

conditions. Estimates are amended for all available information such as historical well performance and

updated commodity prices.

The Company’s reserves drive the calculation of depletion of the oil and gas assets, calculating the future

cash flows of the assets and the recoverable amount for each CGU. The Company compares the

recoverable amount to the carrying amount to determine any potential impairment. In determining the

recoverable amount, the Company makes other key estimates and judgements which involve the proved

and probable reserves, forecasted commodity prices, expected production, future development costs and

discount rates. Any changes to these estimates may materially impact the expected reserves of the

Company. An impairment sensitivity analysis is detailed in Note 11.

The Group currently holds a deemed 100% interest in the Satu Mare concession due to the working interest

partner, who held a 40% interest in the Satu Mare concession, declining to participate in future exploration

or development phases and not contributing their share of costs. The Group therefore issued a notice of

default to the partner in December 2016 under the terms of the joint operating agreement (“JOA”). The

partner did not have the necessary means or intention to remedy the situation and as such the partner is

not entitled to participate in joint venture operations and has no right to transfer their interest to a third

party.

The Group has provided the partner with a Notice of Deemed Transfer pursuant to the JOA. This Notice

of Deemed Transfer states that the Group has claimed this interest without any obligation to the partner.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

Under the terms of the JOA and pursuant to the notice of default and notice of deemed transfer, the Group

has commercially assumed 100% of the joint operation. The Group has notified the National Agency for

Mineral Resources (“NAMR”) of the default of the partner and has provided the requisite guarantees to

NAMR for 100% of the project.

(d) Decommissioning provisions (Note 18)

The Group recognises liabilities for the future decommissioning and restoration of oil and gas assets.

Management is required to apply estimates and judgements related to the estimated abandonment

techniques, costs and abandonment dates. Technological advancements in the industry could lead to

changes to reserve life delaying the abandonment dates, as well as possible cheaper abandonment

techniques. Any changes to these estimates, along with the inflation and discount rates, could result in

material differences and affect future financial results.

(e) Income taxes (Notes 9 and 19)

Deferred income taxes require estimates and judgements from management in determining the future cash

flows and taxable income of each business unit to determine the likelihood that any assets may be

recognised by the Company.

Within Tunisia, taxes are at times paid in advance based on gross sales in certain circumstances.

Management uses their best estimates and future cash flow projections to determine if these advances will

be utilised against income taxes in the future periods. When it is deemed that these advances will not be

utilised in the future, they are recorded through the Statement of Comprehensive Income as a tax expense.

(f) VAT receivable

The Company has outstanding VAT claims that have been disputed by Romanian authorities dating back

to 2017. The VAT in question relates to operational and developmental costs in Romania for costs paid in

full by the Company at 100% working interest (see Note 5(c)). Management believes that these amounts

are fully recoverable and therefore the Company has recorded 100% of the VAT balance in Trade and

other receivables.

(g) Product inventory (Note 16)

Within Tunisia, crude oil inventory volumes are estimated based on historical production less volumes sold

and other adjustments for shrinkage, as well as estimates based on facility capacity and volume

assumptions.

(h) Exploration and evaluation assets (Note 12)

E&E assets are subject to ongoing technical, commercial and management review to confirm the continued

intent to establish the technical feasibility and commercial viability of any prospect for which costs have

been incurred. E&E assets remain capitalised until a point at which management determines whether a

project is economically viable.

6. REVENUE

The Group sells its production pursuant to variable-price contracts with customers. The transaction price for

these variable-priced contracts is based on underlying commodity prices, adjusted for quality, location and other

factors depending on the contract terms. Under the contracts, the Group is required to deliver a variable volume

of crude oil and natural gas to the contract counterparty. The disaggregation of revenue by major products and

geographical market is included in the segment note (see Note 31).

As at 31 December 2021, the receivable balance related to contracts with customers, included within accounts

receivable is $2.8 million (31 December 2020 - $2.9 million).

7. SHARE-BASED PAYMENT EXPENSE

The Group has granted ordinary share purchase options to directors and employees with exercise prices equal

to or greater than the fair value of the ordinary shares on the grant date. Upon exercise, the options are settled

in ordinary shares on the AIM market. For options issued prior to 2016, each tranche of the share purchase

options had a five-year term and vested one-third immediately with the remaining two-thirds at one-third per

year each anniversary of the grant date. In 2016, options were granted with a seven-year term and vested one-

third per year on the anniversary of the grant date for the three subsequent years. In 2017, options were

granted with a five-year term, which vested one-third per year on the anniversary date for the three subsequent

years. In 2018, options were granted with a ten-year term, which vested one-third immediately with the

remaining two-thirds at one-third per year each anniversary of the grant date for the two subsequent years.

In 2020, the Group repriced all stock options with the exception of those of the non-executive directors, to a

strike price of £0.02, which constitutes a modification to the share-based payment plan. The Group expensed

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

the incremental fair-value increase related to all vested stock options and will expense the fair-value increase

related to unvested stock options over the remaining term of the options. The options granted to non-executive

directors have not been repriced or converted to the Company’s LTIP. The increase in the fair value was

calculated using the Black-Scholes model as of the day of modification, with and without the amended strike

price. The incremental fair value increase was determined to be insignificant.

In 2020, the Company issued 22.5 million awards under the LTIP (“Awards”) to members of the management

team on 21 December 2020. These Awards were issued to management and provide the right to acquire one

share of the Company at $nil cost. These Awards were valued at the closing price (£0.0265) on the issuance

date of the Awards. The total fair value of these awards was $0.8 million (£0.6 million). As at 31 December

2021, the total awards outstanding under this LTIP was 22.5 million (2020 – 22.5 million), with a weighted

average valuation of £0.0265 (2020 £0.0265).

Also in 2020, the Company also issued shares to the executive Directors in lieu of a voluntary 20% salary

reduction during the second and third quarters. These shares were awarded at the weighted average closing

share price over the respective periods.

The weighted average fair value of options granted during the year ended 31 December 2021 was £0.01 per

option (31 December 2020 - £0.03 per option) using the following assumptions:

Inputs used in the Black

Scholes model

2020

Risk-free interest rate

0.02%

Expected dividend yield

nil

Expected volatility (based on actual historical volatility)

146%

Forfeiture rate

Expected option life (in years)

7.3

A summary of the changes to the option plans during the year ended 31 December 2021, are presented below:

(a) CAD denominated options

202

2020

Options Exercise Price Options Exercise Price

Balance, beginning of year 200,000 0.37 200,000

0.37

Forfeited (100,000) - - -

Balance, end of year 100,000 0.37 200,000

0.37

As at 31 December 2021 there are 100,000 (2020 – 200,000) options outstanding to non-executive directors

with a weighted average contractual life of 2.7 (2020 – 2.7) years and a weighted average exercise price of

CA$0.37 (2020 – CA$0.37).

(b) GBP denominated options

2020

Options Exercise Price Options Exercise Price

Balance, beginning of year 32,893,000 0.02 13,079,667

0.17

Granted 1,750,000 0.02 22,380,000

0.02

Expired - - - -

Forfeited (1,000,000) (0.02) (2,566,667) (0.19)

Balance, end of year 33,643,000 0.02 32,893,000 0.02

As at 31 December 2021 there are 33,643,000 (2020 – 32,893,000) options outstanding to executive directors

and employees with a weighted average contractual life of 8.9 (2020 – 8.0) years and a weighted average

exercise price of £0.02 (2020 - £0.02).

GBP denominated option

breakdown

Exercise price

(GBP)

Options

outstanding

Options

exercisable

Average life

(years)

0.02

33,643,000

25,349,668 8.9

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

8. FINANCE EXPENSE

Year ended 31

December

202

2020

Interest expense on long-term debt

2,890

Amortisation of debt costs

Amortisation of debt modification

249

Interest of leases (Note 20)

Accretion on decommissioning provision (Note 18)

460

Foreign exchange and other

3,807

9. TAXATION

202

2020

Current income tax expense

1,8

2,251

Deferred income tax

Origination and reversal of temporary differences (Note 19)

(1,

460

)

(1,416)

Tax expense

419

835

Reconciliation of the effective tax rate:

Year ended 31 December

2020

Income (loss) before income taxes

843

(8,462)

Statutory tax rate

50.0%

Expected income tax

422

(4,231)

Non-taxable (deductible) items (57) (699)

Losses utilised/expired (526) 207

Tax rate differences (3,248) (190)

Advance taxes unrecoverable - 1,777

Foreign exchange and other 35 656

Net change in tax attributes not recognised (207) 3,315

Income tax expense 419 835

The Company has elected to use the Sabria concession tax rate as the statutory rate instead of using 0% tax

rate applicable to the Company in Jersey. Sabria is currently the only producing concession that does not have

the ability to eliminate all tax liability through the utilisation of loss pools, and therefore the majority of the

Company’s tax expense relates to Sabria.

The advance taxes unrecoverable in the year ending 31 December 2020 is related to taxes that are prepaid

within the various operating concessions in Tunisia. Tunisia requires taxes to be paid in advance based on the

prior year tax balance. The amounts paid may only be deducted from future taxes and are unrecoverable. The

Company has determined that based on the future development plans within Tunisia that the Company will not

generate enough taxable income to fully utilise all advance taxes paid, losses carried forward and other taxable

pools available to the Company.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

10. EARNINGS (LOSS) PER SHARE

Year ended 31 December

($000’s, except per share amounts)

2020

Income (loss) for the year

8,424 (9,297)

Weighted average shares outstanding

Basic 1,162,931 272,411

Diluted 1,172,911 272,411

Income (loss) per share

Basic and diluted 0.01 (0.03)

In determining diluted net income per share, the Group assumes that the proceeds received from the exercise

of “in-the-money” stock options are used to repurchase ordinary shares at the average market price. In

calculating the weighted-average number of diluted ordinary shares outstanding for the year ended 31

December 2021, the Group excluded 0.1 million (2020 – 33.1 million) stock options. In 2020 there were 2.3

million warrants excluded as they were anti-dilutive due to the Company being in a loss position. These

warrants expired in 2021.

11. PROPERTY, PLANT AND EQUIPMENT

Oil and gas

interests

Corporate

assets

Total

Cost or deemed cost:

Balance as at 31 December 2019 256,234

2,552

258,786

Capital additions 5,567 141 5,708

Change in decommissioning provision 1,646 -

1,646

Disposals (91) (1,069) (1,160)

Balance as at 31 December 2020 263,356 1,624 264,980

Capital additions 5,797 69 5,866

Change in decommissioning provision 793 - 793

Disposals - (50) (50)

Balance as at 31 December 2021 269,946 1,643 271,589

Accumulated depletion and depreciation

Balance as at 31 December 2019 (163,048) (2,152) (165,200)

Depletion and depreciation (14,307) (443) (14,750)

Impairment (9,600) - (9,600)

Disposals 71 1,069 1,140

Balance as at 31 December 2020 (186,884) (1,526) (188,410)

Depletion and depreciation (10,378) - (10,378)

Disposals - 42 42

Balance as at 31 December 2021 (197,262) (1,484) (198,746)

Cumulative translation adjustment

Balance as at 31 December 2020 1,211 18 1,229

Currency translation adjustments (2,320) (5) (2,325)

Balance as at 31 December 2021 (1,109) 13 (1,096)

Net book value

Balance as at 31 December 2020 77,683 116 77,799

Balance as at 31 December 2021 71,575 172 71,747

Future development costs associated with the proved plus probable reserves are included in the calculation of

the Group’s depletion. The future development costs for Tunisia are $30.1 million (2020 - $29.8 million) and

for Romania are $5.3 million (2020 - $4.7 million).

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

IMPAIRMENT

At 31 December 2021, the Company completed an impairment assessment on its PP&E to determine if there

were any indicators of impairment or impairment reversals. In South Tunisia and Sabria, no indicators of

impairment or impairment reversals were identified. In Moftinu the Company determined that there was an

indicator of impairment and an impairment test was conducted on the Moftinu CGU.

The Company determined the estimated recoverable amount based on a discounted cash flow model, using

an after-tax discount rate equal to the weighted average cost of capital of Romania (10%), computed internally

using external market data. The following table shows the forecast commodity prices used in the GCA 31

December 2021 Reserve Report and used in the discounted cash flow model:

Brent

Romania Gas

Year

(US$/bbl) (US$/Mcf)

202

75.92 20.35

202

71.00 11.60

202

70.00 8.99

202

71.40 8.28

202

+2% inflation +2% inflation

Although the discounted cash flow model indicated no further net impairment or reversal of impairment for the

year ended 31 December 2021, the following table provides a sensitivity of the impairment expense that would

arise with the following changes to the key assumptions used in the model.

1% increase

to discount

rate

1% decrease

to discount

rate

10% increase

to commodity

prices

10% decrease

to commodity

prices

Additional impairment, net of tax - - - -

An impairment assessment was completed at 30 June 2020, which resulted in the Company recording $9.6

million of impairment within both operating units (Romania, $6.2 million and Tunisia, $3.4 million). An

impairment test was conducted on the Group’s Property, plant and equipment to assess the impact of the

weakness and volatility of commodity prices, largely as a result of the economic impact of the global COVID-

19 pandemic. Management performed impairment assessments on all CGUs and identified that impairment

tests were required for the following CGUs: Sabria, Chouech and Moftinu. The Group determined the estimated

recoverable amount based on a discounted cash flow. The following table shows the forecast consensus prices

used at 30 June 2020:

Brent

Sabria Gas

Chouech

Gas

Romania Gas

Year

(US$/bbl) (US$/Mcf) (US$/Mcf) (US$/Mcf)

202

0 (remaining)

42.45 5.91 4.64 3.60

202

52.24 7.28 5.72 5.25

2022

57.26 7.98 6.27 5.75

2023

59.49 8.29 6.52 5.75

2024

62.97 8.78 6.90 5.75

2025

64.23 8.96 7.04 5.75

2026

65.51 9.14 7.18 5.75

2027

66.82 9.32 7.32 5.75

2028

68.16 9.51 7.47 5.75

2029

69.52 9.70 7.62 5.75

2030

70.91 9.89 7.77 5.75

Remainder

75.28 10.50 8.17 5.75

At 31 December 2020, the Company completed an impairment assessment on its PP&E to determine if there

were any indicators of impairment or impairment reversals. Due to the continued lower commodity prices the

Company deemed that there were indicators of impairment and an impairment test was conducted on all CGUs.

During the assessment, the Company combined two CGUs (Chouech and Ech Chouech) into one new CGU,

“South Tunisia”. The Company determined that the Ech Chouech concession is reliant on the Chouech facilities

to operate. Therefore, the Company assessed that the two concessions are a single CGU.

The CGUs that remain unchanged resulted in no further impairment as the estimated recoverable amount

exceeded the carrying value. The Company determined the estimated recoverable amount based on a

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

discounted cash flow, using an after-tax discount rate equal to the weighted average cost of capital of each

subsidiary (Romania – 8%, Tunisia – 18%), computed internally using external market data. The Company

determined that no reversals of impairment were appropriate at this time due to the highly volatile commodity

prices.

With regards to the South Tunisia CGU, the Company first tested for impairment on an individual CGU basis

prior to combination to determine the potential impairment or reversal of impairment, and then compared the

carrying value of the new South Tunisia CGU against the discounted cash flow model.

Prior to the combination, the Ech Chouech concession had a $nil carrying value, yet management’s calculations

using a discounted cash flow model resulted in positive value attributable to the CGU. Due to the current status

of the field management determined that an impairment reversal in the amount of $5.4 million was appropriate

as this aligned with the expected discounted future cash flows. The Chouech field had a carrying value in

excess of the discounted cash flow model of $5.4 million therefore, management determined that on a stand-

alone basis, that an impairment charge of $5.4 million is required. In completing the impairment analysis for

the combined South Tunisia CGU, management determined there to be no impairment charge. The net

impairment charge/reversal nets to $nil at 31 December 2020. In Romania, the Company determined that the

3D seismic acquired in 2014 in the Santau area of the Satu Mare Concession identified future prospects that

are in a distinct geographic area from the Moftinu area and concluded that each of Santau and Moftinu should

be identified as separate CGUs. There was no impairment expense identified in the Santau and Moftinu CGUs

at 31 December 2020.

The following table shows the forecast commodity prices used in the GCA 31 December 2020 reserve report

and used in the discounted cash flow model:

Brent

Sabria Gas

South Tunisia

Gas

Romania Gas

Year

(US$/bbl) (US$/Mcf) (US$/Mcf) (US$/Mcf)

202

53.95 6.26 5.51 6.32

2022

56.70 6.59 5.80 5.96

2023

59.85 6.96 6.13 5.72

2024

63.00 7.34 6.46 6.00

2025+

+2% inflation +2% inflation +2% inflation +2% inflation

Although the discounted cash flow indicated no further net impairment or reversal of impairment for the year

ended 31 December 2020, the following table provides a sensitivity of the impairment expense that would arise

with the following changes to the key assumptions used in the model.

1% increase

to discount

rate

1% decrease

to discount

rate

10% increase

to commodity

prices

10% decrease

to commodity

prices

Additional impairment, net of tax - 0.1 - 1.3

The results of the impairment tests completed by management are sensitive to changes with regards to any of

the key assumptions such as, commodity prices, future development costs, change in reserves and production,

or the future operating costs. Any changes to the assumptions could increase or decrease the expected

recoverable amounts from the assets and may result in impairment or potential reversal of impairment.

At 31 December 2021, the Group recorded $0.5 million of depletion in inventory (2020 - $nil).

12. EXPLORATION AND EVALUATION ASSETS

Carrying amount

202

2020

Balance, beginning of the year 14 1,004

Additions 4,888 -

Change in decommissioning provision 494 -

Recoveries - (235)

Impairment of exploration expense - (748)

Cumulative translation adjustment (354) (7)

Balance, end of the year 5,042 14

The Company currently holds land rights to a large amount of undeveloped land within Romania.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

In the year ended 31 December 2020, within the Satu Mare concession, the Company incurred permitting and

pre-seismic work in the Capleni-Domanesti area, after which no seismic acquisition was completed. The

Company has determined that the costs related to the preliminary seismic work is fully impaired.

The Company has recorded an impairment expense of $nil (2020 - $0.7 million) as at 31 December 2021. All

remaining E&E costs relate to work on the exploratory well in Sancrai and preliminary costs related to seismic

acquisition in the Satu Mare Concession.

13. RIGHT-OF-USE ASSETS

The following table details the cost and accumulated depreciation of the ROU assets:

Buildings

Vehicles

Total

Cost

Balance as at 31 December 2019

1,293

39 1,332

Additions

247 - 247

Disposals

(700) - (700)

Balance as at 31 December 2020 840 39

879

Additions 97 - 97

Disposals (66) - (66)

Balance as at 31 December 2021 871 39 910

Accumulated depreciation

Balance as at 31 December 2019 (504) (13) (517)

Depreciation (531) (14) (545)

Disposals 700 - 700

Balance as at 31 December 2020 (335) (27) (362)

Depreciation (212) (12) (224)

Disposals 66 - 66

Balance as at 31 December 2021 (481) (39) (520)

Cumulative translation adjustment

Balance as at 31 December 2019 2

Currency translation adjustments (7)

(7)

Balance as at 31 December 2020 (5) -

(5)

Currency translation adjustments (15) - (15)

Balance as at 31 December 2021 (20) - (20)

Carrying amounts

Balance as at 31 December 2020 500

12 512

Balance as at 31 December 2021 370 - 370

14. CASH

As at 31 December

2021

2020

Cash and cash equivalents

8,429

6,002

Restricted cash

1,144

1,159

Total cash

9,57

7,161

The Group has cash on deposit with the Alberta Energy Regulator of $1.1 million (2020 - $1.2 million), as

required to meet future abandonment obligations existing on certain oil and gas properties in Canada (see Note

18). This deposit accrues nominal interest. The fair value of restricted cash approximates the carrying value.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

15. TRADE AND OTHER RECEIVABLES

As at 31 December

2020

Trade receivables

269

5,317

VAT receivable

956

2,605

Corporate tax receivable

213

228

Prepaids and other

958

726

Total trade and other receivables

7,396

8,876

The trade receivables consist of commodity sales in both Romania and Tunisia. The Group has determined

that the ECL is nominal for the years ended 31 December 2021 and 2020 while using the days past due criteria

to measure the ECL. The Company has reviewed the historical transactions with the vendors and has no

history of default or unpaid invoices and has used a nominal percentage in calculating the ECL. The Company

has not taken an allowance for doubtful accounts as at 31 December 2021 and 2020.

The VAT receivable relates to operating and development costs in Romania and are recovered through the

Romanian government. Of the VAT receivable, $1.7 million relates to 2018 and prior which has been disputed

by the Romanian authorities. In 2021, the Company received $1.1 million of the prior year balance from the

Romanian authorities. Serinus strongly believes the Company is entitled to the remaining $1.7 million and is

pursuing strategies to recover this.

16. PRODUCT INVENTORY

Product inventory consists of the Company's entitlement crude oil barrels in Tunisia, which are valued at the

lower of cost or net realisable value. Costs include operating expenses and depletion associated with crude oil

entitlement barrels and are determined on a concession-by-concession basis.

These costs are initially capitalised and expensed when sold. As at December 31, 2021, the Company held

12.2 Mbbls of crude oil in inventory valued at approximately $53.65/bbl.

17. SHAREHOLDER’S CAPITAL

AUTHORISED

The Group is authorised to issue an unlimited number of ordinary shares without nominal or par value. Changes

in issued ordinary shares are as follows:

Year ended 31 December

202

2020

Number of

Amount

($000s)

Number of

Amount

($000s)

Balance, beginning of the year 1,140,660,629 401,426 238,881,285

377,942

Issued for cash 100 - 787,936,852

21,315

Issuance costs, net of tax - - -

(1,573)

Issued in lieu of salary - - 917,090 76

Issued to retire Convertible Loan - - 112,925,402 3,666

Warrants exercised - - -

Balance, end of the year 1,140,660,729 401,426 1,140,660,629 401,426

TREASURY SHARES

Treasury shares represent the shares purchased and held by the Group. All treasury shares held, as below,

are excluded from earnings per share calculations.

Year ended 31 December

2021

2020

Number of

Amount

($000s)

Number of

Amount

($000s)

Balance, beginning of the year - - - -

Shares purchased 5,925,000 121 -

Balance, end of the year 5,925,000 121 -

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

WARRANTS

Year ended 31 December

2021

2020

Number of

Warrants

Amount

($000s)

Number of

Warrants

Amount

($000s)

Balance, beginning of the year 2,254,229 97 2,254,229

Warrants expired (2,254,229) - - -

Balance, end of the year - 97 2,254,229

18. DECOMMISSIONING PROVISION

As at 31 December

2020

Balance, beginning of the year

34,074

31,638

Liabilities incurred

639

843

Liabilities settled

(332)

Accretion

460

Change in estimate

527

838

Foreign currency translation

(417)

295

Balance, end of year

34,

868

34,074

The Group’s decommissioning provisions are based on its net ownership in wells and facilities in Tunisia,

Romania, Brunei and Canada. Management estimates the costs to abandon and reclaim the wells and facilities

using existing technology and the estimated time period during which these costs will be incurred in the future.

During the year, liabilities were incurred in Romania relating to two new wells, reduced by the abandonment of

one well. In Tunisia, the Company incurred liabilities related to two new water pits.

The Group has estimated as at 31 December 2021 the decommissioning provisions of Brunei’s Block L and

the wells in Canada to be $2.7 million. During the year, it was determined that the Company was no longer

obligated to fulfil the decommissioning provisions of $0.2 million relating to one of the legacy properties. The

remaining obligations are reported as current liabilities as they relate to non-producing properties or expired

production sharing contracts.

The change in estimate in the current year is based on changes to interest rates, discount rates, the estimated

date of abandonment and reclamation, and the expected costs of abandonment.

The Company anticipates the concession licenses will continue to be extended until they are no longer

economical for the Company to continue operating. As at 31 December 2021, the Company has aligned the

abandonment dates with the expected economic life of the asset.

The significant assumptions used in the calculation of the decommissioning provision are as follows:

As at 31 December

202

2020

Risk-free

rate (%)

Inflation

rate (%)

Net present

value

Risk-free

rate (%)

Inflation

rate (%)

Net present

value

Tunisia 0.3 - 1.9 2.0 28,454 0.1 – 1.7

1.4

27,426

Romania 3.5 – 5.1 3.6 3,743 2.3 – 3.0

2.5

3,800

Brunei - - 1,643 -

1,801

Canada - - 1,028 -

1,047

Total 34,868 34,074

Due within one year 6,636 7,124

Long-term liability 28,232 26,950

Total 34,868 34,074

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

19. DEFERRED INCOME TAX

The deferred taxes are recognised on a taxable body basis, specifically on an entity-by-entity basis with the

exception of Tunisia. Tunisia taxes each concession on a standalone basis, and therefore the deferred taxes

are determined on each concession.

Movement in deferred income tax balances:

Tax effect related to:

31 December

202

Recovery

31 December

PP&E and E&E assets (16,104) 808 (15,296)

Decommissioning provision 3,928

315 4,243

Other 200 337 537

Deferred income tax liability (11,976) 1,460 (10,516)

Tax effect related to:

31 December

201

Recovery

31 December

2020

PP&E and E&E assets (16,962) 858

(16,104)

Decommissioning provision 3,661

267 3,928

Other (91) 291 200

Deferred income tax liability (13,392) 1,416 (11,976)

UNRECOGNISED DEFERRED TAX ASSETS

Deferred tax assets have not been recognised in respect of the following deductible temporary differences:

As at 31 December

2020

PP&E and E&E assets (3,063) (3,718)

ROU assets and lease liabilities - 157

Decommissioning provision 7,741 7,578

Non-capital losses carried forward and other 11,923 13,325

Unrecognised deferred tax asset 16,601 17,342

Deferred tax assets have not been recognised in respect of these items because it is uncertain that future

taxable profits will be available against which they can be utilised due to the large amount of non-capital losses

available to the Company.

The Group has Canadian non-capital losses of $0.3 million (2020 - $0.3 million) that do not expire, Cyprus tax

losses of $14.6 million (2020 - $12.5 million) that expire between 2022 and 2026, Tunisian losses of $4.3 million

that expire in five years and $24.0 million have no expiry date (2020 - $15.4 and $41.6 million respectively),

and Romanian losses of $7.1 million (2020 - $5.6 million) that expire after seven years between 2022 to 2028.

The Group has temporary differences associated with its investments in its foreign subsidiaries. The Group

has not recorded any deferred tax liabilities in respect to these temporary differences as they are not expected

to reverse in the foreseeable future.

The Group operates in multiple jurisdictions with complex tax laws and regulations, which are evolving over

time. The Group has taken certain tax positions in its tax filings and these filings are subject to audit and

potential reassessment after the lapse of considerable time. Accordingly, the actual income tax impact may

differ significantly from that estimated and recorded by management.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

20. LEASE LIABILITIES

The following table details the movement in the Group’s lease obligations for the year ended 31 December

2021:

As at 31 December

202

2020

Opening balance

586

876

Additions

247

Principle payments

(

)

(537)

Cumulative translation adjustment

(

)

Balance, end of the year

445

586

Lease liabilities due within one year

193

164

Lease liabilities due beyond one year

252

422

During the year the Company made total payments toward lease liabilities in the amount of $0.2 million (2020

- $0.6 million), of which $0.1 million (2020 - $0.1 million) was interest.

The Group has elected to exclude short-term leases and low-value leases from the Group’s lease liabilities.

Payments towards short-term leases, and leases of low-value assets for the year ended 31 December 2021

were nominal and have been included in G&A expense in the Statement of Comprehensive Loss. The Group’s

short-term leases and leases of low-value consist primarily of office equipment leases.

21. OTHER PROVISIONS

JV audit

Severance

Other

Total

Balance as at 31 December 2019 1,135

147

1,323

Change in provision 76 - - 76

Balance as at 31 December 2020 1,211

147

41 1,399

Reclassification - - (41) (41)

Balance as at 31 December 2021 1,211 147 - 1,358

Current -

Non-current 1,211 147 - 1,358

The Group is subject to audits arising in the normal course of business, with its joint venture partner in the

Sabria concession in Tunisia. A provision is made to reflect management’s best estimate of eventual settlement

of these audits. The years currently under audit are 2014-2019. Management has reviewed the audit claims

and has made a provision for what it expects to settle. Management expects settlement of the joint venture

audit provision to occur later than twelve months from 31 December 2021.

As at 31 December 2017, a provision was made for potential severance costs relating to the termination of

employees in the Chouech field in Tunisia. Since shutting in the field, agreements have been reached with the

majority of the employees. The remaining provision at 31 December 2021 reflects the potential costs to

terminate the remaining employees.

22. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

As at 31 December

2020

Accounts payable and accrued liabilities

734

14,319

Taxes payable

629

Total accounts payable and accrued liabilities

10,

165

14,948

23. RELEASE OF PROVISION

Year ended 31 December

2021

2020

Release of provision 6,636 1,905

In 2021, the Company reversed a provision of $6.0 million related to an exploration penalty due to the passage

of statute of limitations. Management deemed that a previously uncollectable VAT receivable of $0.6 million,

as collectible due to changing circumstances during the year.

The release of provision in 2020 was the elimination of a long-standing disputed payable for $1.9 million related

to drilling costs on Block L in Brunei, which has passed the relevant statute of limitation period.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

24. AGGREGATE PAYROLL EXPENSE

The aggregate payroll expense of employees and executive management of Serinus was as follows:

Year ended 31 December

2020

Wages, salaries, and benefits

5,0

4,450

Share-based payment expense

213

1,418

Total aggregate payroll expense

5,262

5,868

Of the total aggregate payroll expense, $0.1 million (2020 - $0.1 million) has been classified as E&E assets.

25. RELATED PARTY TRANSACTIONS

During the years ended 31 December 2021 and 2020, related party transactions include the compensation of

key management personnel. Key management personnel consist of Serinus’ Board of Directors, both executive

and non-executive. Transactions with key management personnel are noted in the table below:

Year ended 31 December

2020

Wages and salaries

1,067

832

Benefits

105

Share-based payment expense

224

1,177

Total related party transactions

1,396

2,103

26. SUPPLEMENTAL CASH FLOW DISCLOSURE

Year ended 31 December

2020

Cash provided by (used in):

Trade receivables and other

2,280

932

Inventory

(656)

Accounts payable and accrued liabilities

(1,468)

Restricted cash

Changes in non-cash working capital from operations

866

(536)

The following table reconciles capital expenditures to the cash flow statement:

Year ended 31 December

202

2020

PP&E additions (Note 11)

880

5,708

E&E additions (recoveries) (Note 12)

4,88

(235)

Total capital additions

10,

768

5,473

Changes in non-cash working capital

480

(1,113)

Total capital expenditures

11,248

4,360

The following table reconciles the long-term debt movements:

As at 31 December

202

2020

Balance, beginning of the year

31,096

Cash Changes:

Principal payment on Convertible Loan

(18,500)

Non-cash Changes:

Gain on extinguishment of debt

(11,985)

Shares issued to extinguish debt

(3,666)

Fees incurred to retire Convertible Loan

(167)

Interest on Convertible Loan

2,890

Amortisation of modification gain

249

Amortisation of discounts and debt costs

Balance, end of the year

Includes amounts in general and administrative expenses, production expenses and exploration and development expenditures.

Represents the amortization of share-based payment expense associated with options granted.

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

27. CAPITAL MANAGEMENT

Year ended 31 December

2020

Shareholders’ equity

37,432

31,379

Total capital resources

37,432

31,379

The Group manages its capital structure to maximise financial flexibility as well as closely monitors cash

forecasts. Management considers capital to include debt and equity instruments. The Group has the ability to

manage its capital structure raising financing through debt or equity issuances, repurchasing shares and settling

debt obligations. Further, each potential acquisition and investment opportunity is assessed to determine the

nature and total amount of capital required together with the relative proportions of debt and equity to be

deployed. The Group does not presently utilise any quantitative measures to monitor its capital.

In December 2020 the Company raised $19.7 million, net of issuance costs, in equity from the issuance of

787.9 million ordinary shares. The funds were used to facilitate the repayment of the Convertible Loan.

28. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

During the year, the Company met all the commitments of the third exploration phase on the Satu Mare

Concession, and agreed with the National Agency for Mineral Resources (“NAMR”) to enter a two-year

evaluation phase from 28 October 2021 and 27 October 2023, with the following work commitments:

Phase 1: from 28 Oct 2021 to 27 Oct 2022 the Company is required to reprocess 160.9 km 2D seismic in the

Madaras area at an estimated total cost of US$100,000.

Phase 2: from 28 Oct 2022 to 27 Oct 2023 the Company is required to reprocess 30.05 km of 2D seismic in

the Santau-Nusfalau area at estimated total cost of US$50,000.

CONTINGENCIES

The Tunisian state oil and gas company, ETAP, has the right to back into up to a 50% working interest in the

Chouech concession if, and when, the cumulative crude oil sales, net of royalties and shrinkage, from the

concession exceeds 6.5 million barrels. As at 31 December 2021, cumulative liquid hydrocarbon sales net of

royalties and shrinkage was 5.4 million (2020 – 5.3 million) barrels. The Company currently does not expect to

meet this threshold by the expiry of the concession.

29. PRIOR YEAR COMPARATIVES

The prior year comparatives have been reclassified to align with the current year disclosure. These

reclassifications are immaterial.

30. INCOME (LOSS) FROM OPERATIONS ANALYSIS

($000)

202

2020

Administrative expenses (4,479) (3,944)

Share-based payment expense (Note 7) (213) (1,418)

Impairment recovery (expense) (Note 11, 12) - (10,348)

Release of provision (Note 23) 6,636 1,905

Included within administrative expenses of $4.5 million (2020 - $3.9 million) are the following:

($000)

202

2020

Salaries and wages (2,249) (1,704)

Audit and review fees (431) (497)

Consulting fees (237) (350)

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

31. SEGMENT INFORMATION

The Group’s reportable segments are organised by geographical areas and consist of the exploration,

development and production of oil and natural gas in Romania and Tunisia. The Corporate segment includes

all corporate activities and items not allocated to reportable operating segments and therefore includes Brunei.

As at 31 December 20

Romania

Tunisia

Corporate

Total

Total assets 33,637 55,688 5,459 94,784

For the year ended 31 December 20

Crude oil revenue - 10,984 - 10,984

Natural gas revenue 26,809 1,993 - 28,802

Condensate revenue 198 - - 198

Total revenue 27,007 12,977 - 39,984

Cost of sales

Royalties (1,605) (1,715) - (3,320)

Production expenses (4,758) (5,174) (44) (9,976)

Depletion and depreciation (6,650) (3,256) (149) (10,055)

Windfall tax (9,432) - - (9,432)

Total cost of sales (22,445) (10,145) (193) (32,783)

Gross profit (loss) 4,562 2,832 (193) 7,201

Administrative expenses - - (4,479) (4,479)

Share-based payment expense - - (213) (213)

Release of provision 636 - 6,000 6,636

Decommissioning (provision)

recovery - (17) 159 142

Operating income 5,198 2,815 1,274 9,287

Finance expense (99) (290) (55) (444)

Net income before income taxes 5,099 2,525 1,219 8,843

Tax expense - (406) (13) (419)

Net income for the year 5,099 2,119 1,206 8,424

Capital expenditures 9,513 1,268 10 10,768

Serinus Energy plc

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(US$ 000s, except per share amounts, unless otherwise noted)

As at 31 December

2020

Romania

Tunisia

Corporate

Total

Total assets 31,077 57,212 6,073 94,362

For the year ended 31 December

2020

Crude oil revenue -

5,762 - 5,762

Natural gas revenue 16,740 1,361 -

18,101

Condensate revenue 167 -

167

Total revenue 16,907 7,123 -

24,030

Cost of sales

Royalties (960) (844) -

(1,804)

Production expenses (3,706) (4,520) (54) (8,280)

Depletion and depreciation (11,739) (2,912) (644) (15,295)

Windfall tax (1,486) -

(1,486)

Total cost of sales (17,891) (8,276) (698) (26,865)

Gross loss (984) (1,153) (698) (2,835)

Administrative expenses -

(3,944) (3,944)

Share-based payment expense -

(1,418) (1,418)

Impairment expense (6,948) (3,400) - (10,348)

Release of provision - - 1,905 1,905

Operating loss (7,932) (4,553) (4,155) (16,640)

Extinguishment of debt - - 11,985 11,985

Finance expense (5) (415) (3,387) (3,807)

Net income (loss) before income

taxes (7,937) (4,968) 4,443 (8,462)

Tax expense -

(824) (11) (835)

Net income (loss) for the year (7,937) (5,792) 4,432 (9,297)

Capital expenditures 4,210 1,251 12 5,473