Serinus Energy plc
2023 Annual Report and Accounts
(US dollars)
2
2023 HIGHLIGHTS
FINANCIAL
• Revenue for the year ended 31 December 2023 was $17.9 million (2022 - $49.3 million)
• Cash generated from operations for the year ended 31 December 2023 was $1.9 million (2022 - $7.4 million)
• EBITDA for the year ended 31 December 2023 was $2.1 million (2022 - $12.7 million)
• Gross profit for the year was $2.5 million (2022 - $12.9 million)
• The Group recognised impairment of the Romanian assets in the amount of $7.0 million (2022 – $1.9 million)
reflecting the depletion of the Moftinu gas field
• The Group’s production expense averaged $34.78/boe (2022 - $31.82/boe)
• The Group realised a net price of $77.58/boe for the year ended 31 December 2023 (2022 – $149.46/boe),
comprising:
o Realised oil price - $79.85/bbl (2022 – $94.39/bbl)
o Realised natural gas price - $11.94/Mcf (2022 – $34.53/Mcf)
• The Group’s operating netback decreased during the year ended 31 December 2023, in line with the
commodity prices and declining production in Romania, and was $33.89/boe (2022 - $107.59/boe),
comprising:
o Romania operating netback – negative $2.19/boe (31 December 2022 - $181.57/boe)
o Tunisia operating netback – $40.35/boe (31 December 2022 - $54.34/boe)
• Capital expenditures of $5.5 million for the year ended 31 December 2023 (2022 - $12.9 million), comprising:
o Romania - $0.5 million
o Tunisia - $5.0 million
• Third party reserves report attributes $45.79 million of Net Present Value at a 10% discount rate to the audited
Proved and Probable Reserves of the Group as at 31 December 2023 (2022 – $85.4 million)
OPERATIONAL
• In Tunisia, installation of artificial lift in the Sabria W-1 well will require a sidetrack. The sidetrack design has
been completed and the tender process for the long lead items is progressing.
• The Sabria N-2 well is dewatering at a slow rate and the Group is in discussions with its partner regarding
stimulation techniques to enhance the dewatering of this well.
• Production in Chouech Es Saida continues to increase with the benefits of artificial lift programme.
• The Company conducted two liftings of Tunisian crude oil in 2023 (May and November) and expects three
liftings in 2024 with the first lifting confirmed to occur in March 2024.
• Static and dynamic reservoir models of the Sabria field are being finalised. The study will help inform optimum
reservoir management including potential well workovers and new well locations.
• The Moftinu Gas Field continues to produce at naturally declining rates.
• In 2023, Canar-1 water injection well was continuously used to dispose of water produced from the Moftinu
field. This resulted in a cost saving of approximately $600,000 for the year.
• In October 2023, the Group received an exploration phase extension of the Satu Mare Concession in Romania.
The Concession has been granted until 2034.
• Production for the year averaged 642 boe/d, comprising:
o Romania – 103 boe/d
o Tunisia - 539 boe/d
• The Company continued its excellent safety record with no Lost Time Incidents in 2023.
3
SERINUS AT A GLANCE
Serinus Energy plc (the “Company” or “Serinus”) is an oil and gas exploration, appraisal and development company
which is incorporated under the Companies (Jersey) Law 1991. The Company, through its subsidiaries (together
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 Group currently holds the 2,950 km
2
Satu Mare Concession. The Satu Mare Concession area
includes the Moftinu Gas Project which was brought on production in April 2019 and has produced approximately
9.4 Bcf and $93.4 million of revenue to the end of 2023. In addition to the Moftinu Gas Development Project the
Satu Mare Concession holds several highly prospective exploration plays. Serinus’ recently completed block wide
geological review has highlighted the potential of multiple plays that have encountered oil and gas on the block.
Focus is on proven hydrocarbon systems, known productive trends that need further data, and studies of over 40
legacy wells on the concession area that have encountered oil and gas. The concession is extensively covered by
legacy 2D seismic, augmented by the Group’s own 3D and 2D acquisition programs that have further refined the
identified prospects. Putting this extensive evidence-based analysis together in a block wide review has allowed
the Group to identify a pathway towards future exploration growth.
TUNISIA
The Group’s Tunisian operations are comprised of two concession areas.
The largest asset in the Tunisian portfolio is the Sabria field, which is a large oilfield with an independently estimated
original in-place volume of 445 million barrels-of-oil-equivalent of which 1.6% 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 Group has embarked on an artificial lift programme whereby the first
pumps in the Sabria field will be installed. Independent third-party studies suggest that the use of pumps in this
field can have a material impact on production volumes.
The Chouech Es Saida concession in southern Tunisia holds a producing oilfield that produces from four wells,
three of which are produced using artificial lift. Chouech Es Saida is a mature oilfield that benefits from active
production management. Underlying this oilfield are significant gas prospects. These prospects lie in a structure
that currently produces gas in an adjacent block. Exploration of these lower gas zones became commercially
possible with the recent construction of gas transportation infrastructure in the region. Upon exploration success
these prospects can be developed in the medium term, with the ability to access the near-by under-utilised gas
transmission capacity.
4
OPERATIONAL SUMMARY AND OUTLOOK
CORPORATE
The Group is focused on developing its existing assets and enhancing production by active reservoir management.
A critical foundation to the advancement of these projects is the cash flow generation inherent in our production
assets. For the year to 31 December 2023, the Group generated cashflow from operating activities of $1.9 million
and invested $5.5 million of capital expenditure.
The Group is currently focused on enhancing production from its Tunisian assets. The large underdeveloped Sabria
field offers significant opportunities in a well identified oilfield. Investments in artificial lift and, in time, new wells
offer near term production growth. The Satu Mare Concession in Romania has excellent exploration potential that
can offer the Company another Moftinu style shallow gas development. Work continues and exploration targets
have been identified. The Moftinu gas field is a shallow gas field that has initial high production rates followed by
natural declines. Managing these declines to extract the most value from the gas in place has allowed the Group
to extract $93.4 million of revenue from this field since production began in 2019.
ROMANIA
The Group’s Romanian operating subsidiary, Serinus Energy Romania S.A. ("Serinus Romania"), holds the licence
to the Satu Mare concession area, covering approximately 2,950 km
2
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 has four gas production wells - M-1003, M-1004, M-1007 and M-1008. During 2023, the Group's
Romanian operations produced a total of 225 MMcf of gas, equating to an average daily production of 103 boe/day
(2022: 379 boe/day).
The Moftinu gas field is nearing the end of its natural life. The field has identified existing gas in uncompleted zones
that can be completed and produced with higher gas prices and reduced windfall tax. The Group has recognised
an impairment of $7.0 million.
In October 2023, the Group was granted an exploration phase extension to the Satu Mare Concession in Romania.
The Moftinu gas field has been declared a Commercial Area, all other areas of the Concession remain Exploration
Area. The exploration period extension is in two phases. The first phase of the extension is mandatory and is two
years in duration starting on 28 October 2023. The work commitment for the first phase is the reprocessing of 100
kilometres of legacy 2D seismic as well as a 2D seismic acquisition program of 100 kilometres including processing
the acquired seismic data. The second phase of the extension is optional and is two years in duration starting on
28 October 2025 with a work commitment of drilling one well within the concession area with no total drilling depth
requirement stipulated.
The Canar-1 water injection well is currently disposing of all produced water volumes from the Moftinu field. The
use of Canar-1 as a water injection well is delivering significant cost savings in operating expenses due to the
elimination of the high costs of trucking produced water volumes for disposal off-site.
The Group has identified additional gas volumes in uncompleted zones in M-1003 and M-1007. During initial drilling
and completion of these wells gas was encountered and logged. The decision was made to complete and produce
lower zones until such time as those zones were depleted. Upon depletion of the lower zones the Group can return
to these wells, complete the higher zones and produce the incremental gas.
Serinus has continued to operate safely and effectively in Romania throughout the period. As at the year-end 2023,
the Group had achieved 1,712 accident-free days of continuous operation which is a testament to the
professionalism and hard work of our team in Romania.
In February 2023, the International Chamber of Commerce (“ICC”) has released the final merits award in respect
of Serinus Romania arbitration case against its former partner in the Satu Mare Concession in Romania, Oilfield
Exploration Business Solutions S.A. (“OEBS"), and has awarded in favour of Serinus.
The decision of the arbitral tribunal has confirmed that, as a result of OEBS' default under the Joint Operating
Agreement between the parties (“JOA”), OEBS' 40% participating interest in the Satu Mare Concession in Romania
will be transferred to Serinus as of the notification to the parties of the approval by the Romanian Government and
the National Agency of Fiscal Administration ("ANAF"). The arbitral tribunal has also directed OEBS to take all
necessary actions to formally transfer the 40% participating interest to Serinus.
Key elements of the decision are as follows:
• OEBS is to be considered as withdrawn from the JOA and the Concession Agreement as of the notification
to the parties of the approval of the competent authorities of such withdrawal.
• The transfer of OEBS' 40% participating interest to Serinus will be effective as of the notification to the
parties of the approval by the Romanian Government and ANAF. This will result in OEBS having no more
interest in the JOA and the Concession Agreement.
• OEBS is ordered to undertake all actions necessary to transfer the 40% participating interest to Serinus.
• Serinus is the true and lawful attorney of OEBS to execute such documents and make such filings and
applications as may be necessary to make the transfer of OEBS' 40% participating interest to Serinus
5
legally effective and to obtain any necessary consents from the Romanian Government, the Romanian
Agency for Mineral Resources (NAMR) and ANAF.
TUNISIA
The Group currently holds two concession areas within Tunisia, through its operating subsidiary in Tunisia, Serinus
Tunisia B.V. (“Serinus Tunisia”). These concession areas both contain discovered oil and gas reserves and are
currently producing. The largest asset is the Sabria field. Sabria is a large, conventional oilfield which the Group’s
independent reservoir engineers have estimated to have approximately 445 million barrels of oil equivalent originally
in place. Of this oil in place only 1.6% 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 including new wells. 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.
During 2023, the Group's Tunisian operations produced a total of 167 Mbbl of oil and 177 MMcf of gas, equating to
an average daily production of 539 boe/day (2022: 511 boe/day).
The workover to install a pump into the Sabria W-1 well encountered unexpected conditions as a result of old drilling
mud and tubulars left in the well from operations in 1998. The Group and its partner, Enterprise Tunisienne D'Activite
Petroliere (“ETAP”), suspended the workover and have determined that a sidetrack is required to complete the
operation. The sidetrack design has been completed and the procurement process for the long lead items has
commenced.
The Group and ETAP also conducted workover operations on the Sabria N-2 well. Workover operations were
completed on time and within budget. The objectives of the workover were to remove wellbore restrictions, install
new production tubing, and remediate reservoir damage around the wellbore. Wellbore restrictions were removed
and new production tubing was installed. The well will need further stimulation to clean up the formation damage
and discussions are continuing with the partner on this issue. The well was drilled in 1980 but was damaged during
completion and, although in proximity to producing wells, in particular the prolific WIN-12bis well, was not able to
flow oil to surface. The Group’s engineering analysis estimates that a successful workover and recompletion will
initially increase gross production from the Sabria field by approximately 420 boe/d.
Production from the Chouech Es Saida area increased during 2023. This was the result of the Group’s active
management of the artificial lift systems, optimising production rates. In addition, the active life of the pumping units
has been extended, this has increased the pump life from seven months in 2019 to 36 months in 2023.
The Group applied to extend the Ech Chouech licence which expired in June 2022. The Group intends to continue
its application to regain the licence once the licence process is formalised. The Group remains the only feasible
operator for the Ech Chouech concession due to the proximity of the existing Group’s facilities at Chouech Es Saida
to the Ech Chouech oil field and legal privileges which the Group enjoys as a former title holder granting the Group
pre-emptive rights for this concession.
COVID-19
The Group continues to place the health, safety and wellbeing of all our staff as our top priority. The Group continues
to follow government recommendations such as enhanced sanitation of work sites, social distancing and wearing
masks. Where government advice has required, the Group closed or reduced the presence of staff in our Head
Office, Administration Office and our Business Unit Offices. Our field operations continue to remain ready to modify
daily tasks and routines to ensure safe practices for all staff, as required. Existing operations have remained in
production and our producing assets have seen no significant operational setbacks resulting from the COVID-19
pandemic.
6
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 Group’s existing assets also include large exploration prospects within close proximity of existing infrastructure.
The Group 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 Group 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 Group’s operations are focused on the Sabria and Chouech Es Saida 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 1.6% has been recovered to date. This is a very low
recovery factor for a conventional oilfield and the Group expects to increase that recovery factor materially. The
Chouech field in southern Tunisia offers attractive 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. Underlying the Chouech field is the prospective Acacus gas zone. Gas has been discovered and
produced from this zone in nearby concessions and recent gas infrastructure developments make this exploration
opportunity commercially attractive.
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 Group we have significant technical
and commercial experience and are able to apply that experience across our business units.
7
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 multiple play types and prospects
• Two 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 Group
• 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
8
CHAIRMAN’S LETTER
Dear shareholders,
During year 2023 world economy continued to be affected by global destabilization which also impacted the activity
of the Group.
In 2023 the Group continued to advance its objectives: enhance production in Tunisia and continue to advance the
exploration and development of our Romanian assets. Whilst the Group advanced these goals as planned it is
disappointing that they did not advance as quickly as we all would have hoped.
Operationally the teams performed solid work in Tunisia with two workovers being planned and performed. The
workover on the W-1 well was very frustrating as the conditions encountered in it were unlike what was recorded in
previous well reports. Poor completion practices from the past have impacted the progress on that workover and a
side-track remains the safest and most cost-effective means of deploying a pump into this well. The well remains
attractive for artificial lift and is a known producer in the past. A silver lining from the workover plan is that the Group
will be putting a pump into a clean, newly drilled sidetrack section and not into the older one. This is anticipated to
help make the pump installation smoother and could well allow increased flow rates from a modern well section.
The N-2 well workover was executed very well. The team was able to complete the removal of the wellbore
restrictions and clean out the well bore. Analysis anticipated that reservoir pressures would be sufficient to clean
out the well however this has not been the case. The Group believes that methods commonly used to clean the
well bore of old drilling mud would be sufficient to allow greater flow and continues to discuss with our partner their
application. The technical team continues to study the Sabria field to identify new opportunities for development and
deploying production enhancement techniques. We also look forward to further optimisation of production from
Chouech Es Saida in 2024.
The Moftinu gas field in Romania produced strongly at higher gas prices, however the field is now in the latter stages
of its producing life. As it has been discussed by the Group there are significant volumes of gas in higher zones in
the Moftinu wells. These zones have not been produced and offer additional production opportunities. The field
has provided the Group with significant after-tax cash flow that has allowed further development in the Group’s
portfolio, and we would be eager to produce these “behind pipe” quantities of gas. However, the current fiscal terms
in Romania and the uncertainty of these fiscal terms make this investment decision marginal at lower gas prices.
Tax changes introduced after the Russian invasion of Ukraine have been very punitive to gas producers and rather
than increase the production of domestic gas have served to disincentivise investment, resulting in the continued
decline of domestic onshore gas production in Romania. The Group continues to work with the Romanian
authorities to develop a fiscal policy that would incentivise investment and allow producers to make further
investments in gas production and allow the Romanian government to maintain its tax revenues. These discussions
continue.
The Group strongly believes that its investment plans remain attractive and that there is considerable upside
available in both of its operating areas.
Inflation was a critical effect in 2023. The Group has sought to maintain is operating costs with inflation in
consumables being a key target. Inflation moderated, in the later portion of 2023 however higher prices persist in
tubulars and oilfield consumables. The Group will continue to seek means of reducing costs in the face of historically
higher inflation across all segments of our business.
We hope for certain stabilisation and look optimistically towards 2024; as during the recent years we continue to
focus on our articulated capital plans and developments in Tunisia and Romania. I thank all our shareholders for
their continued support.
Yours sincerely,
Łukasz Rędziniak, Chairman of the Board of Directors
15 March 2024
9
LETTER FROM THE CEO
Dear Fellow Shareholders,
Our business continued to progress its plans for the development of the Sabria and Chouech es Saida field in
Tunisia in 2023. The year saw the realisation of several years’ preparation with the execution of two workovers in
Sabria and the continuation of field enhancements in the Chouech es Saida field.
Production in Chouech es Saida has been particularly encouraging with increases throughout the year. The
average life of pumps in the wells has increased from approximately nine months when pumps were first installed
to more than 24 months currently. This significantly reduces the cost of using pumps to enhance production in this
filed. Pump performance in Chouech es Saida offers great encouragement for the installation of pumps in the
Sabria artificial lift programme.
A workover has been planned on the Sabria W-1 well for some time. This well had previously produced
approximately 70 bbl/d but due to a leak in its tubing string was no longer in production. This well was chosen for
workover firstly to reinstate production but also to install the first artificial lift into the Sabria field. The oil rate using
a pump is estimated to be over 540 bbl/d. The workover initially proceeded well but at a depth of approximately
2,900 metres the team ran into a combination of old drilling mud and debris that had been left in the well since it
was originally drilled. Poor completion practises meant that the well was perforated with heavy drilling mud in the
well rather than circulating it out and replacing with clear completion fluid. The old drilling mud has settled and had
hardened around the tubing. The team attempted to mill through the obstruction but at the rate we were able to
progress, the time to mill the well would have been excessive. The difficult decision to suspend the workover and
return at a later date to sidetrack around the obstruction was made. Work immediately proceeded to design the
sidetrack and begin ordering long lead items for the return to the well. The well remains an important candidate for
returning to production and external engineering reports highlight this well and an excellent candidate for artificial
lift, this remains the case. The Sabria N-2 well workover commenced immediately following the demobilisation of
the rig from the Sabria W-1 well. The workover proceeded ahead of schedule and under budget. The workover was
designed to remove wellbore restrictions, install new production tubing and remediate reservoir damage around the
wellbore. All work was completed and the well began flowing water to surface. The well is approximately 560
metres north of Sabria WIN-12, the Group’s best producer, and it is expected to produce oil once the well has
dewatered. Like the Sabria W-1 well, poor completion practices in the past mean that the near bore areas
surrounding the well are clogged with old drilling mud. The Group has worked to demonstrate this scenario to its
Partner, ETAP, to receive partner approval to conduct an acid job to clean the perforations. The Group believes an
acid job would clear some of the old mud and allow the well to dewater much more quickly and move to producing
oil. Work to solicit and approve partner approval for this clean-up work continues.
In Romania the Moftinu field continues to produce as it nears the end of its natural life. Over the life of this field it
has provided almost US$100 million of revenue to the Group. Cash flow from this field allowed the Group to pay
off the Senior debt and allowed for the ultimate recapitalisation of the Group to leave it debt free. There remains an
estimated 4 BCF of gas that is in uncompleted and unproduced zones in East Moftinu area however the recent
fiscal uncertainties in Romania including the very punitive windfall tax mean that these zones will not be completed
and produced from until fiscal certainty is delivered.
2023 began with commodity prices continuing their strength from 2022. Gas prices in particular fluctuated wildly
through the year based on constraints derived from the war in Ukraine and the expectation of storage builds and
seasonal demand. From a high of EUR 59.00/MWh in January to a low of EUR 23.25/MWh in June the volatility of
the gas price received in Romania was significant. Oil was much more stable reflecting a more global supply and
demand pattern but nonetheless fluctuated from a high of US$96.55/bbl in September and a low of US$ 71.84/bbl
in December. Fluctuations like this are incredibly important for a Group like Serinus which matches its capital
programmes to the available operating cash flow. Work that we would have wished to advance was restrained as
we watch the cashflow generation suffer volatility. The Group has worked hard to manage costs such that maximised
after-tax cash flow is available for future capital plans.
Going forward into 2024 the Group is focused on completing the work on the Sabria W-1 well and installing the first
artificial lift into the Sabria field. Rig availability in Tunisia and procurement of long-lead items are the determining
factors in the timing of this work. A geological model is near completion and will lead to a full field reservoir
simulation model being available in second quarter of 2024. Early results are encouraging that four or five new
drilling locations will result from this work. It will also aid the application of artificial lift in the Sabria field. 2023
provided advancement of our project albeit at a slower pace than we would have hope for. Our investment thesis
remains valid, and we look forward to moving further ahead in 2024.
Yours sincerely,
Jeffrey Auld, Chief Executive Officer
15 March 2024
10
REPORT FROM THE CFO
LIQUIDITY, DEBT AND CAPITAL RESOURCES
During the year the Group invested a total of $5.5 million (2022 - $12.9 million) on capital expenditures before
working capital adjustments. In Romania, the Group invested $0.5 million (2022 - $8.4 million) during the year. In
Tunisia, the Group invested $5.0 million (2022 - $4.5 million) performing workovers and purchasing long lead items
for the Sabria artificial lift programme.
The Group’s funds from operations for the year ended 31 December 2023 were $1.9 million (2022 - $11.4 million).
Including changes in non-cash working capital, the cash flow generated from operating activities in 2023 was $1.9
million (2022 – $7.4 million). The Group is debt-free and continues to pursue opportunities to expand and continue
growing production within our existing resource base to deliver shareholder returns.
Year ended 31 December
($000)
202
3
202
2
Current assets
11,
341
16,654
Current liabilities
(
16,926
)
(16,571)
Working Capital
(
5
,
5
8
5
)
83
The working capital deficit at 31 December 2023 was $5.6 million (2022 – $0.1 million surplus).
Current assets as at 31 December 2023 were $11.3 million (31 December 2022 - $16.7 million), a decrease of $5.4
million. Current assets consist of:
• Cash and cash equivalents of $1.3 million (2022 - $4.9 million)
• Restricted cash of $1.2 million (2022 - $1.1 million)
• Trade and other receivables of $8.1 million (2022 - $10.0 million).
• Product inventory of $0.7 million (2022 - $0.7 million)
Current liabilities as at 31 December 2023 were $16.9 million (2022 – $16.6 million), an increase of $0.3 million.
Current liabilities consist of:
• Accounts payable and accrued liabilities of $9.3 million (2022 - $9.3 million)
• Decommissioning provision of $6.7 million (2022 - $5.1 million)
o Canada - $0.8 million (2022 - $0.8 million) which are offset by restricted cash in the amount of
$1.2 million (2022 - $1.1 million) in current assets
o Romania - $0.6 million (2022 - $0.5 million)
o Tunisia - $5.3 million (2022 - $3.8 million)
• Income taxes payable of $0.8 million (2022- $1.9 million)
• Current portion of lease obligations of $0.1 million (2022 - $0.3 million)
NON-CURRENT ASSETS
Property, plant and equipment (“PP&E”) decreased to $56.0 million (2022 - $62.3 million). The decrease is due to
depletion expense of $4.3 million, a change in the estimate of asset retirement assets of $0.6 million, and an
impairment expense of $7.0 million in Moftinu due to natural depletion of the gas field. The reductions in PP&E were
partially offset by capital additions of $5.5 million. Exploration and evaluation assets (“E&E”) remained the same
and comprised $10.7 million (2022 - $10.5 million).
11
FINANCIAL REVIEW – YEAR ENDED 31 DECEMBER 2023
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
3
202
2
Cash flow from operations
1,
875
7,387
Changes in non-cash working capital
66
4,052
Funds from operations
1,
94
1
11,439
Funds from operations per share
0.02
0.10
Tunisia generated funds from operations of $7.9 million (2022 – $8.0 million) and Romania used funds in operations
of $1.3 million (2022 – generated funds from operations of $9.1 million). Funds used at the Corporate level were
$4.7 million (2022 - $5.6 million) resulting in net funds from operations of $1.9 million (2022 – $11.4 million).
PRODUCTION
Year ended 31 December
202
3
Tunisia
Romania
Group
%
Crude oil (bbl/d) 458 - 458 71%
Natural gas (Mcf/d) 484 617 1,101 29%
Condensate (bbl/d) - - -
Total (boe/d) 539 103 642 100%
Year ended 31 December
202
2
Crude oil (bbl/d) 447 - 447 50%
Natural gas (Mcf/d) 384 2,263 2,647 50%
Condensate (bbl/d) - 1 1 -
Total (boe/d) 511 379 889 100%
During the year, production volumes decreased by 247 boe/d (28%) to 642 boe/d (2022 – 889 boe/d) primarily due
to a combination of natural production declines and the shut-in of wells in Moftinu. Romania’s production volumes
decreased by 276 boe/d (73%) to 103 boe/d (2022 – 379 boe/d) while production in Tunisia increased by 28 boe/d
(5%) to 539 boe/d as result of the oil fields’ maintenance programme and ongoing workover programmes which
continue at Chouech Es Saida field with the aim to further optimise production.
12
OIL AND GAS REVENUE
($000)
Year ended 31 December
202
3
Tunisia
Romania
Group
%
Oil revenue 13,313 - 13,313 74%
Gas revenue 1,879 2,683 4,562 26%
Condensate revenue - - - -
Total revenue 15,192 2,683 17,875 100%
Year ended 31 December
202
2
Oil revenue 15,854 - 15,854 31%
Gas revenue 1,576 31,793 33,369 68%
Condensate revenue - 57 57 1%
Total revenue 17,430 31,850 49,280 100%
REALISED PRICE
Year ended 31 December
202
3
Tunisia
Romania
Group
Oil ($/bbl) 79.85 - 79.85
Gas ($/Mcf) 10.65 13.05 11.94
Condensate ($/bbl) - - -
Average realised price ($/boe) 77.45 78.30 77.58
Year ended 31 December
202
2
Oil ($/bbl) 94.39 - 94.39
Gas ($/Mcf) 11.24 38.48 34.52
Condensate ($/bbl) - 81.33 81.33
Average realised price ($/boe) 91.10 230.15 149.45
Revenue during the year decreased to $17.9 million (2022 – $49.3 million) as the Group saw the average realised
price decrease to $77.58/boe (2022 - $149.45/boe) and production decline in Romania.
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 2023, the Group completed two oil liftings (2022 – three liftings).
13
ROYALTIES
Year ended 31 December
($000)
202
3
202
2
Tunisia
1,92
9
2,182
Romania
125
1,132
Total
2,054
3,314
Total ($/boe)
8.91
9.38
Tunisia oil royalty (% of oil revenue)
12.7%
12.9%
Romania gas royalty (% of gas revenue)
4.
7
%
3.6%
Total (% of revenue)
11.5%
6.7%
Royalties decreased to $2.1 million (2022 - $3.3 million) while the Group’s average royalty rate increased to 11.5%
(2022 – 6.7%).
In Romania the royalty is calculated using a reference price that is set by the Romanian authorities and not the
realised price to the Group. The reference gas prices during 2023 remained higher than the realised price by 40%.
Romanian royalty rates vary based on the level of production during a quarter. Natural gas royalty rates range from
3.5% to 13.0%.
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
2023, the royalty rate remained unchanged in Sabria at 10% for oil and 8% for gas. Chouech Es Saida royalty rate
was flat at 15% for both oil and gas.
PRODUCTION EXPENSES
Year ended 31 December
($000)
202
3
202
2
Tunisia
5,349
4,851
Romania
2,
633
5,591
Canada
31
49
Group
8,013
10,491
Tunisia production expense ($/boe)
27.27
25.35
Romania production expense ($/boe)
76.84
40.40
Total production expense ($/boe)
34.78
31.82
During the year production expenses decreased by $2.5 million (24%) to $8.0 million (2022 - $10.5 million). Per
unit production expenses increased by $2.96/boe (1%) to $34.78 (2022 - $31.82).
Tunisia’s production expenses increased from the prior year by $0.4 million to $5.3 million (2022 - $4.9 million), with
per unit production increasing to $27.27/boe (2022 - $25.35/boe) which is consistent with the slight increase in
production and high inflationary environment during the year.
Romania’s overall operating costs decreased to $2.6 million (2022 – $5.6 million), with per unit production expenses
increasing to $76.84/boe (2022 - $40.40/boe) due to naturally declining production and the impact of inflation in
Romania.
Canada production expenses relate to the Sturgeon Lake assets, which are not producing and are incurring minimal
operating costs to maintain the property.
14
OPERATING NETBACK
Serinus uses operating netback as a key performance indicator to assist management in understanding Serinus’
profitability relative to current market conditions and as an analytical tool to benchmark changes in operational
performance against prior periods. Operating netback consists of petroleum and natural gas revenues less direct
costs consisting of royalties and production expenses. Netback is not a standard measure under IFRS and therefore
may not be comparable to similar measures reported by other entities.
Year ended 31 December
202
3
($/boe)
Tunisia
Romania
Group
Sales volume (boe/d) 537 94 631
Realised price 77.45 78.30 77.58
Royalties (9.83) (3.65) (8.91)
Production expense (27.27) (76.84) (34.78)
Operating netback 40.35 (2.19) 33.89
Year ended 31 December
202
2
($/boe)
Tunisia
Romania
Group
Sales volume (boe/d) 524 378 903
Realised price 91.10 230.15 149.46
Royalties (11.41) (8.18) (10.05)
Production expense (25.35) (40.40) (31.82)
Operating netback 54.34 181.57 107.59
The Group operating netback decreased to $33.89/boe (2022 – $107.59/boe) due to lower realised prices and
higher per unit production expenses.
The Group generated a gross profit of $2.5 million (2022 –$12.9 million), largely due to a significant decrease in the
Group’s netbacks.
EARNING 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 year ended 31 December 2023, the Group’s EBITDA
decreased to $2.1 million (2022 - $12.7 million).
WINDFALL TAX
Year ended 31 December
($000)
202
3
202
2
Windfall tax
783
16,014
Windfall tax ($/Mcf - Romania gas)
3.47
19.38
Windfall tax ($/boe - Romania gas)
22.84
116.30
During 2023, the Group incurred windfall taxes in Romania of $0.8 million (2022 - $16.0 million), a substantial
decrease of $15.2 million. This decrease is directly related to lower realised gas prices which decreased from an
average realised price of $38.48/Mcf in 2022 to $13.05/Mcf in 2023.
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.
15
DEPLETION AND DEPRECIATION
Year ended 31 December
($000)
202
3
202
2
Tunisia
3,582
2,783
Romania
866
3,623
Corporate
12
4
158
Total
4,572
6,564
Tunisia ($/boe)
18.26
14.54
Romania ($/boe)
25.27
26.19
Total ($/boe)
19.84
19.91
Depletion and depreciation expense decreased by $2.0 million (30%) to $4.6 million (2022 - $6.6 million), being a
per unit decrease of $0.07/boe to $19.84/boe (2022 - $19.91/boe). The decrease in expense is primarily due to a
lower depletable base on the Group’s assets and declining production in Romania.
GENERAL AND ADMINISTRATIVE (“G&A”) EXPENSE
Year ended 31 December
($000)
202
3
202
2
G&A expense
4,
928
5,300
G&A expense ($/boe)
21.
39
16.07
G&A costs decreased during the year by $0.4 million (8%) to $4.9 million (2022 - $5.3 million) despite the current
high inflationary environment. Per unit G&A costs increased by $5.3/boe to $21.39/boe (2022 - $16.07/boe) due to
lower production.
SHARE-BASED PAYMENT
Year ended 31 December
($000)
202
3
202
2
Share-based payment
3
70
Share-based payment ($/boe)
0.01
0.20
Share-based compensation decreased to $3 thousand (2022 – $0.1 million) due to lower stock options granted in
the current year.
NET FINANCE EXPENSE
Year ended 31 December
($000)
202
3
202
2
Interest on leases
76
33
Accretion on decommissioning provision
1,801
1,143
Foreign exchange and other
46
461
1,
923
1,637
Net finance expense for 2023 increased to $1.9 million (2022 – $1.6 million) predominantly due to increase in
decommissioning obligations in the year of $0.7 million.
16
IMPAIRMENT
At 31 December 2023, the Group completed an impairment assessment to determine if there were any indicators
of impairment or impairment reversals. In Tunisia, there were no indicators of impairment or impairment reversals
identified at Sabria or South Tunisia. The Group had applied to extend the Ech Chouech licence but this expired in
June 2022. The Group intends to continue its application to regain the licence once the licence application process
is formalised. No indication has been received that they will not be successful once the process to re-apply becomes
available and as such has made the judgement that it will be able to regain the Ech Chouech licence and therefore
no impairment has been charged to this asset. In Moftinu, the Group determined that there were indicators of
impairment and recognised an impairment expense of $7.0 million. The primary impairment indicators in Romania
during 2023 included reduced gas prices throughout 2023, natural depletion of the Moftinu gas field reflecting on
life of shallow gas fields and the fiscal regime in Romania.
TAXATION
During the year ended 31 December 2023 income tax expense was $1.7 million (31 December 2022 - $3.1 million).
The change in income tax expense is due to the recovery of tax basis in Tunisia during the year.
SOLIDARITY TAX
On 29 December 2022, the Government of Romania published Emergency Ordinance no.186/2022 detailing
measures to implement Council Regulation (EU) 2022/1854 regarding the emergency intervention to introduce a
solidarity contribution for companies that carry out activities in the oil, natural gas, coal and refinery sectors. This
additional tax in Romania is calculated at a rate of 60% applied to the Group’s annual profit, in excess of 20% of its
average profits for the financial years 2018-2021. The solidarity tax will apply for the financial years 2022 and 2023.
The Group does not believe that the solidarity tax is applicable to it and has received legal advice to support that
position and will challenge the legality of this additional tax. If the Group were to consider the tax applicable for
2022, then the amount due is estimated to be approximately $741,000, while for 2023 there is no solidarity tax since
the Group in Romania is in a loss annual position. However, the Group has made the judgement that the solidarity
tax is not applicable and therefore has made no provision in respect of this tax within the financial statements.
The Group has submitted a petition in front of the Prime Minister’s office to challenge the validity and legality of the
Solidarity Tax.
FOREIGN CURRENCY TRANSLATION
Foreign currency translation occurs from fluctuations in the foreign exchange rates in entities with a different
functional currency than the reporting currency (USD). Functional currency of Serinus Tunisia remained USD and
the management do not envisage any triggers which could lead for its change in foreseeable future. Functional
currency of Serinus Romania was Romanian Leu (RON) up to 31 December 2022 subsequent to which
management considered changed circumstances and economic environment in Romania and concluded that
functional currency of the Group’s Romanian business unit should be changed from RON to USD in 2023. In making
this conclusion, management considered all primary and secondary indicators for determination of the functional
currency in accordance with IAS 21 The Effects of Changes in Foreign Currency Exchange Rates. Particularly,
management considered cash flow indictors of Serinus Romania, its sales price and sales market indicators,
expense indicators, financing indicators, degree of autonomy, as well as intra-Group transactions and
arrangements.
In 2022, while the Romanian business unit had a functional currency of RON, the exchange rate of RON to USD
fluctuated approximately 5% from 0.229 to 0.217. Translation of the balance sheet to the 2022 year-end rate
resulted in a $2.0 million translation loss through other comprehensive income which was recognised within 2022
equity. Following change of the functional currency to USD in 2023, translation adjustments for prior periods
remained in equity and the translated USD amounts for non-monetary assets at the end of 2022 become the
accounting basis for those assets in the period of the change and subsequent periods.
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.
Vlad Ryabov, Chief Financial Officer
15 March 2024
17
REVIEW OF OPERATIONS
ROMANIA
• Satu Mare Block – 2,950 km
2
of onshore land.
• Located within the Pannonian 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% working interest which is owned and operated through the wholly owned
subsidiary Serinus Energy Romania S.A. The Group has completed all of its commitments under the fourth
exploration phase of the Satu Mare Concession Agreement. In October 2023, the Group received a four
year exploration period extension divided into two phases. The first phase of the extension is mandatory
and is two years in duration starting on 28 October 2023. The work commitment for the first phase is the
reprocessing of 100 kilometres of legacy 2D seismic as well as a 2D seismic acquisition program of 100
kilometres including processing the acquired seismic data. The second phase of the extension is optional
and is two years in duration starting on 28 October 2025 with a work commitment of drilling one well within
the concession area with no total drilling depth requirement stipulated.
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 Group has a 100% working interest in the concession as its partner has defaulted on its obligations
under the Joint Operating Agreement. The Group filed a Request for Arbitration with the Secretariat of the
International Court of Arbitration of the International Chamber of Commerce (“ICC”) seeking a declaration
affirming the Group’s rightful claim of ownership of its defaulted partners’ 40% participating interest and to
compel transfer of that interest to the Group. In 2023 Serinus announced that it had received confirmation
from the ICC that as a result of its partners’ default under the Joint Operating Agreement, the defaulted
partners’ 40% participating interest in the Satu Mare concession will be transferred to Serinus Romania,
directing the defaulted partner to take all necessary actions to formally transfer the 40% participating
interest to Serinus.
• 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
2
(80 km
2
Moftinu & 180 km
2
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 M-1007 (a re-drill of M-1001) and M-1003 (1,600m).
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
2
of 3D seismic.
The M-1008 well was drilled in February 2021 and qualified as the 1,000m commitment well and
the Sancrai well was drilled in the second half of 2021 which qualified as the 1,600m well.
• The Group 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 Group 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 Group was 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 Group was required to reprocess 30.1 km
2D seismic in the Santau-Nusfalau area at an estimated cost of $50,000.
• The Phase 1 work commitment was completed in 2022 and Phase 2 was completed early in 2023.
• The greater Moftinu gas field area has been declared a commercial field.
• In October 2023, the Group has received an exploration phase extension of the Satu Mare Concession in
Romania. The extension is in two phases. The first phase of the extension is mandatory and is two years
in duration starting on 28 October 2023. The work commitment for the first phase is the reprocessing of
100 kilometres of legacy 2D seismic as well as a 2D seismic acquisition program of 100 kilometres
including processing the acquired seismic data. The second phase of the extension is optional and is two
years in duration starting on 28 October 2025 with a work commitment of drilling one well within the
concession area with no total drilling depth requirement stipulated.
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.
18
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 MMcf/d and can accommodate up to six flowlines. During
2023, production was predominantly comprised from three wells (M-1003, M-1004 and M-1007) averaging 0.6
MMcf/day (2022 – 2.3 MMcf/d). The Group continues to explore future drilling locations both within the existing field
of Moftinu, and throughout the rest of the Satu Mare concession. The Group believes there are similar shallow gas
fields to the Moftinu gas field, providing Serinus with additional low-cost shallow gas reserves.
TUNISIA
The Group currently holds two Tunisia concessions, each of which currently produces oil and gas (Sabria and
Chouech Es Saida). 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 Expired June 2022
Sanrhar 100% 36,879 Relinquished 2021
Zinnia 100% 17,471 Relinquished 2021
The Group applied to extend the Ech Chouech licence which expired in June 2022. The Group intends to continue
its application to regain the licence once the licence process is formalised. The Group remains the only feasible
operator for the Ech Chouech concession due to the proximity of the existing Group’s facilities at Chouech Es Saida
to the Ech Chouech oil field and legal privileges which the Group enjoys as a former title holder granting the Group
pre-emptive rights for this concession.
Sabria
• Produced over 7.2 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.
• Installation of artificial lift in the Sabria W-1 well will require a sidetrack. The sidetrack design has been
completed and the procurement process for the long lead items is progressing. Plans for additional
production enhancement through artificial lift are in place for other wells in the field.
Chouech Es Saida
• Produced over 4.0 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 Group continued to optimise the performance of the pumps in Chouech Es Saida wells in 2023,
resulting in steadily improving performance from the field.
19
RESERVES
1
GROUP NET 1P & 2P RESERVES – USING FORECAST PRICES
202
3
202
2
Oil &
Liquids
Gas
Boe
Oil &
Liquids
Gas
Boe
Change
(Mbbl)
(MMcf)
(Mboe)
(Mbbl)
(MMcf)
(Mboe)
Tunisia
Proved (1P)
2,220
4,070
2,898
2,310
4,640
3,083
(6%)
Probable 1,910
4,930
2,732
2,630
6,290
3,678
(26%)
Proved & Probable (2P)
4,130
9,000
5,630
4,940
10,930
6,762
(17%)
Romania
Proved (1P)
0.4
1,100
183
0.4
1,640
274
(33%)
Probable 0.2
1,080
180
0.3
1,060
177
2%
Proved & Probable (2P)
0.6
2,180
363
0.7
2,700
451
(20%)
Group
Proved (1P)
2,220
5,170
3,081
2,310
6,280
3,357
(8%)
Probable 1,910
6,010
2,912
2,630
7,350
3,855
(24%)
Proved & Probable (2P)
4,130
11,180
5,993
4,941
13,630
7,212
(17%)
The downward revision in Group reserves was attributable to 2023 production and a reduction in reserve volumes
primarily associated with a reduced commodity price and reclassification of certain volumes in Tunisia from
Reserves to Contingent Resources. Given that the Ech Chouech licence had expired in June 2022, the Group
reserves for the year ended 31 December 2023 and 2022 do not include reserves attributed to Ech Chouech. The
Group had applied to extend the Ech Chouech licence but this expired and the Group intends to continue its
application to regain the licence once the licence application process is formalised. No indication has been received
that its application would not be successful once the process to re-apply becomes available and as such the Group
has made the judgement that it will be able to regain the Ech Chouech licence and therefore no impairment has
been charged to this asset. For the year ended 31 December 2021, the Gaffney Cline third party reserves report
attributed 253Mboe of 2P Reserves to Ech Chouech.
NET PRESENT VALUE OF FUTURE NET REVENUES – AFTER TAX, USING FORECAST PRICING
202
3
202
2
Discount rates
PV 10%
(US$ millions)
0%
10%
15%
0%
10%
15%
Change
Tunisia
Proved (1P)
24.5 11.3 7.5 52.6 30.3 23.5 (63%)
Probable 79.3 37.0 27.8 93.7 48.7 39.4 (24%)
Proved & Probable (2P)
103.8 48.3 35.3 146.3 79.0 62.9 (39%)
Romania
Proved (1P)
(7.8) (6.3) (5.8) 0.9 1.5 1.7 (520%)
Probable 4.5 3.8 3.5 5.5 4.9 4.6 (22%)
Proved & Probable (2P)
(3.3) (2.5) (2.3) 6.4 6.4 6.3 (139%)
Group
Proved (1P)
16.7 5.0 1.7 53.5 31.8 25.2 (84%)
Probable 83.8 40.8 31.3 99.2 53.6 43.9 (24%)
Proved & Probable (2P)
100.5 45.8 33.0 152.7 85.4 69.1 (46%)
1
Source: 2023 and 2022 results from Gaffney Cline & Associates Limited Reserves audit at 31 December 2023 and 31 December
2022, respectively.
20
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 Group 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
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.
GROUP GROSS UNRISKED CONTINGENT RESOURCES – USING FORECAST PRICES
202
3
202
2
Oil &
Liquids
Gas
Boe
Oil &
Liquids
Gas
Boe
Change
(Mbbl) (MMcf) (Mboe) (Mbbl) (MMcf) (Mboe)
Tunisia
1C Contingent Resources 500 1,500 750 400 1,000 567 32%
2C Contingent Resources 1,600 4,300 2,316 1,000 2,900
1,483
56%
3C Contingent Resources 2,800 7,900 4,116 1,900
5,300
2,783 48%
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 500 4,000 1,167 400 3,500 984 19%
2C Contingent Resources 1,600 8,600 3,033 1,000 7,200 2,200 38%
3C Contingent Resources 2,800 14,900 5,283 1,900 12,300 3,950 34%
PRICE FORECASTS
The commodity price forecast used in preparing the evaluation of the 2023 reserves and resources is as follows:
Brent
Sabria Gas
Chouech
Gas
Romania Gas
Year
(US$/bbl) (US$/Mcf) (US$/Mcf) (US$/Mcf)
2024
76.49 9.56 8.41 10.76
2025
73.29 9.16 8.06 11.50
2026
76.50 9.56 8.42 10.42
2027
2
80.00 10.00 8.80 11.00
2
+2% inflation per year on commodity prices for 2028 and beyond
21
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Serinus is an oil and gas exploration, development and production Group whose strategic purpose is to develop
and produce hydrocarbon 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. Thirty percent 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
2
in the north-west
of Romania, across primarily agricultural farmland, while the two Tunisian concessions are located in the 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 has continued to present an excellent HSE track record through 2023, with a zero-
frequency rate (per one million man hours worked) for Total Recordable Injuries across all sites (2022 - zero for
Serinus Romania employees) and in January 2024, the Moftinu Gas Plant reached 1,750 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 completed its annual certification inspection and is certified for ISO 14001:2015
(Environmental Management Systems), ISO 9001:2015 (Quality Management) and ISO 45001:2018 (Occupational
Health and Safety).
During 2023, energy use from grid electricity at the Moftinu Gas Plant was 315 MWh, 0.45% of the annual production
of 69,910 MWh, compared with 317 MWh in 2022, which was 0.12% of that year’s annual production of 267,582
22
MWh. Nine solar panels have been installed at the Moftinu gas plant which generated 27.44kWh of energy in 2023,
offsetting the equivalent of 9.007kg of CO
2
emissions. Serinus Energy Romania continues to assess opportunities
to expand its utilisation of solar power on its available sites.
In 2023, 6.367 MMcf of gas was flared from the two wells in production, including gas utilisation by the two
compressors, during the year, being 8.85% of annual production, and equivalent to flared gas of 0.53 MMcf per
month. 13,853m
3
of produced water was generated from the two wells in 2023, compared with 19,341m
3
of
produced water from three wells during 2022 and 3,292m
3
of produced water from four wells in 2021.
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 2023 which monitored an average CO
2
emission level of 0.55% of total flue gas, below the benchmark CO
2
threshold of 3.8%.
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 September 2023. The
Group 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 designed
by The Sniffers called Sniffers Full Emission Management Platform “SFEMP”. Measured parts per million 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
2,698 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 2,618 were accessible.
Of the 2,618 accessible potential emission sources identified, there were only 7 registered leaks, being 0.26% of
accessible sources and resulted in an emission loss of 1.1 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 2.7 kg/year. The report concluded that a successful
repair of the leak above Repair Definition could reduce the emission loss by 1.5 kg/year, equating to 88.85% of the
total emission. The leak has been repaired.
23
TUNISIA
Serinus Tunisia maintained a strong HSE track record through 2023, with a zero-frequency rate (per one million
man hours worked) for Total Recordable Injuries across all sites (2022 – zero for Serinus Tunisia employees).
There were no environmental incidents at Sabria and two minor incidents at Chouech Es Saida 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 Group’s responsibilities to the local environment. The annual environmental report for 2023
was submitted to the Agence Nationale de Protection de l’Environnement (“ANPE”) in January 2024.
During 2023, the annual environmental monitoring was undertaken by Le Centre Mediterraneen d’Analyses (“CMA”)
at the Sabria and Chouech Es Saida fields, assessing: air emissions from stacks at both fields; air quality monitoring;
groundwater monitoring; produced water; fresh water; soil sampling and noise pollution. The environmental
monitoring programme for remote locations is reviewed by local management and implemented at all sites.
Stack air emission analysis and air quality monitoring was conducted at Sabria and Oum Chiah in September 2023.
Analysis of the results demonstrated that the Group was in compliance with approved thresholds of groundwater
and soil contaminants and required solid waste management. The Group’s own review of air emissions showed
compliance in all areas, 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, except for carbon monoxide (“CO”) emissions from older fixed
equipment. The Group has investigated mitigation measures and 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, 37,581m
3
of produced water was disposed of in 2023 (2022 – 49,129m
3
) and at Chouech Es
Saida 196,770m
3
of produced water was evaporated from lined surface pits in 2023 (2022 – 225,283m
3
). The
Group is investigating alternative environmentally-responsible produced water disposal solutions.
A review of environmental management at the Sabria fields was conducted by First North African Consultancy for
the Environment (“FNAC” www.fnac-environment.com), an engineering consultancy, in September 2020. This was
designed to review compliance at Sabria with Tunisian environmental regulations and analyse underground water
and soil pollution in proximity to the water disposal project. The scope of this work included: the recovery, analysis
and assessment of environmental and technical documents and reports related to the evaporation ponds; the
analysis of all previous waste pit treatment operations and related reports; analysis of existing red register
(hazardous waste) and blue register (domestic waste); coring and sampling investigations of the potential impacted
areas (soil and underground water) within the Sabria field; water sampling and laboratory analysis from existing
piezometers and production water discharge; and the performance of 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.
Subsequent to this review, recommendations from the report have been, and continue to be, implemented. The
Group began air emissions monitoring at Sabria and Chouech in August 2015 and continues to do so.
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, 1,164 kg of paper and plastic bottles were
recycled in the Tunis office in 2022, which decreased to 784 kg of paper and plastic bottles being recycled in 2023,
as a result of training and greater awareness of wastage. Electricity consumption at the Tunis office in 2023 was
110,337 kWh higher than 2022 (93,920 kWh) as a result of the temporary contractors presence that have been
hired for both Sabria workovers and the geological study of Sabria. At Sabria electricity consumption decreased
12% to 601,259kWh (2022 – 679,902kWh). Chouech is not connected to the electricity grid and power at Chouech
is provided by on site gas generators. Fresh water consumption in 2023 at Sabria was 15,820m
3
(2022 – 16,290m
3
)
and at Chouech, 26,498m
3
(2022 – 41,440m
3
). Diesel consumption across all operational locations was 150m
3
a
2% decrease over 2022 (153m
3
) but remains a significant reduction from 2019 (305m
3
) reinforced by a combination
of greater awareness of wastage, training, optimisation and more efficient transport management.
24
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 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. In Romania, personnel at both the head office and on-site at the
Moftinu gas plant receive monthly HSSE training for both local regulatory requirements and corporate policies.
We undertake a range of activities to continuously improve our HSE Management Plan to ensure that the Group’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 Group 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 2023, a total of 47 HSSE training drills and asset protection
drills took place in Tunisia and 240 HSSE training sessions took place in Romania. Regular HSSE audits are
undertaken to review policies and procedures with 24 internal HSSE audits completed in Tunisia in 2023 (2022 -
25) and an annual audit was undertaken by Lloyds Register for ISO certifications in Romania.
The Emergency Response 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 1,712 days without accidents as at 31 December 2023. In Tunisia, there were 2,948 days with no
accidents as at 31 December 2023. In 2023, 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 2022 was 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. While
much of the widespread impact of COVID-19 has abated, the Group remains alert to any potential resurgence and
maintains its ability to re-introduce the measures previously, and successfully, adopted to protect its workforce.
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 30% of the staff in Romania
are women, while in Tunisia 39% 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 Corporate Social Responsibility (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
25
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 Kébili, 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 “Kébili CSR Consortium”). Since 2015 the Kébili 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 Group’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 31 to 34 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 63 out of 180
countries in the 2023 CPI. Tunisia is ranked number 87 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.
26
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, changes in the taxation environment and non-
compliance with laws and regulations. Currently the Group 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, taxes 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 Group is doing the following in
order to mitigate this risk:
• Has extensive monitoring and review of HSE and crisis management policies and procedures.
• Follows 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
Group monitors contractor performance to ensure contractor compliance with Group 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 at least once a year and as additionally required to evaluate
compensation and incentivisation plans to ensure they remain competitive.
AVAILABILITY OF FINANCING
The risk that the Group will not be able to raise funds through debt or equity if required. Currently the Group 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.
• Maintain a public listing of its equity on the Alternative Investment Market of the London Stock Exchange
in order to access capital, if required.
• The Group is currently debt-free, with a low operating cost base and has continued to generate positive
cashflows during 2023.
• 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.
27
FINANCIAL RISK
The Group is subject to commodity price volatility, interest rates, foreign exchange rate volatility and credit risk of
counterparties. Currently the Group 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 Group can sustain all macroeconomic changes.
• Careful cost management to preserve financial flexibility in the event of economic or commodity price
downturns.
• The Group 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 Group is doing the following in order to
mitigate this risk:
• The Group’s production in Romania is 100% gas, providing exposure to a cleaner, transition fuel.
• The Group’s main source of production in Romania is a modern energy, emission efficient and highly
automated gas plant limiting the environmental impact of the Group’s production.
• The Group 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 Group’s strategy is to maintain a low operating cost base in order to maintain operational flexibility in
the event of lower commodity prices.
28
BOARD OF DIRECTORS AND MANAGEMENT TEAM
BOARD OF DIRECTORS
Łukasz Rędziniak
Chairman, Independent Director, Chair of Remuneration Committee, Member of the Environmental, Social, &
Governance Committee
Appointed March 2016
Mr. Rędziniak is a graduate of the Faculty of Law and Administration of the Jagiellonian University.
Mr. Rędziniak 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 Between
2013 and 2022, he worked as a Member of the Management Board at Kulczyk Investments S.A. He currently
serves on the Management Board of Kulczyk Privatstiftung as well as Supervisory Board of Ciech SA.
James Causgrove
Independent Director, Chair of the Reserves Committee, Member of the Audit Committee, Member of the
Remuneration Committee, Member of the Environmental, Social, & Governance Committee
Appointed September 2017
Mr. Causgrove is an experienced Oil and Gas executive with over 40 years’ experience. On March 31, 2019, Mr.
Causgrove retired as COO of Harvest Operations Corporation and is now the President and principal consultant for
Causgrove Energy West with a focus on energy opportunities in Western Canada. Mr. Causgrove offers both
excellent technical engineering and business experience along with a strong track record in management and
leadership in the oil and gas sector. Since 1979, working for first Chevron Corporation, then Pengrowth Energy
Corporation, and finally Harvest Operations Corporation, Mr. Causgrove 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. Mr. Causgrove 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 Mr. Causgrove spent
time working in Joint Ventures, Human Resources, Strategic and Business Planning, and in the Midstream
business. Mr. Causgrove gained valuable business insights as first a technical leader, then as a middle manager,
and finally as an executive for Chevron, Pengrowth, and Harvest. In his roles as COO at Harvest and as Vice
President at Pengrowth, Mr. Causgrove worked as part of the senior leadership team and 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 is a chartered accountant and experienced capital markets professional with a background in
corporate finance and investor relations. After a long investment banking career at Investec and as a corporate
partner at Oriel Securities (now Stifel Europe), she joined Genel Energy plc to establish and lead an Investor
Relations function. Following this, Ms. Fortescue spent six years at Premier Oil Plc in various corporate finance
roles including capital markets transactions and debt refinancings. Ms. Fortescue has spent over 20 years advising
companies on corporate finance transactions, fundraising, strategy, debt refinancing and restructurings, investor
relations and the impact of corporate transactions on stakeholders. Current directorships/partnerships: FUTH
Consulting Limited, Clean Power Hydrogen plc.
Ms. Fortescue has an undergraduate degree in Accounting and Finance from Kingston University.
29
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 is a Non-Executive Director and Audit Committee Chair of
Norman Broadbent plc and a Trustee of the Delta plc pension scheme.
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 Group 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
Resigned June 2023
30
SENIOR MANAGEMENT
Vladislav Ryabov
Chief Financial Officer, Serinus Energy plc
Mr. Ryabov joined Serinus Energy Plc in March 2023 as Group Financial Controller and was promoted to Chief
Financial Officer in September 2023. Mr. Ryabov started his career in public practice with Deloitte CIS in 2001
where he qualified as an accountant and in November 2007 moved to Deloitte UK in London. Mr. Ryabov’s
experience is spanning a variety of sectors including over nine-year tenure in public practice with Deloitte and over
twelve years in the natural resources sector for oil & gas exploration and production operations in emerging markets,
followed by most recent finance director role in the Saudi investment Group, all contributing to his development into
experienced finance professional.
Mr. Ryabov has a Master’s degree in Finance and Banking as well as Bachelor’s degree in Finance and Accounting
from the Tashkent State University of Economics.
Stuart Morrison
Chief Operating Officer, Serinus Energy plc
Mr. Morrison has over 36 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 Group’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 Group’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 Group 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.
31
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
https://serinusenergy.com/shareholder-information/
As an issuer listed on the Warsaw Stock Exchange, Poland (“WSE”), the Group was subject to, and followed, the
recommendations and rules contained within the “Code of Best Practice for WSE Listed Companies 2021”. These
rules were adopted by the WSE Supervisory Board on 29 March 2021 (Resolution No. 13/1834/2021) and are
accessible at:
https://www.gpw.pl/best-practice2021
https://www.gpw.pl/pub/GPW/files/PDF/dobre_praktyki/en/DPSN2021_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 and 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 Group to keep investors
and analysts informed are as follows:
• Presenting quarterly results presentations online
• Investor roadshows
• Participating in online interviews
• Attending investor conferences
• Hosting capital markets days
• Timely disclosure of material information
• Regular reporting
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 Group’s website.
32
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
Group delivers on our commitments to all parties.
The Group 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 Group 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 Group 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, one Executive Director 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 Group.
Directors’ attendance at Board and Committee meetings during 2023 was as follows:
Director
Board
Audit
Committee
Remuneration
Committee
Environmental
Social &
Governance
Committee
Reserves
Committee
Total Meetings
5
4
3
2
1
Łukasz Rędziniak 5 1 3 2 -
Jeffrey Auld 5 4 - 2 1
Andrew Fairclough
3
3 2 - - 1
James Causgrove 5 4 3 2 1
Natalie Fortescue 5 4 - 2 1
Jon Kempster 5 4 3 - -
3
Andrew Fairclough resigned in June 2023.
33
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 Group’s advisers.
• Reviewed the Group’s risk profile.
• Reviewed feedback from shareholders post quarterly and full year results.
The Group 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 executive director is full time with the Group.
The Group’s Board has a broad range of relevant experience suitable for issues pertaining to the oversight of a
publicly listed oil and gas Group. 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 Group during 2023 was 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 Group.
PRINCIPLE 7: EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT OBJECTIVES,
SEEKING CONTINUOUS IMPROVEMENT
The Group is constantly assessing the individual contributions of all Board members to ensure each member:
• Is actively contributing to the success of the Group.
• 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.
34
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 2023,
the Board met for five scheduled meetings.
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
Group’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 Group.
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 https://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 Group 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 Group.
• 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 GROUP IS GOVERNED AND IS PERFORMING BY MAINTAINING
A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS
The Group 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 Group’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 Group’s brokers. The Group 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 Group’s shareholder meetings, any resolutions voted by shareholders that have a significant number of
dissenting votes the Group 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.
35
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
• Łukasz Rędziniak – Chairman
• James Causgrove
• Jon Kempster
RESPONSIBILITIES
The aim of the Remuneration Committee is to:
• Attract, retain and motivate the executive management of the Group.
• 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.
2023 ACTIVITY
The Committee met three times throughout the year (2022 – six times).
36
EXECUTIVE DIRECTORS’ REMUNERATION
Compensation for the executive Directors is shown in US dollars
4
in the table below.
Director
Salaries
Benefits
5
202
3
Total
202
2
Total
Jeffrey Auld
436,364
165,330
601,694
478,662
Andrew Fairclough
155,844
43,350
199,194
341,705
592,208
208,680
800,888
820,367
The 2023 compensation package above for the executive Directors included salaries and benefits and are short-
term in nature.
EXECUTIVE DIRECTORS’ SHARE CAPITAL
The following tables outline the share options outstanding and shares
6
owned as at 31 December 2023 for the
executive Directors. There have been no changes between 31 December 2023 and 15 March 2024.
Director
Share Options
LTIP
Awards
7
Shares
Jeffrey Auld 2,230,000
3,153,603
1,338,875
Andrew Fairclough - - 1,011,684
2,230,000 3,153,603 2,350,559
Stock Options
Director
Grant date
Strike Price
Share Options
Jeffrey Auld
22 Dec 2020 £0.20 1,880,000
Jeffrey Auld 27 May 2019 £0.20 100,000
Jeffrey Auld 03 Dec 2018 £0.20 250,000
2,230,000
LTIP Awards
Director
Grant date
LTIP Awards
Jeffrey Auld 01 June 2023 1,497,248
Jeffrey Auld 29 Apr 2022 356,355
Jeffrey Auld 24 Dec 2020 1,300,000
3,153,603
4
The average GBP:USD rate for the year was 0.8021 (2022 – 0.8262).
5
Benefits include annual performance bonus, medical insurance and UK pension scheme contributions.
6
2023 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.
7
Each LTIP award represents a right to acquire a share of the Group at $nil consideration.
37
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Non-executive Director’s receive a £30,000 annual fee, with each Chair receiving an additional £10,000 fee.
Director
Fees
8
Share Options
202
3
Total
202
2
Total
Łukasz Rędziniak 62,338 - 62,338 60,518
James Causgrove 49,870 - 49,870 48,414
Natalie Fortescue 49,870 - 49,870 48,414
Jon Kempster 49,870 - 49,870 48,414
211,948 - 211,948 205,760
Łukasz Rędziniak, Chairman of the Remuneration Committee
15 March 2024
8
The average GBP:USD rate for the year was 0.8021 (2022 – 0.8262).
38
AUDIT COMMITTEE REPORT
This report addresses the responsibilities, the membership and the activities of the Audit Committee in 2023 up to
the approval of the 2023 Annual Report and 2023 year-end Financial Statements.
MEMBERSHIP
• Jon Kempster – Chairman
• James 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.
2023 ACTIVITY
The Committee met four times throughout the year (2022 – four times).
The Committee, together with the CFO, is responsible for the relationship with the external auditor. PKF Littlejohn
LLP is the Group’s auditor.
For the 2023 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. Corporate Risk Register.
4. Going concern (see page 16 of this Annual Report or Note 2 of the Financial Statements).
5. Cash flow forecasts.
INTERNAL CONTROLS AND RISK MANAGEMENT, WHISTLEBLOWING AND FRAUD
The Committee is vigilant regarding internal financial controls and risk management. During 2023, the Committee
has undertaken anti-bribery and anti-corruption exercises and has reviewed corporate risk register and whistle
blowing arrangements.
Jon Kempster, Chairman of the Audit Committee
15 March 2024
39
REPORT OF THE DIRECTORS
The Directors’ present their report, together with the audited consolidated financial statements of Group for the year
ended 31 December 2023.
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 Group 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 3% of
the ordinary shares of the Group, as reported by the shareholders to the Group:
Xtellus Capital Partners Inc 10.02%
Crux Asset Management 8.42%
Michael Hennigan 7.94%
Quercus TFI SA 7.18%
Marlborough Fund Managers 4.15%
Spreadex LTD 4.10%
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 10 to 16 of this Annual Report.
The Directors do not recommend payment of a dividend in respect of these financial statements (2022 - $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. The directors have elected to prepare
accounts under IFRS as adopted by the United Kingdom for all purposes except for the financial statements for the
purposes of the Warsaw Stock Exchange filing which are prepared under European Union (“EU”) endorsed IFRS.
Under Group 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 Group 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
Group will continue in business (note 2).
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group 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 Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
40
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 Group’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 Group’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
15 March 2024
41
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SERINUS ENERGY PLC
Opinion
We have audited the Group financial statements of Serinus Energy plc (the ‘Group’) for the year
ended 31 December 2023 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 EU-adopted international accounting standards.
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 2023 and of
its loss for the year then ended; and
• have been properly prepared in accordance with EU-adopted international accounting
standards.
• 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 director’s 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 any 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.
• We assessed 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.
42
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, consistent with prior year, which resulted in
a figure of $785,000 (2022: $900,000). Gross assets were determined as an appropriate basis for
materiality because the principal focus of the group in 2023 remained on the development of its oil
and gas assets in Tunisia and Romania.
Overall Materiality for the significant components of the group ranged from $210,000 to $500,000
(2022: $400,000 to $600,000), based on 1% of gross assets for each component, consistent with
prior year.
Group performance materiality was set at $510,250, down from 540,000 in the prior year due to the
decrease in overall materiality.
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 $39,250 (2022: $45,000), calculated as 5%
of overall materiality. 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. The two key 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.
43
Key Audit Matter
How the scope of our audit responded to
the key audit 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. The total
net book value of Property, Plant and
Equipment has decreased from $62.3m at
31 December 2022 to $56m at 31 December
2023, mainly due to the impairment in
Romania.
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.
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.
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 management in order to
be able to assess the operating activity and
development of the assets undertaken
during the year;
• Ensuring ownership of licences and that a
commitment and ability to reapply for any
expired licences existed;
• Examined 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) against the criteria
in the accounting standard in order 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 by 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.
44
•
Discussing the process of reporting the
reserves report with the group’s reserve
expert and challenging them on any areas
that could be considered contentious.
Based on the audit work performed and the
challenge of management we do not consider
the carrying value of development and
production assets to be materially misstated. It
is however important to draw users attention to
the fact that the net value ($4.6m) of the Ech
Chouech licence area is dependent on the
successful renewal of this licence.
Failure to obtain the necessary licence
renewals may result in an impairment to the
carrying value of the linked development and
production assets held.
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
45
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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, 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 meetings; review of Regulatory News Service announcements and correspondence.
46
• 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 company’s members, as a body, in accordance with our
engagement letter. Our audit work has been undertaken so that we might state to the company’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 company and the company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Joseph Archer (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
15 March 2024
47
Serinus Energy plc
Consolidated Statement of Comprehensive Income for the year ended 31 December 2023
(US$ 000s, except per share amounts)
Note
202
3
202
2
Revenue 6
17,875
49,280
Cost of sales
Royalties
(2,054)
(3,314)
Windfall tax
(783)
(16,014)
Production expenses
(8,013)
(10,491)
Depletion and depreciation 11, 13
(4,572)
(6,564)
Total cost of sales
(15,422)
(36,383)
Gross profit
2,453
12,897
Administrative expenses
(4,928)
(5,300)
Share-based payment expense 7
(3)
(70)
Total administrative expenses
(4,
931
)
(5,370)
Impairment expense 11,12
(6,965)
(1,871)
Release of provision 23
-
1,639
Decommissioning provision recovery 18
16
209
Loss on disposal of assets
-
(1,081)
Operating income
(9,
427
)
6,423
Finance expense 8
(1,
923
)
(1,637)
Net income before tax
(
11
,
350
)
4,786
Tax expense 9
(1,672)
(3,156)
Income after taxation attributable to equity owners of the parent
(
13
,
022
)
1,630
Other comprehensive income
Other comprehensive income to be classified to profit and loss in subsequent
periods:
Foreign currency translation adjustment
-
(1,998)
Total comprehensive income for the year attributable to equity owners of the
parent
(
13
,
022
)
(368)
Earnings per share:
Basic 10
(0.11)
0.01
Diluted 10
(0.11)
0.01
The accompanying notes on pages 51 to 76 form part of the consolidated financial statements
48
Serinus Energy plc
Consolidated Statement of Financial Position as at 31 December 2023
(US$ 000s, except per share amounts)
As at
Note
31 December
202
3
31 December
202
2
Non
-
current assets
Property, plant and equipment 11
56,032
62,311
Exploration and evaluation assets 12
10,703
10,529
Right-of-use assets 13
498
688
Total non-current assets
67,233
73,528
Current assets
Restricted cash 14
1,171
1,088
Trade and other receivables 15
8,137
10,007
Product inventory 16
698
705
Cash and cash equivalents 14
1,335
4,854
Total current assets
11,
341
16,654
Total assets
78,
574
90,182
Equity
Share capital 17
401,426
401,426
Share-based payment reserve 7
25,560
25,557
Treasury shares 17
(458)
(455)
Accumulated deficit
(399,
378
)
(386,356)
Cumulative translation reserve
(3,
372
)
(3,372)
Total equity
23,
778
36,800
Liabilities
Non
-
current
liabilities
Decommissioning provision 18
24
,
004
24,046
Deferred tax liability 19
12,125
10,942
Lease liabilities 20
42
4
465
Other provisions 21
1,
317
1,358
Total non-current liabilities
37
,
870
36,811
Current liabilities
Current portion of decommissioning provision 18
6
,
720
5,085
Current portion of lease liabilities 20
137
280
Accounts payable and accrued liabilities 22
10,
069
11,206
Total current liabilities
16
,
92
6
16,571
Total liabilities
54,
79
6
53,382
Total liabilities and equity
78,
574
90,182
The accompanying notes on pages 51 to 76 form part of the consolidated financial statements
These consolidated financial statements were approved by the Board of Directors and authorised for issue on 15 March 2024 and
were signed on its behalf by:
JON KEMPSTER
DIRECTOR, CHAIR OF THE AUDIT COMMITTEE
JEFFREY AULD
DIRECTOR
49
Serinus Energy plc
Consolidated Statement of Shareholder’s Equity for the year ended 31 December 2023
(US$ 000s, except per share amounts)
Note
Share
capital
Share-
based
payment
reserve
Treasury
Shares
Accumulated
deficit
Accumulated
other
comprehensive
loss
Total
Balance at 31 December 2021
401,426
25,487
(121)
(387,986)
(1,374)
37,432
Income for the year
-
-
-
1,630
-
1,630
Other comprehensive loss for the year -
-
-
-
(1,998)
(1,998)
Total comprehensive loss for the year -
-
-
1,630
(1,998)
(368)
Transactions with equity owners
Share-based payment expense
-
70
-
-
-
70
Shares purchased to be held in Treasury
-
-
(334)
-
-
(334)
Balance at 31 December 2022
401,426
25,557
(455)
(
386
,356)
(3,372)
36,800
Income for the year
-
-
-
(13,022)
-
(13,022)
Other comprehensive loss for the year
-
-
-
-
-
-
Total comprehensive loss for the year -
-
-
(13,022)
-
(13,022)
Transactions with equity owners
Share-based payment expense -
3
-
-
-
3
Shares purchased to be held in Treasury
-
-
(3)
-
-
(3)
Balance at 31 December 2023
401,426
25,560
(458)
(399,
378
)
(3,
372
)
23,
778
The accompanying notes on pages 51 to 76 form part of the consolidated financial statements
50
Serinus Energy plc
Consolidated Statement of Cash Flows for the year ended 31 December 2023
(US$ 000s, except per share amounts)
The accompanying notes on pages 51 to 76 form part of the consolidated financial statements
Note
202
3
202
2
Operating activities
Income for the year
(
13
,
022
)
1,630
Items not involving cash:
Depletion and depreciation 11, 13
4,
572
6,564
Impairment expense 11, 12
6,
965
1,871
Share-based payment expense 7
3
70
Tax expense 9
1,
672
3,156
Accretion expense on decommissioning provision 18
1,
801
1,143
Change in other provisions 21
(41)
-
Foreign exchange (gain) / loss
19
2
144
Decommissioning provision recovery
(16)
(209)
Other income
(59)
(19)
Loss on disposal of assets
-
1,081
Release of provision 23
-
(1,639)
Income taxes paid
(192)
(2,353)
Expenditures on decommissioning liabilities
-
-
Funds from operations
1,
875
11,439
Changes in non-cash working capital 26
66
(4,052)
Cashflows from operating activities
1,
94
1
7,387
Financing activities
Lease payments 20
(
184
)
(211)
Shares purchased to be held in treasury 17
(3)
(334)
Cashflows used in from financing activities
(
187
)
(545)
Investing activities
Capital expenditures 26
(5,
298
)
(10,875)
Proceeds on disposition of property, plant and equipment
-
42
Cashflows used in investing activities
(5,
298
)
(10,833)
Change in cash and cash equivalents
(3,
54
4
)
(3,991)
Cash and cash equivalents, beginning of year 14
4,854
8,429
Impact of foreign currency translation on cash
2
5
416
Cash and cash equivalents, end of year 14
1,335
4,854
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
51
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
nd
Floor, The Le Gallais Building, 54 Bath Street, St.
Helier, Jersey, JE1 1FW.
Serinus is a publicly listed Group 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 2023 and 2022.
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 2023 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. The directors have elected to prepare
accounts under IFRS as adopted by the United Kingdom for all purposes except for the financial statements for
the purposes of the Warsaw Stock Exchange filing which are prepared under European Union (“EU”) endorsed
IFRS. No material differences have been noted between EU IFRS and UK IFRS for the year ended 31
December 2023.
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 three directly held subsidiaries, Serinus Energy Canada Inc., Serinus Holdings Limited and
Serinus Petroleum Consultants Limited. 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. and Serinus Tunisia B.V. 99.999996% of Serinus Energy
Romania S.A. is held by Serinus Holdings Limited, with Serinus Tunisia B.V. owning the remaining
0.000004% of Serinus Energy Romania S.A. On 21 December 2022, the Group completed a
reorganisation whereby the interests in Serinus Tunisia B.V. and Serinus Energy Romania S.A. were
transferred from Serinus B.V. to Serinus Holdings Limited. On 9 August 2022 KOB Borneo Limited was
struck off and on 17 August 2022, the liquidation of Serinus B.V. was completed.
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.
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
52
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.
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.
(c) Foreign currency
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.
If the functional currency changes from a foreign currency to the Group’s reporting
currency, translation adjustments for prior periods remain in equity and the translated amounts for
non-monetary assets at the end of the prior period become the accounting basis for those assets in
the period of the change and subsequent periods.
(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.
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
53
(e) Windfall tax
Within the Romanian operating segment, the Group 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
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 Group’s LTIP comprise of a right to acquire a share of the Group 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 Group’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 Group 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 Group 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 Group 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 Group classifies these as prepaid taxes when they are paid. The
Group reassesses the likelihood that these prepaid taxes will result in a benefit to the Group, and to the
extent that these are deemed to have no value, the Group includes this through profit and loss as a tax
expense.
(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
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
54
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 2023
(US$ 000s, except per share amounts, unless otherwise noted)
55
(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 2023
(US$ 000s, except per share amounts, unless otherwise noted)
56
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 Group 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 Group uses the weighted average cost of capital of the business
unit the lease is incurred within. Over the life of the lease, the Group 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 Group’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 2023
(US$ 000s, except per share amounts, unless otherwise noted)
57
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.
(n) 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.
(o) 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.
(p) 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.
(q) 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.
(r) 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.
(s) Accounting standards issued but not yet adopted
The following standards have been published and are mandatory for accounting periods beginning after 1
January 2023 but have not been early adopted by the Group and could have an impact on the Group
financial statements:
i. Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
ii. Amendments to IAS 1 Classification of Liabilities as Current or Non-current
iii. Amendments to IAS 1 Non-current Liabilities with Covenants
iv. Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements
v. Amendments to IFRS 16 Lease Liability in a Sale and Leaseback
The management do not expect that adoption of the standards listed above will have a material impact on
the financial statements of the Group in future periods, except if indicated below.
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
58
4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
All financial assets and financial liabilities are held at amortised costs.
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 Group enters into lifting agreements with trading counterparties based on the market
price of Brent crude oil. In Romania, the Group 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 2023, a 10% change in the price of crude oil per bbl would have impacted revenue, net of
royalties by $1.3 million (2022 - $1.4 million) and a 10% change in the price of gas per mcf would have impacted
revenue, net of royalties by $0.5 million (2022 - $3.3 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 Group has payables that originate in GBP, CAD, LEU and TND. As such the Group is affected by changes
in the USD exchange rate compared to the following currencies: GBP, CAD, LEU and TND.
Functional currency of Serinus Romania was Romanian Leu (RON) up to 31 December 2022 subsequent
which management considered changed circumstances and economic environment in Romania and concluded
that functional currency of the Group’s Romanian business unit changed from RON to USD in 2023. In making
this conclusion, management considered all primary and secondary indicators for determination of the
functional currency in accordance with IAS 21 The Effects of Changes in Foreign Currency Exchange Rates.
Particularly, management considered cash flow indictors of Serinus Romania, its sales price and sales market
indicators, expense indicators, financing indicators, degree of autonomy, as well as intra-Group transactions
and arrangements.
The Group’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.
As at 31 December 2023
GBP
CAD
LEU
TND
Cash and cash equivalents
146
78
352
3,089
Restricted cash
-
1,550
5
-
Accounts receivable
65
2
2,068
12,233
Accounts payable
(425) (74) (6,154) (24,742)
Lease liabilities
(316) (85) (563) -
Net foreign exchange exposure
(530) 1,471
(4,292) (9,420)
Translation to USD
1.2731
0.7547
0.2224
0.3263
USD equivalent
(675) 1,110
(955) (3,074)
As at 31 December
2022
GBP
CAD
LE
U
TND
Cash and cash equivalents 296 179 1,825 4,715
Restricted cash - 1,476 22 -
Accounts receivable 49 33 14,747 15,785
Accounts payable (660) (58) (15,302) (13,484)
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
59
Lease liabilities (322) (165) - (392)
Net foreign exchange exposure (637) 1,465 1,292 6,624
Translation to USD 1.2103 0.7370 0.2165 0.3217
USD equivalent (771) 1,080 280 2,131
For the year ended 31 December 2023, a 1% change in foreign exchange rates would have impacted net
income by $130,000 (2022 - $27,000).
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
60
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 2023, Tunisia’s revenue was
generated from three customers (2022 – three), with a 75%, 16% and 9% weighting (2022 – 80%, 10%, 10%).
Romania’s sales were made primarily to three customers (2023 – three), with a 78%, 8% and 7% weighting
(2022 – 49%, 37% and 4%). At 31 December 2023, the Group had $nil (2022 - $nil million) of revenue
receivables that were considered past due (over 90 days outstanding).
The Group 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 Group’s vendors, it was determined that the ECL was insignificant as there is no history of default or unpaid
invoices. As a result the Group has determined the ECL percentage to be nominal and has not recorded any
allowance for doubtful accounts as at 31 December 2023 and 31 December 2022.
The Group manages its current VAT receivables by submitting VAT returns on a monthly basis. This allows
the Group 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.
As a
t
31 Decem
ber
202
3
1 year
1
-
3
years
3+ years
Total
Accounts payable and accrued liabilities 10,069 - - 10,069
Lease liabilities 137 424 - 561
Total 10,206 424 - 10,630
As at 31 December
202
2
1 year
1
-
3 years
3+ years
Total
Accounts payable and accrued liabilities 11,205 - - 11,205
Lease liabilities 307 237 311 855
Total 11,512 237 311 12,060
The Directors have considered the circumstances, current status and practical realisations of $5.3 million of
current liabilities that relate to long-term historic liabilities and based on this assessment do not believe that
these will become due in the next 12 months.
INTEREST RATE RISK
During 2021, the Group fully repaid its long-term debt, and no longer has an interest rate risk.
5. USE OF ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with IFRS requires management to make significant
estimates and judgements based on currently available information. Management uses their professional
judgement along with the most up to date information in making these estimates and judgements, however
actual results could differ. By their very nature, these estimates are subject to measurement uncertainty and
the effect on the financial statements of future periods could be material. Estimates and underlying assumptions
are reviewed on an ongoing basis and any changes are recognised in the period that the estimates and
judgements have changed. The significant estimates and judgements made by management in the statements
are described below:
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
61
(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 Group conducts a reserve audit at the end of each fiscal year, which is completed by independent
qualified reserves engineers. The Group’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. See the reserves estimates in the Review of Operations.
The Group’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 Group compares the recoverable
amount to the carrying amount to determine any potential impairment. In determining the recoverable
amount, the Group 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 Group. An
impairment sensitivity analysis is detailed in Note 11.
(c) Deemed 100% interest in the Satu Mare concession
The Group has a 100% working interest in the concession as its partner has defaulted on its obligations
under the Joint Operating Agreement. The Group filed a Request for Arbitration with the Secretariat of
the International Court of Arbitration of the International Chamber of Commerce (“ICC”) seeking a
declaration affirming the Group’s rightful claim of ownership of its defaulted partners’ 40% participating
interest and to compel transfer of that interest to the Group. Following the year end, Serinus announced
that it had received confirmation from the ICC that as a result of its partners’ default under the Joint
Operating Agreement, the defaulted partners’ 40% participating interest in the Satu Mare concession will
be transferred to Serinus Romania, directing the defaulted partner to take all necessary actions to formally
transfer the 40% participating interest to Serinus.
(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 Group.
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.
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
62
(f) VAT receivable
The Group has outstanding VAT claims that have been disputed by Romanian authorities dating back to
2016. The VAT in question relates to operational and developmental costs in Romania for costs paid in
full by the Group at 100% working interest (see Note 5(c)). Management believes that these amounts are
fully recoverable because in December 2023 the Romanian Court ruled in favour of Serinus Romania
regarding the claim against ANAF for $1.7 million in outstanding VAT refund and therefore the Group 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.
(i) Impairment of assets (Note 11)
The management and directors review the carrying value of the Group’s assets to determine whether
there are any indicators of impairment such that the carrying values of the assets may not be recoverable.
The assessment of whether an indicator of impairment or reversal thereof has arisen requires
considerable judgement, taking account of factors such as future operational and financial plans,
commodity prices and the competitive environment.
For exploration and evaluation assets held by the Group, namely exploration works at the Satu Mare
concession in Romania, before the technical feasibility and commercial viability of extracting hydrocarbon
resources is demonstrable, indicators of impairment can include: (a) the right to explore in a specific area
has expired and is not expected to be renewed; (b) significant expenditure for further exploration or
evaluation activities is not being planned; (c) exploration and evaluation of mineral resources have not led
to the discovery or confirmation of commercially viable resource; or (d) that sufficient data exists to indicate
that the carrying amount of the asset may not be recovered in full from development or sale.
The Group’s operating oil & gas assets, some of which have previously been impaired, are assessed for
impairment at a Cash Generating Unit (CGU) level, in accordance with IAS 36, which align to the
concession agreements held by the Group, i.e. Moftinu and Santau in Romania and in Tunisia, Sabria and
Chouech Es Saida and Ech Chouech as the South Tunisia CGU. These assets are sensitive to changes
in operational assumptions and commodity pricing and therefore the management and directors need to
make judgements as to whether certain events represent indicators of impairment or impairment reversal.
Where such indicators exist, the carrying value of the assets of a CGU or exploration and evaluation asset
is compared with the recoverable amount of those assets, that is, the higher of its fair value less costs to
sell and value in use, which is typically determined on the basis of discounted future cash flows.
For the year ended 31 December 2023, the management and directors performed assessment of
impairment indicators across the Group’s CGUs. In Tunisia, there were no indicators of impairment or
impairment reversals identified at Sabria or South Tunisia. The Group has applied to extend the Ech
Chouech licence but this expired in June 2022. The Group intends to continue its application to regain
the licence once the licence process is formalised. No indication has been received that they will not be
successful once the process to re-apply becomes available and as such has made the judgement that
they will be able to regain the Ech Chouech licence and therefore no impairment has been charged to this
asset. At Moftinu, the management and directors identified an indicator of impairment and recorded an
impairment expense of $7.0 million (2022 - $1.9 million). The primary impairment indicators in Romania
during 2023 included reduced gas prices throughout 2023, natural depletion of the Moftinu gas field
reflecting on life of shallow gas fields and fiscal regime in Romania.
Note 11 and 12 disclose the carrying amounts of the Group’s property, plant and equipment and
exploration and evaluation assets, respectively, as well as assumptions made by the management and
directors in the discounted cash flow model which is used to determine estimated recoverable amounts.
(j) Solidarity Tax
In December 2022, the Government of Romania published Emergency Ordinance no.186/2022 detailing
measures to implement Council Regulation (EU) 2022/1854 regarding the emergency intervention to
introduce a solidarity contribution for companies that carry out activities in the oil, natural gas, coal and
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
63
refinery sectors. This additional tax in Romania is calculated at a rate of 60% applied to the Group’s
annual profit, in excess of 20% of its average profits for the financial years 2018-2021. The solidarity tax
will apply for the financial years 2022 and 2023.
The Group does not believe that the solidarity tax is applicable to it and has received legal advice to
support that position and will challenge the legality of this additional tax. If the Group were to consider the
tax applicable the amount due is estimated to be approximately $741,000. However, the Group has made
the judgement that the solidarity tax is not applicable and therefore has made no provision in respect of
this tax within the financial statements.
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 2023, the receivable balance related to contracts with customers, included within accounts
receivable is $3.1 million (31 December 2022 - $3.8 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. The 2017 options have expired. 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 £0.20, which constitutes a modification to the share-based payment plan. The Group expensed
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 Group’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 Group issued 2.2 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 Group at $nil cost. These Awards were valued at the closing price (£0.265) on the issuance date of the
Awards. In 2021, the Group issued 175,000 stock options with a strike price of £0.20.
In 2022, the Group issued 702,717 awards under the LTIP to members of the management team on 29 April
2022. These Awards were issued to management and provide the right to acquire one share of the Group at
$nil cost. These Awards were valued at the closing price (£0.169) on the issuance date of the Awards. The
total fair value of these awards was $0.1 million (£0.1 million). As at 31 December 2022, the total awards
outstanding under the LTIP was 2.9 million (2021 – 2.2 million), with a weighted average valuation of £0.0265
(2021 £0.0265).
The weighted average fair value of options granted during the year ended 31 December 2023 was £nil per
option as there were no options granted in 2023 (31 December 2022 - £0.13 per option) using the following
assumptions:
Inputs used in the Black
-
Scholes model
202
3
202
2
Risk-free interest rate nil
1.31%
Expected dividend yield nil
nil
Expected volatility (based on actual historical volatility) nil
70%
Forfeiture rate nil
5%
Expected option life (in years) nil
10
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
64
A summary of the changes to the option plans during the year ended 31 December 2023, are presented below:
(a) CAD denominated options
202
3
202
2
Options Exercise Price Options Exercise Price
Balance, beginning of year - - 10,000 3.70
Forfeited - - - -
Expired - - (10,000) (3.70)
Balance, end of year - - - -
As at 31 December 2023 there are nil (2022 – nil) options outstanding to non-executive directors as the options
expired in the year.
(b) GBP denominated options
202
3
202
2
Options
Exercise
Price Options
Exercise
Price
Balance, beginning of year 3,115,600 0.20 3,364,300 0.20
Granted - - 5,000 0.20
Forfeited (175,000) - (253,700) -
Balance, end of year 2,940,600 0.20 3,115,600 0.20
As at 31 December 2023 there are 2,940,600 (2022 – 3,115,600) options outstanding to executive directors
and employees with a weighted average contractual life of 4.0 (2022 – 5.0) years and a weighted average
exercise price of £0.20 (2022 - £0.20).
8. FINANCE EXPENSE
Year ended 31 December
202
3
202
2
Interest of leases (Note 20)
76
33
Accretion on decommissioning provision (Note 18)
1,801
1,143
Foreign exchange and other
46
461
1,923
1,637
9. TAXATION
Year ended 31 December
2023
2022
Current income tax expense
490
2,738
Deferred income tax
Origination and reversal of temporary differences (Note 19)
1,182
418
Tax expense
1,672
3,156
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
65
Reconciliation of the effective tax rate:
Year ended 31 December
202
3
202
2
(Loss) / Income before income taxes
(
11,3
5
0
)
4,786
Statutory tax rate
50%
50.0%
Expected income tax
(5,6
75
)
2,393
Non-taxable (deductible) items
1,892
(2,331)
Losses utilised
(924)
(459)
Tax rate differences
5
,
407
1,667
Foreign exchange and other
7,199
3,470
Net change in tax attributes not recognised
(
6,227
)
(1,584)
Income tax expense
1,672
3,156
The Group has elected to use the Sabria concession tax rate as the statutory rate instead of using 0% tax rate
applicable to the Group 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 Group’s
tax expense relates to Sabria.
The advance taxes unrecoverable in the year ending 31 December 2023 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
Group has determined that based on the future development plans within Tunisia that the Group will not
generate enough taxable income to fully utilise all advance taxes paid, losses carried forward and other taxable
pools available to the Group.
10. EARNINGS PER SHARE
Year ended 31 December
($000’s, except per share amounts)
202
3
202
2
(Loss) / Income for the year
(1
3
,
022
)
1,630
Weighted average shares outstanding
Basic 113,513
114,686
Diluted 113,513
114,686
(Loss) / Income per share
Basic and diluted
(0.11)
0.01
In determining diluted net income per share, the Group assumes that the proceeds received from the exercise
of “in-the-money” stock options are used to repurchase ordinary shares at the average market price. In
calculating the weighted-average number of diluted ordinary shares outstanding for the year ended 31
December 2022, the Group excluded 1 million stock options all of which expired during 2023. Since there were
no “in-the-money” stock during 2023, basic and diluted shares are the same. All outstanding warrants expired
in 2021.
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
66
11. PROPERTY, PLANT AND EQUIPMENT
Oil and gas
interests
Corporate assets
Total
Cost or deemed cost:
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
Capital additions 7,702 76 7,778
Change in decommissioning provision (5,380) - (5,380)
Disposals (2,218) - (2,218)
Balance as at 31 December 2022 270,050 1,719 271,769
Capital additions 5,516 - 5,516
Change in decommissioning provision (501) - (501)
Disposals - - -
Balance as at 31 December 2023 275,065 1,719 276,784
Accumulated depletion and
depreciation
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)
Depletion and depreciation (6,507) (158) (6,665)
Disposals 1,095 - 1,095
Impairments (1,871) - (1,871)
Balance as at 31 December 2022 (204,545) (1,642) (206,187)
Depletion and depreciation (4,317) (12) (4,329)
Disposals - - -
Impairments (6,965) - (6,965)
Balance as at 31 December 2023 (215,827) (1,654) (217,481)
Cumulative translation adjustment
Balance as at 31 December 2021 (1,109) 13 (1,096)
Currency translation adjustments (2,175) - (2,175)
Balance as at 31 December 2022 (3,284) 13 (3,271)
Currency translation adjustments - - -
Balance as at 31 December 2023 (3,284) 13 (3,271)
Net book value
Balance as at 31 December 2022 62,221 90 62,311
Balance as at 31 December 2023 55,954 78 56,032
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 $30.8 million (2022 - $28.7 million) and
for Romania are $6.0 million (2022 - $3.6 million).
IMPAIRMENT
At 31 December 2023, the Group completed an impairment assessment to determine if there were any
indicators of impairment or impairment reversals. In Tunisia, there were no indicators of impairment or
impairment reversals identified at Sabria or South Tunisia. The Group had applied to extend the Ech Chouech
licence but this expired in June 2022. The Group intends to continue its application to regain the licence once
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
67
the licence application process is formalised. No indication has been received that they will not be successful
once the process to re-apply becomes available and as such has made the judgement that they will be able to
regain the Ech Chouech licence and therefore no impairment has been charged to this asset. In Moftinu, the
Group determined that there was an indicator of impairment and recorded an impairment expense of $7.0
million.
The Group determined the estimated recoverable amount based on a discounted cash flow model, using
production profiles from the third-party reserves report and an after-tax discount rate equal to the weighted
average cost of capital of Romania (22%), computed internally using external market data.
The following table shows the forecast commodity prices used in the GCA 31 December 2023 Reserve Report
and used in the discounted cash flow model:
Brent
Romania Gas
Year
(US$/bbl) (US$/MMBtu)
202
4
76.49 10.76
202
5
73.29 11.50
202
6
76.50 10.42
202
7
80.00 11.00
202
8
+
+2% inflation +2% inflation
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.
Romania ($000s)
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 - - - -
At 31 December 2022, the Group 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 Group determined that there was an indicator of
impairment and recorded an impairment expense of $1.9 million. The Group determined the estimated
recoverable amount based on a discounted cash flow model, using an after-tax discount rate equal to the
weighted average cost of capital of Romania (17%), computed internally using external market data. The
following table shows the forecast commodity prices used in the GCA 31 December 2022 Reserve Report and
used in the discounted cash flow model:
Brent
Romania Gas
Year
(US$/bbl) (US$/MMBtu)
202
3
83.83 24.28
202
4
78.99 23.59
202
5
80.00 19.03
202
6
81.60 13.00
202
7
+
+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 2022, 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.
Romania ($000s)
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 67 (67) (1,620) 1,620
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 2023, the Group recorded $0.1 million of depletion in inventory (2022 - $0.2 million).
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
68
12. EXPLORATION AND EVALUATION ASSETS
Carrying amount
202
3
202
2
Balance, beginning of the year
10,529
5,042
Additions
-
5,225
Change in decommissioning provision
174
739
Cumulative translation adjustment
-
(477)
Balance, end of the year
10,703
10,529
The Group currently holds land rights to a large amount of undeveloped land within Romania.
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 2020
840 39
879
Additions
97 - 97
Disposals
(66) - (66)
Balance as at 31 December 2021 871 39 910
Additions 584 - 584
Disposals (127) - (127)
Balance as at 31 December 2022 1,328 39 1,367
Additions 75 - 75
Disposals - - -
Balance as at 31 December 2023 1,403 39 1,442
Accumulated depreciation
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)
Depreciation (256) - (256)
Disposals 127 - 127
Balance as at 31 December 2022 (610) (39) (649)
Depreciation (265) - (265)
Disposals - - -
Balance as at 31 December 2023 (875) (39) (914)
Cumulative translation adjustment
Balance as at 31 December 2020 (5) -
(5)
Currency translation adjustments (15) - (15)
Balance as at 31 December 2021 (20) - (20)
Currency translation adjustments (10) - (10)
Balance as at 31 December 2022 (30) - (30)
Currency translation adjustments - - -
Balance as at 31 December 2023 (30) - (30)
Carrying amounts
Balance as at 31 December 2022 688 - 688
Balance as at 31 December 2023 498 - 498
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
69
14. CASH
As at 31 December
202
3
202
2
Cash and cash equivalents
1,335
4,854
Restricted cash
1,171
1,088
Total cash
2,506
5,942
The Group has cash on deposit with the Alberta Energy Regulator of $1.2 million (2022 - $1.1 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.
15. TRADE AND OTHER RECEIVABLES
As at 31 December
202
3
202
2
Trade receivables
4,146
6,772
VAT receivable
1,906
723
Corporate tax receivable
463
380
Prepaids and other
1,
622
2,132
Total trade and other receivables
8,
137
10,007
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 2023 and 2022 while using the days past due criteria
to measure the ECL. The Group 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 Group has not
taken an allowance for doubtful accounts as at 31 December 2023 and 2022.
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 years which has been
disputed by the Romanian authorities. On 18 December 2023, the Romanian Court has ruled in favour of the
Group regarding the claim against ANAF for VAT refund of US$1.7 million. Serinus is pursuing strategies to
recover this VAT in first quarter of 2024.
16. PRODUCT INVENTORY
Product inventory consists of the Group'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 31 December 2023, the Group held 9.9
Mbbls of crude oil in inventory valued at approximately $70.50/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
3
202
2
Number of
shares
Amount
($000s)
Number of
shares
Amount
($000s)
Balance, beginning of the year 114,066,073 401,426 114,066,073 401,426
Issued for cash - - - -
Issuance costs, net of tax - - - -
Issued in lieu of salary - - - -
Issued to retire Convertible Loan - - - -
Warrants exercised - - - -
Balance, end of the year 114,066,073 401,426 114,066,073 401,426
Following shareholder approval at the Group’s AGM on 12 May 2022, the Group undertook a share
consolidation on a one for ten basis whereby for every 10 Ordinary Shares (each and Existing Share) as shown
on the register of members of the Group to be in issue at 6.00 p.m on 12 May 2022, be consolidated into one
Ordinary Share, having the same rights as the Existing Ordinary Shares. Prior to the consolidation there were
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
70
1,140,660,729 Ordinary Shares of no par value in issue and following the consolidation there were 114,066,073
Ordinary Shares.
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
202
3
202
2
Number of
shares
Amount
($000s)
Number of
shares
Amount
($000s)
Balance, beginning of the year 2,712,249 455 592,500 121
Shares purchased 100,000 3 2,119,749 334
Balance, end of the year 2,812,249 458 2,712,249 455
18. DECOMMISSIONING PROVISION
As at 31 December
202
3
202
2
Balance, beginning of the year
29,131
34,868
Liabilities incurred
198
703
Liabilities settled
-
(1,852)
Accretion
1,801
1,143
Change in estimate
(40
6
)
(5,611)
Foreign currency translation
-
(120)
Balance, end of year
30,72
4
29,131
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 Group incurred liabilities related to two new water pits.
The Group has estimated as at 31 December 2023 the decommissioning provisions of the wells in Canada to
be $0.8 million. During 2022, the Group completed the abandonment of three wells in Canada and it was
determined that the Group was no longer obligated to fulfil the decommissioning provisions of $1.6 million
relating to legacy properties. The remaining obligations are reported as current liabilities as they relate to non-
producing properties or expired production sharing contracts.
The change in estimate in the current year is based on changes to interest rates, discount rates, the estimated
date of abandonment and reclamation, and the expected costs of abandonment.
The Group anticipates the concession licenses will continue to be extended until they are no longer economical
for the Group to continue operating. As at 31 December 2023, the Group has aligned the abandonment dates
with the expected economic life of the asset.
The significant assumptions used in the calculation of the decommissioning provision are as follows:
As at 31 December
202
3
202
2
Risk-free
rate (%)
Inflation
rate (%)
Net
present
value
Risk-free
rate (%)
Inflation
rate (%)
Net
present
value
Tunisia 3.7 – 5.4 2.0 24,415 1.9 – 3.6 2.0 24,211
Romania 6.1 – 8.5 2.5 – 12.6 5,431 6.8 – 8.6 2.5 – 11.8 4,102
Canada - - 878 - - 818
Total 30,724
29,131
Due within one year 6,720 5,085
Long-term liability 24,004 24,046
Total 30,724 29,131
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
71
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
2
Recovery
31 December
202
3
PP&E and E&E assets (14,743) (1,071) (15,814)
Decommissioning provision 3,306 21 3,327
Other 495 (133) 362
Deferred income tax liability (10,942) (1,183) (12,125)
Tax effect related to:
31 December
2021
Recovery
31 December
2022
PP&E and E&E assets (15,304) 561 (14,743)
Decommissioning provision 4,243 (937) 3,306
Other 537 (42) 495
Deferred income tax liability (10,524) (418) (10,942)
UNRECOGNISED DEFERRED TAX ASSETS
Deferred tax assets have not been recognised in respect of the following deductible temporary differences:
As at 31 December
202
3
202
2
PP&E and E&E assets
(1,
537
)
(2,100)
ROU assets and lease liabilities
-
(10)
Decommissioning provision
6,
277
6,814
Non-capital losses carried forward and other
3,822
10,086
Unrecognised deferred tax asset
8
,
562
14,790
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 Group.
The Group has Canadian non-capital losses of $0.3 million (2022 - $0.3 million) that do not expire, Tunisian
losses of $7.8 million have no expiry date (2022 - $0.9 which expiry in four years and $10.5 million with no
expiry), and Romanian losses of $6.6 million (2022 - $4.3 million) that expire after seven years between 2024
to 2030.
The Group has temporary differences associated with its investments in its foreign subsidiaries. The Group
has not recorded any deferred tax liabilities in respect to these temporary differences as they are not expected
to reverse in the foreseeable future.
The Group operates in multiple jurisdictions with complex tax laws and regulations, which are evolving over
time. The Group has taken certain tax positions in its tax filings and these filings are subject to audit and
potential reassessment after the lapse of considerable time. Accordingly, the actual income tax impact may
differ significantly from that estimated and recorded by management.
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
72
20. LEASE LIABILITIES
The following table details the movement in the Group’s lease obligations for the year ended 31 December
2023:
As at 31 December
202
3
202
2
Opening balance
745
445
Additions
-
584
Principle payments
(
184
)
(285)
Cumulative translation adjustment
-
1
Balance, end of the year
561
745
Lease liabilities due within one year
137
280
Lease liabilities due beyond one year
424
465
During the year the Group made total payments toward lease liabilities in the amount of $0.2 million (2022 -
$0.3 million), of which $0.08 million (2022 - $0.03 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 2023
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 2020 1,211
147
41 1,399
Change in provision - - (41) (41)
Balance as at 31 December 2021 1,211
147
- 1,358
Change in provision - - - -
Balance as at 31 December 2022 1,211 147 - 1,358
Change in provision - (41) - (41)
Balance as at 31 December 2023 1,211 106 - 1,317
Current -
-
-
-
Non-current 1,211 106 - 1,317
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 2014-2021. 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 2023.
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 2023 reflects the potential costs to
terminate the remaining employees.
22. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at 31 December
202
3
202
2
Accounts payable and accrued liabilities
9,
32
0
9,295
Taxes payable
749
1,911
Total accounts payable and accrued liabilities
10,
069
11,206
23. RELEASE OF PROVISION
Year ended 31 December
202
3
202
2
Release of provision
-
1,639
In 2022, the Group reversed decommissioning provisions of $1.6 million related to Block L, due to the passage
of statute of limitations.
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
73
24. AGGREGATE PAYROLL EXPENSE
The aggregate payroll expense of employees and executive management of Serinus was as follows:
Year ended 31 December
202
3
202
2
Wages, salaries, and benefits
9
4,952
5,447
Share-based payment expense
10
3
70
Total aggregate payroll expense
4,955
5,517
25. RELATED PARTY TRANSACTIONS
During the years ended 31 December 2023 and 2022, 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
202
3
202
2
Wages and salaries
834
938
Benefits
209
94
Share-based payment expense
3
69
Total related party transactions
1,
046
1,101
26. SUPPLEMENTAL CASH FLOW DISCLOSURE
Year ended 31 December
202
3
202
2
Cash (used in) generated from:
Trade receivables and other
1,
863
(3,126)
Inventory
7
157
Accounts payable and accrued liabilities
(1,752)
(1,088)
Restricted cash
(52)
5
Changes in non-cash working capital from operations
66
(4,052)
The following table reconciles capital expenditures to the cash flow statement:
Year ended 31 December
202
3
202
2
PP&E additions (Note 11)
5,516
7,778
E&E additions (Note 12)
-
5,225
Total capital additions
5,516
13,003
Changes in non-cash working capital
(218)
(2,052)
Total capital expenditures
5,298
10,951
27. CAPITAL MANAGEMENT
Year ended 31 December
202
3
202
2
Shareholders’ equity
23,828
36,800
Total capital resources
23,828
36,800
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.
9
Includes amounts in general and administrative expenses, production expenses and exploration and development expenditures.
10
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 2023
(US$ 000s, except per share amounts, unless otherwise noted)
74
28. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
In October 2023, the Group received an exploration phase extension of the Satu Mare Concession in Romania.
The exploration period extension is in two phases:
• The first phase of the extension is mandatory and is two years in duration starting on 28 October 2023
(Phase 1). The work commitment for the first phase is the reprocessing of 100 kilometres of legacy
2D seismic as well as a 2D seismic acquisition program of 100 kilometres including processing the
acquired seismic data. The work commitment for Phase 1 is estimated at $1.2 million.
• The second phase of the license extension is optional and is two years in duration starting on 28
October 2025 (Phase 2) with a work commitment of drilling one well within the concession area with
no total drilling depth requirement stipulated. The work commitment for Phase 2 is estimated at $2.3
million.
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 2023, cumulative liquid hydrocarbon sales net of
royalties and shrinkage was 5.5 million (2022 – 5.4 million) barrels. The Group 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 FROM OPERATIONS ANALYSIS
($000)
202
3
202
2
Administrative expenses (4,928) (5,300)
Share-based payment expense (Note 7) (3) (70)
Impairment recovery (expense) (Note 11, 12) (6,965) (1,871)
Release of provision (Note 23) - 1,639
Included within administrative expenses of $5.3 million (2022 - $5.3 million) are the following:
($000)
202
3
202
2
Salaries and wages (2,313) (2,653)
Corporate audit and review fees (264) (450)
Consulting fees (261) (400)
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
75
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
202
3
Romania
Tunisia
Corporate
Total
Total assets 24,027 52,322 2,275 78,624
For the year ended 31 December 2023
Crude oil revenue
-
13,312
-
13,312
Natural gas revenue
2,683
1,880
-
4,563
Condensate revenue
-
-
-
-
Total revenue
2,683
15,192
-
17,875
Cost of sales
Royalties
(125) (1,929) -
(2,054)
Production expenses
(2,633) (5,349) (31) (8,013)
Depletion and depreciation
(866) (3,582) (124) (4,572)
Windfall tax
(783) -
-
(783)
Total cost of sales
(4,407) (10,860) (155) (15,422)
Gross profit (loss)
(1,724) 4,332
(155) 2,453
Administrative expenses
-
-
(4,928) (4,928)
Share-based payment expense
-
-
(3) (3)
Release of provision
-
-
-
-
Impairment expense
(6,965) -
-
(6,965)
Loss on asset disposal
-
-
-
-
Decommissioning recovery
-
31
(15) 16
Operating income (loss)
(8,689) 4,363
(5,101) (9,427)
Finance expense
(1,866) (824) 767
(1,923)
Net income (loss) before income taxes
(10,555) 3,539
(4,334) (11,350)
Tax expense
(2) (1,670) -
(1,672)
Net income (loss) for the year
(10,557) 1,869
(4,434) (13,022)
Capital expenditures
550
4,966 -
5,516
Serinus Energy plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
(US$ 000s, except per share amounts, unless otherwise noted)
76
As at 31 December 202
2
Romania
Tunisia
Corporate
Total
Total assets 32,881 54,587 2,715 90,183
For the year ended 31 December 202
2
Crude oil revenue - 15,854 - 15,854
Natural gas revenue 31,793 1,576 - 33,369
Condensate revenue 57 - - 57
Total revenue 31,850 17,430 - 49,280
Cost of sales
Royalties (1,132) (2,182) - (3,314)
Production expenses (5,590)
(4,851)
(50) (10,491)
Depletion and depreciation (3,624) (2,782) (158) (6,564)
Windfall tax (16,014) - - (16,014)
Total cost of sales (26,360) (9,815) (208) (36,383)
Gross profit (loss) 5,490 7,615 (208) 12,897
Administrative expenses - - (5,300) (5,300)
Share-based payment expense - - (70) (70)
Release of provision - - 1,639 1,639
Impairment expense (1,871) - - (1,871)
Loss on asset disposal (63) (1,018) - (1,081)
Decommissioning recovery - 62 147 209
Operating income (loss) 3,556 6,659 (3,792) 1,658
Finance expense (848) (1,015) 226 (1,637)
Net income (loss) before income taxes 2,707 5,644 (3,566) 4,786
Tax expense (152) (3,017) 13 (3,156)
Net income (loss) for the year 2,556 2,628 (3,553) 1,630
Capital expenditures 8,388 4,452 76 12,916
