Serinus Energy continues to generate strong cash flow and earnings

Serinus Energy plc (LON:SENX) has announced its Annual Financial Results for 2022.



·       Revenue for the year ended 31 December 2022 was $49.3 million (31 December 2021 – $40.0 million)

·       EBITDA for the year ended 31 December 2022 was $12.7 million (31 December 2021 – $12.3 million)

·    The Company generated net income of $1.6 million, which includes a $1.9 million asset impairment (31 December 2021 – net income of $8.4 million)

·       The Company realised a net price of $149.46/boe for the year ended 31 December 2022, comprising:

o   Realised oil price – $94.39/bbl

o   Realised natural gas price – $34.53/Mcf

·       The Group’s operating netback remained strong for the year ended 31 December 2022 and was $107.59/boe (31 December 2021 – $44.60/boe), comprising:

o   Romania operating netback – $181.57/boe (31 December 2021 – $52.44/boe)

o   Tunisia operating netback – $54.34/boe (31 December 2021 – $29.77/boe)

·       Capital expenditures of $12.9 million (31 December 2021 – $10.7 million), comprising:

o   Romania – $8.4 million

o   Tunisia – $4.5 million

·     Third party reserves report attributes $85.4 million of Net Present Value at a 10% discount rate to the audited Proved and Probable Reserves of the Company as at 31 December 2022

·      Cash balance as at 31 December 2022 was $4.9 million


·      Completed the Romanian near-term exploration programme in 2022. Drilled two exploration wells in Romania in 2022. Both the Moftinu Nord-1 well and the Canar-1 well encountered gas in targeted reservoirs however quantities did not justify commercial development

·     The Canar-1 well has been completed for use as a solar powered water injection well.  Water from Moftinu field is being disposed of at Canar-1 resulting in a cost saving of approximately $800,000 per year

·    The second compressor at the Moftinu field was commissioned in February 2022.  The compressors have stabilised production and will extend overall field life

·     The Company initiated a comprehensive block wide Geological Review engaging RISC Consultancy to take the Company’s existing database of 2D, 3D and well data and using that database construct a consistent geological model.  This model, containing all of the extensive legacy and modern data covers the entirety of the 3000 km2 Satu Mare concession 

·      Knowledge from the Moftinu field development and recent exploration drilling has been incorporated into the comprehensive geological model to guide the Company in its further exploration of the highly prospective and multi-play Satu Mare concession

·     In Tunisia, the workover to install the first submersible pump for the Artificial Lift programme has commenced at the Sabria field.  Plans for additional pumps in the Sabria field are being progressed

·       Workovers in the Chouech Es Saida field continue the increased production from wells CS-3 and CS-1

·       Production for the year averaged 889 boe/d, comprising:

o   Romania – 379 boe/d

o   Tunisia – 510 boe/d



With the disruption of the COVID-19 pandemic and the associated global supply chain interruptions receding in 2022 the Company was able to advance its exploration and development projects.  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 2022, the Company generated cashflow from operating activities of $7.5 million and invested $10.7 million of capital expenditure.  The Company has a working capital surplus and in 2022 allocated the majority of the cash flow generated by the businesses to near-term exploration and production opportunities.

The Company continues to focus on the active management of the Moftinu Gas field production levels.  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 Company to extract $90.9 million of revenue from this field since production began in 2019. 

The Company continues to advance the implementation of its artificial lift programme in the Sabria field in Tunisia, beginning with the Sabria-W1 well.  In 2022 the Company was frustrated in accelerating the installation of the first pump in the Sabria field by the default of the national rig company in Tunisia, Compagnie Tunisienne de Forage (“CTF”).  The initial rig contract committed CTF to provide their rig CTF-006 in mid-2022 but CTF was unable to provide the rig as per their contractual obligation.  An alternative rig (CTF-004) was mobilised to the site in December 2022.

The Company’s capital programme in 2022 was therefore concentrated on the two exploration wells, Canar-1 and Moftinu Nord-1, drilled in Romania and the acceleration of the design and permitting of a new 2D seismic programme.  The new 2D seismic was designed to complement the existing 2D seismic and tie to existing 3D seismic data to refine the high-rank prospects adjacent to the Moftinu gas field.

The Company, under the authority granted by the shareholders at the 2022 Annual General Meeting, executed the purchase of its own shares.  The Board believes that the share price at the time of its purchases did not reflect the intrinsic value of the business and will continue to evaluate the investment return of share buybacks as part of its allocation of capital across the Group (note 17).


The Group’s Romanian operating subsidiary holds the licence to the Satu Mare concession area, covering approximately 3,000 km2 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 – Moftinu -1003, Moftinu-1004, Moftinu-1007 and Moftinu-1008.  During 2022, the Company’s Romanian operations produced a total of 826 MMcf of gas and 527 barrels of condensate, equating to an average daily production of 379 boe/day.

The Company has completed all of its commitments under the third exploration phase of the Satu Mare Concession Agreement, and in October 2021, received an additional two-year evaluation phase on the Satu Mare Concession until 27 October 2023.  The Company is in routine conversations with the National Agency for Mineral Resources (“NAMR”) regarding the further extension of this concession and will apply for a further appraisal period during 2023.  The greater Moftinu gas field area has been declared a commercial field and is exempt from this routine licence extension procedure.

During the year the Company drilled two exploration wells; Canar-1 and Moftinu Nord-1, adjacent to the Moftinu gas field.  These near field prospects were selected due to their proximity to the Moftinu Gas Plant.  It was expected that, upon success, these fields could be quickly tied into the existing processing infrastructure to deliver near-term cash flow.  Regrettably both wells discovered gas in the expected zones however neither field contained sufficient gas to justify commercial development.  The Canar-1 well was drilled on time and under budget and encountered gas in four prospective zones.  Post drilling analysis suggest that the seal of the reservoir was compromised and did not sufficiently prevent the gas from migrating away from the reservoir.  The Moftinu Nord-1 well was drilled on time and under budget but demonstrated a similar compromise of seal to the Canar-1 well.  Whilst it is disappointing to have discovered gas but to have that gas be in insufficient quantities, these two wells give greater insights into those risks that must be focused on while drilling exploration wells on various prospects.  Both Canar-1 and Moftinu Nord-1 demonstrated Type-3 AVO responses.  Typically, such a response is considered a Direct Hydrocarbon Indicator.  The two exploration wells demonstrated the effectiveness of the AVO responses and the use of AVO to identify gas accumulations.  The wells also highlighted the requirement to focus on seal types to allow for future success, especially for such shallow targets.  In the third quarter of 2022 the Company initiated a third party independent geological review of the Satu Mare Concession.  This review was designed to be a block wide review of the geological development of the many play types on the block.  The review was conducted by RISC, a geologic consulting firm, and was designed to combine the myriad of technical information into a block wide exploration model.  During the study Serinus technical personal worked with RISC to analyse the many historical wells and multitude of legacy 2D seismic.  This is the first time that a block wide review of all technical information has been prepared and the results are a valuable tool for future exploration opportunities.

Additional interpretation work is also being conducted on the Santau 3D area with a view to confirming drilling locations on prospects that will form the basis for future multi-well drilling campaigns.

After the drilling of Canar-1, the Company has implemented the technical program to convert this well into a water injection well.  This will allow the produced water volumes from the Moftinu wells to be injected in Canar-1.  The Company applied for and received all local and national permits, to get Canar-1 approved as a water injection well.  Produced water injection began in the fourth quarter of 2022.  The use of Canar-1 as a water injection well has resulted in a significant savings in operating expense.  Previous water disposal required extensive trucking of produced water volumes, injection using the Canar-1 well has resulted in cost savings in water transportation and water injection of 91%, approximately $800,000 per year.  At these injection levels, Canar-1 will recover the cost of drilling and conversion to water injection during 2023. 

The Company incorporated a new gas trading subsidiary, Serinus Energy Romania Trading S.r.l. in October 2021, which trades the Company’s Romanian gas production into the Romanian market.  Serinus Energy Romania Trading S.r.l was created to allow our licensed gas traders to directly access the Romanian gas market and to capture the full value of gas prices in Romania through the ability to access all available types of contracts of various durations and respond accordingly to the price signals of these contracts.  Gas pricing in Romania has moved significantly in 2022 from a low of $31/Mcf to a high of $67/Mcf.  Much of this price volatility has occurred counter to typical pricing seasonality.  The ability of the Company to utilise its own gas trading function has resulted in an average realised price of $39.96/Mcf for 2022, with an average realised gas price of $37.07/Mcf in the fourth quarter of 2022.  Whilst lower than the highs of 2022 current gas prices on the Romanian Commodity Exchange (“BRM”) remain strong over the first quarter of 2023.

Serinus has continued to operate safely and effectively in Romania throughout the period.  As at the year-end 2022, the Company had achieved 1,347 accident-free days of continuous operation which is a testament to the professionalism and hard work of our team in Romania.

The Company has a deemed 100% working interest in the concession as its partner has defaulted on its obligations under the Joint Operating Agreement.  The Company has filed a Request for Arbitration with the Secretariat of the International Court of Arbitration of the International Chamber of Commerce seeking a declaration affirming the Company’s rightful claim of ownership of its defaulted partner’s 40% participating interest and to compel transfer of that interest to the Company.  

After the year-end the Company announced the successful conclusion of its arbitration against its former partner.


The Company currently holds two concession areas within 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 Company’s independent reservoir engineers have estimated to have approximately 445 million barrels of oil equivalent originally in place.  Of this oil in place only 1.1% has been produced to date due to a low rate of development on the field.  Serinus has spent extensive time studying the best means of further developing this field and considers this to be an excellent asset for remedial work to increase production and, on completion of ongoing reservoir studies, to conduct further development operations.

A major project for the operations in Tunisia in 2022 is the introduction of the first Artificial Lift programme to be implemented on the W-1 well in the Sabria field.  The W-1 is a currently suspended well that was identified as a candidate to benefit from the installation of a pump.  The Company agreed a rig contract with the Compagnie Tunisienne de Forage (“CTF”), the national drilling company.  The contract allowed for the provision of a drilling rig to conduct the W-1 workover.  The rig was originally scheduled to have been delivered to the W-1 site in May 2022.  The Company was made aware that for a variety of reasons CTF was unable to provide the rig that was named in the agreed rig contract, CTF-006.  Additionally, CTF informed the company that it did not have another rig available and suitable for the work that the Company anticipated.  Having defaulted on the contract, CTF worked with the Company to procure a replacement rig.  However, the replacement rig, CTF-004 was only able to be provided late in 2022.  This frustrating delay has meant that the W-1 work over and pump installation has not been completed in 2022.  Following the successful completion of the W-1 workover and pump installation the Company anticipates commencing a programme to install artificial lift in the remaining candidate wells in Sabria.

The delays faced by the CTF default have also affected the workover of the N-2 well in Sabria.  This well was drilled in 1980 but was damaged during completion and, although in proximity to producing wells, was not able to flow oil to surface due to damage during completion.  The workover program will re-complete the well and remove any wellbore restrictions.  The Company anticipates that the N-2 well will be on production in mid-2023.

During the year, the Company conducted further workover operations in the Chouech Es Saida area to replace and standardise pumps in order to increase production and efficiency.  Better pump design and installation has increased the pump life from seven months in 2019 to 24 months in 2022.  The Company has applied to extend the Ech Chouech licence but this expired in June 2022.  The Company intends to continue its application to regain the licence once the licence process is formalised.


The Company continues to place the health, safety and wellbeing of all our staff as our top priority.  The Company continues to follow government recommendations such as enhanced sanitation of work sites, social distancing and wearing masks.  Where government advice has required, the Company 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.


Investment in Serinus offers shareholders an ability to access international oil and gas upstream operations with strong cash flow generation through the oil and gas commodity cycle.  Our low-cost onshore asset base provides significant near-term production growth opportunities.  The size of the existing asset base allows for significant organic growth without incremental asset acquisition cost in areas where our technical knowledge has been refined over the years that Serinus has operated these concession areas.  Serinus offers a compelling growth opportunity where risks are mitigated by our extensive experience in our operating areas and the low-cost nature of our assets.   The Company’s existing assets also include large exploration prospects within close proximity of existing infrastructure.  The Company allocates capital to these exploration prospects which if successful can add meaningful production and cash flow to the Group.

Serinus’ operations in Romania are focused on the large Satu Mare Concession Area.  The Satu Mare Concession Area is located in the north west of Romania along-side the Hungarian border.  This large block contains the Moftinu gas field, and the Company believes that numerous shallow gas opportunities with similar characteristics to the Moftinu field are present in the immediate surrounding area.  In addition, the southern portion of the concession offers excellent exploration opportunities for large oil prospects as across the southern boundary of the Satu Mare concession is the Suplacu de Barcau oil field (held by OMV Petrom).  This is a significant oilfield estimated to have produced in excess of 100 million barrels.

In Tunisia, the Company’s operations are focused on the Sabria 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 1.1% has been recovered to date.  This is a very low recovery factor for a conventional oilfield and the Company expects to increase that recovery factor materially.  The Chouech 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 Company we have significant technical and commercial experience and are able to apply that experience across our business units.



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.


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 company

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

3.   Manage Risks:

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

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

·    Operator of all concessions allows for cost control

4.   Focus on Growth:

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

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


Dear shareholders,

It is my pleasure to write this letter to you as Chairman of Serinus Energy plc.

2022 is another year that will be remembered by all of us, primarily due to tragic war developments also heavily impacting oil and gas sector.  Our Board, however, is eager to report that notwithstanding the constraints, the Company continues to generate strong cash flow and earnings.  As shareholders will recall 2021 was the first year since the Company’s inception that positive earnings were generated.  I am happy to report that the trend is being continued and that the Company generates positive earnings from operations in 2022.  Cost control remains essential to a cyclical commodities based business and I can assure you that in our case it does remain stable in the face of some very difficult inflation.

Inflation remains one of the challenges posed by the COVID-19 pandemic and our team has remained focused on executing our business plan and delivering value to our stakeholders.  Our production has declined in Romania in line with the parameters of a shallow gas field.  It is now important that we use our technical skills to find the next Moftinu Gas Development.  It must be remembered as we near the $100 million of revenue from the Moftinu gas field that these low-cost high return shallow gas fields offer dramatic earnings.  Consequently the strategy in Romania remains the same as we transition to finding the another Moftinu-like opportunity.  The Satu Mare Concession is a very large concession and we have so far identified more than thirty prospect opportunities with expected 181 million barrels of oil equivalent to be explored for.  Upon success any one of these prospects can offer the so rewarding returns we saw with Moftinu.  There are clearly major opportunities yet to be discovered there.

In Tunisia our strategy continues to focus on the improvement in recovery from the Sabria field.  Sabria is a large conventional oil field that has had little more than one percent of the in-place oil volumes recovered.  Social and political turmoil in Tunisia has made our work difficult but we remain confident in the technical capabilities of our teams and the large upside that is available in Sabria.  As we look beyond the artificial lift programme our teams are preparing the technical work for new wells.  As part of the longer-term strategy the Company would be eager to have the conditions allowing for new producing wells to be drilled in Sabria.

We have also made important investments in our operations, including drilling new wells and upgrading existing facilities.  As the nature of our business sometimes unfortunately dictates the exploration wells drilled in Romania were not commercially successful and I certainly share our shareholders frustrations when we come so close by discovering gas but fail at a later stage as there was simply not enough gas to ensure commercial sales. This was highly disappointing however I know that this is what exploration is like and I am comfortable that the low-risk, low-cost nature of our exploration programme will come to success in the near future.

Looking ahead, we are confident in the future of the energy sector, countries that we operate and the continued growth of our company. We remain focused on executing our strategy, delivering value to our shareholders, and contributing to the communities in which we operate.

Thank you for your continued support. I look forward to updating you on our progress in the coming year.

Yours sincerely,

Lukasz Rędziniak, Chairman of the Board of Directors

17 March 2023


Dear Fellow Shareholders,

2022 was an operationally challenging year for Serinus as inflation continued to pressure the business.  Sweeping inflation in costs across the business required nimble solutions and a far greater degree of anticipation as we worked to achieve our operational targets.  The Company reacted by ordering long lead items for our drilling plans well in advance of what we would normally consider.  These actions allowed us to avoid the steep inflation in steel tubulars and other manufactured oilfield equipment.  Delays to fabrication eased in 2022 and we did not see some of the delays that were globally experienced in 2021.  We have pre-ordered the requisite pumps for the Tunisian artificial lift programme and those pumps are in hand in anticipation of our programme.  As we look forward, we see inflation beginning to moderate however our cost control focus will continue unabated.

Commodity prices once again took the headlines in 2022 as Russia invaded Ukraine and caused disruption to global energy markets.  Gas prices in Europe spiked and the Company’s Romania trading subsidiary was able to take advantage of these heightened gas prices.  Inevitably the higher commodity prices globally have allowed governments to review fiscal terms and, in many countries, increased windfall taxes were the result.  In Romania we have been exposed to windfall taxes since the inception of production in Moftinu and no fiscal changes have affected us.  Fiscal terms in Tunisia have remained stable and there has been no indications that these terms will change.

Operationally 2022 saw our business pursue our strategy in Romania of transitioning from a wholly production business to searching for the next leg of growth. The strategy included two near field exploration wells that were designed to add production to the existing gas plant infrastructure.  Frustratingly these two wells did not discover enough gas to assure commercial production and were therefore suspended.  The Canar-1 well has now been converted to a water injection well and has provided savings of approximately $60,000 per month in water disposal costs.  Whilst these two wells were not commercially successful they did provide the encouragement that the Satu Mare concession is highly gas prone and significant exploration opportunities remain to be explored by the Company.  The results of the Canar-1 and Moftinu Nord-1 wells showed that the seal on reservoirs is a risk that needs to be better understood. To that end the Company engaged independent geological and geophysical consultants to perform a block wide technical review to refine our understanding of which exploration opportunities to pursue next.  The block remains highly prospective, and the estimated size of the prospective resources offers a considerable economic prize for the business.

In Tunisia our strategy of increasing the recovery factor from our fields has continued.  Global delays to fabrication have meant that pump procurement has been delayed and in June we were informed by the Compagnie de Tunisienne de Forage (“CTF”), Tunisia’s state owned, monopoly, drilling company that the rig that we had contracted would not be made available to us.  Having defaulted on this contract the CTF then attempted to provide a replacement rig.  The rig suggested was not certified to the degree required by Serinus and was therefore delayed until mid-December.  Given the state owned, monopolistic nature of CTF the Company was deprived of normal contractual remedies and was forced to wait until a suitable rig became available.  This has meant the initial workovers associated with our pump programme were not completed within 2022 as anticipated.  Technically the merits of this programme remain valid and the Company is doggedly pursuing the completion of the workovers in SAB W-1 and N-2 as soon as possible.

As we move into 2023 we remain confident that the technical strategy of the business is sound.  Execution of the strategy has been slower than hoped but the considerable upside, both through exploration in Satu Mare and enhanced production in Tunisia remain excellent catalysts for growth in the business.

Yours sincerely,

Jeffery Auld, Chief Executive Officer

17 March 2023

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