LONDON, UK: Serica Energy has entered into an settlement to acquire the entire issued share capital of Tailwind Energy Investments from Tailwind Energy Holdings.
The consideration for the acquisition comprises:
- The issue of as a lot as 111.048 million new ordinary shares in Serica Energy. Following the issue of the Consideration Shares, they will represent as a lot as 28.9 per cent of Serica’s enlarged issued share capital
- A money payment on Completion of £58.7 million.
On the foundation of the Serica closing price as of 19 December 2022 of 278 pence per share this would be equal to £367 million. Serica will even be taking on Tailwind’s net debt, which as at 30 November 2022 was c.£277 million.
As a half of the Transaction, Mercuria, the largest final shareholder of Tailwind, will become a strategic investor in Serica with a 25.2 per cent holding and can enter right into a Relationship Agreement with Serica.
Transaction Highlights
- Significant increase in Serica’s scale, portfolio diversity and natural funding opportunities
- Estimated proforma mixed manufacturing in 2023 will rise considerably to between 40,000 boe/d and 45,000 boe/d placing Serica within the highest 10 UKCS producers and top three UKCS listed independent producers
- Acquiring fully developed 2P reserves of forty two million boe to create a mixed portfolio with 2P reserves of 104 million boe
- Will create a balanced unfold of manufacturing from two main hubs – Bruce and Triton – which have separate transportation infrastructure
- Number of manufacturing fields will increase from 5 to eleven with substantial upside and natural growth opportunities
- Enlarged group will function greater than eighty per cent of its net production
- Adding predominantly oil reserves reduces focus of commodity price risk while gas stays greater than 50% of production
- The carbon depth of the enlarged group’s producing assets is projected to stay below the UKCS average
- Introduces Mercuria as a strategic investor with a 25.2 per cent shareholding in Serica
- Serica will profit from the availability of Mercuria’s financing and hedging capability mixed with its wide geographic reach
- Relationship Agreement between Serica and Mercuria will govern ongoing relationship
- Two Mercuria nominated non-executive administrators becoming a member of the Serica board on completion
Mitch Flegg, CEO of Serica Energy, commented: “I am excited by the announcement of this transaction and by the possibilities it brings for Serica in phrases of a brand new phase of growth.
The transaction achieves our strategic goal of materially increasing the scale and variety of our UKCS portfolio of assets. The Tailwind portfolio additionally brings a number of natural funding alternatives for additional materials near-term growth in reserves and production. Following this Transaction, Serica will retain its aggressive strengths of a strong balance sheet, positive money flow and low decommissioning cost obligations.
Moreover, through the introduction of Mercuria as a brand new strategic investor, we will be differentially positioned to take benefit of the alternatives we expect to come up through industry consolidation, the North Sea Transition Deal and potentially overseas.
I look ahead to working with my new Tailwind administration colleagues, Steve and Jacques becoming a member of our management team, in addition to the Tailwind employees and contractors becoming a member of Serica on completion.
Their skills and experience, which have been central to the success of Tailwind since its formation, are extremely complementary to these already existing in Serica’s organisation.”
Tony Craven Walker, Chairman of Serica, commented: “Serica has been able to develop its enterprise by a number of times over the previous 5 years with out recourse to any exterior fund raising.
We are proud of that achievement and are now a main North Sea operator with confirmed capabilities, a strong balance sheet and significant ongoing money flow.
The transaction with Tailwind reinforces these strengths, materially enhancing our asset base as we proceed responsibly to present a lot wanted home energy at a time of energy disaster and search to develop and diversify our portfolio of assets further.
The transaction with Tailwind provides a brand new strategic relationship, bringing in Mercuria, one of many world’s largest energy traders, as a main new shareholder of the enlarged group.
The Board believes this relationship will present aggressive advantages because the Company seeks out additional worth accretive transactions. On completion, Mercuria will maintain simply over 25 per cent of Serica and can nominate two new non-Executive administrators to serve on the Board.
I and my Board colleagues are delighted to welcome them, the Tailwind executives and the Tailwind employees to the Company. We look ahead to working collectively on the subsequent phase of Serica’s growth.”
Steve Edwards, CEO of Tailwind, commented: “Since inception in 2016, Tailwind has been pushed by creating worth for its stakeholders; buying and exploiting excessive high quality manufacturing and development alternatives on the UKCS.
Our worth growth and supply over that interval have been exceptional, ensuing from smart M&A and fixed supply of excessive worth natural projects. We have achieved this through the mixture of a dedicated strategy, excellent people and having fun with the fixed support of Mercuria.
My colleagues and I are enthusiastic about this subsequent step with Serica, with the mixed assets, elevated manufacturing and monetary strength making a platform to develop even further. We look ahead to working closely with our Serica colleagues to ship on the thrilling alternatives for the enlarged group.”