Serica Energy plc SQZ Q3 2012 Results

  Serica Energy plc (SQZ) - Q3 2012 Results

RNS Number : 0490R
Serica Energy plc
14 November 2012




Serica Energy plc

("Serica" or the "Company")



Q3 2012 Results



London, 14 November 2012 -  Serica Energy plc (TSX  & AIM: SQZ) announces  its 
financial results for the three and nine months ending 30 September 2012.  The 
results and associated Management Discussion  and Analysis are included  below 
and copies are available at www.serica-energy.com and www.sedar.com.



Highlights:



Serica has continued to make good progress in developing its portfolio  during 
the third quarter and subsequent period to date:



The Company:



o reached agreement to farm-out its interests in the Moroccan offshore blocks
Foum Draa and Sidi Moussa to Cairn Energy and Genel Energy respectively,  with 
potential for drilling in 2013



o completed  the largest  single  continuous offshore  3D seismic  survey  in 
Namibia with excellent quality results, processing of data is now underway



o received DECC notice that it is content with Columbus Development Plan  and 
that, subject to certain standard conditions, the Secretary of State is minded
to issue consent to the plan



o completed the farm-out of its 100% interest in UK North Sea Block 22/19c to
JX Nippon



o commenced the farm out  process for its blocks  in the Irish Rockall  Basin 
containing the largeMuckish prospect



o ended  the quarter  with  no debt  and  US$25.1 million  unrestricted  cash 
balance



Forward prospects:



Serica has  valuable  properties  in  the UK,  Norway,  offshore  Ireland  and 
offshore West Africa and has received a number of proposals relating to  these 
assets. Whilst Serica's focus is on building and realising the full  potential 
of its business for the benefit of shareholders, the Company is carefully  and 
objectively in line  with its  previously stated  strategy and  in the  normal 
course of business, evaluating  all proposals which might  provide a means  of 
accelerating the value of the Company's assets and enhancing shareholder value
whilst also preserving the unrealised upside for future growth.



Tony Craven Walker, Chairman and Interim CEO of Serica commented:



"Serica has continued to make strong progress throughout Q3 both operationally
and through our active asset management  programme, which has led to a  number 
of commercial  opportunities and  transactions. In  the year  to-date we  have 
reached farm-out agreements with a number of high quality partners,  resulting 
in benefits to Serica of approximately US$40 million.



We continue to focus on unlocking the value of the portfolio and realising the
potential of the business for shareholders. We recently received support  from 
DECC over Serica's Development Plan for the Columbus field, subject to certain
standard conditions. This support is a major part of the sanction process  for 
the field and enables the Company to proceed with the evaluation of  financing 
alternatives.



Another important milestone for the Company was the successful completion of a
4,180 km2 3D seismic survey in our Luderitz Basin block, offshore Namibia. The
data is of exceptional quality and will allow us to gain further insight  into 
this largely unexplored basin.



The  good  progress  achieved  in  developing  the  Company's  portfolio   and 
accelerating the  value of  individual  properties places  the Company  in  an 
increasingly strong  position  to grow  its  asset  base for  the  benefit  of 
shareholders. Serica is evaluating a  number of opportunities to  crystallise 
further value for shareholders."





Enquiries:



Serica Energy plc
Tony Craven  Walker, tony.cravenwalker@serica-energy.com           +44   (0)20 
Chairman                                                           7487 7300
Peter        Sadler,                                              
Business
                     peter.sadler@serica-energy.com                +44   (0)20 
Development Director                                               7487 7300
Chris Hearne, CFO    chris.hearne@serica-energy.com                +44   (0)20 
                                                                   7487 7300
J.P.Morgan Cazenove
Michael    Wentworth michael.wentworthstanley@jpmorgancazenove.com +44   (0)20 
Stanley                                                            7588 2828
RBC Capital Markets
Matthew Coakes       matthew.coakes@rbccm.com                      +44   (0)20 
                                                                   7653 4871
College Hill
Matthew Tyler        matthew.tyler@collegehill.com                 +44   (0)20 
                                                                   7457 2020
Catherine Wickman    catherine.wickman@collegehill.com             +44   (0)20 
                                                                   7457 2020
Alexandra Roper      alexandra.roper@collegehill.com               +44   (0)20 
                                                                   7457 2020



The technical information contained in the announcement has been reviewed  and 
approved by Peter Sadler, Business Development Director of Serica Energy  plc. 
Peter Sadler is a qualified Petroleum Engineer (MSc Imperial College,  London, 
1982) and has been a member of the Society of Petroleum Engineers since 1981.





NOTES TO EDITORS



Serica Energy was formed in 2004 and, since then, has drilled in locations  as 
diverse as the  UK Offshore,  the Atlantic margin  offshore Ireland,  offshore 
Indonesia  (North  West  Sumatra,  East  Kalimantan  and  Java)  and  offshore 
Vietnam. Seventeen wells were drilled by the Company as Operator, fourteen of
the wells encountered oil or gas and six of these were commercial. The  first 
of the commercial discoveries,  the Kambuna field in  North West Sumatra,  was 
developed by the Company. The second, the Columbus field in the UK North Sea,
is now in the pre-development stage with project sanction pending. The Company
also has a residual economic interest in the Bream oil field offshore  Norway, 
which will be crystallised when the field is developed, and licence  interests 
offshore Ireland, Morocco and Namibia.



The Company is listed on  both the Toronto Stock  Exchange and the London  AIM 
under the ticker SQZ.



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









FORWARD LOOKING STATEMENTS

This disclosure  contains  certain  forward looking  statements  that  involve 
substantial known  and unknown  risks  and uncertainties,  some of  which  are 
beyond Serica  Energy plc's  control, including:  geological, geophysical  and 
technical risk, the impact of general economic conditions where Serica  Energy 
plc operates, industry conditions, changes  in laws and regulations  including 
the adoption of new environmental laws and regulations and changes in how they
are interpreted and enforced, increased competition, the lack of  availability 
of qualified  personnel or  management, fluctuations  in foreign  exchange  or 
interest rates, stock  market volatility  and market  valuations of  companies 
with respect to announced transactions  and the final valuations thereof,  and 
obtaining required approvals  of regulatory authorities.  Serica Energy  plc's 
actual results, performance or achievement could differ materially from  those 
expressed  in,  or   implied  by,  these   forward  looking  statements   and, 
accordingly, no assurances can be given that any of the events anticipated  by 
the forward looking statements will transpire or  occur, or if any of them  do 
so, what benefits, including  the amount of proceeds,  that Serica Energy  plc 
will derive therefrom.

MANAGEMENT'S DISCUSSION AND ANALYSIS



The following management discussion and analysis ("MD&A") of the financial and
operational results  of  Serica Energy  plc  ("Serica") and  its  subsidiaries 
(together the "Group") contains  information up to  and including 13  November 
2012 and should  be read in  conjunction with the  attached unaudited  interim 
consolidated financial  statements for  the period  ended 30  September  2012, 
which have  been prepared  by  and are  the  responsibility of  the  Company's 
management and have not been reviewed by the Company's independent auditors.



References  to  the  "Company"  include  Serica  and  its  subsidiaries  where 
relevant. All  figures are  reported in  US dollars  ("US$") unless  otherwise 
stated.



The results of  Serica's operations detailed  below in this  MD&A, and in  the 
financial statements, are presented in accordance with International Financial
Reporting Standards ("IFRS").





OVERVIEW - QUARTER ENDED 30 SEPTEMBER 2012



Highlights



Serica  has  continued   to  advance   throughout  the   third  quarter   both 
operationally and  through active  asset  management leading  to a  number  of 
commercial transactions.



During the third quarter and subsequently to-date, the Company:



· Reached agreements to farm-out two  offshore blocks in Morocco for  the 
drilling of two deep water wells.



· Completed the largest single  continuous offshore 3D survey in  Namibia 
as operator with  excellent quality results.  Processing of the  data is  now 
underway.



· Reached agreement to farm-out one block in the North Sea.



· Participated in  the drilling of  the Spaniards East  well to test  the 
potential of the Spaniards discovery. The well encountered Jurassic sands  but 
these were water bearing.



· Commenced the  farm-out process  for its  blocks in  the Irish  Rockall 
Basin which includes the Muckish prospect.



The Company has also recently received notice from the Department of Energy  & 
Climate Change ("DECC") that  the Department is  content with the  Development 
Plan submitted by Serica for the  Columbus field and that, subject to  certain 
conditions, the  Secretary  of  State  is minded  to  issue  consent  for  the 
development and production of  the field in accordance  with that plan.  This 
support from DECC is a major part  of the sanction process for the field,  has 
been received in the time expected and enables the Company to proceed with the
evaluation of financing alternatives.



The  good  progress  achieved  in  developing  the  Company's  portfolio   and 
accelerating the value  of individual properties,  which continued  throughout 
the quarter, places the Company in an increasingly strong position to grow its
asset base  for the  benefit of  shareholders. The  Company is  evaluating  a 
number of opportunities  to crystallise  further value  for shareholders.  In 
addition to the farm-out  process which has now  commenced in relation to  the 
Company's Rockall Basin blocks in  Ireland discussions are taking place  which 
could lead to a farm-out  of the Company's interest  in the Doyle prospect  in 
the  East  Irish  Sea.  The  Company  is  also  evaluating  opportunities  to 
accelerate value in relation, in particular,  to its interest in the  Columbus 
field.



Financial



Serica is  committed  to  careful  and prudent  management  of  its  financial 
resources. Coupled with the Company's programme of selected asset  management 
this has enabled the  Company to contain  expenditures whilst adding  material 
value to its underlying assets.



· The Company ended  the third quarter with  no debt and an  unrestricted 
cash balance of US$25.1 million.



· Farm-out  agreements  reached  during the  year  to-date  have  brought 
resultant benefits to Serica in the form of capital carries for the  Company's 
retained interests totalling approximately US$40 million.



· The  cash  balances,  combined  with the  benefits  of  the  successful 
farm-outs, provide adequate resources  to meet the  Company's near and  medium 
term exploration commitments, including the  recent Spaniards East well  where 
Serica is  contributing  30% of  the  drilling  cost, expected  to  amount  to 
approximately US$7 million.



· Evaluation of financing alternatives for the Company's interest in  the 
Columbus field development continues in parallel with the sanctions  process. 
The Company expects to extend its currently undrawn US$50 million facility and
is reviewing options open to the Company for the provision of alternative debt
finance to supplement capital requirements.



· During the third quarter the Kambuna field contributed sales revenue of
US$3.5 million net to Serica.



Operations



The  following  gives  chronological  highlights  of  operational  and   asset 
management events during the third quarter and subsequently to-date.



· On 23 August, Serica announced an agreement to farm-out its interest in
the Sidi Moussa block offshore Morocco to Genel Energy in consideration for  a 
US$433,000 contribution to Serica's past costs and the funding of a well up to
a gross cap of  US$50 million. Serica  retains a 5%  working interest in  the 
block.



· On 23  August, Premier  Oil, a participant  in the  Bream offshore  oil 
field in Norway, reported that the  Bream project is expected to be  submitted 
for government approval in the  second half of the year  and that a number  of 
contracts are under  tender for  the facilities and  drilling programme.  The 
actual timing is uncertain but Serica  has a significant economic interest  in 
the  Bream  field  and  is  due  a  substantial  payment  on  commencement  of 
production.



· On 28 August, Serica announced an agreement to farm-out its interest in
the Foum Draa block  offshore Morocco to Cairn  Energy in consideration for  a 
US$500,000 contribution to Serica's past costs and the funding of a well up to
a gross cap of US$60 million. Serica retains an 8.33% working interest in the
block. Taken  together  with  the Sidi  Moussa  farm-out  this  substantially 
removes downside  cost  and  risk  to  Serica  shareholders  whilst  retaining 
meaningful interests  in  two  deep  water  wells  to  be  drilled  in  a  new 
exploration area which shows great  promise. Subject to rig availability  the 
wells are likely to be drilled in late 2013 or early 2014.



· On 18 September, Serica announced an agreement to farm-out its interest
in North Sea  block 22/19c  to JX  Nippon in  consideration for  a payment  to 
Serica of US$250,000 and a carry of Serica's 15% retained share of all  future 
costs associated  with the  block including,  at JX  Nippon's discretion,  the 
drilling of an exploration  well to the Jurassic  or deeper. The  transaction 
was given DECC approval and completed on 22 October.



· On 1  October, Serica announced  that it had  successfully completed  a 
4,180 square  kilometre  3D  seismic  survey in  its  Luderitz  Basin  blocks, 
offshore Namibia.  The full  costs of  this survey  were met  by BP  under  a 
farm-out agreement which was announced earlier in the year. Processing of the
extensive information acquired, which is of excellent quality, has commenced.
Serica has a 55% working interest in these blocks.



· On 2  October, notice  was received from  DECC that  the Department  is 
content with the Development Plan for the Columbus field and that, subject  to 
certain standard conditions (including the completion of funding  arrangements 
for the project), the Secretary  of State is minded  to issue consent for  the 
development and production of the Columbus field in accordance with that plan.



· On 2  October, BG  as Operator for  the Lomond  Bridge Linked  Platform 
("BLP"), issued invitations to tender in respect of the BLP. The tenders  are 
a requirement for the BLP sanction process. The BLP is the main export  route 
for gas and gas condensate production from the Columbus field.



· On 15  October, Serica announced  the commencement of  drilling on  the 
Spaniards East well 15/21a-60 to appraise  the area adjacent to the  Spaniards 
oil discovery  in  the central  North  Sea in  which  the Company  has  a  21% 
interest. In  November it  was announced  the well  reached a  total depth  of 
10,694 feet and was plugged and abandoned. The well, operated by Premier  Oil, 
encountered 75 feet of Jurassic sands  but these were interpreted to be  water 
bearing.



· On 2 November,  Serica announced that it  had allotted six million  new 
ordinary shares of Serica to  National Petroleum Corporation of Namibia  (Pty) 
Limited ("NAMCOR").  The  share  issue,  which  was  subject  to  ministerial 
consents in  Namibia,  is the  outstanding  signature payment  due  to  NAMCOR 
following the award of  the Luderitz Basin licences  to Serica earlier in  the 
year. Following the  allotment, NAMCOR holds  approximately 3.3% of  Serica's 
issued share capital.



Management



· On  5 September,  Serica  announced that  Mitch Flegg,  Serica's  Chief 
Operating Officer, became an Executive Director of the Company. Mitch has been
Chief Operating Officer for Serica since March 2011.





Forward Prospects



Serica has  valuable  properties  in  the UK,  Norway,  offshore  Ireland  and 
offshore West Africa and has received a number of proposals relating to  these 
assets. Whilst Serica's focus is on building and realising the full potential
of its business for the benefit of shareholders, the Company is carefully  and 
objectively, in line  with its previously  stated strategy and  in the  normal 
course of business, evaluating  all proposals which might  provide a means  of 
accelerating the value of the Company's assets and enhancing shareholder value
whilst also preserving the unrealised upside for future growth.



In the North  Sea, the  Company is pleased  to have  received indication  that 
project sanction  is  expected to  be  granted, subject  to  certain  standard 
conditions, for the  Columbus field development,  which Serica operates.  The 
required export infrastructure  is expected  to be  in place  to enable  field 
development to proceed as  planned in 2013/14 with  production to commence  by 
mid 2015.



The Company looks forward to bringing this project onto production but is also
keeping under review ways  of bringing forward the  full value of the  project 
for the  benefit of  shareholders.  In parallel  with ongoing  discussions  to 
secure debt finance for field development, Serica is therefore evaluating  the 
possibility of a sale of an interest in the field and has received expressions
of interest.  Such  a  sale,  if concluded,  would  be  consistent  with  the 
Company's strategy to optimise the value of its assets but would also  provide 
Serica with additional funds with which to expand its business.



Serica is very well placed to  demonstrate further the clear potential of  its 
portfolio of properties and prospects, both  in the North Sea and in  emerging 
Atlantic margin basins,  and will continue  to seek ways  to unlock value  and 
build on this position.

DETAILED OPERATIONS OVERVIEW



Serica is an oil and gas  company with exploration and development  activities 
based in the  UK, Ireland,  Namibia and  Morocco, together  with a  production 
interest in the  Kambuna field  in Indonesia and  an economic  interest in  an 
oilfield offshore Norway.



The Company operates a large proportion of its licences. In the UK it is  the 
development operator of the Columbus field. It operates all of its East Irish
Sea licences and Northern North Sea Blocks 210/19a and 210/20a. In Namibia it
is operator for its Luderitz Basin blocks where it has successfully  completed 
one of the largest continuous 3D offshore seismic surveys in Namibia to-date.
In Morocco, pending  completion of  the farm-outs  to Genel  Energy and  Cairn 
Energy, it is technical operator for the Foum Draa and Sidi Moussa Blocks. In
Ireland it operates twelve blocks in the Rockall Basin and three in the  Slyne 
Basin. This places Serica in  a very strong position  to unlock the value  in 
its properties.



Serica's business  activities are  focussed  in two  separate  hubs -  the  UK 
Offshore area, including an  economic interest in the  Bream field in  Norway, 
and a substantial  portfolio of  properties in four  distinct Atlantic  margin 
basins. The Company  retains an interest  in the producing  Kambuna field  in 
Indonesia which is nearing the end of its economic producing life.



Serica is positioned as  a Company with no  debt, a development project,  near 
term drilling  in  the UK  and  overseas, and  an  expanding position  in  new 
Atlantic Margin plays offshore Europe  and Africa which hold great  potential. 
During the third quarter of 2012 the Company continued to make major steps  to 
demonstrate the value of its oil and gas and exploration licences.



SUMMARY OF LICENCE HOLDINGS



The following summary gives further  detailed information on Serica's  licence 
interests in which activities took place during, and subsequent to, the end of
the third quarter.



United Kingdom



Central North Sea: Block 23/16f - Columbus Field Development



The Columbus field,  containing gas  rich in condensates,  extends from  Block 
23/16f to the  south into Block  23/21, operated by  BG International  Limited 
("BG"), which includes the Lomond platform and the producing Lomond field.



During the  first quarter  of  2012 all  participants  in the  Columbus  field 
reached agreement  on the  cost and  production sharing  arrangements and  the 
detailed terms to provide access for the Columbus field production through the
Lomond platform and  the CATS and  Forties pipeline systems.  Under the  cost 
sharing arrangements the participants  in the Columbus  field (other than  BG) 
will be responsible for the drilling of two production wells, the installation
of sub-sea manifolds and the  laying of a pipeline  to take the two-phase  gas 
and gas-condensate  stream to  a  new Bridge  Linked  Platform ("BLP")  to  be 
constructed by BG adjacent to the Lomond platform. BG will be responsible for
the construction and operation of the BLP and provide access for the  Columbus 
field production through the BLP and  Lomond facilities. The tariff and  cost 
sharing terms for  the BLP and  Lomond facilities reflect  these cost  sharing 
arrangements. Serica will be the  Operator for the Columbus field  facilities 
with an interest of 33.2%.



These agreements enable the Columbus project to proceed to project  sanction. 
Application has  been  made to  DECC  on schedule  for  the grant  of  project 
sanction which will enable discussions on project financing to be  completed. 
In October, notice was received from DECC that the Department is content  with 
the Development  Plan for  the Columbus  field and  that, subject  to  certain 
standard conditions (including the completion of funding arrangements for  the 
project),  the  Secretary  of  State  is  minded  to  issue  consent  for  the 
development and  production of  the  Columbus field  in accordance  with  that 
plan. Field development is planned  to be completed by  the end of 2014  with 
field production in mid 2015 following installation of the BLP and  subsequent 
hook-up to the Columbus sub-sea system.



Independent consultant Netherland, Sewell & Associates ("NSAI") carried out  a 
reserves report  on the  Columbus field  for  the end  of 2011.  This  report 
estimated that the gross Proved plus  Probable Reserves of the field are  70.6 
bcf of gas and 4.9 mm  bbl of liquids, a total  of 16.7 mmboe. Serica holds  a 
50% interest in those Columbus reserves lying in Block 23/16f. After providing
for reserves lying in the adjacent  Block, NSAI estimates the Company's  share 
of proved and probable reserves in the field  to be 23.6 bcf of sales gas  and 
1.6 mmbbl of liquids, a net 5.6 mmboe to Serica.



Central North Sea: Block 15/21g and 15/21a (part) - Spaniards Appraisal



In January 2012  an agreement  was finalised  with the  participants of  Block 
15/21a, which contains  the Spaniards oil  discovery, to combine  the area  of 
Block 15/21a covering the  discovery with neighbouring  Block 15/21g in  which 
Serica had a 30% interest. As a  result of this transaction Serica has a  21% 
interest in the amalgamated area including the Spaniards discovery.



In early October the Operator, Premier Oil plc ("Premier"), spudded  Spaniards 
East well  15/21a-60  to evaluate  the  down-dip potential  of  the  Spaniards 
accumulation some 1.2 kilometres to the east of the discovery well. Serica  is 
contributing a 30% share of  the drilling cost of the  well, with the bulk  of 
this cost being incurred in the fourth quarter.



On 6 November,  it was  announced that  the well  had encountered  75 feet  of 
Jurassic sands but  these were interpreted  to be water  bearing from the  log 
data and the well was, accordingly, being plugged and abandoned. The well was
drilled to a total depth of 10,694 feet.



Whilst a full analysis  of the well  results will be  required before a  final 
conclusion can be reached, the  initial interpretation now indicates that  the 
accumulation is  likely to  be confined  to  a more  limited area  around  the 
original discovery well.



Central North Sea: Block 22/19c



In September 2012,  Serica announced  that it  has reached  agreement with  JX 
Nippon Exploration  and  Production  (U.K.)  Limited  ("JX  Nippon")  for  the 
farm-out of  UK Central  North Sea  Block 22/19c  (Licence P.1620),  in  which 
Serica presently  holds a  100%  interest. The  transaction was  given  DECC 
approval and  completed on  22 October.Under  the agreement,  JX Nippon  will 
acquire an operated 85%  interest in the licence,  with Serica retaining  15%. 
As consideration, JX Nippon will pay to Serica US$250,000 and carry  Serica's 
share of all future costs associated with the licence up to and including,  at 
JX Nippon's discretion, the drilling of an exploration well to the Jurassic or
deeper.Serica had  previously participated  in the  drilling of  the  Oates, 
Palaeocene Forties  sand  prospect  in  22/19c,  with  its  costs  carried  by 
Premier.Following lack of success at Oates, Premier relinquished its interest
in the  licence which  was retained  by Serica.It  is the  prospectivity  of 
deeper, older strata which is now being pursued.



Northern North Sea: Blocks 210/19a and 210/20a - South Otter Prospects



These blocks, in which Serica has a 100% interest, are a contiguous block  and 
part block lying immediately south of  the producing Otter oilfield. A  number 
of oil prospects have  been provisionally identified  at Jurassic Brent  Group 
and Home Sand levels. Two of the Brent Group prospects are down-faulted  traps 
and the other is a conventional Brent fault block. The fourth prospect is in a
Jurassic reservoir known as the Home Sand. Drilling of the South Otter blocks
remains subject to an ongoing farm-out programme.



East Irish Sea: Blocks 113/26b and 113/27c - Doyle Prospect



Serica has a 65% operated interest in  these blocks. A gas prospect lying  in 
the north of Block 113/27c, the Doyle prospect, has been fully matured as  the 
result of work  done in  2011 and is  ready to  drill. In line  with its  risk 
management policy, Serica is in substantive discussions with a view to farming
out its interest in the  block for transfer of operatorship  and a carry on  a 
well to test the  Doyle prospect. Plans  for the well to  be drilled are  held 
pending the final outcome of the UK 27^th Licensing Round, with adjacent  open 
acreage among many blocks as yet not awarded.



East Irish Sea: Block 110/8b



In December 2011, Serica was awarded  a 100% interest and the operatorship  of 
Block  110/8b.  The  work  commitment  comprises  a  3D  seismic  reprocessing 
programme, planned to delineate the Darwen  North gas prospect which has  been 
identified in the  block. This work  is ongoing. The  block also contains  a 
small undeveloped oil discovery which will be re-evaluated.



Southern North Sea: Blocks 47/2b (Split), 47/3g (Split), 47/7 (Split) &  47/8d 
(Part)



In December 2011, Blocks  47/2b (Split), 47/3g (Split),  47/7 (Split) &  47/8d 
(Part) in the  Southern North Sea  were offered  under a single  licence to  a 
group in which Serica has a 37.5%  interest. Centrica is the Operator for  the 
group. These blocks  are contiguous  part blocks immediately  adjacent to  the 
York field, also operated by Centrica.



A number of gas prospects, including a possible extension to North York,  have 
been identified  on  the blocks  at  both  the Leman  (Permian)  and  Namurian 
(Carboniferous) levels. The work obligation comprises a 3D seismic acquisition
survey and reprocessing of  existing seismic data. The  3D seismic survey  is 
planned to be undertaken by the partnership in 2013.





Norway



Serica holds a significant economic interest in the Bream oil field in  Norway 
as the result of the sale, in 2008, of its original 20% interest in the  field 
for a deferred consideration payable upon commencement of production from  the 
field. The  field operator  announced plans  in the  second quarter  for  the 
drilling of up to seven development wells to commence in the fourth quarter of
2013 and last  for about 13  months. It  has recently been  reconfirmed by  a 
field participant that contracts are under tender for the facilities and wells
ahead of formal project sanction however, the actual timing of development  is 
uncertain.





Ireland



Rockall Basin: Blocks 5/17, 5/18, 5/22, 5/23, 5/27, and 5/28 - Muckish
Prospects

and Blocks 11/5, 11/10, 11/15, 12/1, 12/6 and 12/11(part) - Midleton and West
Midleton Prospects



Serica holds a 100%  working interest in two  licences covering twelve  blocks 
and part  blocks  over  an  area totalling  2,220  square  kilometres  in  the 
north-eastern part of the  Rockall Basin in the  Atlantic margin off the  west 
coast of Ireland. The presence of a  hydrocarbon system in the Basin has  been 
proven by the Dooish gas-condensate discovery.



A large exploration  prospect, Muckish,  has been  mapped in  Blocks 5/22  and 
5/23.  Further  evaluation  of  3D  seismic  data  coverage  and  the  Dooish 
gas-condensate discovery lying nearby to  the south east, gives confidence  in 
the potential of the prospect which covers an area of approximately 30  square 
kilometres with over 600 metres of vertical closure in a water depth of  1,450 
metres. Blocks 11/10 and 12/6 contain two further pre-Cretaceous fault  block 
prospects, Midleton and  West Midleton,  identified from  existing 3D  seismic 
data. Like Muckish these are  analogous to the nearby gas-condensate  bearing 
Dooish discovery. Serica is undertaking  2D and 3D seismic reprocessing  work 
and other geological studies to firm up these two additional prospects.



A farm-out programme  in preparation  for drilling the  large, high  potential 
Muckish prospect has commenced and is ongoing.



Slyne Basin: Blocks 27/4, 27/5 (west) and 27/9 - Liffey & Boyne Prospects



These blocks cover an area of 305 square kilometres in the Slyne Basin off the
west coast of Ireland.  The Company holds  a 50% interest  in the blocks  and 
operates the Licence.



In 2009, Serica drilled the Bandon exploration well 27/4-1 and made a  shallow 
Jurassic oil  discovery. The  early drilling  of this  well met  the  licence 
obligations for both the  first and second  exploration periods. Although  the 
discovery was not commercial the well was important as it proved the  presence 
of oil  in  the  Jurassic.  Deeper  Jurassic  oil  prospects  of  potentially 
commercial size,  where  the  oil  would  be  of  much  higher  quality,  have 
subsequently been identified including two  prospects, Liffey and Boyne  which 
also  overlay  separate,  deeper  gas  prospects  in  the  Triassic   Sherwood 
sandstone. The Company  has acquired site  survey data in  preparation for  a 
drilling programme to test these prospects.





Namibia



Luderitz Basin: Blocks 2512A, 2513A, 2513B and 2612A (part)



In late  December 2011,  Serica was  awarded an  85% interest  in a  Petroleum 
Agreement covering Blocks 2512A, 2513A, 2513B and 2612A (part) in the Luderitz
Basin, offshore Namibia in partnership with The National Petroleum Corporation
of Namibia (Pty) Limited ("NAMCOR") and Indigenous Energy (Pty) Limited.  The 
blocks lie in the centre of the basin and cover a total area of  approximately 
17,400 square kilometres.



During 2012 the Company has completed all payments due to NAMCOR in respect of
the initial licence award. These payments comprised an initial cash payment of
US$1 million, which was made in January 2012, and a share allotment to  NAMCOR 
of six  million  new ordinary  shares  of Serica,  which  was announced  on  2 
November 2012.



The allotment, which represents 3.28% of the enlarged share capital, was  made 
once NAMCOR received the required consents from the Namibian authorities.



During the third quarter the  Company successfully completed a major  offshore 
survey in the Luderitz Basin blocks  with a final acquisition of 4,180  square 
kilometres of 3D seismic data to  fully delineate prospects identified in  the 
south east of the blocks.  The survey, conducted by  Serica on behalf of  its 
partners in the Licence, BP, NAMCOR and  IEPL, commenced in May and took  four 
and a half months to complete.  The survey was undertaken by Polarcus  Seismic 
Limited using the 10-streamer seismic vessel Polarcus Nadia. The completion of
this survey more than  meets in full the  obligations for seismic  acquisition 
under the terms of the licence.



The completion of this extensive survey,  only nine months after the award  of 
the licence,  is  an  important  step  in  the  exploration  of  this  largely 
unexplored basin. The data is of exceptional quality and has been acquired  in 
the south east of the  licence area over a  clearly defined prospect which  is 
located in  a  good  setting for  potential  reservoir  development.The  data 
includes a tie line to provide  control with existing well 2513/08-1 in  which 
good reservoir sands were encountered in the blocks and is now being processed
fully  to  delineate  the  prospect  and  to  identify  additional   prospects 
associated with locally present  channel sands.Initial results are  expected 
to be  available around  the end  of the  year and  will be  amalgamated  with 
regional geological  information  prior  to  determining  a  forward  drilling 
programme.



Under the terms of  the farm-out to BP,  completed during the second  quarter, 
Serica reduced its interest in the licence  to 55% in return for a payment  to 
recover past costs and the full cost  of the survey being met by BP.  Serica 
has also granted  an option for  BP to  increase its interest  in the  licence 
further by  meeting  the  full  cost of  drilling  and  testing  a  deep-water 
exploration well to the Barremian level before the end of the first four  year 
exploration period. In  the event that  this option is  exercised by BP,  the 
Company's interest in the licence will  be 17.5% carried through drilling  and 
testing the  first well.  Serica will  continue  to be  the Operator  of  the 
licence during the initial seismic period  with BP taking over as Operator  if 
it exercises its option to drill and test a well.





Morocco



Sidi Moussa and Foum Draa Petroleum Agreements



Serica holds  licence interests  in the  Sidi Moussa  and adjacent  Foum  Draa 
Petroleum Agreements  offshore Morocco.  The  blocks cover  a total  area  of 
approximately 12,700 square kilometres  in the sparsely explored  Tarfaya-Ifni 
Basin and extend  from the  Moroccan coastline  into water  depths reaching  a 
maximum of  2,000 metres.  Under  the terms  of  the licence  agreements  the 
participants are  required to  carry the  state oil  company ONHYM  for a  25% 
interest through the exploration and appraisal phase.



The Tarfaya-Ifni Basin  is geologically  analogous to the  oil producing  salt 
basins of West  Africa and  exhibits significant potential.  Sidi Moussa  and 
Foum Draa are  covered by over  5,200 square kilometres  of modern 3D  seismic 
data and over 7,000 kilometres of  2D seismic data. Serica has completed  the 
evaluation of this data which demonstrates  the presence of a large number  of 
salt diapir  related prospects,  stratigraphic traps  and tilted  fault  block 
plays.



During the second quarter, Serica, in conjunction with its partners, conducted
a farm-out exercise  in respect  of both blocks.  This generated  considerable 
industry interest and reached a  successful conclusion with the  announcements 
in August of farm-out deals for both blocks.



Sidi Moussa

Subject to the consent of the Moroccan Authorities, Genel Energy plc ("Genel")
will bejoining  Sericaand its  partners  in the  exploration  of the  set  of 
permits which comprise the Sidi Moussa Offshore area.Under the terms of  the 
transaction, Genel will acquire a 60% equity interest in Sidi Moussa, pro rata
from each of the Sidi Moussa Participants according to its equity interest. In
return Genel will pay a contribution to past costs (US$433,000 net to  Serica) 
and pay  for  the  drilling of  the  commitment  well required  in  the  First 
Extension Period  (including the  full  costs relating  to the  ONHYM  carried 
interest), up to a cap of US$50 million.As a result of the farm-out,  Serica 
will hold an ongoing interest of  5% in the Sidi Moussa permits.  Confirmation 
from the  Moroccan  authorities  approving  the  farm-out  to  Genel  and  the 
commencement of the First  Extension Period, which entails  the drilling of  a 
commitment well, is anticipated shortly. It is expected that the well will  be 
drilled in late 2013 or early 2014.



Foum Draa

Subject to the consent of the  Moroccan Authorities, Cairn Energy plc  "Cairn" 
will be joining  Serica and  its partners  in the  exploration of  the set  of 
permits which comprise the  Foum Draa Offshore area.  Under the terms of  the 
transaction, Cairn will acquire a 50%  operated equity interest in Foum  Draa, 
pro rata  from each  of the  Foum Draa  Participants according  to its  equity 
interest. In return  Cairn will pay  its equity interest  share of past  costs 
(US$500,000 net to Serica) and the first US$60 million towards the drilling of
the commitment  well required  in the  First Extension  Period (including  the 
costs relating to the ONHYM carried  interest). As a result of the  farm-out, 
Serica will hold  an ongoing  interest of 8.3333%  in the  Foum Draa  permits. 
Confirmation from the Moroccan authorities approving the farm-out to Cairn and
the commencement of the First Extension Period, which entails the drilling  of 
a commitment well, is anticipated shortly. It is expected that the well  will 
be drilled in late 2013 or early 2014.



Indonesia



Glagah Kambuna TAC - Kambuna Field, Offshore North Sumatra, Indonesia



Serica's sole  remaining interest  in Indonesia  is its  25% interest  in  the 
Glagah Kambuna Technical  Assistance Contract ("TAC")  offshore North  Sumatra 
which contains the producing Kambuna  gas field. Whilst the Company  continues 
to benefit  from the  cash  flow it  receives from  this  field, it  does  not 
consider the asset to be core to its forward strategy.



The Kambuna field has commenced its  natural decline and production rates  are 
falling  in  line  with  reservoir  pressure  depletion.  The  partnership  is 
reviewing areas where cost cutting can prolong the economic life of the  field 
but, under current projections, the field is expected to reach the end of  its 
economic life in early 2013.



During this final phase, the timing  of field handover to Pertamina and  hence 
the remaining  volume of  reserves to  be produced,  are dependent  both  upon 
commercial considerations and termination  arrangements. Based on the  outcome 
of these issues, a final adjustment to the asset carrying value may be made in
the Company's full  year accounts when  it is anticipated  that these  matters 
will have been clarified.



During the third quarter the field produced at an average rate of 14.3  mmscfd 
(Q3 2011: 36.4  mmscfd) with  approximately 836  bpd of  condensate (Q3  2011: 
2,342 bpd). Average prices realised during the quarter for gas and  condensate 
sales respectively were US$6.56 per mcf (Q3 2011: US$6.1 per mcf) and US$108.1
per barrel (Q3 2011: US$116.9 per  barrel). The highest price achieved  during 
2012 is US$130 per barrel, achieved in March.



Serica commissioned an independent reserves audit on the Kambuna field for its
2011 annual reserves filings. This reserves report, carried out by RPS Energy,
the same consultants as  used by the Operator,  estimates that at 31  December 
2011 the gross  Proved plus Probable  Reserves of  the field are  17.5 bcf  of 
sales gas and 1.1 mm bbl of condensate, a total of 4.7 mmboe. In view of  the 
anticipated near term depletion  of the field, which  is expected to occur  in 
2013, the Company bases its financial  planning and reporting for the  Kambuna 
field on  Proved  reserves only,  which  RPS Energy  estimated  to be,  at  31 
December 2011, 11.2 bcf of sales gas and 0.6 mm bbl of liquids, a total of 2.9
mmboe.



FINANCIAL REVIEW



A detailed review of the Q3 2012 results of operations and other financial
information is set out below.



Results of Operations



The results of  Serica's operations detailed  below in this  MD&A, and in  the 
financial statements, are presented in accordance with International Financial
Reporting Standards ("IFRS").



The continuing operations comprise the core  business hubs of the UK  Offshore 
and Atlantic Margin basin interests, together with the Kambuna field  interest 
in Indonesia.  Discontinued  operations comprise  the  Indonesian  exploration 
business disposal group that was sold in October 2011.



The financial  results  of the  Kambuna  field interest  had  previously  been 
disclosed in  the Q2  2011 and  Q3 2011  reports to  shareholders as  part  of 
discontinued operations  but are  now disclosed  within continuing  operations 
together with the results  of the retained core  business segments. The  three 
and nine month ended 30 September  2011 financial results detailed below  have 
therefore been restated to only  disclose the Indonesian exploration  business 
disposal group as 'discontinued'.



                                       Three months ended   Nine months ended
                                          30 September         30 September
                                                Restated*            Restated*
                                           2012      2011       2012      2011
                                         US$000    US$000     US$000    US$000
Continuing operations
Sales revenue                             3,493     6,579     11,948    21,769
Cost of sales                           (4,609)   (6,235)   (13,785)  (18,700)
Gross (loss)/profit                     (1,116)       344    (1,837)     3,069
Expenses:
Pre-licence costs                          (6)     (192)      (251)   (1,061)
E&E and other asset write offs           (382)         -      (518)         -
Administrative expenses                (1,213)   (1,338)    (3,968)   (4,339)
Foreign exchange gain                      130      (78)        236        11
Share-based payments                     (115)     (208)      (435)     (674)
Depreciation                              (85)      (87)      (254)     (262)
Operating loss before net finance                                        
revenue and taxation
                                        (2,787)   (1,559)   (7,027)   (3,256)
Gain on disposal                             -         -      1,023         -
Finance revenue                              4         2          8        12
Finance costs                            (124)     (186)      (464)   (1,218)
Loss before taxation                    (2,907)   (1,743)    (6,460)   (4,462)
Taxation charge                              -   (1,603)          -   (2,512)
Loss for the period                     (2,907)   (3,346)    (6,460)   (6,974)
from continuing operations
Discontinued operations
Loss for the period from
discontinued operations                       -     (624)          -   (5,836)
Loss for the period                     (2,907)   (3,970)   (6,460)  (12,810)
Earnings per share (EPS)                    US$       US$        US$       US$
Basic and diluted EPS on loss from       (0.02)    (0.02)     (0.04)    (0.04)
continuing operations
Basic and diluted EPS on loss for the    (0.02)    (0.02)     (0.04)    (0.07)
period





* Restated for discontinued operations



Continuing operations



Serica generated a gross loss of US$1.1 million for the three months ended  30 
September 2012 ("Q3 2012") from its retained 25% interest in the Kambuna field
(Q3 2011: gross profit of US$0.3 million).



Sales revenues



The Company currently generates all its  sales revenue from the Kambuna  field 
in Indonesia. Revenue is recognised on an entitlement basis for the  Company's 
net working field interest. Entitlement  revenues are higher in those  periods 
where the full capped  amount of cost recovery  entitlement is eligible to  be 
claimed out of gross revenue. In the 2011 periods, the cycle of eligible  cost 
recovery was such that the  full capped amount of  cost recovery could not  be 
claimed by  the contractors,  therefore  giving lower  contractor  entitlement 
revenues and an increased  government share of  gross revenue. Unclaimed  cost 
recovery amounts are  carried forward to  future periods and  during 2012  the 
maximum possible contractual cost recovery entitlement is being achieved.



The field commenced its anticipated natural  decline during 2011 in line  with 
reservoir pressure depletion.  In addition,  production rates  in January  and 
February 2012  were  reduced during  compression  facility work,  designed  to 
enhance the production capacity of the field after the first quarter of  2012. 
In Q3 2012, gross Kambuna field gas production averaged 14.3 mmscf per day (Q3
2011 36.4 mmscf per  day) together with average  condensate production of  836 
barrels per day (Q2 2011  2,342 barrels per day).  The Q3 2012 gas  production 
was sold at prices averaging US$6.56 per  mscf (Q3 2011 US$6.13 per mscf)  and 
generated US$1.9 million (Q3  2011 US$3.6 million) of  revenue net to  Serica. 
Condensate production is stored and sold when lifted at a price referenced  to 
the Indonesia Attaka official monthly crude oil price. Liftings in the  period 
earned US$1.6 million (Q3 2011 US$3.0 million) of revenue net to Serica at  an 
average price of US$108.1 per barrel (Q3 2011 US$116.9 per barrel).



Cost of sales and depletion charges



Cost of sales were  driven by production from  the Kambuna field and  totalled 
US$4.6 million in  Q3 2012  (Q3 2011:  US$6.2 million).  The charge  comprised 
direct operating costs of US$1.9 million (Q3 2011 US$1.5 million) and non cash
depletion of US$2.7 million (Q3 2011 US$4.7 million).



Operating costs  per  boe  increased  significantly in  all  2012  periods  as 
reducedproduction levels  were  not  offset  by  corresponding  reductions  in 
production costs. The Company revised  its accounting estimate of  entitlement 
reserves for depletion purposes from  'proved and probable' to 'proved',  with 
effect from 1 July 2011. This reduction in entitlement reserve base  generated 
further increases in the depletion charge per boe for the second half of  2011 
onwards.



Other expenses and income



The Company generated a loss before  tax from continuing operations of  US$2.9 
million for Q3 2012  compared to a  loss before tax of  US$1.7 million for  Q3 
2011.



Pre-licence costs  include direct  cost and  allocated general  administrative 
cost incurred  on  oil and  gas  interests prior  to  the award  of  licences, 
concessions or exploration rights. No  significant expense was incurred in  Q3 
2012. The pre-licence work performed throughout 2011 (Q3 2011: US$0.2 million)
culminated in the following awards; Block  110/8b in the East Irish Sea,  four 
blocks in the Southern North Sea, a further six blocks in the Rockall Basin in
Ireland, and  four large  blocks and  part  blocks in  the Luderitz  Basin  in 
Namibia.



There were asset write offs of  obsolete inventory balances of US$0.4  million 
in Q3 2012 (Q3 2011: US$ nil).



Administrative expenses of US$1.2  million for Q3  2012 decreased from  US$1.3 
million for  the  same period  last  year.  The Company  continues  to  reduce 
overheads and expects savings to give further benefit in 2012.



The impact of foreign exchange was not significant in Q3 2012 or Q3 2011.



Share-based payment costs of US$0.1 million in Q3 2012 reflected share options
granted and compare with US$0.2 million for Q3 2011.



Negligible depreciation charges in all periods represent office equipment  and 
fixtures and fittings. The depletion and amortisation charge for Kambuna field
development costs is recorded within 'Cost of Sales'.



In March 2012 the Company announced that it had agreed to farm-out an interest
in its Namibian licence to BP. Under the transaction, BP paid to Serica a  sum 
of US$5.0 million covering  Serica's past costs and  earned a 30% interest  in 
the licence by meeting the  full cost of an  extensive 3D seismic survey.  The 
accounting gain  of  US$1.0  million  on disposal  recorded  in  Q1  2012  and 
disclosed in the nine months ended 30 September 2012 income statement  relates 
to the recognition  of recovery for  those past costs  incurred that had  been 
expensed as pre-licence costs in previous periods. The re-imbursement of those
past costs capitalised as E&E assets on  the award of the licence in  December 
2011 or capitalised as incurred  in Q1 2012, are  treated as a reduction  from 
the book cost of the asset. Completion of the farm-out transaction occurred in
June 2012  following  the consent  of  the Ministry  of  Mines and  Energy  in 
Namibia.



Finance revenue comprising bank deposit interest income has been negligible in
both periods.



Finance costs consist of interest  payable, arrangement costs spread over  the 
term of the  bank loan facility  and other fees.  All outstanding  liabilities 
were fully repaid in  February 2011 causing a  reduction in expense to  US$0.2 
million in Q3  2011 and US$0.1  million in Q3  2012. All facility  arrangement 
costs have  been amortised  and no  interest is  currently payable.  The  only 
ongoing cost related to other minor fees.



Taxation charges typically arise from Kambuna field operations, although there
is no tax payable in Q3 2012. The Q3 2011 charge of US$1.6 million also  arose 
from Kambuna  and  entirely comprised  current  tax charges.  Current  tax  is 
typically charged on  the profit oil  or gas element  of sales revenue  rather 
than the cost recovery component.



The net  loss per  share from  continuing operations  of US$0.02  for Q3  2012 
compares to a net loss per share of US$0.02 for Q3 2011.







Summary of Quarterly Results

                            
                 2012    2012    2012    2011    2011    2011    2011     2010
Quarter        30 Sep 30 June  31 Mar  31 Dec  30 Sep  30 Jun  31 Mar   31 Dec
ended:
               US$000  US$000  US$000  US$000  US$000  US$000  US$000   US$000
Sales           3,493   4,417   4,038   5,342   6,579   6,613   8,577    9,413
revenue
Loss for the                                                          
quarter
              (2,907) (2,162) (1,391) (7,560) (3,970) (6,375) (2,465) (40,112)
Basic and                                                             
diluted loss
per share US$  (0.02)  (0.01)  (0.01)  (0.04)  (0.02)  (0.04)  (0.01)   (0.22)



The fourth quarter 2011 loss includes  an impairment charge of US$2.3  million 
against the Kambuna production asset.



The second quarter 2011 loss includes a charge of US$3.7 million recognised on
the re-measurement to fair value of the Indonesian exploration disposal group.



The fourth quarter  2010 loss  includes asset  write offs  of US$29.5  million 
attributed to  the Kutai  and Oates  E&E assets  and an  impairment charge  of 
US$11.8 million against the Kambuna production asset.



Discontinued operations



The results of discontinued operations below are those generated from Serica's
South East Asia exploration business which was disposed of in October 2011.



At 30  June and  30  September 2011,  as a  result  of the  Board's  strategic 
decision  to  exit  Indonesia,  the  Group's  interests  in  the  region  were 
classified as  a  disposal group  held  for  sale and  therefore  included  as 
discontinued operations. In October 2011, the Group completed the disposal  of 
its operated  exploration  portfolio;  however the  Group's  25%  interest  in 
Kambuna has not been sold. The directors concluded that as at 31 December 2011
and subsequent period ends, whilst still available for sale, Serica's interest
in Kambuna no longer meets  the IFRS 5 criteria to  be classified as an  asset 
held for sale, because an active marketing program is no longer in place,  and 
therefore the results of this part of the disposal group are disclosed  within 
continuing operations together with the results of the retained core  business 
segments.



                                        Three months ended   Nine months ended
                                           30 September        30 September
                                                 *Restated           *Restated
                                           2012       2011      2012      2011
                                         US$000     US$000    US$000    US$000
Discontinued operations
Expenses:
Pre-licence costs                            -      (152)         -     (295)
E&E and other asset write offs               -      (235)         -     (744)
Administrative expenses                      -      (203)         -     (621)
Foreign exchange loss                        -        (4)         -       (3)
Share-based payments                         -       (30)         -      (90)
                                                                        

Operating loss                                -      (624)        -   (1,753)
Other                                        -          -         -     (363)
Loss recognised on
remeasurement to fair value                  -          -         -   (3,720)
Loss before taxation                          -      (624)         -   (5,836)
Taxation charge                              -          -         -         -
Loss for the period                           -      (624)         -   (5,836)
Earnings per share (EPS)                    US$        US$       US$       US$
Basic and diluted EPS on loss for the                                    
period from discontinued operations
                                              -    (0.004)        -   (0.033)

                                               



* Restated for discontinued operations



Asset write-offs in 2011 were  in respect of E&E  and other expenses from  the 
Kutai PSC in Indonesia,  which was sold in  October 2011. 2011 expenditure  on 
the asset was expensed as incurred.



In October  2011  the Company  completed  the  disposal of  its  portfolio  of 
operated exploration interests in South East  Asia to Kris Energy Limited  for 
base consideration  of US$3.4  million  and a  further contingent  payment  of 
US$1.0 million received in December 2011. The transaction generated a loss  of 
US$3.6 million (chiefly comprising a loss recognised on re-measurement to fair
value of US$3.7 million as at 30 September 2011) after deducting booked  asset 
costs and other transaction costs and fees.

Working Capital, Liquidity and Capital Resources



Current Assets and Liabilities



An extract of the  balance sheet detailing current  assets and liabilities  is 
provided below:



                                                                   31 December

                            30 Sep 2012 30 June 2012 31 March 2012        2011
                                 US$000       US$000        US$000      US$000
Current assets:
 Inventories                    1,380        1,802         1,672       1,572
 Trade and other
receivables                       7,147       10,576        15,521       9,338
 Financial assets               1,282        1,410           669         647
    Cash     and     cash 
equivalents                      25,060       23,277        16,640      19,946
Total Current assets             34,869       37,065        34,502      31,503
Less Current liabilities:
 Trade and other payables     (8,125)     (11,082)       (9,274)    (10,267)
 Income tax payable                 -            -         (284)       (302)
Total Current liabilities       (8,125)     (11,082)       (9,558)    (10,569)
Net Current assets               26,744       25,983        24,944      20,934



At 30 September 2012,  the Company had net  current assets of US$26.7  million 
which comprised current assets of US$34.8 million less current liabilities  of 
US$8.1 million,  giving  an overall  increase  in working  capital  of  US$0.8 
million in the three month period.



Inventories decreased from US$1.8 million to  US$1.4 million over the Q3  2012 
period following the write off of minor obsolete items.



Trade and other receivables  at 30 September 2012  totalled US$7.1 million,  a 
decrease of US$3.5 million from the Q2 2012 balance of US$10.6 million.  There 
were significant  cash revenue  receipts of  US$6.2 million  during the  third 
quarter, which included amounts from condensate sales in March and April.  The 
balance as at 30 September 2012 includes; US$2.0 million of trade debtors from
gas and condensate sales from the Kambuna field, US$1.2 million of Morocco and
UK farm-out back cost contributions,  advance payments on ongoing  operations, 
short-term Indonesian VAT  receivables, recoverable amounts  from partners  in 
joint venture  operations in  the UK,  Morocco and  Indonesia, sundry  UK  and 
Kambuna asset working capital balances, and prepayments.



Financial assets at 30 September 2012 represented US$1.3 million of restricted
cash deposits.



Cash and cash equivalents increased from US$23.3 million to US$25.1 million in
the quarter. During Q3 2012 the Company benefitted from US$6.2 million of cash
receipts from Kambuna field  revenues, which included  US$1.2 million from  Q1 
2012 oil sales  outstanding at 30  June 2012. Cash  outflows were incurred  on 
Kambuna  field  operating  costs  and  ongoing  work  on  the  Columbus  field 
development, exploration  work across  the portfolio  in the  UK, Ireland  and 
Morocco together with ongoing administrative and corporate costs.



Trade and other payables of US$8.1 million at 30 September 2012 include US$2.0
million of signature payment liabilities arising on the award of the  Namibian 
licences in December,  a US$1.9  million JV  partner advance  in Namibia,  and 
trade creditors and accruals from  the Kambuna and Columbus operations.  Other 
items include  sundry  creditors and  accruals  from the  ongoing  exploration 
programmes in the  UK and  Ireland, payables for  administrative expenses  and 
other corporate costs.



The current tax  payable in  prior periods arises  in respect  of the  Kambuna 
field in Indonesia. First cash tax  payments from Kambuna field revenues  were 
made in April 2011 although  the field is not currently  in a cash tax  paying 
position.



Long-Term Assets and Liabilities



An extract of the balance sheet detailing long-term assets and liabilities  is 
provided below:



                           30 September 30 June 2012 31 March 2012 31 December
                                   2012                                   2011
                                 US$000       US$000        US$000      US$000

                                                                           
Exploration & evaluation
assets                           67,223       67,114        66,442      69,083
Property, plant and              10,644
equipment                                     13,945        16,496      18,719
Financial assets                      -            -           274         394
Long-term other                   2,178
receivables                                    2,535         3,377       3,613
Provisions                      (2,044)     (2,040)       (2,035)     (2,029)
Deferred income tax                                                          -
liabilities                           -            -             -



During Q3  2012, total  investments in  petroleum and  natural gas  properties 
represented by exploration and evaluation assets ("E&E assets") increased from
US$67.1  million  to  US$67.2  million.  These  amounts  exclude  the  Kambuna 
development costs which are classified as property, plant and equipment.



The net  US$0.1 million  increase in  Q3 2012  consists of  US$1.3 million  of 
additions less  US$1.2 million  of back  cost contributions  recognised in  Q3 
2012. The additions on continuing  operations incurred on ongoing  exploration 
work in Morocco, Ireland and the UK, on the Columbus FDP, and G&A. Expenditure
on the ongoing 3D  seismic survey on the  Luderitz basin licence interests  in 
Namibia is being carried by BP. The back cost contributions are recognised  in 
the Q3 2012 period following the Company's farm-outs in Morocco and the UK.



Property, plant and  equipment chiefly  comprise the  net book  amount of  the 
capital expenditure  on the  Company's interest  in the  Kambuna  development. 
During Q3 2012,  the Company's  investment decreased from  US$13.7 million  to 
US$10.5 million,  principally  due  to depletion  charges  of  US$2.7  million 
arising from  the  production  of  gas  and  condensate.  No  further  capital 
expenditure is  being  recorded  on  the  project.  The  property,  plant  and 
equipment also included balances of  US$0.2 million (31 December 2011:  US$0.5 
million) for office fixtures and fittings and computer equipment.



All financial assets at 30 September 2012 are classified as short-term.



Long-term other receivables of US$2.2  million are represented by value  added 
tax ("VAT") on Indonesian capital spend which is expected to be recovered from
the Indonesian authorities.



Provisions of US$2.0 million  at 30 September 2012  (31 December 2011:  US$2.0 
million)  are  in  respect  of  Kambuna  field  decommissioning  payments   in 
Indonesia.



There is no deferred income tax liability recorded as at 30 September 2012.



Shareholders' Equity



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



                    30 Sep 2012 30 June 2012  31 March 31 December

                                                  2012        2011
                         US$000       US$000    US$000      US$000
Total share capital     207,758      207,758   207,702     207,702
Other reserves           19,910       19,795    19,650      19,475
Accumulated deficit   (122,923)    (120,016) (117,854)   (116,463)



Total share capital includes  the total net proceeds,  both nominal value  and 
any premium, on the issue of equity capital.



Other reserves mainly  include amounts  in respect  of cumulative  share-based 
payment charges. The increase  from US$19.8 million to  US$19.9 million in  Q3 
2012 reflects proportional charges  in the period for  options issued in  2012 
and prior years.



Asset values and Impairment



At 30 September 2012 Serica's  market capitalisation stood at US$84.3  million 
(£52.1 million), based upon a share price of £0.295, which was exceeded by the
net asset value  at that date  of US$104.7  million. By 13  November 2012  the 
Company's market capitalisation had  increased to US$86.6 million.  Management 
conducted a thorough review of the carrying value of its assets and determined
that no  further  write-downs were  required  beyond those  already  disclosed 
above.



Capital Resources



Available financing resources and debt facility



Serica's prime focus has  been to deliver  value through exploration  success. 
To-date this has given rise to the Kambuna gas field development in  Indonesia 
and the Columbus gas field  in the UK North  Sea, for which development  plans 
are being formulated.



Typically exploration activities are equity financed whilst field  development 
costs are  principally debt  financed. In  the current  business  environment, 
access to new equity and debt remains uncertain. Consequently, the Company has
given priority to the careful management of existing financial resources.



The Company's current facility was arranged in November 2009 for a  three-year 
period with J.P.Morgan plc, Bank of Scotland plc and Natixis as Mandated  Lead 
Arrangers. The facility initially covered  US$100 million and was  principally 
set up to refinance the Company's outstanding borrowings on the Kambuna field.
It was also  put in  place to  finance the  appraisal and  development of  the 
Columbus field and for general corporate purposes.



Following the debt repayments in 2010, management reduced its debt facility to
US$50 million total  capacity so as  to restrict ongoing  facility costs.  The 
ability to draw under the facility  for development is determined both by  the 
achievement of milestones on the relevant project and also by the availability
calculated  under  a  projection  model.  The  outstanding  amount  under  the 
Company's debt  facility  was fully  repaid  in February  2011.  The  facility 
expires shortly and negotiations to extend this are in progress.



At 30 September 2012,  the Company held cash  and cash equivalents of  US$25.1 
million and  US$1.3  million  of  short-term  restricted  cash  in  continuing 
operations. Overall, the  current cash  balances held, the  revenues from  the 
retained 25% Kambuna interest, and the control that the Company can exert over
the timing and cost  of its exploration  programmes both through  operatorship 
and through farm-outs leave  it well placed to  manage its commitments in  the 
short to medium term.



Summary of contractual obligations



The following table summarises the Company's contractual obligations as at  30 
September 2012;

                               Total <1 year 1-3 years >3 years
Contractual Obligations       US$000  US$000    US$000   US$000
Operating leases                 275     275         -        -
Other long-term obligations    1,805     500     1,305        -
Total contractual obligations  2,080     775     1,305        -



Other long-term obligations relate to decommissioning payments in Indonesia.



Lease commitments



At 30 September 2012, Serica had  no capital lease obligations. At that  date, 
the Company had commitments to future minimum payments under operating  leases 
in respect of  rental office  premises and office  equipment for  each of  the 
following period/years as follows:



                 US$000
31 December 2012    135
31 December 2013    140



Capital expenditure commitments, obligations and plans



As  at  30  September  2012,  there  were  no  material  outstanding   capital 
acquisition costs expected on the Kambuna project.



The  Company  also  typically  has  obligations  to  carry  out  defined  work 
programmes on its  oil and gas  properties, under  the terms of  the award  of 
rights to these  properties. The Company  is not obliged  to meet other  joint 
venture partner shares of these programmes.



Following the  finalisation  of  the amalgamation  agreement  to  combine  the 
Central North Sea Blocks 15/21g and 15/21a in January 2012, as at 30 September
2012 the venture partners were committed  to drilling an appraisal well in  4Q 
2012. As noted above in the operations review, this was completed in  November 
2012 and  Serica's  estimated  30%  share of  costs  is  approximately  US$7.0 
million.



Also in the  UK North  Sea, the  partners in  Licence P1906  (York Area)  have 
obligations to acquire seismic data in the first licence period. Plans are now
advanced to acquire this  in 2013 and Serica's  estimated 40% paying share  is 
US$3.8 million.



The most  significant  other  obligations  were in  respect  of  the  Namibian 
licence, awarded  in December  2011.  Under the  terms  of this  licence,  the 
Company has a minimum  obligation expenditure on  exploration work of  US$15.0 
million covering the entire initial four year period of the licence, ending in
December 2015. Following the Q1 2012 farm-out transaction with BP noted in the
operations review, the Company will  incur no significant expenditure  towards 
its work programme obligation. As at 30 September 2012, the value of work done
on the 3D Seismic  acquisition programme had  exceeded the minimum  obligation 
expenditure on the licence.



Other less material minimum obligations include G&G, seismic work and  ongoing 
licence fees in the UK and Ireland.



Off-Balance Sheet Arrangements



The Company  has  not  entered  into any  off-balance  sheet  transactions  or 
arrangements.



Critical Accounting Estimates



The Company's significant accounting  policies are detailed in  note 2 to  the 
attached  interim  financial  statements.  International  Financial  Reporting 
Standards have  been  adopted.  The  costs of  exploring  for  and  developing 
petroleum and natural gas reserves are capitalised. The capitalisation and any
write off of E&E assets, or depletion of producing assets, necessarily involve
certain judgments with regard to whether the asset will ultimately prove to be
recoverable. Key sources  of estimation  uncertainty that  impact the  Company 
relate to  assessment  of  commercial  reserves  and  the  impairment  of  the 
Company's assets. Oil and  gas properties are subject  to periodic review  for 
impairment,  whilst  goodwill  is  reviewed  at  least  annually.   Impairment 
considerations necessarily involve certain judgements as to whether E&E assets
will lead to commercial discoveries and whether future field revenues will  be 
sufficient to cover capitalised costs.  Recoverable amounts can be  determined 
based upon  risked  potential,  or  where relevant,  discovered  oil  and  gas 
reserves. In  each  case,  recoverable  amount  calculations  are  based  upon 
estimations and management assumptions  about future outcomes, product  prices 
and performance. Management  is required to  assess the level  of the  Group's 
commercial reserves  together with  the future  expenditures to  access  those 
reserves, which are  utilised in  determining the  amortisation and  depletion 
charge  for  the  period  and  assessing  whether  any  impairment  charge  is 
required.



Financial Instruments



The Group's financial  instruments comprise  cash and  cash equivalents,  bank 
loans  and  borrowings,  accounts  payable  and  accounts  receivable.  It  is 
management's opinion that the Group is not exposed to significant interest  or 
credit or currency risks arising from its financial instruments other than  as 
discussed below:



Serica has exposure to interest rate fluctuations on its cash deposits and its
bank loans; given the level of expenditure plans over 2012/13 this is  managed 
in the short-term through selecting treasury  deposit periods of one to  three 
months. Treasury counterparty credit risks are mitigated through spreading the
placement of  funds over  a  range of  institutions each  carrying  acceptable 
published credit ratings to minimise counterparty risk.



Where Serica operates joint ventures on behalf of partners it seeks to recover
the appropriate  share of  costs from  these third  parties. The  majority  of 
partners in these ventures are well established oil and gas companies. In  the 
event of non payment, operating agreements typically provide recourse  through 
increased venture shares.



Serica retains certain cash holdings and other financial instruments  relating 
to  its  operations,  limited  to  the  levels  necessary  to  support   those 
operations. The US$ reporting currency value of these may fluctuate from  time 
to time causing reported foreign exchange gains and losses. Serica maintains a
broad strategy of  matching the  currency of funds  held on  deposit with  the 
expected expenditures  in  those  currencies. Management  believes  that  this 
mitigates  much  of  any  actual   potential  currency  risk  from   financial 
instruments. Loan funding is available in US Dollars and Pounds Sterling.



It is management's opinion  that the fair value  of its financial  instruments 
approximate to their carrying values, unless otherwise noted.



Share Options



As at 30  September 2012, the  following director and  employee share  options 
were outstanding:



   Expiry Date    Amount Exercise cost
                                  Cdn$
    March 2014 1,000,000     1,800,000
 December 2014   200,000       200,000
  January 2015   600,000       600,000
     June 2015   100,000       180,000
                         Exercise cost
                                     £
  October 2013   750,000       300,000
  January 2014   228,000        72,960
 November 2015   280,000       271,600
  January 2016   135,000       139,725
     June 2016   270,000       259,200
  January 2017   243,000       247,860
      May 2017   210,000       218,400
    March 2018   594,000       445,500
    March 2018   350,000       287,000
  January 2020 2,203,500     1,498,380
    April 2021   450,000       141,188
  January 2022 2,144,960       458,485



In January 2012, 859,690 share options were granted to two executive directors
and 1,285,270  share options  were  granted to  certain employees  other  than 
directors with an exercise cost of £0.21375  and an expiry date of 10  January 
2022.



In April 2012, 110,000  share options were exercised  by employees other  than 
directors at a price of £0.32, and 1,902,500 share options were cancelled.



In August 2012, 1,200,000 share options expired.



In September 2012, 1,257,000 share options expired.



In October  2012, 1,200,000  share  options were  granted to  three  executive 
directors with an exercise cost of £0.29 and an expiry date of 8 October 2022.



Outstanding Share Capital



On 2 November 2012, 6,000,000 new ordinary shares in the Company were allotted
to NAMCOR in respect of the earlier award of the Namibian licences to Serica.



As at 13 November 2012, the Company had 182,770,311 ordinary shares issued and
outstanding.



Business Risk and Uncertainties



Serica, like  all  companies in  the  oil and  gas  industry, operates  in  an 
environment subject to inherent risks  and uncertainties. The Board  regularly 
considers the principal risks to which the company is exposed and monitors any
agreed  mitigating  actions.  The  overall  strategy  for  the  protection  of 
shareholder value against these risks is to retain a broad portfolio of assets
with varied risk/reward profiles,  to apply prudent  industry practice in  all 
operations, to  carry insurance  where available  and cost  effective, and  to 
retain adequate working capital.



The principal risks currently recognised  and the mitigating actions taken  by 
the management are as follows:



Investment Returns: Management seeks to raise funds and then to generate
shareholder returns though investment in a portfolio of exploration acreage
leading to the drilling of wells and discovery of commercial reserves.
Delivery of this business model carries a number of key risks.
Risk                                 Mitigation
Market support may be eroded        · Management regularly communicates
obstructing fundraising and lowering its strategy to shareholders
the share price
                                     · Focus is placed on building an
                                     asset portfolio capable of delivering
                                     regular news flow and offering continuing
                                     prospectivity
General market conditions may        · Management aims to retain adequate
fluctuate hindering delivery of the  working capital to ride out downturns
company's business plan              should they arise
Management's decisions on capital    · Rigorous analysis is conducted of
allocation may not deliver the       all investment proposals
expected successful outcomes
                                     · Operations are spread over a range
                                     of areas and risk profiles
Each asset carries its own risk      · Management aims to avoid
profile and no outcome can be        over-exposure to individual assets and to
certain                              identify the associated risks objectively





Operations: Operations may not go according to plan leading to damage,
pollution, cost overruns and poor outcomes.
Risk                                 Mitigation
Individual wells may not deliver     · Thorough pre-drill evaluations are
recoverable oil and gas reserves     conducted to identify the risk/reward
                                     balance

                                     · Exposure is selectively mitigated
                                     through farm-out
Wells may blow out or equipment may  · The Group retains fully trained
fail causing environmental damage    and experienced personnel
and delays
                                     · The planning process involves risk
                                     identification and establishment of
                                     mitigation measures

                                     · Emphasis is placed on engaging
                                     experienced contractors

                                     · Appropriate insurances are
                                     retained
Production may be interrupted        · Serica's only producing field,
generating significant revenue loss  Kambuna, is in the later stages of
                                     production and insurance is not
                                     considered cost-effective
Operations may take far longer or    · Management applies rigorous budget
cost more than expected             control

                                     · Adequate working capital is
                                     retained to cover reasonable
                                     eventualities
Resource estimates may be misleading · The Group deploys qualified
curtailing actual production and     personnel
reducing reserves estimates
                                     · Ongoing performance is monitored

                                     · Regular third-party reports are
                                     commissioned





Personnel: The company relies upon a pool of experienced and motivated
personnel to identify and execute successful investment strategies
Risks                              Mitigation
Key personnel may be lost to other · The Remuneration Committee regularly
companies                          evaluates total compensation to ensure the
                                   Company remains competitive
Personal safety may be at risk in  · A culture of safety is encouraged
demanding operating environments,  throughout the organisation
typically offshore
                                   · Responsible personnel are designated
                                   at all appropriate levels

                                   · The Group maintains up-to-date
                                   emergency response resources and procedures

                                   · Insurance cover is carried in
                                   accordance with industry best practice
Staff and representatives may find · Company policies and procedures are
themselves exposed to bribery and  communicated to personnel regularly
corrupt practices
                                   · Management reviews all significant
                                   contracts and relationships with agents and
                                   governments





Commercial environment: World and regional markets continue to be volatile
with fluctuations and access issues that might hinder the company's business
success
Risk                                Mitigation
Volatile commodity prices mean that  · Kambuna gas is sold under
the company cannot be certain of the long-term contracts and similar
future sales value of its products   arrangements will be considered for
                                     Columbus production

                                     · Such contracts can be supplemented
                                     by price hedging although none is
                                     currently in place for Kambuna condensate

                                     · Budget planning considers a range
                                     of commodity pricing
The company may not be able to get   · A range of different off-take
access, at reasonable cost, to       options have been considered for Columbus
infrastructure and product markets   and field partners are currently in
when required                        advanced negotiation
Credit to support field development  · Serica's existing facility was
programmes may not be available at   designed to fund part of Columbus capital
reasonable cost                      costs

                                     · Funding requirements for Kambuna
                                     were significantly mitigated through part
                                     disposal
Fiscal regimes may vary, increasing  · Operations are currently spread
effective tax rates and reducing the over a range of different fiscal regimes
expected value of reserves           in Indonesia, Western Europe and Africa

                                     · Before committing to a significant
                                     investment the likelihood of fiscal term
                                     changes is considered when evaluating the
                                     risk/reward balance



In addition to  the principal  risks and uncertainties  described herein,  the 
Company is subject to a number of other risk factors generally, a  description 
of which  is  set out  in  our latest  Annual  Information Form  available  on 
www.sedar.com.



Nature and Continuance of Operations



The principal activity of the Company is to identify, acquire and subsequently
exploit oil and gas reserves. Its  activities are located in the UK,  Ireland, 
Namibia and  Morocco,  together with  a  currently retained  interest  in  the 
Kambuna Field in Indonesia.



The Company's financial statements have been prepared with the assumption that
the Company will be able to  realise its assets and discharge its  liabilities 
in the  normal course  of business  rather than  through a  process of  forced 
liquidation. During the three month period ended 30 September 2012 the Company
generated a loss of US$2.9 million from continuing operations. At 30 September
2012 the Company had US$25.1 million of net cash.



The Company intends to utilise its existing cash balances and future operating
cash inflows  to fund  the immediate  needs of  its investment  programme  and 
ongoing operations. Further details of  the Company's financial resources  and 
debt facility are given above in the Financial Review in this MD&A.



Key Performance Indicators ("KPIs")



The Company's main  business is  the acquisition of  interests in  prospective 
exploration acreage, the  discovery of hydrocarbons  in commercial  quantities 
and the crystallisation  of value  whether through production  or disposal  of 
reserves.  The  Company  tracks  its  non-financial  performance  through  the 
accumulation of  licence  interests  in  proven  and  prospective  hydrocarbon 
producing regions, the level of  success in encountering hydrocarbons and  the 
development of  production facilities.  In parallel,  the Company  tracks  its 
financial performance  through  management of  expenditures  within  resources 
available, the cost-effective exploitation of reserves and the crystallisation
of value at the optimum point.



Additional Information



Additional information  relating to  Serica,  including the  Company's  annual 
information   form,   can   be   found    on   the   Company's   website    at 
www.serica-energy.com and on SEDAR at www.sedar.com



Approved on Behalf of the Board



(Signed)   "Antony   Craven   Walker"   (Signed) 
"Christopher Hearne"



Antony Craven Walker    Christopher Hearne
Chief Executive Officer Finance Director

14 November 2012

Forward Looking Statements

This disclosure  contains  certain  forward looking  statements  that  involve 
substantial known  and unknown  risks  and uncertainties,  some of  which  are 
beyond Serica Energy plc's control, including: the impact of general  economic 
conditions where Serica Energy plc  operates, industry conditions, changes  in 
laws and  regulations including  the adoption  of new  environmental laws  and 
regulations and changes in  how they are  interpreted and enforced,  increased 
competition, the lack  of availability of  qualified personnel or  management, 
fluctuations in foreign  exchange or interest  rates, stock market  volatility 
and market valuations of companies with respect to announced transactions  and 
the final valuations thereof, and  obtaining required approvals of  regulatory 
authorities. Serica Energy  plc's actual results,  performance or  achievement 
could differ materially from those expressed in, or implied by, these  forward 
looking statements and, accordingly,  no assurances can be  given that any  of 
the events anticipated  by the  forward looking statements  will transpire  or 
occur, or  if any  of  them do  so, what  benefits,  including the  amount  of 
proceeds, that Serica Energy plc will derive therefrom.





GLOSSARY



bbl                   barrel of 42 US gallons
bcf                   billion standard cubic feet
boe                   barrels of oil equivalent (barrels of oil, condensate
                      and LPG plus the heating equivalent of gas converted
                      into barrels at a rate of 4,800 standard cubic feet per
                      barrel for Kambuna, which has a relatively high
                      calorific value, and 6,000 standard cubic feet per
                      barrel for Columbus)
boepd                 barrels of oil equivalent per day
bopd or bpd           barrels of oil or condensate per day
FPSO                  Floating Production, Storage and Offtake vessel (often a
                      converted oil tanker)
LNG                   Liquefied Natural Gas (mainly methane and ethane)
LPG                   Liquefied Petroleum Gas (mainly butane and propane)
mcf                   thousand cubic feet
mmbbl                 million barrels
mmboe                 million barrels of oil equivalent
mmBtu                 million British Thermal Units
mmscfd                million standard cubic feet per day
PSC                   Production Sharing Contract
Proved Reserves       Proved reserves are those Reserves that can be estimated
                      with a high degree of certainty to be recoverable. It is
                      likely that the actual remaining quantities recovered
                      will exceed the estimated proved reserves.
Probable Reserves     Probable reserves are those additional Reserves that are
                      less certain to be recovered than proved reserves. It is
                      equally likely that the actual remaining quantities
                      recovered will be greater or less than the sum of the
                      estimated proved + probable reserves.
Possible Reserves     Possible reserves are those additional Reserves that are
                      less certain to be recovered than probable reserves. It
                      is unlikely that the actual remaining quantities
                      recovered will exceed the sum of the estimated proved +
                      probable + possible reserves
Reserves              Estimates of discovered recoverable commercial
                      hydrocarbon reserves calculated in accordance with the
                      Canadian National Instrument 51‑101
Contingent Resources  Estimates of discovered recoverable hydrocarbon
                      resources for which commercial production is not yet
                      assured, calculated in accordance with the Canadian
                      National Instrument 51‑101
Prospective Resources Estimates of the potential recoverable hydrocarbon
                      resources attributable to undrilled prospects,
                      calculated in accordance with the Canadian National
                      Instrument 51‑101
TAC                   Technical Assistance Contract
tcf                   trillion standard cubic feet



Serica Energy plc

Group Income Statement

For the period ended 30 September

Unaudited                            Three     Three     Nine      Nine
                                    months    months   months    months
                                     ended     ended    ended     ended
                                    30 Sep    30 Sep   30 Sep    30 Sep
                         Notes        2012      2011     2012      2011
                                           *Restated          *Restated
Continuing operations               US$000    US$000   US$000    US$000
Sales revenue                    4   3,493     6,579   11,948    21,769
Cost of sales                    5 (4,609)   (6,235) (13,785)  (18,700)


Gross (loss)/profit                (1,116)       344  (1,837)     3,069
Pre-licence costs                      (6)     (192)    (251)   (1,061)
E&E and other asset write offs       (382)         -    (518)         -
Administrative expenses            (1,213)   (1,338)  (3,968)   (4,339)
Foreign exchange gain/(loss)           130      (78)      236        11
Share-based payments                 (115)     (208)    (435)     (674)
Depreciation                          (85)      (87)    (254)     (262)
Operating loss from continuing
operations                         (2,787)   (1,559)  (7,027)   (3,256)
Gain on disposal                 7       -         -    1,023         -
Finance revenue                          4         2        8        12
Finance costs                        (124)     (186)    (464)   (1,218)
Loss before taxation               (2,907)   (1,743)  (6,460)   (4,462)
Taxation charge for the period  11       -   (1,603)        -   (2,512)
Loss for the period from
continuing operations              (2,907)   (3,346)  (6,460)   (6,974)
Discontinued operations
Loss for the period from
discontinued operations          6       -     (624)        -   (5,836)
Loss for the period                (2,907)   (3,970)  (6,460)  (12,810)
Loss per ordinary share (EPS)
Loss on continuing operations
Basic and diluted EPS (US$)         (0.02)    (0.02)   (0.04)    (0.04)
Loss for the period
Basic and diluted EPS (US$)         (0.02)    (0.02)   (0.04)    (0.07)

* Restated for discontinued operations - see note 6



Total Statement of Comprehensive Income

There are no other comprehensive income items other than those passing through
the income statement.

Serica Energy plc

Consolidated Balance Sheet





                                      30 Sep     30 June    31 Dec      30 Sep
                                        2012        2012      2011        2011
                                      US$000      US$000    US$000      US$000
                            Note (Unaudited) (Unaudited) (Audited) (Unaudited)
Non-current assets
Exploration & evaluation     7
assets                                67,223      67,114    69,083      65,352
Property, plant and          8
equipment                             10,644      13,945    18,719         536
Financial assets                           -           -       394         530
Other receivables                      2,178       2,535     3,613           -
                                      80,045      83,594    91,809      66,418
Current assets
Inventories                            1,380       1,802     1,572         809
Trade and other receivables            7,147      10,576     9,338       1,950
Financial assets                       1,282       1,410       647         523
Cash and cash equivalents             25,060      23,277    19,946      18,450
                                      34,869      37,065    31,503      21,732
Assets held for sale         6             -           -         -      34,531
TOTAL ASSETS                         114,914     120,659   123,312     122,681
Current liabilities
Trade and other payables             (8,125)    (11,082)  (10,267)     (3,688)
Income taxation payable                    -           -     (302)           -
Non-current liabilities
Provisions                           (2,044)     (2,040)   (2,029)           -
Deferred income tax
liabilities                                -           -         -           -
Liabilities associated with  6
assets                                     -           -         -     (4,461)
held for sale
TOTAL LIABILITIES                   (10,169)    (13,122)  (12,598)     (8,149)
NET ASSETS                           104,745     107,537   110,714     114,532
Share capital                9       207,758     207,758   207,702     207,702
Other reserves                        19,910      19,795    19,475      19,192
Accumulated deficit                (122,923)   (120,016) (116,463)   (112,362)
TOTAL EQUITY                         104,745     107,537   110,714     114,532




















Serica Energy plc

Statement of Changes in Equity



For the year ended 31 December 2011 and period ended 30 September 2012



Group                          Share capital Other reserves   Deficit    Total
                                      US$000         US$000    US$000   US$000
At 1 January 2011 (audited)          207,657         18,428  (96,093)  129,992
Loss for the year                          -              -  (20,370) (20,370)
Total comprehensive income                 -              -  (20,370) (20,370)
Share-based payments                       -          1,047         -    1,047
Proceeds on exercise of
options                                   45              -         -       45
At 31 December 2011 (audited)        207,702         19,475 (116,463)  110,714
Loss for the period                        -              -   (1,391)  (1,391)
Total comprehensive income                 -              -   (1,391)  (1,391)
Share-based payments                       -            175         -      175
At 31 March 2012 (unaudited)         207,702         19,650 (117,854)  109,498
Loss for the period                        -              -   (2,162)  (2,162)
Total comprehensive income                 -              -   (2,162)  (2,162)
Proceeds on exercise of
options                                   56              -         -       56
Share-based payments                       -            145         -      145
At 30 June 2012 (unaudited)          207,758         19,795 (120,016)  107,537
Loss for the period                        -              -   (2,907)  (2,907)
Total comprehensive income                 -              -   (2,907)  (2,907)
Share-based payments                       -            115         -      115
At 30 September 2012
(unaudited)                          207,758         19,910 (122,923)  104,745





Serica Energy plc

Consolidated Cash Flow Statement

For the period ended 30 September



Unaudited                                    Three     Three    Nine      Nine
                                            months    months  months    months
                                             ended     ended   ended     ended
                                            30 Sep    30 Sep  30 Sep    30 Sep
                                              2012      2011    2012      2011
                                                   *Restated         *Restated
                                            US$000    US$000  US$000    US$000
Cash flows from operating activities:
Loss for the period                        (2,907)   (3,970) (6,460)  (12,810)
Adjustments to reconcile loss for the
period
to net cash flow from operating activities
Taxation                                         -     1,603       -     2,512
Net finance costs                              120       184     456     1,206
Gain on disposal                                 -         - (1,023)         -
Depreciation                                    85        87     254       262
Depletion and amortisation                   2,749     4,748   8,440    13,811
Asset write offs                               382       235     518       744
Loss on re-measurement to fair value             -         -       -     3,720
Share-based payments                           115       238     435       764
Decrease in receivables                      4,590     4,135   3,986     8,357
Decrease in inventories                        422       820     192       842
Decrease in payables                       (2,957)   (1,813) (2,142)   (8,037)
Cash generated from operations               2,599     6,267   4,656    11,371
Taxation paid                                    -   (1,791)   (302)   (4,925)
Net cash flow from operations                2,599     4,476   4,354     6,446
Cash flows from investing activities:
Reclassification/(purchase) of P,P & E         467     (447)   (619)   (1,286)
Purchase of E&E assets                     (1,301)     (477) (3,436)   (3,562)
Proceeds from disposals                          -         -   5,000         -
Interest received                                4         2       8        12
Net cash (outflow)/inflow from investing     (830)     (922)     953   (4,836)
Cash proceeds from financing activities:
Repayments of loans and borrowings               -         -       -  (11,800)
Proceeds on exercise of options                  -         -      56        45
Finance costs paid                           (116)     (172)   (445)     (636)
Net cash from financing activities           (116)     (172)   (389)  (12,391)
Cash and cash equivalents
Net increase/(decrease) in period            1,653     3,382   4,918  (10,781)
Effect of exchange rates on cash               130      (30)     196         6
Amount at start of period                   23,277    15,875  19,946    30,002
Amount at end of period                     25,060    19,227  25,060    19,227



*Restated for discontinued operations - see note 6

Serica Energy
plc



Notes to the Unaudited Consolidated Financial Statements



1. Corporate information



The interim condensed consolidated financial  statements of the Group for  the 
nine months ended 30  September 2012 were authorised  for issue in  accordance 
with a resolution of the directors on 13 November 2012.



Serica Energy plc is  a public limited company  incorporated and domiciled  in 
England & Wales. The Company's ordinary shares  are traded on AIM and the  TSX 
Exchange. The principal activity  of the Company is  to identify, acquire  and 
exploit oil and gas reserves.



2. Basis of preparation and accounting policies



Basis of Preparation



The interim condensed  consolidated financial statements  for the nine  months 
ended 30 September 2012 have been  prepared in accordance with IAS 34  Interim 
Financial Reporting.



These unaudited interim  consolidated financial statements  of the Group  have 
been prepared in accordance  with International Financial Reporting  Standards 
following the  same accounting  policies  and methods  of computation  as  the 
consolidated financial statements for the  year ended 31 December 2011.  These 
unaudited interim consolidated  financial statements  do not  include all  the 
information and footnotes required by generally accepted accounting principles
for annual financial statements  and therefore should  be read in  conjunction 
with the consolidated financial statements and the notes thereto in the Serica
Energy plc annual report for the year ended 31 December 2011.



Going Concern



The financial  position  of the  Group,  its  cash flows  and  available  debt 
facilities are described in the Financial  Review in the Q3 2012  Management's 
Discussion and  Analysis. As  at  30 September  2012,  the Group  had  US$25.1 
million of net cash.



The Directors are required to consider  the availability of resources to  meet 
the Group and Company's liabilities for the forseeable future.



After making enquiries, the Directors  have a reasonable expectation that  the 
Group has  adequate resources  to continue  in operational  existence for  the 
foreseeable future. Accordingly they continue to adopt the going concern basis
in preparing the interim condensed financial statements.



Significant accounting policies



The accounting policies adopted  in the preparation  of the interim  condensed 
consolidated financial statements  are consistent with  those followed in  the 
preparation of the Group's annual financial  statements for the year ended  31 
December 2011.



The Group financial statements are presented in US dollars and all values  are 
rounded to  the  nearest  thousand  dollars  (US$000)  except  when  otherwise 
indicated.



Basis of Consolidation



The consolidated financial statements include the accounts of the Company  and 
its wholly-owned  subsidiaries  Serica  Holdings  UK  Limited,  Serica  Energy 
Holdings B.V., Serica Energy Corporation, Asia Petroleum Development  Limited, 
Petroleum Development Associates (Asia) Limited, Serica Energia Iberica  S.L., 
Serica Energy (UK) Limited,  PDA Lematang Limited,  APD (Asahan) Limited,  APD 
(Biliton) Limited, Serica Glagah Kambuna  B.V., Serica Foum Draa B.V.,  Serica 
Sidi Moussa B.V.,  Serica Energy Rockall  B.V., Serica Energy  Slyne B.V.  and 
Serica Energy Namibia B.V.. Together, these comprise the "Group".



All  inter-company  balances  and  transactions  have  been  eliminated   upon 
consolidation.





3. Segmental Information



The Group's  business  is that  of  oil  & gas  exploration,  development  and 
production. The Group's reportable and geographical segments are based on  the 
locations of the Group's assets.



The following tables  present profit information  on the Group's  geographical 
segments for the  nine months  ended 30 September  2012 and  2011 and  certain 
asset and liability information as at 30 September 2012. Costs associated with
the UK corporate centre are included  in the UK & Ireland reportable  segment. 
Reportable information in  respect of  the Group's interest  in the  producing 
Kambuna field in Indonesia is disclosed as a separate segment.



Nine months ended 30 September 2012 (unaudited)
                              UK & Ireland  Africa Kambuna    Total

                                    US$000                      

                                            US$000  US$000   US$000
Continuing
Revenue                                  -       -  11,948   11,948
(Loss)/profit for the period      (5,178)     977 (2,259)  (6,460)
Other segmental information
Segmental assets                    96,622   1,539  16,753  114,914
Unallocated assets                                                -
Total assets                                                114,914
Segmental liabilities              (2,037) (3,942) (4,190) (10,169)
Unallocated liabilities                                           -
Total liabilities                                          (10,169)



Nine months ended 30 September 2011 (unaudited)
                                                                 *Restated
                             UK & Ireland Africa Kambuna   Total Discontinued

                                   US$000                                

                                          US$000  US$000  US$000       US$000
Continuing
Revenue                                 -      -  21,769  21,769            -
(Loss)/profit for the period      (6,686)  (803)     515 (6,974)      (5,836)



*Restated for discontinued operations - see note 6

4. Sales Revenue



Nine months ended 30 September:    2012   2011
                                 US$000 US$000
Gas sales                         6,459 12,462
Condensate sales                  5,489  9,307
                                 11,948 21,769



5. Cost of sales



Nine months ended 30 September:    2012   2011
                                 US$000 US$000
Operating costs                   5,552  4,634
Depletion                         8,440 13,811
Movement in inventories of oil    (207)    255
                                 13,785 18,700



6. Discontinued operations



The results of discontinued operations below are those generated from Serica's
South East Asia operations which were disposed of in October 2011.



At 30  June and  30  September 2011,  as a  result  of the  Board's  strategic 
decision  to  exit  Indonesia,  the  Group's  interests  in  the  region  were 
classified as  a  disposal group  held  for  sale and  therefore  included  as 
discontinued operations. In October 2011, the Group completed the disposal  of 
its operated  exploration  portfolio;  however the  Group's  25%  non-operated 
interest in Kambuna has not been sold.  The directors concluded that as at  31 
December 2011 and  subsequent period  ends, whilst still  available for  sale, 
Serica's interest  in  Kambuna no  longer  meets the  IFRS  5 criteria  to  be 
classified as an asset held for  sale, because an active marketing program  is 
no longer in place,  and therefore the  results of this  part of the  disposal 
group are disclosed within continuing operations together with the results  of 
the retained core business segments.



The results of the discontinued operations are presented below:



Unaudited                    Three                      Three   Nine      Nine
                            months                     months months    months
                             ended                      ended  ended     ended
                            30 Sep                     30 Sep 30 Sep    30 Sep
                              2012                       2011   2012      2011
                            US$000                     US$000 US$000    US$000
                                                    *Restated        *Restated
Expenses:
Pre-licence costs                -                      (152)      -     (295)
E&E and other asset write                               (235)            (744)
offs                             -                                 -
Administrative expenses            The story has been
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