Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

The Force looks to be with Serinus Energy as it seeks oil in Tunisia and Romania

It’s real Lawrence of Arabia country says Jeffrey Auld, chief executive, but like many places that look uninviting on the surface it’s underneath where the value lies
Darth Vader
Tunisia is one of two significant oil and gas assets held by AIM-listed Serinus – the other is a gas play in Romania

Anyone who has seen one of the recent Stars Wars films will know what Serinus Energy PLC’s (LON:SENX) acreage in the south of Tunisia looks like.

It’s real Lawrence of Arabia country, says Jeffrey Auld, chief executive, but like many places that look uninviting on the surface it’s underneath where the value lies.

WATCH: Serinus Energy on the verge of commissioning gas plant in Romania

Tunisia is one of two significant oil and gas assets held by AIM-listed Serinus – the other is a gas play in Romania.

Both have substantial potential believes Auld, so much so that the industry veteran was persuaded out of retirement two years ago to take charge.

The mix of assets in Romania and Tunisia is unusual and interesting he told Proactive.

Tunisia is a 358mln barrel oil-in-place field while Romania is an economically attractive shallow gas play that stretches over a 3,000sq km block and contains

The trick now is to get both sides working properly together says Auld, who has worked for much larger companies than Serinus in the past.

In Romania, the end of the month should see commissioning of a gas plant to process first production from its Moftinu field.

A first well is due to be hooked up this month, with a second well scheduled to be added during July.

Initial production will be 2mln scf (standard cubic feet) while the second well (1007 - a re-drill after a blow-out) will boost this up to around 10mln scf per day.

Commitment wells (two) are scheduled for this year and early 2019, which will boost production close to plant capacity of around 15mln scf/d (2,500 barrels equivalent).

Auld says the appeal in Romania is that for a finance package of about US$25mln it can make a cashflow return of between US$75mln-£80mln at current prices and after taxes and costs.

“The process is also very repeatable”.

Once the gas plant at Motfinu is up to speed, it really is a case of acquiring seismic over a different part of its block and ‘cookie cutting’ the development process, he says.

“These are shallow gas fields. They are not large - 3.65mln barrels equivalent –  capital costs are low and the gas sells at a good price.

“We are not Exxon, so having US$25mln capital packages is perfect for us.”

Indeed, once cashflow starts come through strongly at Moftinu, Auld envisages two or more developments can be undertaken simultaneously.

Prices are the standard European gas benchmarks with no special determination in Romania, which is part of the European Union.

In Tunisia, the situation is slightly more complicated due to production being halted in the south due to industrial action and a volatile social situation.

Before that, production was running at 1,100 barrels per day across its Tunisia acreage, but that has now fallen to about 350 barrels per day.

Sabria, in the centre of the country was also shut-in for a while, and Auld is waiting for coil tubing to clear some of the scale that has built up on the pumps.

More workovers are being undertaken while it waits. 

READ: Serinus Energy update reveals progress commercially and with the drill bit

Auld wants to get production back up to 650 barrels even without any contribution from its southern acreage.

Given a clear run there’s lot of things that can be done to improve production in Tunisia, he says, and investors should not overlook the fact Serinus has very big reserves in the country. 

The company raised £10mln when it switched from a Canadian listing to AIM in May.

Serinus raised the money at 15p and the share price has since ticked up to 15.5p, valuing the group at £35mln.

Family office Kulczyk Investments has a 39% stake, through it was 52% before the placing and AIM listing.

Results last year showed a loss of US$18.8mln as revenues were affected by the Tunisian disruptions, but the numbers are set to change markedly once the Romanian gas plant comes on stream.

There also might be a deal or two for M&A specialist Auld, though he is playing that down for the moment.

“We have lots of work to with existing assets, though clearly if another set we can do the same thing with came along we would take a close look.”

View full SENX profile View Profile

Serinus Energy Timeline

Related Articles

range resources well in trinidad
August 16 2018
Infrastructure upgrades at Range’s Beach Marcelle oil field are underway, while two new wells at the project are due to be drilled later this year
oil and gas operations
May 23 2018
An acreage award in the UK 30th Offshore Licensing Round expands the group's flagship Liberator field
1532456979_Prairie_Provident_Resources_-_Rig_in_Wheat.png
July 24 2018
The company is focused in the Wheatland and Princess in Southern Alberta, where it is targeting the Lower Mannville formation

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use