Serica Energy plc (Serica Energy) has been awarded a production license over block 22/19c in the UK 25th round of offshore licensing. The company is the license operator and holds a 100% working interest. Block 22/19c lies in the UK Central North Sea and is located about 20 kilometers to the west of Serica Energy’s Columbus field, currently under development. The license contains two Palaeocene Forties sand prospects known as Oates and Bowers.

The Oates prospect is considered low risk and exhibits a well-defined amplitude response on the 3D seismic data, similar to that seen in the Columbus field, in which three successful wells have been drilled by the company. The Oates prospect has estimated prospective resources of 180 billion standard cubic feet of gas or 60 million barrels of oil, depending upon whether oil or gas is found.

The license is classed as a Traditional license and, during the initial term of four years, Serica Energy must drill a well to test the Palaeocene target and at the end of the initial term 50% of the license area must be relinquished.

Serica Energy’s Chief Executive officer, Paul Ellis said: We are delighted to have been awarded Block 22/19c as it was the highest ranked block in our 25th Round applications. Success with the Oates prospect could also enhance the economics of the Columbus development, through the shared use of facilities such as pipelines and risers. We look forward to an early start to our drilling programme, so that potential development synergies may be realized.

Supplemental information:

The area covered by the license is about 150 square kilometers.

The license was granted on June 20, 2009 for a period of up to 26 years subject to certain work programme and relinquishment requirements.

The principal reservoir target is the Palaeocene age Forties sandstone, which may contain light oil or gas and which lies about 2900 meters below sea level. Water depth in the license is about 90 metres. The planned exploration well to test the Forties reservoir at the Oates prospect is estimated to cost $20 million. Serica Energy hopes to drill the well within the first twelve months of the license, although its commitment is to drill a well within the initial four year term.

The nearest commercial development of a Palaeocene sandstone reservoir is at the Monan field, which lies about eight kilometers to the east of the Licence. The Columbus gas condensate field, the Huntington oil field and the Mungo oil field all lie within 20 kilometers of the license.

It is equally likely that oil or gas could be found at the Oates prospect and the estimate of most likely prospective resources is either 180 billion cubic feet of gas or 60 million barrels of oil. If the exploration is successful, the production wells would probably be tied back to nearby existing infrastructure and be sold into the UK market at the then prevailing term or spot oil and gas prices. The probability of technical success for the Oates prospect has been estimated at about 40%. These estimates of prospective resources and probabilities of success have been made by Serica Energy’s in-house technical team. The prospective resources are those quantities of oil and gas presently estimated to be potentially recoverable from these undiscovered accumulations. If discovered, they would be technically and economically viable to recover. However, there is no certainty that these prospective resources will be discovered.

Serica Energy is the operator of the license and is also the operator of the Columbus gas-condensate field in block 23/16f which is currently under development 20 kilometers east of block 22/19c. Serica Energy operates other exploration ventures in the UK, Ireland, Spain and Indonesia and has a 50% interest in the Kambuna field in Indonesia that will soon provide the company’s first significant production revenue. Serica Energy is also participating in the Tuong Vi well currently being drilled offshore Vietnam and was recently awarded two large exploration blocks offshore Morocco.