Serica Energy Stock

Good morning, and welcome to the Serica Energy plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd like to hand you over to Chris Cox, CEO. Good morning, sir.

Good morning. Good morning, everyone, and welcome to Serica's 2026 Half Year Results Presentation. I'm joined as usual by Martin Copeland, CFO; and Andrew Benbow, our Head of Investor Relations. Martin and I will now run through a short presentation, leaving time for Q&A afterwards.

I'm pleased to say this has been a very strong period for Serica. We've been working hard across our asset base to increase reliability, and this has driven a material increase in production with Q2 averaging 50,000 barrels a day. In turn, of course, supported by the stronger than forecast commodity prices, we have generated material cash flows, turning a net debt position of $200 million at the start of the year into net cash of $26 million by the middle of the year. We've also made significant strategic moves to support our growth and deliver value to our shareholders. We've got our financing -- refinancing done, giving us a strong liquidity position, allowing us significant flexibility as we enter the next phase of organic investment and portfolio growth.

We expect very soon to be able to confirm the contracting of a rig to deliver the start of our high-impact and rapid return organic growth projects in the U.K. North Sea, and continue to seek further opportunities to deliver shareholder value via M&A. In the period, we completed the acquisition of non-operated stakes in Catcher and Golden Eagle from ONE-Dyas and prior to that, operated assets West of Shetland from TotalEnergies. We continue to see that as an area with huge potential for Serica as well as a critical basin in supporting the U.K.'s gas needs well into the next decade. As we press on with further growth in the U.K., we have also made our first step in building a truly diversified and international portfolio with the recommended acquisition of Pharos Energy.

Strictly speaking, this represents a reentry into Southeast Asia for those of you with long enough memories to remember Serica's early history. More on that later. But our success is built on our production, which pleasingly averaged just over 45,000 barrels a day in the period. This is a significant step-up from 2025, driven by far higher uptime across the portfolio as well as the addition of production from new assets. The key driver for change was, of course, our Triton Hub. Following a 24-day outage earlier in the year during which essential safety critical maintenance work was carried out, production restarted on the 9th of March. From that date until the end of the period, Triton produced on all but 2 days with uptime of over 95%.

The Q2 production of 20,300 barrels a day was a far better signifier of what the asset can deliver. And H1 production was 70% higher than H2 in 2025 and over 800% higher than H1 2025. This doesn't mean that Triton is yet performing to its true capacity. We remain facilities rather than well stock constrained, a genuine rarity in the UKCS today. The focus has been on reliability, and we are pleased with the work Dana has been doing and continues to do, and we continue to work closely with them. The challenge is now to ensure the good work on better reliability continues whilst also optimizing for a further increase in production to deliver the true potential from the hub. We still have production to come from Belinda.

But having said that, we do not want to take away from the fact the performance in H1 has been encouraging. Given the tax loss shelter we have at Triton, strong production here is also highly cash generative to the bottom line. Bruce was steady with 86% uptime in the period, but the Bruce Hub can also do more. We have further strengthened the team in H1, including particularly with the arrival of Scott McGinigal as our new Chief Operating Officer. And I look forward to introducing him on a future occasion once he has had a chance to get fully up to speed with the portfolio. Teams across all our assets are working hard to deliver optimized performance, especially as we are now very much into the critical turnaround maintenance season. At Bruce, we are also working to ensure that the facilities are set up to deliver the expected production uplift from the resumption of drilling next year.

The addition of production from West of Shetland was notable in H1 with Lancaster producing robustly until production ceased in line with expectations in May due to the FPSO being contracted elsewhere and with the Greater Laggan Area then contributing well in Q2. With both our key hubs now in their annual maintenance periods, production in Q3 will always be considerably lower than the H1 average. But with expectations of a very robust Q4, especially as we bring the Spirit assets into the business from the 1st of October, we remain firmly on track to deliver rates of over 65,000 barrels a day as we hit our stride in Q4.

Now I'll hand over to Martin to discuss how this robust H1 performance has translated into cash flow.

Thanks, Chris. It is indeed good to be presenting today a set of results which show that the confidence we have always had in the core robustness of our business is paying off in a period that combines strong operational performance with stronger commodity prices. Revenue in H1 was more than double the prior year period, with the key driver being production up 20,000 barrels of oil equivalent per day on the comparable period last year, as well as the average realized oil price up 33% at $93 a barrel and realized gas prices of 101p a therm, roughly 50% up year-on-year. The impact of higher commodity prices was, however, somewhat offset by our hedging, the necessary insurance price we pay for protecting the downside and as required under our RBL.

Despite realized hedging losses of $89 million or just under $11 a barrel of oil equivalent, we still realized a post-hedging oil price of $73 a barrel and 97p per therm for gas. As should be apparent from this, the impact of hedging was considerably more skewed to oil than to gas, which is in part because the higher tax exposure we have in our gas assets act somewhat as a natural hedge. We've included, as usual, our updated hedge position in the appendix of this deck, but what I can say is that we've not added material new hedge positions since early March.

Operating and lifting costs in the period were $247 million as reported, but were inflated by the high cost of Lancaster, which included FPSO lease costs for a vessel sized for considerably more than the 6,000 barrels of oil equivalent per day the field was producing before it ceased production in May, which meant its costs were around $89 per barrel. With those costs now removed, the underlying portfolio has a creditable operating and lifting cost of just under $25 per barrel of oil equivalent, more appropriately representing our relatively low breakeven and material cash generative capacity.

The corollary of materially increased business activity and higher prices was a larger-than-normal working capital outflow of just over $50 million. But we still generated a very robust post-tax CFFO of $280 million, which equates to nearly $40 per barrel of oil equivalent. This is the KPI against which we peg our refreshed distribution policy. And although we will only apply the 15% to 30% ratio in the context of the full year, it is worth noting the H1 tax position as the metric is, of course, post tax. In the first half of the year, we actually received $9 million from a tax rebate due to a slight overpayment of tax in 2025 and no net payment owing in January.

However, the accounting current tax charge for the period was $60 million, and we would expect that cash tax payments will, of course, come in H2 as we make installment tax payments in July and October with, for instance, having paid just over $25 million last month. The phasing of tax payments, together with both dividend payments falling in the second half and the fact that summer maintenance occurs in Q3 and hence, reduces production are the key reasons why our cash generation is naturally biased towards the first half of the year.

And as you can see, the cash build in H1 was impressive with just under $300 million added to our cash position in the period. As well as the underlying strength of the business, it's worth noting the receipt of $69 million in total on completion of the deals with TotalEnergies and ONE-Dyas, which represented the post-tax interim cash flows from the historic effective dates of those transactions and which further boosted our cash. These are, of course, not run rate items that we will see in H2. As we've also announced today, now that we have more specific timing for and details of the completion of the Spirit Energy transaction due to occur in the early hours of the 1st of October, we also expect just under GBP 40 million to be paid out on completion for this deal after we factor in completion adjustments for the GBP 57 million agreed purchase price and the offsetting but fully 78% tax affected pre-completion cash flows.

We are, however, seeing considerably stronger gas prices than our acquisition case and the Spirit asset cash flows will be considerably more tax efficient in our hands post completion. When we announced the Spirit deal, we stated an expectation that the assets would generate around $100 million in free cash flow by the end of 2028. We now expect the free cash flow to be more than double that figure. Including these cash flows from the 1st of October, we expect to return to material cash generation in a robust fourth quarter of the year. And of course, the best time to fix the roof is when the sun is shining.

And with this in mind, we are very pleased that we took proactive steps to optimize our liquidity position during the half to set us up very strongly ahead of the exciting growth investment that we're set to make in our U.K. portfolio, while also enabling us to remain active and opportunistic in M&A. Firstly, we took advantage of positive market conditions to make our first step into the Nordic bond market, raising $300 million with a term of 5 years and at a very attractive fixed interest rate. The debt under our bond forms the core debt in our capital structure and is complemented by our refinanced RBL facility, which we signed and completed in July.

The new bank facilities are $750 million split into a $500 million revolving loan facility and a separate $250 million tranche for issuing letters of credit. The initial borrowing base under the RBL is $458 million, and the facility is fully undrawn. This bank committed funding, combined with the $326 million of cash we had at the end of June, resulted in pro forma liquidity of not far off $800 million. We'd like to thank our counterparties in the fixed income investors and banks who have helped deliver this solid platform of liquidity, which, together with continued robust cash generation will enable us to invest in our organic growth opportunities, whilst also remaining nimble and opportunistic for M&A opportunities as they arise. And we remain committed to predictable and material shareholder returns.

We have today declared our interim dividend at 6p per share, the same level as 2025, with our final dividend for the year being calculated in accordance with our policy of 15% to 30% of post-tax CFFO. The 6p interim would correspond to only about 11% of the H1 post-tax CFO. And if we were to maintain the full year at 16p, that would be comfortably within our payout ratio guardrails at around 18% of the midpoint of our GBP 450 million to GBP 475 million post-tax CFFO full year guidance.

We will only determine our overall shareholder distribution based on the full year audited numbers, but we are confident that our financial frame gives us the flexibility to balance healthy distributions to shareholders with investment to maximize value generation through organic growth and acquisitions. And we believe there are great opportunities to create material value for shareholders. And thanks to strong financing partners and the support we enjoy from them, we have the capital available to take advantage of them and deliver.

And with that, back to Chris to remind people of some of these opportunities.

Thanks, Martin. As we detailed at our Capital Markets Day, we have an exciting array of opportunities ahead of us in our organic portfolio. Multiple wells at Bruce plus Kyla, Glendronach and others have the potential to deliver material production uplifts totaling a possible incremental 30,000 barrels a day and delivering rates of return over 40%. I'm pleased to say that we are now close to signing a contract for a rig to deliver the start of this drilling program. We are looking to obtain a rig for an initial 400-day duration with options to extend. Drilling is expected to begin in Q3 next year.

And it is most likely that we will begin at Bruce with the South Central East and South Central West wells. After 15 years without a well being drilled in the Bruce Field, this is a great opportunity to go after, potentially adding 10,000 barrels a day with production starting within a year of drilling commencement. As a reminder, this drilling would be highly tax efficient and is the logical place to start as the regulatory approval process is simpler than for other opportunities in the portfolio due to the fact that it's infill drilling in an existing producing field. After that, there is the potential for the rig to move to Kyla or head west of Shetland for Glendronach.

Both opportunities are also looking attractive. While we are focused on our operated program, it is also worth noting the organic growth on our newly acquired and the yet-to-be acquired assets with drilling set for Catcher and ongoing at Cygnus. And we also continue to seek inorganic growth. The key strategic move made in this regard came post period end with the announced recommended offer for Pharos Energy, a deal consistent with the strategic aims we outlined at the Capital Markets Day. It provides us with a first step in building an international platform with room for further growth at an attractive price.

Pharos is a materially cash-generative business, meaning the deal offers a rapid payback accretive across all key metrics. The acquisition cost per 2P barrel compares favorably with recent precedent transactions in the relevant countries. And upon completion, the transaction will boost our reserves and resources by 13% and 15%, respectively, and add materially cash-generative production. The acquisition of Pharos adds a highly complementary business to ours. Similar to Serica, the business has a history of being a cash-generative dividend payer, aiming to offer both growth and returns. We believe that the assets will continue to generate cash while being part of a company better placed to deliver further growth from the asset base and from further business development opportunities around them.

This further cash generation and growth potential complements and does not reduce our commitment to the U.K. and is an ideal springboard for further growth in Southeast Asia. It is, of course, far from complete, but we are hopeful that we will see it added to our portfolio next year. And it is not the end of our inorganic growth aims. We have an excellent team and the financial capability to move quickly to take advantage of opportunities. We are certainly not ignoring the U.K., although the recent wave of consolidation means that there is inevitably not quite the same number of opportunities available. Our team is also looking overseas at areas which can deliver Serica's strategy with Southeast Asia standing out as somewhere that we believe growth can be delivered and acquisition opportunities are likely to be available.

This is not at the expense of U.K. growth, but working alongside it. We are continuing to build a robust business with an attractive long-term future, delivering material value for our shareholders, and we are working hard to deliver this ambition. And we're on track so far in 2026. Our production expectation post the acquisition of Spirit Energy remains 65,000 barrels a day. That acquisition is now set to complete on the 1st of October. The fact that this additional production will not now start before Q4 has slightly impacted our guidance for the year. But notwithstanding this, our production is still expected to be over 40,000 barrels a day for 2026.

And our post-tax cash flow from operations is expected to be in the range of $450 million to $475 million. We are in a strong position and continue to look forward to taking that to the main market later this year. The business has real momentum at present, and we want to get our story to as many potential shareholders as possible. And we expect to build on this momentum.

We have numerous catalysts ahead from the signing of the rig contract through the main market move, completion of M&A and further ahead, the drilling program itself. And what this slide doesn't show is the value-accretive M&A that we hope to deliver along the way. We feel that we're in a great position. We are highly cash generative with the ability to grow further, both through high-return organic growth and through rigorous and selective M&A. As we do this, we will continue to deliver material and sustainable dividends. We have a fantastic team scaled up and ready for the growth ahead, and I believe we can deliver for all of our stakeholders.

And with that, I will hand over to Andrew to run the Q&A.

Thank you very much. First question is about Bruce. You mentioned that Bruce can do more, in what way?

Yes, we've spoken a bit about this before. So Bruce produces most days. And as I said during the presentation, it's had decent uptime this year. But on any given day, it doesn't produce the maximum potential of all the wells we have. And that's partly due to the complexity of the facilities and some wells that are high pressure back out other wells and things like that. So there's a number of things we can do. There are individual well interventions that we need to do, to do things like scale squeeze where wells get plugged up and every now and again, you just got to go in and flush them out. We can optimize the bullheading operation, which is where we pump high-pressure gas into the well to try and kick wells off when they're quite low pressure.

We can optimize the way our compression runs. We're looking at potential gas lift in the future, which is a much more sophisticated way of improving the performance of low-pressure wells than bullheading, but it does require well interventions. And one thing worth noting is if we drill these new wells starting next year and they come on at high rates, they're likely to help some of the low-pressure wells to flow. So there's a lot of optimization to be done. And it's just one of those things about getting after it every day and each day saying, have you done the maximum that you could do on that day from all of your wells? And currently, the answer is no, but we're getting better.

A few questions for Martin, I think now, actually. Does the improved cash flow leave room to consider buybacks, as to me, not me personally, the person asking the question, the shares must look exceptionally cheap to the Board.

Yes. I mean, we -- obviously, we have got good cash flow. And I think as we said at the CMD, we're going to implement a distribution policy based on payout ratio. And I gave the numbers in my talk there that said that if you kept the dividend at 16p, it would be 18%, which obviously is comfortably in the range of 15% to 30%. But we'll only really know that when we get to the end of the year. I think the -- we talk about shareholder distributions. And so our bias is towards dividends, I have to say that, and that's because in most of the conversations we have with shareholders, that is the preference. But we're not ruling out buybacks. They're in our armory as where we got our mandate renewed at the AGM.

But I think our bias will probably be more towards potentially paying an additional dividend if we were to do that. But we'll also look at that as against the opportunity set we have in front of us. And Chris painted what that picture is and the returns. I think we've indicated that the average return we anticipate is something like a 40% IRR. So we'll always weigh that up in terms of delivering the best value for shareholders.

I think that also answers the next question, which is why we held the dividend at 6p? That will be reviewed at the end of the year.

We tried to make that clear. It is a new policy, so it's probably just worth reiterating. Our view has always been that we keep -- we aim to keep the interim kind of flat and then look at the ratio only at the year-end. And partly, that's just accounting prudence in the sense that we then have fully audited numbers, and we know exactly how the year has panned out, and we'll be able to apply it at that point.

Another question for you, Martin, is about our tax profit. The GBP 6.1 million after-tax profit at the time of high oil and gas prices looks rather underwhelming. Can you explain how GBP 272 million gross profit becomes a GBP 76 million pretax loss?

Yes, it's the funding gains of accounting relative to cash. And you'll have seen that as I presented the slides, it was really about the cash delivery. And we certainly think that most of our investors are more focused on what we deliver in terms of cash. The real answer to that is there are 2 kind of relatively significant noncash items that have -- that obviously weighed on the pretax profit. And one of them is the mark-to-market value of our hedge book as of the 30th of June, and that is unrealized hedging losses. So it's a point-in-time view as to the potential future value, if you like, or indeed in this instance, cost of our hedge book. But it's a point in time. It just happens to be what the price or the forward curve was on the 30th of June. It doesn't mean that it will pan out to be that in reality that, in fact, we could end up in a position where those hedges are in the money by the time they come around to actually maturing.

So it is a -- it's what you're required to do, at least under the method of accounting that we follow. And so that's the impact that it has on the P&L. So that's one of the reasons why we do really focus on cash because that is an artifice. It's not really a fair reality of what the economic outlook is likely to be. And the second one, I'm afraid, is even more arcane in the acquisitions that we've done, as people will probably be aware, we are confident that we'll be creating significant value by the fact that we have a good amount of tax losses, and we've acquired taxpaying production into it, and that is the way to realize value from those losses, and that is beginning to pay off, and you can see that at least the beginning of that through what's coming through in the results from GLA that remember, we've only had in on the books from completion since the 26th of March.

But the way the accounting works is even though, obviously, from an M&A perspective, we took that value creation into account, the accounting treatment requires you to recognize the notional value of that tax loss in your calculations, whereas in reality, we discounted it and we took a time value of that, et cetera. And the difference between those 2 things is recognized as goodwill. And we think of it as technical goodwill. And essentially, it's not -- it has to therefore be expensed through the P&L, and that's another GBP 95 million difference.

So that -- both of those 2 things hit the profit before tax and that ends up giving us actually a loss before tax, which reverses to a very small admittedly net income or profit after tax but you'll actually see that the -- and that mostly comes from the recognition of deferred tax asset value that creates a positive number in the tax line. So it reverses that loss. Again, that really is just a testament to the delivery of value from the tax losses beginning to show through, and we'd expect to see more of that come the year-end as well.

Yes. I'd just say that there's a reason why we give the table that we do on the front of the presentation. That's because we think it's the -- those are the best metrics on which to judge the strength of the business rather than some of the technical accounting things that you see from the back.

We've had quite a few questions on M&A come in. It's just worth reminding people that because of takeover panel rules, we cannot comment on quite a few things in relation to the Pharos Energy transaction. We've had people asking about potential cash flows and things like that. I'm afraid this is not something we can comment on at this time. Similarly, on something we can comment on the slight tangent. We've had quite a few people who have been asking about BP's process. So I'll just ask one question, which is effective. Were you surprised by BP's wish to sell North Sea assets? Do you believe there'll be a ready market to procure them?

We were not surprised. I mean we've said to people that we track everything that's going on in the U.K. And so we look at everything and going in the U.K., and we're obviously fully aware of what's going on. And it's been known, frankly, that BP has been considering this for some time. The fact that they put an announcement on the particular day that they did, I guess, was because they had results coming up, et cetera. And I guess there'll be people looking at it now, but I suspect this is going to take quite some time to see how it all plays out.

Moving on, I still think, sadly, Chris, this is all for Martin. Serica has a significant tax advantage for its accumulated tax losses. When should shareholders expect this to translate into materially higher EPS rather than simply funding further acquisitions?

Well, it is beginning to come through. I mean, as I mentioned, we -- it actually has reversed a loss before tax into a profit before tax. So that is the beginning of it. But remember that, that was really only seeing that effect over a period of -- a relatively short period, certainly for GLA. Some of it's coming through also through the Triton results as well, and we expect that to continue. And we don't typically update the loss balance as it is at the half year, but we've got the numbers in there in the accounts, and they're still very sizable, as you will see. So as we see healthy production and strong robust prices, that benefit is going to come through and is coming through, through the numbers today.

Moving on to the politics. We've had a couple of questions. So which aspects of the current U.K. tax regime are having the greatest impact on Serica's investment decisions? What specific changes would unlock shareholder value? And I'll ask the second part of that question because people have asked it a couple of times. Have we seen any evidence of prime ministerial pragmatism as yet?

So I maybe try the first one and then I'll hand it over to Chris. I mean the specific -- I mean, we actually think our portfolio as a whole is quite nicely set up to be able to manage in all conditions. We've got -- because we have different parts of the business, which have got different attributes. And as Chris mentioned, the drilling that we're planning at Bruce is tax efficient because actually, we have not got losses in the entities that hold Bruce. And so using the benefit of capital allowances there is very attractive.

And then in the other part of our business now, I'd say, Triton, where actually apart from Kyla, which may come in the future, there isn't that much CapEx going on. That will benefit from the losses that we have there. So we see the combination of those 2 things as being quite a nice balance. Clearly, we would overall like to see the energy profits levy removed. And that is more because it's just going to be better for the whole industry and better for our supply chain. And I'm sure the sentiment move that, that would entail would be a positive as well. So -- but we've got to go and run the business in the best possible way, and we believe that we are set up for whatever happens. And I'll ask Chris maybe to pick up on the wider point about...

On the pragmatism point, look, first of all, it's -- I've got to say it's very pleasing to hear the government talk about being pragmatic about energy and the North Sea in particular. That's all we've been asking for is a bit of pragmatism. And I hope that, that means a recognition that if we're going to use energy, it might as well be our homegrown energy because it's better for jobs. It's better for the economy. It's better for the environment. So what's not to like. So we think that's what's meant by pragmatism. But of course, there hasn't been any policy change yet. And that's not a surprise. I mean it's very early days. And I think if I was in government right now, I want to take my time to make sure I do it right rather than rush to make decisions. So hopefully, in the coming months, we'll start to see policies come out that reflect the good words that we're hearing.

Chris, while you have the mic, I think we'll move on to Triton. What, if any, progress has been made at Triton moving from single to dual compressor operations? And the second part of that question, which I think is related to the first, if processing at Triton is rate limiting, do you have any more plans to add processing throughput to the FPSO?

That was me thinking we were going to get through one of these without me having a Triton question because it's been doing really well. So on the 2 compressor operations, we're not running with 2 compressors today. We're running on 1. We have the second compressor available to us. But actually, in order to run with 2 compressors, you also need 2 gas turbines. And the second gas turbine has got some repair work that's going to be going on during the turnaround. So that should be available to us later. So hopefully, by the end of the year, we'll be able to run with 2 compressors. For now, I'm very happy with the kind of uptime we have, and we're getting about 20,000 barrels a day net to Serica out of Triton. And if we continue like that for the rest of the year after the shutdown, I'd be delighted.

And of course, having that second compressor available gives you a bit of backup, and it should improve our production efficiency. In terms of additional processing capacity, we don't need it. We have what we need on the platform. We just need everything to work. And so getting that second gas turbine running after the maintenance shutdown, so we've got 2 gas turbines and 2 gas compressors. That's what we need. The limiting factor at the moment is gas export. So although gas is kind of a byproduct on Triton because it's essentially a bunch of oil fields producing into there, it's our gas export capacity that's limiting us. Once we get to 2 compressors running on a consistent basis, we don't have a restriction on the amount of oil that we can produce. So we don't actually need more kit. We just need everything we have to be running.

Moving on to personal bugbear of mine, why it takes so long to move from AIM to the Main Market. Does the revised completion of Spirit add any complication to the relisting process? And why is the move taking so long?

So on the first part, the answer is no. The Spirit acquisition, we've obviously had in the works for a long time. So it has been one of the reasons to be fair, why it's taken so long. So the answers are kind of linked. We -- because the asset acquisitions we did and Spirit is actually particularly complicated because it's a combination of company and asset acquisitions in both the U.K. and the Netherlands. So from a kind of M&A mechanics, it's more complex. But that did require us both that and the prior acquisitions we did, the GLA and the ONE-Dyas required us to get a so-called competent persons report, a CPR, produced for those assets. So that has been one of the factors that's caused the delay, and it's essentially why we didn't get to the main market last year.

So no, that date moving is not really an issue. And we either will or will not be successful on Pharos, that also won't necessarily cause an issue. We are committed to getting to the main market this year, and that is what we said today again. So yes, it is -- as Andrew said, it's certainly a personal bugbear of his and some of it is just a lot of process that you have to do, which seems a little bit odd considering as a company, we've been listed for 20-plus years now on AIM, and we're just moving from one part of the London Stock Exchange to another part of it. But unfortunately, we don't make the rules. We have to follow them.

Yes, moving away from that, I think. What is the hedging strategy given the oil glut forecast from certain analysts?

Yes. If I knew exactly what was going to happen with the oil price, it would be really, really easy to get the hedging policy right? Because yes, you can hear stories of oil glut, but you can also see, my goodness, there does seem to have been some funny movements, let's say, going on in the quoted oil price, which, by the way, for everyone's benefit, when you normally hear it, it's actually the prompt month future price that you're hearing is the price. So our strategy is probably just going to be to say steady as she goes.

And I made the point that we haven't put on new hedges since March because we are pretty fully hedged at the moment. That was a deliberate policy at the beginning of the year. it's hard to imagine, but we're into a pretty bearish mood set generally at the beginning of the year, and we knew we were going to have to refinance the balance sheet. So those 2 things led to us dialing the hedging up a little bit. So we now think we're comfortably in a good place. And obviously, there's a chart in the appendix which shows how that proportion of hedging tails off over the next year and the following year.

But equally, we still have an RBL. It's not drawn at the moment, but it does have certain policies within it. And the minimum hedging that it requires is 25% of the current year and 15% of the following year. So I think you could expect to see that as a kind of minimum level. Ultimately, what we're focused on doing is saying we want to protect the cost base in an environment where the oil price and the gas price are not where we've seen them over the last 6 months and where they would trend back to $60 a barrel or 60p a therm, we want to be able to ensure that for shareholders, this business is sustainable and protected even if that eventuality occurs, and that's why we do it. So hopefully, that answers the question.

On a slightly related note, can you please confirm the macro deck on which the CFFO guidance is set?

Yes. Well, that -- we did it based on the current forward curve. And just for people's understanding, because of the hedging, and I think I made the point that the hedging is more skewed towards oil than it is towards gas, because of the hedging that we have in place, we're actually not that exposed between now and the end of the year on the oil price. Obviously, we are on production. So -- and we had a great first half, and we obviously look forward to having a strong second half. But on prices for oil, not that exposed.

So really, what you're looking at is the gas price forward curve that's the key variant within that. And even there, it's slightly dampened because the gas business is going to be taxed at largely at 78%. So funnily enough, although you think there was a massive sensitivity to commodity prices, it's not as big as you would think. The bigger driver is going to be production performance over the course of the next 6 months.

Moving on to the last couple of questions now, and apologies to any that I've missed. Do you foresee much churn in the shareholder base for moving to the main market?

Well, first of all, churn, churn is just people selling out, et cetera. And one of the byproducts of, we admit, it's been a long time we've been talking about moving to the main market, and we haven't yet done it. But one of the benefits of that is that anyone who was holding us because we were AIM only and they had to hold us only -- could only hold AIM has had plenty of time and have, in fact, cycled out. So we don't expect to see any material amount of selling pressure. But the opposite is what we expect to see and that probably won't come immediately, although some of it is actually comes in because it foresees the action.

But we will see funds that track only the -- either the FTSE All-Share or we hope in due course as and when we would enter the FTSE 250 that track the FTSE 250 Index. And then we would expect to see index funds basically having to buy into us because they have to buy every component of the index under its weighting. So that will create a degree of churn, if you like, but it will essentially be a buying component at the outset as people -- as index money has to come into our register that isn't there today.

And the final question, why do you feel the share price is currently unrepresentative of the true value and expectations of the company?

We always think that the share price should be higher than it is. And I'm not going to comment on how it represents value, et cetera. There are plenty of analysts that cover us that got views out there, and I know our consensus target price is materially above where our share price is today. The thing that seems to be happening at the moment, not just to us, by the way, but to many of our peers is the movement in the share price in any given day is driven by sentiment and more often than not by Donald Trump's tweets or Truth Social posts than anything fundamental, and that is a frustration, but it's not a frustration that we can really do much about other than just deliver. And we hope to think that what we've just shown in the last 6 months is delivery. I don't know, Chris, you wanted to comment more on?

No, I completely agree with you. We -- for most of this year, our share price has moved on a daily basis almost based on what Mr. Trump has said. And I hope we get back to a place soon where people are looking at the fundamentals of the business rather than politics in a different part of the world, but we are where we are.

Thanks very much. And with that, Chris, you've got any final comments. Please go ahead.

Well, I'd just like to acknowledge the fact that we've had much better operational performance in the first half of the year. And it's really pleasing to see it. It's been a huge effort by lots of people to get to this place. And a lot of that's Dana, let's face it, that's helped with that turnaround. Long may it continue. There's still -- we mentioned this already. There's more to come still from both our major hubs. But look, it's pleasing to see a bit of an improvement, at least in the first half of the year. And we need that, frankly.

I think we have to earn the right to spend money and good production performance gives us the right, I think, to go out and spend money on some of the organic opportunities that we have in our asset base. And that's what's coming next. And I think the next time we speak to the market is probably going to be to announce that we've secured a rig, and we'll probably share a bit more about the specifics of the drilling program that we're going to pursue. So I look forward to sharing that with everybody soon. So thank you very much.

Perfect. Thank you, guys, for your presentation this morning. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team of Serica Energy plc, we'd like to thank you for attending today's presentation, and good morning to you all.

Good morning, ladies and gentlemen, and welcome to the Serica Energy plc Full Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself; however, the company can review all questions submitted today and will publish responses where it's appropriate to do so. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful.

And I would now like to hand you over to the executive management team from Serica Energy plc, Chris. Good morning, sir.

Good morning, and welcome to our 2025 full year results presentation. I'm joined as usual by Martin Copeland, CFO; and Andrew Benbow, our Head of Investor Relations.

Thank you to everyone who has submitted questions ahead of the call, but please feel free to post any further questions you have during the presentation. And should we not get time this morning, then please contact Andrew directly. We will respond promptly to every question we receive. Martin and I will now run through a short presentation and then answer as many questions as we can in the time available.

This slide is a reminder of our strategy and our purpose. We're here to produce hydrocarbons safely and efficiently while creating value for shareholders and also helping to deliver energy security, jobs and investment for the country. You may be aware that this has been our purpose unchanged for some time now. And I know that such statements can sometimes sound like typical corporate speak. But as we speak today against the backdrop of the terrible events in the Middle East, the importance of our contribution to domestic energy security has never been more apparent.

We are unapologetic about the role we play in providing much-needed energy products for society. We have a two-pronged strategy for creating value. Our DNA is taking on mid- to late-life assets and then extending their field life and optimizing production. We've been delivering on that strategy recently with a number of M&A transactions, and we expect that to continue. And we are well positioned at present with a highly cash-generative production portfolio with organic growth options fighting for capital allocation.

Our strong positioning is partly as a result of strategic delivery last year. We invested in our existing portfolio, carrying out significant work on resilience and asset life extensions as well as completing a highly successful 5-well drilling program around Triton. These wells will help retain robust production at the FPSO, and the success of that campaign gives us confidence to continue to exploit multiple organic investment opportunities elsewhere in our portfolio.

As we continue investing, we also continued our track record of shareholder distributions with dividends amounting to 16p per share. As announced today, these distributions are continuing in 2026, as we recommend a 10p final dividend in respect of last year, continuing to strive to offer investors a compelling mix of growth and returns. And of course, key to our strategic delivery in 2025 were multiple acquisitions. We were one of the more active M&A players in the U.K. sector last year, announcing multiple acquisitions that increased and diversified our portfolio, enhanced cash flows and added to our opportunity set.

In total, we increased our reserves by 19%, adding some quality long-life fields to our portfolio. The impact on production will also be material, adding over 20,000 barrels a day to our production capacity. The deals were done at very attractive prices with reserves added at a low cost of $3.30 per barrel.

The acquisitions, which we have completed, being Prax Upstream and now TotalEnergies, which completed today, have resulted in the net receipt of cash by Serica amounting to $75 million in aggregate. And the ones still to be completed, from ONE-Dyas and Spirit Energy, will also result in net cash receipts or only limited cash paid out on completion. Hence, these acquisitions will be cash flow accretive this year, thereby supporting further portfolio investment and returns to our shareholders.

Looking ahead, our strategy remains unchanged as we seek to acquire assets that may be non-core to others, but can be enhanced by Serica through extending field life and delivering further value, both corporately and through the subsurface. We will continue to look for potential acquisitions in the U.K., although the amount of recent consolidation means there may be fewer opportunities in the near term. As a result, and as we previously signaled, we will continue to explore opportunities overseas, but only in areas where we are confident that we can deliver our clear value creation strategy.

As we grow, we are ensuring that the capabilities of our team grow with us. We are confident in our strategy and confident that we have the right team to deliver it. Since joining, I felt there were some areas in which Serica lacked the expertise required to excel as a North Sea producer. And as our portfolio has grown, the need to strengthen our capability has grown with it. We've made a number of targeted senior appointments that have materially improved our decision-making, our talent management and our ability to deliver for shareholders.

We have established a quality executive leadership team and are putting in place the wider organizational structure and processes to position us to deliver on our strategic and operational goals. We are not finished, but I believe we are close to achieving the goal of establishing the right team to lead a top-performing FTSE 250 company. We need a team with depth and breadth, as we are now building a broader and more complex business.

Our portfolio is more diverse and robust with assets that will encompass the entirety of the U.K. continental shelf from the West of Shetland to the Southern North Sea. Our new assets will significantly enhance the predictability and quality of our overall production and cash flows with less reliance on the 2 main hubs and the number of producing fields set to more than double. By the end of the year, we will have equity in a total of 26 producing fields. We are growing our presence in the basin and keen to continue growing. We now operate around 10% of the U.K.'s natural gas production. And today, having assumed control of the Shetland Gas Plant, we have the potential to play a key enabling role in the most prospective gas basin in the UKCS.

The projected decline in North Sea production, we often see reported, is one enforced by policy and not geology. As our Chairman has said today, we urge the government to unblock the logjam in its approval of the development of new oil and gas fields, change its stance to the award of new licenses, scrap the onerous and counterproductive EPL and replace it with the already announced OGPM as soon as possible and to change its tone towards the sector.

The opportunities in our portfolio alone show there is more to be delivered from the UKCS, much of which is short cycle in nature, and we're keen to play our part. And we are set to increase our production materially in 2026. As you can see from the chart on the right, our expectation for 65,000 barrels a day by the end of the year is not aspirational. It is, in fact, less than what we would be delivering today had all the asset transactions completed. That figure does include Lancaster with production scheduled to cease in May as expected, when the FPSO moves on to its next project. But of course, we need to actually own these assets first. And I'm pleased to say that completions remain on track with the previously stated timetables.

We targeted the end of the first quarter for the TotalEnergies acquisition, and that completed today, slightly ahead of schedule. This transaction brings into the portfolio over 5,000 barrels a day of unhedged gas production. We also remain on track for midyear completion for the ONE-Dyas transaction and later in the second half of the year for Spirit Energy.

On our Core portfolio, production has increased in 2026 year-to-date compared with Q4 last year, but it's still not where we would want it to be. Production at the Bruce Hub has largely been robust, and we are regularly producing 20,000 barrels a day net from the hub, which is a real positive given the current gas prices. Unfortunately, some further unscheduled maintenance at Triton needed to be carried out in February and early March that required a shutdown for just over 3 weeks.

The operator, Dana, concluded that due to overdue maintenance on some production and power generation systems, they could not wait until the summer shutdown to complete work on those systems. They, therefore, took the proactive step to fix the issues immediately rather than to continue to run the equipment that could potentially fail. This work was completed on the 9th of March, and Triton has been running continuously since that time.

As indicated in our January trading statement, we also lost production from Orlando for much of the period due to wave damage caused to the Ninian host platform, but this is now also back online and producing over 3,000 barrels a day. Since production restart at Triton, we have seen a fortnight of stable production averaging over 50,000 barrels a day in that period. Over the last few days, we have also seen the first production from Belinda, the last field in the U.K. to receive development consent. It is too early to determine a stable rate for Belinda, but early indications are promising.

Triton is currently running with a single gas export compressor as the second compressor is offline awaiting a spare part. Maximum production in this operating mode is roughly 25,000 barrels a day net to Serica. And as we now have excess well capacity, we can anticipate being able to flow at that rate at least through the end of 2027. Once the second compressor is available, we will need to decide with Dana whether it makes sense to keep the second compressor as a backup to give more stability at 25,000 barrels a day or to run the 2 compressors in parallel at a higher rate, but with more vulnerability to downtime.

Our production guidance of significantly over 40,000 barrels a day was based on very conservative uptime, effectively building in a weaker month of downtime at Triton. As such, with a significant production uplift to come, we are comfortable in retaining our guidance is unchanged.

Going forward, the predictability of our production will be enhanced by the new assets coming in with some, notably GLA and Cygnus having historically very high uptime. But for now, we continue to be focused on delivering improved performance from our existing assets where there's still plenty to do. We are working to embed a culture of operational excellence, where we are not satisfied if we produce anything less than the maximum possible on any given day.

In the last few years, there have not been enough maximum production days, and we are reenergizing our entire workforce to pull together to deliver more. There is also work to be done this year to help deliver production well into the future. At the Bruce Hub, there is exciting subsurface potential, and we are doing the necessary work this year to prepare for potential drilling in 2027.

At Triton, we are working closely with Dana, and the focus is very much on delivering stability of operations. Dana have been taking many of the same actions that we have taken at Serica to improve performance, in particular, with strengthening of their team with new offshore installation managers, maintenance team leaders and safety advisers as well as bringing in-house some key technical specialist roles, which were previously outsourced.

We are also, of course, working hard to integrate our new assets, and I am delighted to welcome our new colleagues from TotalEnergies into Serica and those transferring across to our operations and maintenance contractor, px, today.

Even without the addition of reserves from new assets, I'm pleased to say that our reserves replacement effectively achieved 100% in 2025. This was achieved through the excellent work of our subsurface team and largely by 10.2 million barrels being moved from resources into 2P reserves due to the maturation of the Kyle redevelopment, which has now been renamed Kyla. This effectively offset the 10.1 million barrels of production in the year.

With the addition of the newly acquired assets, our 2P reserves rise 19% on a pro forma basis. We will continue to be balanced between oil and gas. But on completion of the acquisitions, we will become slightly more gas-weighted as our acquisitions are mostly gas fields. I'm pleased to say we have also delivered a 16% increase in 2C resources, indicative of our attractive opportunity set. This increase was driven by the extensive work on maturing the potential Bruce drilling program as additional infill well opportunities delivered an 18.2 million barrel increase in 2C resources. This outweighed the relinquishment of the Mansell license and transfer of Kyla to reserves. The addition of Wagtail, which we announced during the year, also provided an uplift of 8 million barrels of 2C resources.

In total, we now have over 100 million barrels of 2C resources, constituting a diverse and attractive opportunity set. These are projects of various types and across our asset base, but are all tangible and deliverable opportunities. With prudent investment, there is plenty in the hopper to sustain our production at or above current levels into the next decade. We are continuing to high-grade the suite of opportunities and plan to share considerably more detail on these at a Capital Markets Day in early June.

We are focusing at present on those opportunities that have the potential for rapid payback, and there are a number of projects that fit that description. One that we have talked about before is Bruce. Bruce is a huge field, and there is plenty of remaining potential there, as can be seen by the increase in resources we have been able to share today. There has been no drilling on Bruce since 2012, and drilling on the field, which sits with our -- within our subsidiaries that do not have tax losses, would be highly tax efficient.

First hydrocarbons are possible within 1 year of drilling, and we see a first phase of wells that could add over 10,000 barrels a day to production. This is a significant opportunity to deliver greater production of critical gas supply to the U.K. in a relatively short-term time frame. This opportunity is the result of work done over more than a year now across the integrated disciplines within our exceptional subsurface team, which, as I may have mentioned before, is the best in the business.

Market screening for a rig is currently underway to enable us to potentially take an investment decision later in the year, which could enable drilling to begin in 2027. There is still more work to be done, and there are other opportunities also battling for capital. Kyla also offers a material production uplift. This was a previously producing field, which ceased production due to the host infrastructure being decommissioned. A horizontal well drilled into the best part of the reservoir and producing into Triton could also, therefore, add 10,000 barrels a day to our portfolio.

And then, we have the opportunities just welcomed into or to be brought into our portfolio via acquisition. Glendronach is a compelling opportunity, and there are others not even mentioned on this slide that we look forward to discussing at the Capital Markets Day.

And we are very excited by the overall potential West of Shetland. I realize this is quite a busy map, so let me give you a quick overview. We've acquired the acreage, which is shown in blue, which includes the Laggan and Tormore and other producing fields as well as a number of exploration prospects plus the associated pipelines in orange and the Shetland Gas Plant. Further west and north of our acreage is an extensive area colored in gray. This acreage is owned by Adura and Ithaca, 2 of the largest U.K. producers who are bullish about the drilling prospects in the area.

The industry consultant, Westwood Global Energy, recently published a report identifying that the West of Shetland Basin holds an estimated 5 trillion cubic feet of gas. Of course, that sounds like a big number, and it is. In fact, it's equivalent to supplying every household in the U.K. for 5 years. And yet some people continue to say that the amount of gas we can produce in the U.K. is not significant. With 1.5 billion barrels of discovered and prospective resources situated within tieback distance of our existing infrastructure, this is an area of material potential for the industry and for Serica. And the Shetland Gas Plant is an asset of strategic importance to the country.

While we are not primarily a third-party infrastructure company, as well as processing our own gas through the plant, we are currently processing gas for Adura from their Victory field, which only started producing last September. And we hope soon to be doing the same for Ithaca and Adura, Tornado field, which they are looking to move to final investment decision by the end of the year. But as well as exciting third-party opportunities, which all add value for Serica, there are also opportunities for the GLA joint venture to develop and add value from the assets on which we have completed today. These include the Glendronach tieback and a possible infill well at Tormore.

And now that these are in our portfolio, they will be assessed and ranked against the other development opportunities we have in the battle for capital allocation, about which, again, we will give more detail at our Capital Markets Day.

And with that, I will hand over to Martin to give you more on our finances and how we are seeing things in the near-term market situations.

Thanks, Chris. As we largely preannounced with our January trading statement, the story of last year is mostly that despite a challenging year operationally, our relative financial strength and our confidence in the resolution of those issues enabled us to continue delivering on investment in the portfolio and on healthy shareholder returns, including maintaining the full year dividend at 16p, inclusive of the 10p proposed final dividend we are announcing today.

When it comes to how we generated and used cash during the year, this waterfall chart shows the picture of what actually happened to gross cash from our year-end 2024 to our year-end 2025 position. But the real story of the business potential lies in understanding what the deferred production cost us in foregone 2025 revenues from the unscheduled Triton interruptions.

Based simply on adjusting for what would have happened if Triton had delivered operating efficiency in line with our 2025 budget and factoring in the actual prices of oil and gas, which prevailed, we estimate we missed out on some $250 million of revenues last year. And because those missed revenues were at Triton, where not only do we still have material tax losses, but we were also investing heavily, which is the key method of sheltering the EPL and that our cost base is very largely fixed in nature, those foregone revenues would have flowed almost directly to additional free cash flow generation.

We were, however, helped last year by the receipt of $63 million tax rebate in respect of overpaid taxes from 2024, but also from a low cash tax bill during the year, given we were able to factor in the impact of group relief into the installment payments made during the year. These are the reasons why the tax bar is, in fact, a positive on this chart. So we very much do not see 2025 as representative.

And indeed, as we indicated in January, we are confident of material free cash flow generation this year, and that outlook has, of course, only improved in the current market conditions. In fact, as it says on this page, with the completion of the TotalEnergies deal today, we have more than halved our net debt as compared to the year-end level and are on track to be in a net cash position by the end of H1.

Turning in a little more detail to the income statement. While realized prices were generally not materially different than in 2024, being marginally lower in oil, but higher in gas, our revenues of $601 million were down 20% from the prior year, essentially in line with the lower volumes. But the truer comparison of the impact of Triton issues can be seen in the comparison with the 2023 pro forma levels. On this basis, production was down some 4.5 million barrels or approximately 30%.

Our hedge book was in the money at year-end and delivered unrealized hedging gains of $75 million and just under $8 million in realized gains, as we benefited especially from protection against the lower prices seen in Q2 in the wake of the liberation day tariff announcements. Operating costs were roughly 10% higher than 2024, largely as a result of increased maintenance activity at the Bruce platform, as we sought to reduce maintenance backlogs, but also because of a slight weakening of the dollar versus our largely pound-denominated costs.

G&A costs were up by just under $2 million, as we made choices to add capabilities to set us up for future success, and we incurred transaction costs of $5.5 million associated with the extensive M&A activity. Despite the challenges in the year, we still delivered a profit before tax of $80 million, but at half the level of the prior year.

Our current tax charge was only $2 million, as we benefited from in-year group relief associated with losses made in the Triton subsidiaries. However, in common with all our North Sea peers, and as we also reported in our H1 results last year, we had a material deferred tax charge of $130 million, including a $65 million charge relating to the enactment in Q1 of the extension of the EPL from 2028 to 2030. The result of these noncash accounting impacts is that we reported a book tax charge of 165% and posted a loss after tax of $52 million for the year.

Turning now to the balance sheet and notable changes in the year, which result mostly from acquisitions. Our exploration and evaluation balance doubled to $43 million, primarily as a result of the completion of the Parkmead acquisition, as we became operator and brought into a greater share of the Skerryvore exploration prospect. We also consolidated the acquisition of Prax Upstream, which completed on the 11th of December as a business combination.

As preannounced in January, we ended the year with net debt of $200 million, being effectively 1x EBITDAX. But as already explained, we see this as something of an anomaly and would have been net cash pro forma for the deferred cash flow from the Triton issues. And as already noted, we have more than halved our net debt since the balance sheet date.

Finally, inclusive of the impact of new drilling at Belinda and Evelyn as well as bringing Lancaster into the portfolio from the Prax Upstream business, we ended the year with the exceptionally low level of decom provisions of less than $2 per 2P barrel of oil equivalent.

While we always update on our hedging with our results, given the dramatic events in commodity markets year-to-date, we felt that a slightly deeper dive is merited today. Before turning to how we positioned -- we are positioned and what we expect to be doing in the future, we wanted to give a bit of background on what's been happening in oil and U.K. wholesale gas markets year-to-date.

We came into the new year with all market fundamentals in terms of physical supply of oil and, to a lesser extent, gas pointed to a weak Brent prices during 2026 and medium-term weakness in gas prices. Bearish sentiment was evident in the market, and this was apparent in that despite unusually low European storage levels, U.K. gas prices averaging around 84p per therm for January and February were roughly half the level of the equivalent mid-winter period in 2025. However, of course, things changed dramatically after the war in Iran commenced on the 28th of February. For the 3 weeks of March so far, NBP day-ahead pricing has averaged 127p per therm, and Brent has averaged $103 per barrel.

But as the charts on this page, which show the shape of the forward curve for Brent and for NBP at various dates since early January right up to a week ago on the 19th of March, things really elevated in reaction to the de facto closure of the Strait of Hormuz and the physical attack on the Ras Laffan and Pearl GTL plants in Qatar. But although near-term prices, the front end of the curve have risen sharply, the prices further out in time have not risen nearly as much, and the forward curve for both oil and gas are in very steep and, in fact, unprecedented backwardation. These forward prices should not be seen as predictors of future prices, but they do represent the levels at which Serica would be able to hedge in the market through swaps.

So with this backdrop in mind, we turn to where our hedge book stands today. We've been building our hedges materially during the first quarter, and the reason for that goes to the reasons why we hedge. Firstly, we have an ongoing requirement by our banks to hedge a certain amount on a rolling basis, being 50% of the current year and 30% of the following year. But beyond that, we are always striving, appreciating that we cannot predict events and prices to find the Goldilocks solution, not too little and not too much.

On the one hand, we seek to ensure that we protect downside sufficiently to ensure that we can cover our cost base in tougher times as well as to support our capital allocation priorities, including the dividend. This also includes maximizing the liquidity available to us through the borrowing base under our RBL. But on the other hand, we do not want to overhedge so that events, even if they are the kind of tail risk events we have seen this month, which cause prices to spike, can benefit our shareholders. So we were always looking to protect the downside, but leave as much as possible of the upside potential.

In common with our peers, we do this both by imposing policy limits on our absolute amount of hedging and by the choice of instruments that we use for hedging. As shown on this table, Serica is currently hedged for about 60% of our forecast production in 2026 and about 50% in 2027, which is inside our policy limits. When we combine the impact of the unhedged part with the use of zero-cost collars, which retain an element of upside exposure, we retain about 40% upside exposure in 2026 and around 55% in 2027.

The position in gas is actually more exposed to upside than in oil with only around 50% of our gas volumes hedged this year and less than 40% for next year. While we have built the book since the beginning of the year, about 50% of the hedges we've built have been taken on since the start of facilities from the 2nd of March, and we've been able to capture some very attractive opportunities. For instance, although the table show averages for the quarter, we have, in fact, recently placed some swaps for March at levels up to $111 per barrel for oil, which is especially pleasing given our most recent Triton lifting concluded only earlier this week.

We appreciate that it can be confusing to understand the intricacies of hedging approaches. And although we hope the floor prices are quite clear on this table, it is tough to figure out what the foregone upside price implications are. So, as a bit of a guide, we estimate that our current hedge book for 2026 with oil prices at a notional $100 a barrel, we realized roughly $80 a barrel. And at 150p per therm for gas, we realized roughly 130p per therm.

Taking a look at this slide, you may think you've seen this before, and that is because you have. We're pleased to say that we are simply reiterating our guidance across production, OpEx and CapEx at the levels we set forth with our trading statement in January. What we have though updated on this page is the carry-forward tax loss balances that we've reported today as of the 31st of December 2025.

As you can see from a combination of our own activities during the year as well as M&A that we completed during 2025, we ended the year with essentially double the level of tax losses as we started with. We now have roughly $2 billion of corporation tax and SCT losses and roughly $500 million of EPL losses. And using the simple math that we've applied before of corporation tax loss times 30%, SCT times 10% and EPL times 38%, then the notional value of these losses is around $1 billion.

Finally for me, I wanted to say a few words to add what Chris has already covered in relation to the M&A we announced in the year. In my previous career as a banker, we would tend to consider that the M&A was done when the deal was signed. But what I've since learned is that to ensure we deliver value, we need not only to be capable of efficiently delivering complex operated asset transactions through to completion, but also to ensure that the businesses are integrated efficiently into Serica and set up to realize their value potential.

Serica has, therefore, invested in human capital to ensure that we have the skills and processes that are needed to be successful in an M&A growth strategy. This includes being agile and opportunistic in the execution phase and ensuring that we always do what we say we will do. So we sustain Serica's good reputation in the M&A market as a credible and trustworthy counterparty. That also means having the people, processes and systems that are set up to deliver in a repeatable way to coordinate and drive forward the multiple work streams needed to get to completion and day 1 in the fastest possible time, all while also ensuring safe and reliable continuous operation of high-sensitivity assets and complex IT systems. The process we have just completed to see GLA and the Shetland gas plant come under our control today is a great example of this.

Finally, this also means doing the necessary work upfront to protect value from the transaction and to ensure that the people and systems can be integrated as smoothly as possible to ensure that the value can be realized in practice. One example of this is the approach we've taken with the Spirit Energy deal, which is not yet completed. Although we only assume completion from around end September, we know that future gas prices were key to value realization on this deal.

So based on a very constructive relationship with Spirit Energy and with their parent, Centrica Energy, we have been able to put in place deal contingent hedging for roughly 50% of the production, but on a basis which protects the value of our deal, but still leaves ample upside potential for Serica to enjoy. This was made possible in part thanks to Centrica Energy being a leading participant in gas markets and working through the complexities of a structure like this with us.

With that, I will hand back to Chris for some concluding remarks.

Thank you, Martin. This is another slide that should look quite familiar, and that's because our focus areas remain unchanged. Safety is, of course, the #1 priority and delivering reliable production this year that will generate material free cash flow. We are integrating acquisitions, progressing organic growth projects and still looking in the market to continue prudently adding to the portfolio to deliver for our shareholders. In addition, we continue to plan to move from AIM to the main market of the London Stock Exchange during the year. We are very excited by the opportunities ahead and look forward to updating you on progress throughout the year.

And with that, I will hand over to Andrew to run the M&A (sic) [ Q&A ].

The M&A, I hope not.

Q&A, the Q&A. I'm sorry.

I think we'll keep other people with the Q&A -- with the M&A.

Right. So the first question actually is about the last thing that you mentioned. When are you anticipating being admitted to the main market? And what impact do you think this might have on the share price?

So probably I'll take that one. Yes, we -- I think we put in our detailed announcement today that we expect now that will be in Q3. It's -- the work is ongoing for it. There's a lot of process. And I know, as Andrew often says, a surprising amount of process just to move from one part of the London Stock Exchange to another. But nonetheless, there is, and we are working it hard. We expect it will be during Q3 of this year. So very much on track to get there during the year.

In terms of what it will do for the share price, I mean, it's very -- obviously, our main reason for wanting to do that is to get a greater degree of exposure for Serica to investors generally. And the wider the exposure we get, the better it is generally for support for our share price. And in particular, certainly at anything around our current market capitalization, we would be very comfortably inside the FTSE 250. So one of the 350 biggest companies in the U.K. And the benefit of that is once you get into the FTSE 250, there are a lot of tracker and index funds that have to follow stocks in that segment. So that's one of the main reasons why we see a benefit in moving to the main board, and we remain very much on track to make that move during the course of the year.

Moving on to Triton. We've had a few questions come in unsurprisingly. So I'll try and amalgamate in a way that makes sense. There's kind of 3 questions really. One is, why couldn't the maintenance have been done last year? Second is a similar one, which is, will the work at Triton reduce the maintenance period later this year? And then the general question, which I think is the one that everyone wants to know is, how much should the reliability of Triton concern shareholders?

Thank you. I'll try and address all 3 of those. So the work that had to be done in February and March was not something that we actually even knew about when the last shutdown took place. What happened was in doing some inspections of key equipment, Dana discovered that they could not vouch for the status of some of that equipment. They could not prove that they've been maintained properly or inspected properly, and they didn't have the records to be able to prove that. So there wasn't necessarily evidence that there was anything wrong with the equipment. They just couldn't show from their maintenance systems that it had been inspected when it should have been inspected and maintained properly. And so what that meant was when they put all of that together, they felt that there was a risk that was intolerable and equipment could break before it got to the next shutdown. And so rather than take that risk, they took the decision that they would shut down and fix it now.

I think you asked, does that shorten the shutdown in the summer? It doesn't because some of the things they discovered that need maintenance, they haven't done now and they haven't to the summer shutdown. However, I will say that in our planning for the year, we assumed that Triton would be off essentially for 3 months in the summer, whereas Dana is planning for a 65-day outage. So we've built in a buffer there to some extent. And as I said during the presentation, we've also assumed a week's downtime on Triton as we go through the year outside of that summer shutdown window. So we think we've made some fairly conservative estimates around Triton for the year.

So how much should shareholders be concerned about Triton? Look, it's still not as reliable as we want it to be. That's clear. And we are working with Dana on a number of things to try and improve the reliability. And the key is, frankly, it's the power turbines and the compressors where we're reliant on one of each at the moment, and there are 2 of each on the vessel. And we need to get to a point where we've got 2 power turbines and 2 compressors available. And that's -- it's going to take a few months before we're in that position. In the meantime, we're quite vulnerable to outages. But as I've said, I think we've been quite prudent and put in place some fairly conservative assumptions this year such that we're confident with the production guidance that we've given.

And we're going to be part of -- Dana has just formed a compression improvement task force, which is targeting getting 90% efficiency with a single compressor and figuring out what else needs to be done in order to have 2 compressor operations. And we're going to be involved in that work ourselves. So I think, as we move forward, things will get better. But for now, it's -- we still have that vulnerability. We can't shy away from it.

And just briefly to clarify, our guidance takes in effectively 1 week of downtime each month over the course of the year. Keeping on Triton for another one, would you be comfortable bringing Kyla into the FPSO?

So -- yes, I'll take that one. So, Kyla, just to be clear, we've announced that we've moved the barrels from Kyla into reserves as of the end of last year. That doesn't mean we've taken a sanctioned decision on it yet. As I mentioned during the presentation, it's fighting for capital with a lot of opportunities in our portfolio. And we will make a decision on which ones we're going to pursue in which kind of time frame as we go through the year, and more detail at the Capital Markets Day. So we haven't taken FID on Kyla yet, but it's mature enough. We know enough about it. We like it as a development. So we were at a point where we could move it from resources into reserves.

Now, of course, we're not going to bring in another field into Triton until we're comfortable that we can produce it safely and efficiently. And the fact is we've only just brought on Belinda in the last few days. And we had anticipated that at the end of January, and it didn't happen because we had a shutdown. So there's no way we're bringing another development into Triton until we get stable operations there. But as I've said, I think Dana is doing a lot of the right things to achieve stable production and 2 compressor operations. And I'm hopeful that we get to the point where, yes, we can sanction Kyla and bring it into Triton.

Somebody on the side actually has just said that they're a bit bored of talking about Triton's compressor...

Me too. Me too. I'm fed up with talking about it, too, but it's what we get asked questions about and for good reason.

They do have a question with it as well, which is -- which I think I'll take the time to broadly think about it, which is what percentage of group production will come from Triton in 2027? Now, we obviously haven't guided for 2027 as yet. But if you look at analyst expectations, it's probably somewhere in between 1/4 and 1/3 of production will come from Triton next year. So it clearly becomes of significantly less importance to the portfolio, albeit still being highly cash generative.

Next question, I think, is one for Martin, actually. Why do companies who acquire assets from [ TotalEnergies ] sometimes pay Serica rather than Serica paying for the assets? I presume they're concerned about the decommissioning costs at the end of field life. What value is it that you can see that vendors can't?

Good question. So yes, there's a bunch of things embedded in that, obviously. One is companies like TotalEnergies makes a strategic decision that they basically want out of an asset like this. And you can understand why because we think it's got amazing potential, we're buying it as it is, but they thought it was going to be a lot bigger than it actually is. And so it's kind of got -- it's been something that's been strategically on the decision to exit. So, therefore, price is not the most important thing. But add to that, yes, why -- they're not -- obviously, they're a commercial and sensible company, and we are too.

And therefore, they -- whilst we're receiving cash, that's because the effective date, the historic date at which the deal we economically owned it was the 1st of January 2024. So the $57 million odd that we received today is basically the after-tax cash flow from that asset for that period until today. So that effectively, we economically owned it, and we receive it today because we've legally completed today.

And then, when you think about how that works, yes, we are taking on the decommissioning liability associated with that asset in the future. The thing about decommissioning liabilities are that they are obviously an obligation to decommission in the future, but the timing of that decommissioning, and indeed, the absolute amount of the cost of it are not certain. And absolutely, our objective, which is different than that of, say, TotalEnergies when they owned it, is to continue to invest in the portfolio through some of the things that Chris talked about, like maybe Glendronach, maybe a Tormore well, but also getting the benefit of third-party gas into the plant like Victory that's already there and Tornado that we hope to come in the not-too-distant future.

All of those things would just push out the time at which decommissioning happens. And all of that is very significant in terms of additional value for us. So for us, it's about delivering on those things, which TotalEnergies was not going to do because the capital investment associated with them just didn't screen for them relative to all the other global opportunities they have. It does screen for us, and we, therefore, look forward to doing it. And it's a case of, again, as Chris indicated, it's right assets, right hands, and it's just the natural kind of food chain, I would say.

One other little point is there's also a tax differential. And TotalEnergies was being fully taxed on it under their ownership. And indeed, the receipt of cash we've had today is after it's been taxed for that whole period at 78%. But when in our hands, we're buying it into some of the entities we acquired through Prax Upstream, and that means it will be sheltered from a large amount of the tax now as of from today when it comes into our ownership. So there's a different valuation reference point for us as well. So I hope that answers the question. And that's just using GLA as an example, but you could play that across to other things as well.

And speaking of some of the other things that we're acquiring, given the context of very high commodity prices, could you talk about the expected payments on closing of the acquisitions of the ONE-Dyas and Spirit's assets? Assuming oil and more particularly gas prices stay where they are, those payments could be very favorable to Serica.

Yes. I mean, clearly, they will -- we do -- as we track them, they're going to be up versus where our original planning for them was when we did the M&A because we weren't planning for prices where they are right now. So yes, the net impact of that is going to be that we expect to get higher payments than we would have done or in the case of Spirit Energy to essentially probably the net payment by us will probably be lower. The exact numbers of those is obviously something that needs to be worked through based on what actually happens to commodity prices between now and when we actually complete.

The only other cautionary note I'd say is that, again, just as I mentioned for TotalEnergies in the case of both ONE-Dyas and Spirit Energy, under their ownership, they're being fully taxed with the full EPL rate. And so whatever the increment is, it's going to have a higher tax rate against it than it would under us. So that does help to dampen the impact of higher prices a little bit.

A more general question on the M&A landscape in the North Sea. How is the current market? And how has the M&A dynamics changed after Adura and NEO NEXT+?

Yes. I mean, I think Chris alluded to that in his remarks that -- we'll have to say that we think the opportunity set in the U.K. this year is going to be down on last year. And I guess, it's kind of easy to say that because there was a hell of a lot of activity last year, right? So the bar would be very high to be able to repeat the level of activity in the basin this year that we saw last year. But that impact of the significant consolidation that we've seen is probably a reason why we think there'll be less M&A this year. It doesn't mean to say there won't be any.

And I do think in time, as the likes of an Adura or a NEO NEXT+ and some of the others, Ithaca, as they look at their portfolios, they may well see that there are assets within there that in the normal course, they look to divest and move on. And that's kind of normal course business that we would expect to carry on. But overall, we just think the activity in the U.K. is likely to be down. The other cautionary note on M&A is that whilst we see these very high prices, high -- not just high, but volatile prices, prices that move all over the place are very difficult to transact M&A in, right? It just makes doing deals really hard when prices are moving really fast. So that's not a comment specifically about the U.K. It's just a general comment about doing M&A in the upstream.

And while we're on the discussion about U.K. M&A, then how about overseas? You mentioned it's something that you're looking at. So what kind of areas could people expect an acquisition to be made in?

Do you want me to take that one? So look, we are starting to look overseas and get a bit more serious about that. And there's really a couple of reasons for that. One is what Martin just mentioned, there are fewer and fewer opportunities in the U.K. We're still working on a few opportunities, but not as many as they were a year ago. And we want to have a sustainable business. And at some point -- the U.K. is in decline. And at some point, you'll get to a point where there's not enough production left for us to maintain the kind of size of business that we are. So sooner or later, we have to look overseas anyway if we want to have a sustainable business.

So look, we don't want to limit ourselves too much to where we might go. We do quite like Southeast Asia. So why would that be of interest? Really, it's an area where we can see playing out our strategy in a similar way to we do in the North Sea. Southeast Asia in general is a bit less mature than the North Sea, but it's -- most of the fields are kind of mid- to late life now. So you're getting to the point where a number of the majors are thinking about exiting fields there or just reducing their exposure in the area. So we're at that point now where -- probably where we were in the North Sea 10 or 15 years ago, frankly, where opportunities are coming available for companies like us to go in.

And as we said, push out the decommissioning, extend the life of fields, drill more wells, find more reserves. So we just see that it's a ripe area for that kind of an opportunity. Yes. And I don't really want to comment too much on other areas because as soon as we say we're ruling something out, and then, an opportunity comes up, who knows where we could go. So never say never, but I think Southeast Asia is probably first on our list of places that we like for the reasons I've just mentioned.

I'm aware we're running out of time. We've got quite a lot of questions still to go through, so I'll try and group them together. Dividends, quite a lot of people have asked about dividends. So a question for Martin. Do we see a return to dividend growth? The dividend looks quite small considering the free cash flow to come.

It's a really good question. And look, the way we think about the whole capital allocation piece is we've got to balance the dividends to shareholders with investment in the portfolio and with M&A growth. And it's the -- we're not alone in that. That's kind of the conundrum for all of us and our peers that are involved in this. It's probably going to sound a bit like a stuck record in saying, wait for the CMD, but we are definitely planning to give a great deal more detail about how we balance all of those things at the Capital Markets Day.

I guess, it's a sign of confidence we felt to show that we were able to continue the dividend at the same level as before despite the fact we had a challenging year last year, but -- now, but we expect to give a lot more clarity. And we've got to -- and show the really interesting and exciting returns can come from the investment in our portfolio, but it always while ensuring that we also pay a sensible amount of dividend. So I know that's not going to directly answer your question, but that's probably what we can give for now.

Another quick one for you, Martin, about tax losses. How long do you think they'll last for? And which of your assets do they cover?

Really good question. And we -- you probably noticed that we've sort of stopped giving guidance on how long we think they're going to last for, and that's because we used to give it. And then, we found that they lasted for a lot longer. And as it happens last year, we created a lot more losses either through our own activity because the silver lining on Triton performance was that, as I probably indicated, we actually added to the loss pool there rather than reducing it during the year. But then, of course, we also did some transactions that brought some losses with them.

So in terms of -- and then, of course, how quickly use it is also a function of what happens to the commodity price, which is incredibly difficult to predict. So it sounds like a bit of a cop out. We've got a lot of losses now. They basically will -- are reasonably balanced across our portfolio with the exception of Bruce, Keith and Rhum, which is in the entities that basically don't have any losses. But that, as Chris indicated, is one of the key areas we're looking to make investment into. And investment is not only needed to bring short-cycle gas to the U.K., which it desperately needs, but is also efficient when it comes to the use of tax because if we can invest, we get still strong capital allowances against the 78% tax rate that applies there. So we have a strategy which is kind of fit for all seasons in that respect.

And speaking of tax rates, I think we should finish with politics and apologies to people whose questions we haven't got around to, but please do e-mail them over to me directly if you'd like a response. Are you talking face-to-face with Ed Miliband or Rachel Reeves? With such pressure from so many sources, do you feel the logic of the message is getting through? And are there any milestones going forward? And do you feel more positive in the stance of Whitehall?

So we're speaking with everybody that will listen, both individually and as part of industry bodies. I was personally in the meeting with Rachel Reeves, #11, whenever that was, just around the spring statement time. The message is definitely getting through about the need to stimulate the North Sea before it's too late. We have a tax regime that's been designed by this government in consultation with the industry. And yet, as we sit here today, that won't come into force until 2030. And our argument is just bring that in now. Treasury absolutely get that. I guess all I'll say is there are other parts of the government that are not necessarily sold on that idea. So I'm not going to try and predict where we'll end up on that because at the moment, I don't think anybody in government really knows where we're going to end up on that.

Martin, anything you want to add?

No. I think Chris has covered it very well. I mean, look, everyone in this call will know, we've seen the volume of really quite broad-based sentiment now to recognize the importance of security of supply. And that's an argument that we've clearly been supporting for a long time. We just hope that a sense of pragmatism, the recognition of the importance of security of supply from a sort of defense and just national security perspective will begin to carry more weight than it perhaps does -- has done in recent times.

And with that, Chris, would you like to give any closing remarks?

Well, just that we've got another exciting year ahead of us. We are integrating new assets into our portfolio. We're seeking to do more M&A still on top of that. We will be growing production as we go through this year, both on our existing portfolio and the new assets. We will be moving to the main market this year. And we've got lots of exciting investment opportunities in our portfolio, about which we will speak at the Capital Markets Day, which is the next time we will see you.

Perfect, guys, if I may just jump back in there. Thank you very much indeed for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Serica Energy plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.

Good morning, and welcome to the Serica Energy plc investor presentation [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review the questions submitted today and publish responses appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Chris Cox, CEO. Good morning, sir.

Thank you. Good morning, and welcome to our trading and operations update. I'm joined as usual by Martin Copeland, CFO; and Andrew Benbow, our Head of Investor Relations. Thanks to everyone who submitted questions ahead of the call. And please feel free to post any further questions you have during the presentation.

Should we not get time this morning, please feel free to contact Andrew directly. We will respond promptly to every question we receive. Martin and I will now run through a short presentation and then answer as many questions as we can in the time available. When I reflect on 2025, there are obvious disappointments in terms of operational performance. So I cannot claim to be entirely happy.

However, I'm very pleased with the position we find ourselves in going into 2026. It's always a challenge to get M&A deals over the line. But after deciding to withdraw from our discussions with EnQuest in early May last year, the team did a great job and delivered multiple deals that all support our strategic objectives, growing production and cash flows and delivering value for shareholders.

These deals are set to boost our reserves by over 1/4, will be cash flow accretive this year and will significantly enhance our production going forward as well as adding additional development options to our portfolio of investment opportunities. The transactions were also great deals financially, meaning that the acquisitions have been in the case of Prax and will be in the case of the others, completed with either the receipt of cash by Serica or with only minimal cash paid out.

We also continued our track record of shareholder distributions in 2025 with dividends amounting to 16p per share, and this was done despite the evident operational challenges and a continued strong investment program. This investment has delivered significant incremental production as well as enhancing the resilience and positioning for life extension across our asset base.

Triton is inevitably the asset that gets the most visibility, of course, due to the prolonged shutdown. But in addition to the multiple improvements in key areas of plant on the FPSO that position us for marked improvement in operating resilience. Key work also took place on the Bruce platform as we invest to extend the life of production facilities and to ensure that the excellent potential of our subsurface can be fully delivered through the topside facilities.

Finally, we did a lot of work growing our capability as an organization in 2025. We've established a high-quality executive leadership team and are putting in place the wider organizational structure and processes to position us to deliver on our strategic and operational goals. And this is how the portfolio looks as we enter 2026, far more diversified with assets set to be included in a portfolio that will encompass the entirety of the U.K. North Sea from West of Shetland to the Southern North Sea.

Production will rise as the acquisitions complete and importantly, will become significantly more diversified with our total number of assets more than doubling to '25 by year-end. This should mean increased resilience of production and revenues and less reliance on individual facilities or export routes.

We will continue to be balanced between oil and gas, but pro forma for the acquisitions, we expect our production to become slightly more gas weighted more towards 60-40 than 50-50 as our acquisitions are mostly gas-oriented. We are also ensuring that our portfolio remains as well positioned as possible in the context of the disappointing decision by the government to retain the energy profits levy.

This means we will act to optimize our tax position, including through targeting investments where they benefit most effectively from the application of capital allowances. We believe that we have set the company up to continue to deliver value-accretive growth whilst also delivering material direct cash returns to shareholders. And as indicated in our RNS today, we will give more details on this in the coming months as we finish the high grading of our future investment opportunities.

But of course, our business starts with the safe and efficient production of hydrocarbons, and we expect this production to be materially higher in 2026 than it was in 2025. As most of you will be only too aware, 2025 was impacted by significant reliability issues at Triton, which resulted in a lengthy outage while comprehensive work was undertaken across the FPSO.

This is clear on the chart on this page, which shows no production at all from Triton in Q2 and also far lower production than should have been the case in the other quarters of the year. However, significant work was undertaken across key systems on the FPSO during this time. And with this work having been completed, we expect far greater uptime this year.

The operator is following a methodical and careful process of optimizing both reliability of production and optimized well configuration, including the new wells from our drilling program. This means that running with one compressor and targeting increased reliability is the current focus, with the result of this already seen with current production over 20,000 barrels a day net to Serica.

Following a period of stability on one compressor, there is the potential to move to twin compressor operations and achieve rates of over 30,000 barrels a day net to Serica. While production in 2025 was disappointing, we have already seen improvements in 2026 with year-to-date production of 43,000 barrels a day. This has by no means been a perfect start to the year as we have dealt with a number of short outages at Triton.

Also at Bruce, a number of wells require assistance to flow by injecting high-pressure gas, so-called bull-heading operations. And these gas injection facilities have not been available to us until the last few days. Hence, Bruce production has also been reduced at the start of the year. Over the course of the last week, both Triton and Bruce have been building back up to more normal production rates and are now performing more in line with their potential.

Current production is again around 50,000 barrels a day. This is despite losing roughly 2,000 barrels a day from our Orlando field, which is currently shut in due to storm damage at the Ninian host platform. What this means is that we are, therefore, confident that we will deliver a 2026 annual outturn, which we expect to be a material increase in our production to significantly over 40,000 barrels a day.

But the extent to which we surpass this remains uncertain at this stage. This uncertainty comes from a number of different factors, which are currently difficult to predict. How reliable Triton is when we switch over to 2 compressor operations, what stable flow rates can be achieved from our 2 new wells at Evelyn and Belinda, the length of the maintenance shutdown at Triton and the timing of cessation of production at Lancaster.

In stating that we will average significantly over 40,000 barrels a day, we've made some fairly conservative assumptions about these factors. But until we have more information on some of these, we are not in a position to provide more definitive guidance, especially given the fact that 2026 production will be impacted by the completion dates of our various M&A transactions.

These schedules remain on track with the previously stated timetables around the end of the first quarter for the TotalEnergies acquisitions, midyear for ONE-Dyas and then later in the second half for Spirit Energy. But movement in these dates would also impact the outcome of our production for 2026. We will, of course, update the market on the expected production as we reduce these uncertainties during the coming months. But our production bedrock this year will remain Bruce and Triton, and they're also the focus of our activity program through 2026.

In Q4, bull-heading at Bruce was sporadic, meaning that production for the quarter averaged 15,400 barrels a day, which is below par for the asset. With bull-heading now resumed, production has again hit 20,000 barrels a day net to Serica. As we move towards a potential infill drilling campaign at Bruce, the first time they will have been drilling since 2012, we are also carrying out work this year to ensure that the facility is able to produce the subsurface potential and sustain the life of the asset.

This work includes the installation of a new subsea umbilical control cable in the western area of the field, initial work on rewheeling of our low-pressure booster compressor and completing and commissioning our flare gas recovery project. At Triton, the focus is very much on delivering stability of operations, as already mentioned. There is, of course, still work to do on the asset. Hence, the operator expects the annual maintenance period to be up to 2 months.

But 2026 is set up to be much better than recent years. We will also have a 30-day maintenance stoppage at Bruce, which will enable the commissioning of some of the project work on the platform. Our operational focus is also turning towards the organic growth opportunities across the portfolio. We are currently putting the finishing touches to our detailed subsurface evaluation of a wide range of very attractive opportunities.

Bruce may well be leading the way, but there are also attractive opportunities at Glendronach in our newly acquired Gala, Aria and Kyle in the Triton area as well as others in the capital allocation mix. We are planning to give a comprehensive update to the market on our organic growth opportunities in the spring when we will be able to give more detail also on some of the new opportunities such as Glendronach, which won't officially be a Serica asset until the TotalEnergies deal completes towards the end of Q1.

As I have said before, I consider it a good position to be in to have a real battle for capital allocation between growth opportunities and also to have the capital with which to invest. And on that note, I'll hand over to Martin.

Thanks, Chris. And it's good to be able to speak to you all ahead of what we are confident will be an exciting year for Serica and for our shareholders. But first, turning to the headlines of our 2025 performance. As this slide illustrates, inevitably, the production issues in 2025, especially at Triton, impacted our financial performance.

We estimate that we were down around 4.5 million barrels of oil equivalent in 2025, which at prevailing oil prices is equivalent to around $300 million of lost revenue. As our OpEx is roughly 90% fixed in nature, this impact flowed through to the bottom line of cash generation. It is though worth noting that in reality, this production and hence, revenue is not actually lost, but rather deferred.

And as Chris has indicated, we are confident of materially better performance in 2026. Although the lost revenues were painful, this pain was somewhat offset on an after-tax basis. Cash tax paid in 2025 was $9 million, down from $153 million in 2024 and $348 million in 2023 as we benefited again from group relief effects in 2025, which also resulted in a $71 million tax refund being received in June 2025 in respect of the same effect applied to tax selling later to 2024.

Continued portfolio investment, in particular, from the culmination of our Triton well program meant that our CapEx spend totaled $250 million, in line with guidance. The production boost as a result of this spend is very much expected to be seen in the improved performance from Triton in 2026 and beyond. From a balance sheet perspective, we ended the year with net debt of $200 million, which will be less than 1x estimated 2025 EBITDAX in a year where EBITDAX will also be impacted by the same lost revenues from lower production previously mentioned.

It's also worth noting that we had underlift at the year-end of just over $27 million due to lifting timings on Triton and Lancaster, which has turned into cash early in the new year. Our liquidity at year-end remained healthy at $290 million and factoring in the considerable cash flow expected in 2026, this gives us confidence to continue delivering on our strategy of direct returns and judicious investment in the portfolio through which to create shareholder value.

And that is what we plan to do in 2026, invest in our portfolio and deliver for our shareholders. Our OpEx in absolute terms will increase to $380 million to $400 million, up from $365 million in 2025 as we add assets and scale to the company. Although there is also an additional amount of around $65 million, which is spend expected on the Lancaster field for the period to the expected cessation of production in Q2 2026.

This is essentially the Aoka Mizu leased FPSO costs and hence, it's not really a comparable OpEx number as in common with other leased FPSOs, it embeds a component of capital cost recovery and is therefore not the same as our other operating costs. Our CapEx for 2026 is focused on ensuring our assets are positioned to deliver more in the years to come, increasing asset uptime and extending the life of assets while also improving emissions profiles in line with the North Sea transition deal to set us up to deliver the subsurface production potential of our portfolio.

Our base CapEx is estimated at $125 million to $145 million, focused on the activities that Chris outlined on our Bruce Hub and Triton. On Bruce, in particular, this is very tax-efficient investment since the retention of investment allowances means that 84.25% of the spend can be recouped in tax relief, a rate higher than the 78% marginal tax rate. This is, in fact, even higher for the flare gas recovery project on Bruce, which benefits from the additional decarbonization allowance and hence, tax relief of 109% on the spend.

We are, of course, also conscious of the need to protect our balance sheet and our ability to deliver on our strategy from the impact of lower commodity prices. We saw lower average oil prices in 2025 of $67, down from $75 in 2024 and gas prices marginally higher on average at 84p a therm as compared to 76p a therm. But we are conscious that as we enter 2026, we are doing so against the backdrop of fundamentals that could lead to a period of lower oil and gas prices, albeit with continued potential, especially in the age of Trump for event-driven upside.

We continue to manage our hedge book actively and in line with our RBL requirements. For calendar years 2026 and 2027, the company has hedged approximately 12,300 barrels of oil equivalent per day and 5,500 barrels of oil equivalent per day of production, respectively. We have focused these hedges on collars, and hence, these provide downside protection at effective floors of $60 a barrel for Brent oil and 67p [indiscernible] while retaining exposure to the upside up to the ceilings set out in this table.

As of the latest mark-to-market valuation, the hedge portfolio has a value of $30 million today. We will continue to manage this portfolio proactively as well as to build in protection in respect of the acquisition portfolio once those deals complete. And with that, I'll hand back to Chris to conclude.

Thanks, Martin. And hopefully, that gives you a good idea of where our focus areas are heading into 2026. Safety is, of course, our #1 priority and delivering reliable production this year that will generate material free cash flow. We are integrating acquisitions, progressing organic growth projects and still looking in the market to continue to prudently add to the portfolio to deliver for our shareholders. And with that, I'll hand over to Andrew to run the Q&A.

Thank you very much, guys. As always, please keep questions coming if you want to be answered today. And if we don't answer your questions specifically, then do feel free to drop me a line. First question is about compressors at Triton. First one being, why is there so much uncertainty as to when the second compressor can be used? And do you need to run with 2 compressors at Triton to make your production guidance?

So thanks. So first of all, the second compressor has been rebuilt and has run and was running through part of December and part of January. So -- and we now flip back to the A compressor most recently. As I mentioned in the presentation, the focus right now for Dana is to stabilize production with the new wells online.

We actually need 2 power gen trains in order to start up 2 compressors at the same time, and that should happen sometime in the next couple of weeks. So up till now, we've been restricted to a single compressor. And it means that we haven't been able to produce all the wells at the same time. As I said in the presentation, we've made some fairly conservative assumptions in saying we'll be significantly over 40,000 barrels a day for the year.

And one of those assumptions is we can deliver that with a single compressor. So I think the truth is if we can run through a large portion of this year with 2 compressors and all wells online, it gives us the opportunity to add to the production that we've already spoken about. It's upside essentially.

So an immediate follow-on question to that. Does that mean Belinda and Evelyn haven't flowed yet? Or are they flowing?

That's a great question. So Evelyn has -- and Evelyn's potential production is really encouraging. So far, we've had to choke the well back because it produces quite a lot of gas, and we expected this. So just to give a little bit of detail, the Evelyn well was drilled quite close to the gas oil contact deliberately, and we expect to produce a lot of gas from it in the first year or so. But that means that we bump up against the limit for gas compression for export.

And so we can't produce the well flat out at the moment. So the maximum that Evelyn has done is just over 5,000 barrels a day so far, but that's choked back significantly. It can do quite a bit more than that. Belinda, [indiscernible] is supposed to come online today. So we haven't flowed it while we've had Evelyn on and testing that for a while. We're now going to try Belinda actually later today. So hopefully, we can update you a bit more on the actual potential of those 2 wells next time we speak.

Speaking of Evelyn's potential and given the number of new growth opportunities, how do you go about prioritizing them? Particularly someone has asked about how do the Kyle Redevelopment and the Bruce infill program rank, but I think what would be at least at this stage is a general view of how we look at things going forward.

Well, we -- I mean, when we're evaluating which things to invest in, we look at a basket of different metrics. obviously, rate of return and the NPV that they deliver are the kind of things we look at. But importantly, capital efficiency is one of the big drivers for us. So bang for the buck, which opportunities produce the quickest payback and produce the highest return on the investment are the ones that are likely to get delivered.

And obviously, the ones that have the least amount of uncertainty in them, so the ones where we can be most confident of delivering. But we have a basket of about 10 different metrics that we look at when we discuss these with our Board, and it's not one single thing that we're looking at. It's kind of which ones look the best when we combine all of those different metrics.

And maybe worth adding, Chris, that when we think about return on investment, we also think about it in the context of tax, right? So some of the investments that we can make are more tax efficient than others. and particularly actually in and around Bruce because that's where we're a full taxpayer.

So the post-tax return on investment can look more attractive where that's the case. So we're going to factor all of that into how we make decisions. And it's basically -- essentially, we're prioritizing on where is the best economic return, taking into account all the factors.

I think, Martin, while you've got the floor and mentioned the words return, we've had a couple of questions about the dividend as well. You previously stated that 6p for an interim dividend was described as sustainable in the medium term. How is the dividend looking now?

Yes. I mean, look, hopefully, we delivered a message today that says we plan on the focus on combining investment in the portfolio with shareholder returns. And what we've said in the past, sort of remains the case. And obviously, we expect this year to be a good strong year. That said, it's only the 21st of January, and we're not in a position to declare a dividend for the year, and we will do that in the ordinary course as we announce our results post audit of the 2025 performance. So we'll obviously give more details on that in March when we do that.

And I think a similar and related note in a way is what's your 2026 breakeven oil and gas price?

Yes. So obviously, breakeven is an interesting question because it does depend a bit on terms of through what cost lines, et cetera, you're talking about a breakeven. But just to give people a rough feel, on an operating cost basis, it's around $30 a barrel Brent equivalent.

And if you include the CapEx as well, it's probably more like $45 a barrel. We also operate a very large part of our portfolio. So we've got the levers of -- so we can actually make adjustments to that. And clearly, we gave information today on where our hedging is. We'll always look at that and see whether it makes sense to pick moments to build in more hedge protection. So we're obviously very actively managing to get that into the strongest possible position.

I think while we're on oil price, the question just come in asking if there's a realistic chance that the oil and gas prices will reduce to a point where the EPL is dropped.

It's a really good question. I mean, yes, I mean, well, I mean, obviously -- so just not getting too political, but the government in the budget kind of effectively told us where they thought windfall prices were, which was 90p a therm and $90 a barrel, but notwithstanding that, they didn't remove the EPL. The -- where the windfall price -- windfall gets dropped is actually -- I'm going to get those numbers slightly wrong, but I think it's $76 a barrel and 59p a therm today. Those will go up in April.

And I think they will go up with the today announced 2025 inflation rate of 3.4%. So those numbers will keep creeping up. The problem is that just to remind people that in order -- under the current legislation in order for the windfall tax to go, both of those need to be below that threshold, and it needs to be for 6 months. So whilst oil is, frankly, comfortably below that and has been for some time, the gas price is not, which obviously we're not unhappy about in principle.

But -- so look, I can't say. I mean, if you look at the forward curve, it would say that, that is going to happen in the next couple of years. And indeed, that's where the government, I think, thinks is likely. But I can't say how likely that is to happen in the near term, unfortunately.

And then before we move back to Chris, Martin ask you one on main market listing, any update on the time line?

Absolutely. We -- I think we put in our RNS that we're going -- that we remain committed to the move to the main market, and we'll do that as viable. There are a bunch of sort of procedures and processes, which means that it can't be until after our results. And we will obviously update again on the timing of that, but we remain very committed to doing that as soon as we can.

Great. And moving back to Chris now as we focus again on operations. How old is the infrastructure at Bruce? And how would you compare the risk of production disruption there compared to, for example, Triton?

I can't give you an actual date of when Bruce came online. I think it was in the '90s. So it's actually a similar vintage to Triton. But these things always produce for longer than their design life, and we've seen that with fields like Ninian, Brenton and Fortis all went on for actually decades beyond their original design life.

So the thing that really matters is not when did they come online, but how well are they looked after. And I'd like to think that we've done a pretty good job of maintaining Bruce, and we still have more work to do, but it's in reasonable shape for a facility of its age. I think some of the problems we've had at Triton over the last 18 months or so are related to the fact that they weren't maintained as well as they could have been.

And what's been happening in 2025 is catching up on some of that work that maybe should have been done earlier. And although the performance -- the production performance during the year wasn't great. I've got to say, I think Dana's response to the problems they've had has been spot on, and they're catching up on the maintenance and they're replacing bits of kit that are beyond their design life and likely to fail. So they've done a lot of work over the last 12 months to improve the resilience of the facility.

And what they're doing at the moment is trying to get stable production, as I said, with a single compressor right now before they move up to the next step, which is hopefully boost us to 30,000 barrels a day net. So I think they're doing all the right things, frankly, despite a disappointing year last year. Back to Bruce, our -- the issue with Bruce has been that we haven't been able to produce the maximum on any given day that the wells are capable of doing.

So the Bruce facility itself runs quite reliably. And most days of the year, we've got production from Bruce. It's just not as high as we would like. And that requires some additional work in terms of reconfiguring compressors, maybe some additional pipe work, reconfiguring where the different wells come in, in order to fix that problem. But in terms of overall reliability, it's been pretty good.

Sticking with Bruce, someone's got a bit more specific. Can you provide more color on what bull-heading actually entails? And they speculate that by some people, they consider it quite a high-risk operation.

Well, first of all, it's not a risky operation. And obviously, if it was risky, we wouldn't be doing it. But it does involve -- so some of the wells, particularly the subsea wells on Bruce are quite low pressure. And if we just open the valve and expect them to flow, up onto the platform, some of them just don't start under their own pressure because what you've got is a flow line on the seabed and then -- and a wellbore and then they've got to get up to the platform, and that's all full of liquid.

And so in order to kick the wells off and get them started, what we do is we inject high-pressure gas through those flow lines all the way down into the wellbore. That lightens the load on the well, and it means it can start producing. And generally, once they start, they carry on producing. It's -- I'm hesitant to say this because it might give people an idea about my misspent youth. But it's a bit like siphoning petrol out of a car. Once you've sucked down the thing and it starts flowing, it keeps going. So bull-heading a little bit like that, but less illegal.

Misspent use from previous year was there, I think. Talking about debt now, someone is saying, given the timing of cash outflows, completion date of M&A, should we expect net debt to stay flat? Or in what direction can we expect it to go?

Yes. Let me answer that. No, it should definitely not stay flat. And we think that the year-end number was probably effectively at a high point. I mentioned in my comments that we actually had underlift at the year-end, which basically translate means that we had cash out to us. So it actually would have been less than that had that lifting happened just before the year-end, but that's a sort of minor issue.

But overall, the cash generation even at prevailing oil prices means that we would expect net debt to come down. And as I also mentioned, when we look at the completion payments on the M&A, actually, when we complete the first one, it will be a receipt of cash by us, a fairly significant amount rather than a payment out. And the others will be relatively modest amount. So assuming we deliver on what we've just said, you would certainly expect to see, all else being equal, net debt to come down quite markedly.

Very clear. Question about tax losses. What effective tax rate should we model going forward broadly? But also how quickly do you expect to utilize the losses?

Look, it's a really good question. And we'll obviously say more about actual loss balances, et cetera, with our results. We typically would do that at that point because, I mean, this is a trading statement, just a spot update on what happened last year. And obviously, we haven't had our results audited yet. So we'll give a lot more detail on all of that in March.

So that's not to try and duck the question. I think the point here is that we -- last year and the year before, actually, we benefited from group relief, which has meant that we were actually had a significant tax payable in relation to our -- effectively our gas business, BKR. But because of the impact on Triton, and this is, I guess, a silver lining in a sense to some of the issues, we were able to use in-year losses made at the entities that hold the Triton asset to shelter the tax payment due on the BKR side of the business.

This year, we don't expect that to be the case. And we're also investing a little bit less. So investment at Triton also was very helpful last year in that it sheltered EPL payments, which themselves can't be sheltered by the loss balances. So -- on balance, you'd expect to see our effective tax rate go up this year. We've got investment program at Bruce, which will shelter some of the tax. We've obviously got the loss balances, which probably have ended up net-net about the same as they were before, although we'll give the exact balances come the results.

So we'll continue to benefit from shelter of tax losses at the Triton asset. We've got some CapEx at Bruce. So I'm not going to give a hard number, but it's going to be up on where it was in the last year. But clearly, last year was a very, very low point in terms of our actual effective tax rate.

It looks like we're moving towards the end of the Q&A at the moment. So please do submit any more questions if you have them. One question or a couple of questions actually coming in relating to the Greater Buchan area. What is the current thinking about that project and what activity is expected this year?

Well, Buchan has to fit into the list of organic opportunities we have, which we've discussed earlier around how we look at these things. So we will share more in March on which opportunities we're looking to fund in the short term. And I'm not going to commit at this stage until we've been through all of that work.

So I think that we continue to look at development options and screen different scenarios for Bruce -- for Buchan at the moment. But I can't tell you where that's going to sit in our list of high-graded opportunities at this stage.

Yes. I think in response to another question that's come in, have you set a date for the Capital Markets Day? I think we're sort of aiming towards May at the moment for that when we'll be able to give a bit more color across the portfolio on the organic growth opportunities.

One of the question is, can you give some color on the timing of the downtime of the assets? I'll take that. That will be Q3 this year as per standard practice. And I think that actually completes the Q&A that we've had come in today. So with that, I'll pass over to Chris.

Okay. Thanks, Andrew. So look, we can't get away from the fact that 2025 was disappointing in terms of operational performance. But I think we set ourselves up for success during the year. So we were building resilience, which hopefully we take advantage of in 2026. And of course, we had a lot of success around M&A and growing the portfolio and maturing our organic opportunities during the course of 2025.

So our focus for 2026 is stable operations across the portfolio and growing production. Delivery of the potential of our new wells, particularly the 5 new wells around Triton, where we haven't managed to see the full potential of those wells yet and integration of the new assets, which we've announced through the M&A deals. So more focus on delivery for this year. Of course, we continue to look at inorganic growth opportunities and further organic opportunities. And as Andrew has just said, we'll tell you more about which of those organic opportunities we plan to fund and when as we go through this year. And with that, I think we're done.

Chris, Martin, thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Serica Energy plc, we'd like to thank you for attending today's presentation, and good morning to you all.

Good morning, and welcome to the Serica Energy plc acquisition of Portfolio Assets in the North Sea Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Chris Cox. Good morning to you, sir.

Thank you. Good morning, and welcome. I'm joined as usual by Martin Copeland, our CFO; and Andrew Benbow, our Head of Investor Relations. And we're here to bring you some festive cheer today as we describe what is a great deal for our shareholders. Martin and I will run through a short presentation and then take questions. So please submit questions as we go along, and we will answer as many as we can.

The deal we've announced this morning is positive for Serica for a number of reasons. And those who listen to our presentation when announcing the Prax acquisition may hear some repetition today. If it is repetitive, it's because we are seeking to deliver on our strategy in a consistent manner. And this deal is very much in line with that strategy. It increases our reserves, further diversifies our portfolio and delivers material tax-efficient cash generation at an attractive valuation.

Inclusive of the Prax Upstream and associated transactions, we are set to increase our reserves by more than 1/4 and add materially to our production. And the production we're adding is from high-quality, high uptime assets that will improve our production stability and the reliability of our cash flows. This deal also brings us further optionality when it comes to our organic growth projects. Of course, we now know that the budget did not bring forward the date for ending the EPL, but it did give us better clarity on the future tax regime and on the regulatory process. And we can still make investment choices by allocating our spend in the most tax-effective way to deliver attractive returns for our shareholders.

A 78% tax rate is clearly inappropriate. And even judging by the government's own oil and gas price mechanism, the successor to EPL, we are clearly not in a windfall environment. But notwithstanding the tax environment, we have a portfolio that is well positioned. We are efficient in our tax structure, and we have tremendous organic growth options and investing in those receives tax relief in year at the rate of 84.25%. We plan to give more details on these investments in the new year.

As some of you may know, I was previously CEO of Spirit Energy, and so I know the assets we are acquiring in this deal as well as many of the people very well. I'm therefore, delighted to bring the assets into the Serica portfolio and look forward to welcoming the Spirit people in Aberdeen and Hoofddorp into Serica in due course. And I hope by now, it goes without saying, but of course, our key focus with all our M&A is not just to get bigger, but to create and unlock shareholder value. We aim to do accretive deals that bolster our delivery of robust and reliable cash flow, enabling us to invest in organic opportunities, which sustain and grow our production and create value at the same time as continuing to pay a material and sustainable dividend. This deal delivers on all of those objectives.

And we're creating a more diverse, robust and exciting portfolio. As you can see from this updated map, assuming we complete on all the deals we've announced, and by the way, there's no reason to think that we won't, we will have assets across all basins of the U.K. continental shelf with the exception of the East Irish Sea. From the west of Shetland through North and Central North Sea to now entering the Southern North Sea. We continue to build on what we see as an engine room of highly cash-generative production assets, both operated and non-operated.

We are also assembling additional exciting appraisal and development opportunities to add to those in our existing portfolio. This should allow us to cherry-pick and invest in those opportunities with the potential to create maximum value for shareholders in the prevailing fiscal and regulatory environment. Having a genuine battle for capital allocation is a great position to be in, whether that is infill drilling around Bruce, development of contingent resources west of Shetland and around Triton to redevelopment projects like Buchan Horst and even exploration like our Skerryvore prospect.

Turning back to our portfolio. We are adding to these options with infill opportunities at GMA, Cygnus and Clipper South in the portfolio acquired today. And as with the Prax and GLA deals, we are not paying for any of this potential upside. We expect to give more detail on these investment choices in a Capital Markets Day in early March with further insight into the ranking, timing and tax-adjusted economics of these options.

Our portfolio is representative of the great potential that remains in the U.K. North Sea. We are as well positioned as it is possible to be in the current environment. But the recent budget was undoubtedly a missed opportunity to unlock significant wider investment by the sector. It would be possible to really boost our world-class U.K. supply chain, support jobs and energy security whilst also helping to contribute to economic growth should the new OGPM tax be brought in more rapidly than is currently proposed.

We have today added some quality assets to our portfolio at an attractive cost of under $4 per 2P barrel. Given the economic date is the start of this year, and these are cash-generative assets, upon completion in the second half of next year, there is expected to be limited cash payable by Serica. Also, very importantly, in this transaction, we have negotiated that the cost of decommissioning the later life operated assets is retained by Spirit Energy as part of the terms of the deal. This represents the clear majority of all such costs and all of the nearer-term spend that is due this decade.

Let's take a closer look at what we have acquired. The headline asset is the Cygnus field operated by Ithaca Energy. Bringing Cygnus into the portfolio means that alongside Rhum, we will have stakes in 2 of the largest producing gas fields in the U.K. We've also obtained a 25% interest in the Clipper South field operated by INEOS Energy and an 8.4% interest in the Shell-operated Galleon field.

We also take on Spirit's operated positions across the Greater Markham Area or GMA. GMA is a late-life asset and although very largely in U.K. waters is actually operated from the Netherlands. The area delivers around 7,000 barrels of oil equivalent per day of net production. And there remains some infill drilling opportunities, which we will evaluate in the coming months alongside the other potential investment opportunities in our portfolio. There are also a few minor late-life operated assets that together in due course with GMA will give us increased operated decommissioning experience but with the costs covered by Spirit.

Moving on to Cygnus. I was fortunate to be involved with Cygnus during its construction and commissioning phases and during its first few years of production. Cygnus is a world-class gas field with predictable performance from both the reservoir and the wells. It is amongst the lowest cost producing fields in the North Sea on a per barrel basis and has emissions, which are less than 1/3 of the North Sea average. It has historically run with high uptime, the result of an efficient facilities design and good performance by the operators. Ithaca is currently executing a 4-well drilling campaign of infill and step-out wells, and there is still more potential for future drilling. Cygnus is a great example of the old industry adage that big fields get bigger.

Clipper South is another high-performing field operated by INEOS. The field has already produced more than was expected at the time of project sanction with high uptime of over 99%. Recent seismic reprocessing has helped to identify 2 potential infill drilling targets. Galleon also has potential for future infill wells, but these opportunities are immature and will require more technical work.

GMA consists of various mature gas fields tied back to the J6 Alpha platform. The vast majority of production today comes from the fields, which are in the U.K. sector, but the J6 Alpha platform sits just inside Dutch waters and the gas is exported by pipeline to Den Helder in the Netherlands. Support for the GMA operations is provided from a support organization based in Hoofddorp just outside Amsterdam. Two of the fields, Chiswick and Grove, still have potential infill drilling targets, which we will evaluate further in the coming months. Eris and Cerus are 2 single well subsea tieback fields, which will be operated and decommissioned by Serica.

I'll now hand over to Martin to discuss a bit more on the financials.

Thanks, Chris. As Chris, has articulated, we're confident that through the acquisitions that we've announced in the last 2 months, we're delivering on our strategic objective of building a stronger and more resilient business and increasing the attractiveness of our investment case, especially as we move to the main market of the London Stock Exchange next year. But importantly, we're also achieving these objectives while ensuring we retain balance sheet capacity and liquidity to invest in organic growth from the exciting opportunities we see in the portfolio and in the assets that we are acquiring where it makes economic sense to do so as well as to deliver attractive shareholder returns through our dividend.

The structure of the deal we are announcing today as with the Prax Upstream and associated deals have long historic effective dates from cash-generative assets and hence, help to support these objectives. For the Spirit assets, we will benefit from after-tax cash flows generated by the acquired assets since the 1st of January 2025 economic effective date. And as a result, we expect to have only modest cash outflow on completion to pay the consideration for this deal.

When we combine this with the impact of the Prax Upstream and associated deals, where, as previously indicated, we expect to be net recipients of completion cash payments amounting to an estimated $100 million in aggregate. These M&A deals will materially strengthen our liquidity position in 2026. And of course, we will also benefit from the positive free cash flow generation from the Prax acquisitions and today's Spirit deal from their respective completion dates. We expect that the business we are acquiring today alone will generate roughly $100 million of cash flow after tax and investment CapEx by 2028.

As you may have noted from our RNS this morning, we are acquiring the Spirit assets through 2 of the newly acquired subsidiaries of Prax Upstream following completion of that deal last week. These businesses have significant carryforward tax losses, which differs from the position of Spirit and will enhance the cash generation of the acquired portfolio following completion. We plan to give more details on our overall 2026 guidance with our January trading statement. And as Chris indicated, to set out more on our capital investment, cash generation and associated funding plans at our Capital Markets Day planned for early March.

We can though be clear now that we're committed to running the business in a financially prudent way, balancing capital allocation into sustaining and growing our production base with shareholder distributions and ensuring that we maintain discipline in the appropriate use of debt finance. As we've trailed in recent announcements, our subsurface team are maturing a number of very attractive organic growth propositions in Serica's current portfolio, and these will be assessed against options in the assets we are acquiring.

And moving to the next slide. And we continue to ensure that our medium-term cash generation and financing will enable us to invest to generate good economic returns and to push out the date of decommissioning spend. But we are also a responsible and efficient operator, undertaking our obligations to plug and abandon wells and decommission assets in a timely manner. The portfolio we have now assembled comprises a range of different approaches to handling the decommissioning. And while the scale of the decom has increased as we've grown the portfolio, we are amongst the lowest in terms of decom per barrel amongst our North Sea peers.

The transaction we announced today follows a model similar to our BKR and Triton assets, where the vast majority of the decom spend liability remains with the historic sellers. In this case, Spirit will be retaining liability for all of the operated assets decommissioning costs, up to a cap set at 115% of the current estimate. This covers all of the GMA assets and some of the smaller positions. And because the key non-operated assets, Cygnus, Clipper South and Galleon, are longer life assets, this decom support also covers all of the decom spend in the acquired portfolio likely through the remainder of this decade.

Although Spirit is providing the financial backing, Serica will be responsible for undertaking the works, and we therefore, see this as a good opportunity for Serica to grow its execution capability, a critical component of a U.K. Continental Shelf and wider upstream toolkit, while not actually footing the bell.

And with that, I'll hand back to Chris.

Thanks, Martin. Well, we have a really busy and exciting period coming up in 2026. And we're pleased to say, by the way, that the scheduled Britain pipeline works have been completed on schedule. And with all that has been done by -- done by team over this year, we are cautiously but quietly confident of better times ahead and the ability to demonstrate much improved asset reliability and production from our newly drilled well stock.

Then as indicated, we will be finalizing our internal work and communicating our plans for investment in the portfolio, which we expect to start with Bruce infill wells. We will then see phased completions of the GLA position from TotalEnergies, the Catcher and Golden Eagle assets from ONE-Dyas and then the assets from Spirit we are announcing today.

And we also expect good progress on our corporate finance initiatives, both through a planned refinancing to fit with our reshape portfolio and the investment opportunities we see as well as through proceeding in 2026 with the planned move to the main market, which we had to postpone from this year due to the M&A opportunities we have secured in the second half of the year. We will, of course, ensure regular and transparent disclosure of all these plans as we move through the year, starting with our trading statement and 2026 guidance scheduled for the 21st of January.

In the meantime, we hope that all our shareholders have enjoyable and restful holiday period. And we will, of course, be open to any questions you have in the normal way. Over to you, Andrew.

Thank you very much, Chris and Martin. As always, had loads of questions come in. I'm going to try and bunch them all together to make it easier. So the first one is relatively quick fire ones for Martin, I think, just to try and clarify a few points that people were asking. So first question is, can you get preempted on this deal?

Yes. I mean, obviously, a good question because clearly, we're all aware that we announced the [ Culzean ] deal, and we did get preempted on that deal. We obviously -- when we announced it, we made it very clear that we knew that there was preemption on that asset. And yes, we would also be like not to have been preempted, we were.

So -- but the good news on this one is that as with most assets in the North Sea, there isn't preemption on the vast majority of this portfolio. It's actually a complicated deal with lots of different parts, but on the parts that drive the value, there's no preemption provisions in it. There is preemption on one of the assets, Galleon, and on a very small part of the Markham field, but those are -- I mean, we only have 8.4% of Galleon in this, so it's not a key value driver. So essentially, there's a tiny bit of preemption, but it won't really change the story as regards to the value that we're delivering today.

Next, moving on to something that Centrica mentioned in their RNS. The RNS stated they've transferred GBP 41 million worth of decommissioning liabilities. Are these, therefore, the later life liabilities?

Exactly so, yes. And that number is a sort of undiscounted number in the future. And because that relates to the -- obviously, the assets that we are maintaining the decom, which is the nonoperated assets, a large bulk of that is sickness because it's the biggest piece in that, and that's really a long time out in the future. We're talking mid-2030s at the earliest.

Moving on to a question about the cash flows that we are going to generate from this deal. Can you indicate if the $100 million of free cash flow is from the 1st of January 2025 and includes the $74 million consideration paid and any tax loss benefits or assumed by it?

Yes. No, is the short answer. So the way we always think about those things and the way we've guided it is we'll think about the pre-completion cash flows. And I think what we indicated is we expect to see completion of this in the second half of next year. The reason for that is that it is a complicated set of assets, a couple of corporates, it's both the U.K. and the Netherlands. So there's quite a lot of partner consents. There's just a lot of process that we have to tick through. It's nothing terribly complicated, but there's a lot to do.

And so we think about that as adding to what we estimate we'll have to pay at completion. And as we said in our prepared remarks, we think that will just be a modest amount at completion. So the bulk of that consideration will be met by the interim period cash flows, which will then -- which are, of course, after-tax cash flow. So it's the net of what is received. The $100 million that we gave an estimate for is assuming we complete around the end of Q3 and then looking forward to the amount of cash -- net cash flow after tax and taking into account tax effects that we expect to generate from this portfolio from the period from then until the end of 2028, and that's the $100 million. So that's not the total. That's just a period through to 2028, but it's just to give a rough idea. And obviously, there are a bunch of assumptions that go into that as well.

Was this a competitive process?

I'll pick that up. Yes, it was a competitive process in a sense. People have seen, I mean, Centrica/Spirit, this has been a kind of strategic move as they've sold another part of Cygnus earlier in the year to Ithaca and then this essentially remain -- is the remaining E&P assets within Spirit. So they will be concentrating themselves back to being the Markham field and going into carbon capture and storage. And so yes, they were marketing this asset. And in fact, I personally was aware of this for really quite some considerable time. And in fact, our friends at Prax were involved in -- well, we're advanced, I guess, on looking at this transaction.

And so when they went into administration and we obviously entered into the transaction to acquire them, we also entered into direct conversations with Spirit at that time and have been in conversation with them on essentially a bilateral basis since that time.

And the last question, the quick fire round is effectively, is GMA U.K. tax?

It is U.K. tax, yes. It's a tiny, tiny amount of it that sits in the Netherlands. And it's just that it's kind of operated out of the Netherlands, but really, you should think of these as U.K. assets, and therefore, it's U.K. tax.

I'm afraid there's more questions to come for you, Martin. So [indiscernible] used to be in a net cash position. However, the company is now in a net debt position. This could easily get out of control with all the purchases, the words not mine. Should investors be concerned?

Well, I don't think you can get out of control with the purchase because these purchases are generating cash, not using cash. And as hopefully, we've tried to explain through the conversations that we've -- the message we've given, as we complete on the deals we announced versus Prax will be net recipients, not payers of around $100 million of cash. So that's a cash inflow, not a cash outflow. And then on this deal, whilst there will be a modest amount to pay, it really is only a modest amount.

And yes, it's true. We used to be in a net cash position. Fundamentally, it's not actually that efficient for a company to always be in a net cash position. But I think the reality is that we are now in a net debt position, but partially because of the underperformance of Triton this year. We don't expect to see that same underperformance in the year to come. So we see next year as being a year of very strong cash generation, and that's a good thing, not least because we've got some exciting plans as to how we can invest a portion of those cash proceeds in order to generate further value for shareholders.

Moving on to questions about the government in the recent budget. People have said that we -- they saw your interview, Martin Copeland, well done on the lobbying. But do you think the government were listening? And did the budget outcome take you by surprise?

Should I pick that up? I can start that one. I mean, well, thank you for the comments on the podcast. And yes, look, we put -- we and indeed the whole industry put a lot of effort in with the treasury. And I think it's really clear that the treasury was listening. I think it was very clear to everybody that they planted an article in the FT in the kind of -- in some of that long run-up to the budget, indicating that they were going to bring forward the date ending the EPL. But then something happened, and I think it's pretty obvious to anyone who lives in the U.K. what happened in the last 2 weeks in the prep to the budget, the debate went from the technical to the political. And I think although the technical was very clear and they understood that the economic value of bringing forward the end of that windfall tax, as Chris mentioned in his remarks, it's pretty obvious that we're not in windfall conditions.

But the politics of it ultimately didn't go in our favor on this time. I think we consider it to be a battle lost, but the war is still proceeding, and we will be continuing to make that case as part of the industry over the coming months and as we go into next year. We might not be doing it quite so outwardly and vocally, but we'll absolutely be continuing to make the case.

Yes. I think the next question is one that Chris can take actually feeds quite nicely into that. Are you concerned that government is not going to approve new developments such as Kyle, Buchan Horst or Glendronach?

No, not. Actually, I think the NSTA, so our regulator is very keen to see developments go ahead. I was in a meeting with oil and gas OEUK last week with the CEO of the NSTA, and he was at pains to point out, Stuart Payne is his name. He was at pains to point out, that they're very keen to see the best developments go ahead. And when we asked about, well, what about new rules, what about the change in legislation? The answer was, well, nothing changes until it changes. So if you've got developments you want to do, crack on with his words.

So I don't think anything has changed at the moment. And as long as we comply with the legislation, developments will still go ahead. And yes, we're waiting for final approval for Jackdaw and Rosebank, but I imagine those are going to come through quite quickly. And then you might see quite a few more on the back of that.

The next question is a bit of a follow-up to that actually. You've done a number of deals in the North Sea recently, including Fynn Beauly and carrying on Skerryvore. Do you have any views on when these might move forward?

Yes. I mean, exploration is in a slightly different bucket. And by the way, exploration has not been stopped by the government. What they've said is no new exploration. And what they mean is they're not going to award licenses for people to go out and do wildcat exploration, but drilling exploration wells on existing licenses is still very much a possibility. And in fact, we're under pressure to act on those kind of opportunities that we have in the portfolio. So we have decision points coming up on both of those within the next 18 months, and we'll see where we get to on it. We -- look, we have to evaluate them alongside all the other investment opportunities that we have. And they need to stack up, and we'll go through a ranking process and only invest in the best things.

Moving on to M&A. Are there more deals out there like this one?

We are constantly active in the M&A market. And hopefully, that will be obvious to people because you don't -- a deal like the one we announced today doesn't just come about in a matter of a few days, right? So we've always got a hopper of things that we're looking at various different levels of advancement. I mean we certainly hope that there are deals as good as this one. We're excited about what we've been able to deliver with this deal. And we will -- hopefully, we're getting a bit of a track record of being able to deliver on high-quality value-additive deals, and we expect to continue to do that. So yes, I mean, there probably are more deals like this, whether they're in the U.K. or potentially internationally in the coming year. That will still be a very important part of the mix of what Serica offers to investors.

And do you favor gas or oil?

No. No is the answer. We favor adding value for our shareholders. And we've said before that we are agnostic about gas or oil. It happens that the last couple of things we've done have added a lot of gas to the portfolio, but there hasn't been a deliberate ploy to only go after gas. And our focus genuinely is on how do we add value for shareholders. And look, the deal that we've announced today, I think it's fantastic for -- less than $4 a 2P barrel with over 75% of the decommissioning retained by the seller is amazing.

So when you ask the question, are there more deals like this out there? I would love to think we could do another one of these, but it is an outstanding deal. And look, the thing we have in our favor, I think, and increasingly so is we're a credible buyer -- for larger companies, they tend to want to deal with somebody that's credible and somebody who's going to be able to complete the transaction and pay the bills going forward, including decommissioning. And we are that. And now people are starting to come to us rather than us having to go out and seek deals.

That would actually be a nice way to leave it, but sadly we've got a few more questions. Why is it going to take you such a long time to complete this deal?

I suppose I touched on that a little bit. It is actually an incredibly complicated deal. And I'd say hats off to my colleague, Chris Boulter and John Stockdale, our GC and indeed our advisers. This is a complicated set of documents that because it's multiple, multiple assets, it's got this decommissioning support, which makes it complicated. So each -- it's asset deals. So each of the assets has partners and the partners have sort of consent rights and which is normal in the North Sea. So when you -- and of course, it's got some Dutch component to it as well as a U.K. component, so there's regulatory consents in both countries. And when we layer all of those things together and actually, there's a Dutch Works Council process to go through. So there's just a number of different things that are -- none of them is particularly unusual in their own right. It's just that when you put all of those things together, it all takes quite a long time.

Now we are extremely incentivized to try to do it more as quickly as we possibly can as are Centrica/Spirit on the other side. So we'll all be working this as hard as we possibly can, but we wanted to put out a prudent target so that people could have a view of when we will likely get to completion, and we'll obviously update people as that -- as we get to relevant milestones, we'll update people as we go through it.

Personnel joining from Spirit or does Serica need to hire more people to ensure it has in-house southern gas space and decommissioning expertise?

Probably a bit of both. There are about 100 Spirit people that will come across to Serica. Roughly 20 of those are in Aberdeen and the rest are either offshore at J6 Alpha or they're in the Hoofddorp office over in the Netherlands. So we get the people that we need to run the operated assets through this deal. We're still looking to grow our capability, and we've done quite a lot of that over the last 12 months, and we'll continue to do that.

One of the things that we lack at the moment as a company is decommissioning skills. We haven't done much of that as a company other than well abandonments, and we will take on some subsea and facilities -- surface facilities decommissioning. So we need to grow that capability, and that's something that we'll be looking to do in the coming months so that once we pick up these assets and we take over operatorship, we'll have that capability in-house.

Great. Another one for Martin now on the dividend policy. A couple of people have asked whether or not that is fine now that we are in debt.

So obviously, we look at dividends as part of everything in capital allocation, and we'll get to that when we -- early in the new year when we look at the whole thing. But as I said in my remarks, we're seeing our priorities as being maintaining a sensible level of balance sheet strength. I think the suggestion that a company that has debt can't pay dividends is clearly wrong. I mean nearly every company in the world that pays dividends also has debt, right? So that's not necessarily a consideration.

But what we will obviously do is look at the balance of our investment portfolio and the need to ensure that we continue to pay a healthy and sustainable dividend to our shareholders, and we'll balance those things. And obviously, we'll declare a dividend in a normal way in line with our final results when we've finished that work.

A good spot from somebody on the call who's noted that in Centrica's announcement, they have a different value for 2P reserves down slightly lower. I can answer that question. It's because we have an updated CPR. So there's no real difference in view. It's not that we have any wild take on the assets. We just have a more up-to-date CPR than they do.

I think one of the things that's contributed to that is that we've mentioned in the remarks that there's infill drilling going on in Cygnus, which obviously at the time when they did theirs, it wasn't sanctioned. It's now sanctioned. So that will have made a reasonable difference.

The question now about whether or not we should expect a period of consolidation following all the recent M&A activity? And can we manage them all without dropping the ball?

So look, I'm not going to say we will stop looking at M&A. I mean it's true that we need to consolidate, and we've got quite a lot of work to do over the next 12 months to integrate the organizations that we're taking on as part of these deals. And I'm not going to downplay that. There is a lot of work, and we've got some outside help to help us get through that process. But as I said earlier, we think there's a window of opportunity in the U.K. that may close over the next 12 months. And so we will continue to look for opportunities that add value for shareholders. And if it means we have to integrate one more organization into ours, then so be it.

It's -- look, I've done a bunch of this in my career. We've got people helping us that have integrated businesses before. It's not rocket science. It's just a lot of hard work. And yes, so we're not going to stop looking at M&A, but it is correct that we -- there's a lot of work to do to consolidate these.

And there's a last question. I think that an inevitable last one is, how is Triton doing at the moment? And is the work complete?

All I can say is the work is complete. So we had to do some repair work on a subsea flow line, and we said it would be completed around about the middle of December, and that is now completed. So we now look forward to ramping up production in the coming days and weeks. That's about all I'll say right now.

And with that, Chris, I think we've answered the majority of questions that came in. As always, I'm afraid that if there's any that I've missed, please do feel free to give me a call or send me an e-mail. We will always respond to any call and e-mail that we get as quickly as we can. And with that, Chris, do you have any final comments?

Just to thank everybody for their attendance and attention. Like I say, I think we've pulled off a bit of a coup here. I think it's a great deal for shareholders, adds a lot of value. Look forward to speaking with you. It's the 21st of January. We'll be giving our guidance for next year and the look ahead. And then a Capital Markets Day sometime in early March will be probably the next time that we will talk. So thank you very much for your attendance.

Thanks very much.

That's great. Well, thank you once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback and all the management team can better understand your views and expectations. On behalf of the management team of Serica Energy plc, we'd like to thank you all for attending today's presentation, and good morning to you all.