Cairn Farms Into Forum Draa Block Offshore Morocco

 Serica Energy plc announces that Cairn, through its subsidiary Capricorn, will be joining Serica and its partners, in the exploration of the set of permits which comprise the Foum Draa Offshore area (“Foum Draa”) in Morocco.

Serica, San Leon and Longreach (together the “Foum Draa Participants”) hold a combined 75% equity interest in Foum Draa with the balancing 25% interest held by the Office National des Hydrocarbures et des Mines (“ONHYM”), the Moroccan State oil company. In accordance with the terms of the permits the costs relating to ONHYM’s 25% interest are carried in full by the Foum Draa Participants during the exploration and appraisal stage.

Under the transaction, Cairn will acquire a 50% operated equity interest in Foum Draa, pro rata from each of the Foum Draa Participants according to its equity interest. In return Cairn will pay its equity interest share of past costs, being US1.5 million (US$500,000 net to Serica) and the first US$60 million towards the drilling of the commitment well required in the First Extension Period (including the costs relating to the ONHYM carried interest), As a result of the farm-out, Serica will hold an ongoing interest of 8.3333% in the Foum Draa permits with San Leon and Longreach holding 14.1667% and 2.5% respectively.

Over the past two and a half years Serica and its partners have been carrying out extensive 3D seismic reprocessing and geological/geophysical analyses of the sub surface in Foum Draa. Having identified several prospective exploration targets, a farm-out process was initiated to attract a partner with the requisite financial and technical capability to drill in the relatively deep waters of Foum Draa. The transaction with Cairn is the successful result of that process.

The partnership has already informed the Moroccan authorities of their intention to proceed into the First Extension Period, which entails the drilling of a commitment well targeted for 2013.

Tony Craven Walker, Serica’s Chairman and Interim Chief Executive said:

 “We welcome Cairn as a new partner in Foum Draa. Given the materiality of the many prospects already identified, we are delighted that Cairn’s deep water drilling expertise will assist in bringing forward an early drilling programme. Serica’s retained 8.33% interest in the block exposes Serica to the very significant upside potential of these prospects in the event of drilling success.

 The transaction with Cairn is the third successful farm-out by Serica since the start of the year. These farm-outs to major industry players have provided strong backing to the quality and potential of Serica’s licenses, particularly our holdings in Atlantic margin basins off West Africa. The transactions, one in Namibia (Luderitz) and two in Morocco (Sidi Moussa and Foum Draa), have recovered past costs, accelerated activity, partnered Serica with substantial E&P players, given us a share in approximately US$160 million of exploration work programmes funded by others and substantiated the significant value of prospects in Serica’s licenses. In addition to providing third party verification of the very significant potential lying in Serica’s exploration portfolio, Serica’s farm-out programme has enabled Serica to retain large exposure to exploration success but at considerably reduced risk and cost to Serica shareholders. We are pleased that, through our farm-out efforts, we have greatly increased the value of Serica’s acreage and the prospects for Serica shareholders.”

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Press Release, August 28, 2012