Serica Energy (SQZ) M&A announcement summary

Deal rationale and strategic fit

• Acquisition expands operations into Vietnam and Egypt, providing international diversification and a platform for further growth in regions with supportive investment climates and rising energy demand.

• Adds scale, diversification, and cash-generative assets, while maintaining a strong commitment to the U.K. North Sea and leveraging complementary business models and teams.

• The deal is immediately accretive on a per-share basis for production, reserves, and key financial metrics.

• Provides access to established, cash-generative assets in supportive regulatory environments and opens potential to replicate North Sea success in high-growth Southeast Asian markets.

• Enlarged group will benefit from enhanced cash generation, complementary operating skills, and proven subsurface capabilities.

Financial terms and conditions

• Recommended cash offer of 28.6683p per share plus a 4.0p special dividend, totaling 32.6683p per share; including the FY25 final dividend, aggregate value is 33.6p per share, valuing the target at approximately £145.7 million.

• The offer represents a 20.7% premium to the previous cash and special dividend offer and a 28.6% premium to the undisturbed closing price.

• Attractive acquisition cost of $8.40 per 2P boe and $4.4/boe for 2P+2C resources, favorable compared to recent transactions.

• Pharos brings a debt-free balance sheet with $45.2 million cash as of June 2026 and no unfunded decommissioning liabilities.

• The deal is accretive across all key metrics and cash generative from day one.

Synergies and expected cost savings

• Efficiencies expected from consolidation, elimination of duplicate functions, and removal of overlapping corporate overhead costs.

• Pharos' FY25 cash corporate costs were $13.2 million, with $8.8 million unallocated to assets.

• Combination leverages subsurface expertise to identify further value opportunities in mature fields.