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If the SP continues to fall, the deal could be in jeopardy.
Feels like SQZ are going to press to try and re kindle the SP
https://www.thetimes.co.uk/article/serica-deal-with-tailwind-energy-will-almost-double-its-oil-output-jht7qtsvr
Serica deal with Tailwind Energy will almost double its oil output
It pointed out that net production in January across both companies was equivalent to 43,300 barrels a day. That included Serica’s output being limited after a gas compressor on one of its fields required maintenance work, although that has now been completed.
Aim-listed Serica, which has its operations base in Aberdeen, already produces about five per cent of the UK’s gas from its interests in the Bruce, Keith, Rhum, Columbus and Erskine fields in the North Sea.
Before Christmas it announced the Tailwind proposed takeover in an offer that was a mix of shares and cash and valued the company at about £644 million, including debt.
Those sums were based on Serica’s 278p closing price on December 19 while yesterday the shares closed down by 1½p, or 0.6 per cent, at 238½p.
Serica believes the combination can help it offset about £470 million of tax, put more oil into its production base — currently mainly gas — and extend its reserves with production maintained at more than 40,000 barrels a day through to the end of 2025.
Mitch Flegg, Serica chief executive, said: “The production performance of both the Serica and Tailwind portfolios has remained strong despite some extremely challenging weather conditions during January.”
Ashley Kelty, at Panmure Gordon, described it as “an encouraging update” and suggested the acquisition will make Serica “a materially larger business and with a much wider portfolio to deliver future growth”.
I am assuming that the cash balance is after the debt has been cleared. So at least we will have further assets as well. The lower share price the more attractive it will be to new share holders. It's just lth that would have suffered. Especially if the dividends are cut
A good ops update from Serica where the Tailwind deal is still in the process of completing but indications are that few obstacles are in the way. With SQZ confirming FY 2022 production of 26,182 boe/d and guidance for this year is now, with Tailwind contribution is 40-47 Boe/d and of course hoping that GE-04 might be doing 8/- boe/d by this month.
Overall I think that all is going well at Serica and assuming regulation stuff like the Bruce work is completed with a minimum of fuss then a bigger, better and more diverse Serica looks like a very solid investment. A certainty in the Bucket List and looking pretty cheap I think that management just need to be perfect operationally and get the story out to the market as soon as Tailwind deal completes.
https://www.malcysblog.com/2023/02/oil-price-serica-gkp-longboat-predator-and-finally/
Let's just hope Serica does not screw up with a disaster in the North sea. That really would be the end of them .They seem to be self destructing on their own ATM . I have for the past twelve years given them the benefit of doubt,but inmv they really have no messed up here. All I know is I have backed the wrong company unless proven otherwise. If they are honest and if there is any positive news then it should be officially relayed to ALL shareholders. If there is nothing then why are they gambling with shareholders money with how hmg are behaving atm. Once again BP,Shell are not. So why is Serica????
Hmmm…Deepwater Horizon, Gilder Field, Bonga spills?
The opps report inmv is preparing us for another gravy train write off. Difficult weather conditions. In other words some part has or will about to drop off one of my rigs. Just think we now have Tailwinds rigs to contend with as well.
No wonder they want to stay on Aim. Would BP,Shell be so blatantly inept.
I didn't see that. So where has one hundred odd million gone. As you say why have the largest holders backed this????.
I go back to bp , shell and harbour. So who has all shareholders interests at heart. Serica Energy or the other players. ???????
As many lth holders will all ready know we are now appraoching a valution of around nine hundred million for the entire group if it goes through. Tailwinds debt level should be around 150 milion or less by the time of completion. We should also be sitting on around five to six hundred milion,but you never know with Serica as there always seems to be some large expensive at the last minute before results.
So whatever happens now the valuation is attractive apart from our new coalition labour concervative party may do which is probably the reason why we continue to fall.
Maybe some wood be buyer could make an offer for us and tailwind seperately.
You see it i see it and every tom cobly that is invested here sees it. So why does Serica and its largest holders do not???
The whole situation hear stinks to high heaven inmho.The oil and gas industry in the North sea has been well and truley shafted by a gvnmt who cannot offer any assurances unless the Labour praty gives them permission. So we are now left with calls of further taxation and guess which companies wiill suffer by this . No i Serica Energy, No 2 Harbour energy No 3 every other company supplying UK energy needs.Who benefits No 1 Overseas lng suppliers, No2 BP, Shell as they no doubt will be part of the imports in some way.
Come on Serica show some metal and move money overseas into an environment that will benefit ALL shareholders and not few by some deal that has been construned behind closed doors .
Clinch
Total agree.
But apart from a few companies like SQZ, the WFT will becomes less relevant O&G companies move out of the UK, take a look at Shell and BP about 5% in the UK and reducing, Harbour and Equinor looking elsewhere. It is somewhat ironic that the more Shell and BP make the more calls for more WFT that will hit companies like SQZ with very little impact on Shell and BP leaving them to make more money importing O&G from overseas.
Probably due to increase WFTs Shell and BP do not think it is worth pandering up to the UK government on ESG projects as the UK becomes more irrelevant as they go to places where they are not at war with O&G.
And people think this wasn’t an intentional demolition of the oil and gas sector by the government. Western governments are socialist governments and take their orders from the world economic forum. Some conspiracy theory it all was.
flexmw
This is no joke. BP have highlighted how to run an Oil and Gas company in the current climate we are now in. Why oh why is Serica coming across as if they are on some kind of Kamakazi mission. As i posted earlier the main investors on here have also a lot to answer for inmho.
As for some secret agreements then if this does prove the case then they have just breached and broken practically every financial law. Our hope as intimated buy other investors is that this gets taken over before the deal completes. Once again both BP and Shell have proved that they are the better investment and have read HMG and their shareholders better than Serica obviously has on all fronts.I think it said it all when BP sold its stake.Still hindsight a wonderful thing, but this company constantly lets shafreholders down via its non existant pr machine.
BP finished up circa 8%.. results & announced 2x share buyback programmes, one of them to offset the dilution caused by shares awarded under their LTIP schemes… now if only our Bod thought a little more of their shareholders… (jokes)…
Genuine question to the more knowledgeable…. has Serica pretty much ruled itself out of carrying out share buybacks for the foreseeable future, if it were to buyback 10% of the stock in the company & cancel them, which it is now permitted to do so, would this increase the Mercuria holding percentage ie getting closer to the 30% mark, also knowing shareholders views on the percentage given to them already…
lol, after update, Serica was my only NS play that finished down .... Mr Market just loves the TW deal !
Also the dividend is my concern as well .They could justify a cut because of the yield on the current share price
Posted this on 31st October:
'At this price SQZ will have more cash than their market cap by the end of February.'
fwiw i have recently bought a few more. At this rate i will end up holding near enough my original holding. As you say there should be little downside from here .Unless of course hmg puts the boot in again.
Mitch has yet again absolutely smashed it out the park with his 'Operations Update', wiping £70m off the market cap since the announcement of which £10m was today! Way to go Mitch!
In the interest of my sanity, I have bravely purchased a further 5000 Serica shares, largely based on the negativity towards UK O & G companies and perhaps, just perhaps all the bad news is currently portrayed in the share price with a 10% downside.
Who knows, they will probably half the dividend next or Rhum will shut in.
Bizzarely the Investment Trusts I purchased when selling a large tranche of Serica at 442p are all up between 6% and 33%. Hindsight eh - should have sold the lot and purchased a condo in Mauritius. GLA and dont think I know anything - I'm just looking for maximum distress.
“Serica expects the merger to be immediately accretive to reserves, production, cash flow and earnings per share.”
But of course we all of these metrics/share are up…net cash per share has declined from nearly £2 per share to about £0.40…we’ve paid £1.60/share for the ‘privilege’ of adding c. 60% to reserves, production etc.
Making factual, but misleading statements.
Ok, moan over, frustrated but trying to move on for the long term value (albeit riskier, more at the whim of commodity markets, given much less net cash support).
Got some more as it continues to fall paid *237p... 1.30pm .
Sold some BP, at 11.30 am for 5.03p analyst say that will rise 19% in next year .
Will be interesting comparison next February 2024.
No analyst for this one ( D )
Had to go back 400 posts here to find myself 14 days ago .
7th Feb 2023 RNS
Serica Energy expects annual production to nearly double
Serica Energy PLC - London-based independent oil & gas exploration and production company - Says net production in 2022 averages 26,182 barrels of oil equivalent per day, compared to 23,727 boepd in 2021. Serica Energy says net output continues to benefit from the investment programmes that it has undertaken since the acquisition of interests in Bruce, Keith and Rhum in 2018. The three producing fields are in the UK northern North Sea.
Chief Executive Mitch Flegg says: "The production performance of both the Serica and Tailwind portfolios has remained strong despite some extremely challenging weather conditions during January."
Looking ahead, the company says net production from the Tailwind portfolio of assets has averaged 19,600 boepd last month, which gives a combined net production rate of over 43,300 boepd in January. It expects 2023 average net production to be in the range of 40,000 boepd to 47,000 boepd from the combined Serica and Tailwind portfolios.
Serica bought Tailwind Energy Investments Ltd last month for a total of GBP367 million.
You can if you tie a mirror to a stick
Banbury, I could expect those things in a Trading or Financial Update rather than Ops. On your other question, I am simply as naive as you are. The question is, can I look beyond the wording of a Circular and the terms of the transaction and see a compelling combination deliver strong returns in future years? The answer to that one is Yes. Is that blind faith? Naivety? Ignorance and belligerence? Maybe, but all investment decisions rely on informed judgment and mine is what it is. Others can and do take an equally informed but opposite view. 30+ years of doing this thing for a living helps inform my judgment, but nothing says I am right or that others are wrong. The one thing we all have in common is that we cannot see around corners.
The way I have been viewing O&G is that due to ESG a number of the Big O&G companies limited exploration and did some ESG stuff to keep the ESG lot less angry. This has been a win win for O&G because the reduced costs of exploration and the shortages that have ensured have put the price of O&G up a lot.
In other words to keep up your reserves in $ terms either pay a lot out for new reserves or do nothing and your current reserves along with your profit will rise above what you would have got if you laid out the money.
The main problem with transition is that it takes time and resources. Governments are quick to declare arbitrary future dates for carbon neutrality without real plans on how to achieve their goals. The main challenge that is easily overlooked is peoples ability to pay for change. There is a clear disconnect between governments desire and ability. You only have to look at the costs involved. Who wants to spend 10-15k on a heat pump the costs an estimated £500 a year more to run and does not heat the average UK house (ie not a modern new build).
Reality is that under investment in O&G will lead to higher prices on continued strong product demand. All I see in O&G at the moment is value