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PS - re JOG. A farm out would have been done and dusted by now had it not been for Sunakhunt.
What I didn't see in the Tailwind acquisition is where the relief at 75% plus the additional concessions for new investment is going to come from and when, when the two come together as one. JOG's farmout is about securing enough working captal to last until first oil 3 or 4 years down the line, but overwhelmingly getting a carry on the significant infrastructure spend before it starts flowing (at a projected 35kboepd). It would have to move efficiently to FDP, then FID, but this should be achievable before Labour gets in and spoils everything. Payment in advance for infrastucture would allow that spend to be made at an effective cost of about 9p in the £.
All just conjecture...........
dyor
Always good to read your posts, Mommur. Whilst my holding in SQZ has never been as large as yours, I did own 450k shares at one time at an average of about 22p. I decided somwhere along the road up (following the BKR deal) however that, for once in my life I should exercise caution so, despite always believing I was selling a share that was fundamentally undervalued I reduced by 2/3rds from about 250p to 440p, putting some of the money into bricks and mortar and what remained into JOG, which is a risky proposition but I understand well. I wasn't expecting to be scuppered by a (so-called) Conservative Govt looking for cheap votes - which is what I will be if a farmout isn't announced by the end of Q1. I have an unwisely large holding but faint heart never won fair lady (so to speak - fair lady would definitely not be interested me following my PC diagnosis as nothing about me, least of all below the waist, works any more. My brain (such as it is) appears unaffected at present thankfully, but I'm not counting any chickens!
I sold a further 50k shares in SQZ recently, when I received a reply from ACW to an email I'd sent him which didn't go anywhere assuaging my concerns about ceding control - with the distinct possiblility of being taken over for a pittance 18 months down the road - to Mercuria, when it would have been a simple matter to include a well-used protective clause in the SPA.
The point of my post is that I've never ruled out SQZ as a potential farminee to JOG's GBA licences. JOG has 170mmboe of 2C resources that are a bit better than the usual 2C. There were 50mmboe of 2P in a CPR when Repsol Sinopec owned the Buchan licences. The rig then failed on H&S grounds, when Buchan was still producing 5kboepd. For whatever reason the two (Repsol & Sinopec) couldn't agree on the best way forward, so the licences were surrendered. The OGA awarded them to JOG. The rest is probably well known to those who follow what's happening in the NS.
Fast (?) forward 4 years and a lot of work later (32,000 hours spent studying the data and modelling the concepts by in-house people and external consultants, using 36 years of production history as a backdrop and then applying modern methodology) with technical due diligence having been completed by all potential farminees by the end of October, we're presently awaiting news of a (hopefully) successful farmout at any time.
Holders here are awaiting a post year-end "state of the nation" at any time.
Probably just a coincidence.
all imo/dyor
There is still time for a bidder to come in. It closes in March…
That said, the window is closing and no doubt Serica will close this deal ASAP.
The risk is no bid comes in and some more investors sell as that upside risk goes away, so we can expect a lot of volatility into the deal close I think. Management will then need to come up with something to keep shareholders happy (dividends/buybacks).
As before, I still think there is value here even post a terrible deal, but I’m not sure the ‘ride’ (volatility either way short-term I mean) is over yet…
I wrote this a few weeks ago:
"I wouldn’t rule out a low ball bid between now and the deal closing in March though. ?Especially if the share price remains near here (250p).?? By March, we’ll have 220+p of net cash…a low ball bid of 300-350p would make sense even with UK tax risks.
You could probably fund a bid at that level with Serica’s existing cash and some moderate net debt supported by Serica’s own operating assets.
So, it’ll be an interesting time until the deal closes in March."
If you think we are in a tight corner spare a thought for The Hardy's are in a real tight spot. Without this TW deal handing over control to Mercuria there was an almost certainty that more approaches would have occurred , t/o would of released value for all. Now we know that a t/o will almost certainly never happen ( other than by Mercuria) so how will the Hardys exit !! Love to know exactly how they voted on this deal.
aimo & dyor
Great posts and very funny.
I'm actually a fan of gallows humour.
Seriously NKOTB agree the SP has factored in how awful the deal looks at face value- so hopefully an upturn is due.
Thehickster
Totally agree, it is like buying a dilapidated house where the survey stated the value is far lower than you are paying and the previous owner took the boiler, and all pipe work for their other property. Also you would have to handover 28% of your house all because of a rumour that you think may exists there is some hidden treasure in the cellar. But don’t worry it’s price may go up some time in the future.
NEWKOBT
“mysterious' backroom dealings that none of us are privy”
It is either the hidden treasure or a sweetheart deal for the BOD, if you think it is hidden treasure I have a great deal for you, some swamp land in the Mississippi and some tulip bulbs.
Seems like the people in favour of this so called deal don't actually have any reasons as to why it's a good deal, but that there might be something that comes to light when all the facts are known. What a strange way to conduct business that would be.
Norma would you like to buy my house for 3 times the asking price and not bother doing a survey either? It's a good deal, honest guv.
BB,
Times like this is when I could actually do with TWO MINDS !
To buy pre or post deal completion RNS due 'sometime' in March or not at all !
With the additional 111m shares being admitted, logic would suggest a drop in SP, however SHOULD the completion RNS be accompanied with op's update of combined entity ( fully expected tbh ) that should cushion any blow .... or when you add in the 'mysterious' backroom dealings that none of us are privy too, it's not unreasonable for there to be a substantial RNS to go some way to doffing one's cap to Serica. Otherwise, our BoD have indeed screwwwwed us over !
In the meantime, SP continues to drift down as cash continues to build ~£500m (~75% of MCap) :-(
aimo & dyor
Sorry missed a key word. Should read abject embarrassment of SQZ standalone CASH value being higher than the SP
Norma leg pulling allowed !
The case for the deal has never been explicitly or convincingly made based on known facts. The locked box is empty so there is hopefully something good to come to compeensate !
I hope they are holding back results for something good rather than the abject embarissment of SQZs stand alone value being higher than the SP !!
£3 again and I'm off. No deal and I would have stayed. I suspect many are similer
Well said Monmur. One never knows - this could be a fruitful ride, even for those that didn’t want to be on board…
Sorry Dick, I’m only leg pulling with Banbury following the intrigue that it caused last week.
"Wait until that locked box bursts open."................
............what are you suggesting is going to burst out, NS? Detail would help us ordinary mortals understand.
I voted no, due to the Mercuria holding going forward, although resigned to the vote going through. I didn't sell a rather large holding, my choice, so no complaints. Going forward, times are challenging especially with the masses misinformed by Politicians and Commentators alike with regard to profits from the likes of Shell and BP with continued calls for more taxing on profits made outwith the UK - duh!!
Less gripe now if you still hold - subliminally your in for the ride and we await the tortoise to commence a pedestrian crawl .
Come on Banbury….Isn’t ‘gut wrenching’ a bit dramatic? I’m surprised you haven’t sold up and moved on given the impact this has had on you.
Looking forward to the future here. Wait until that locked box bursts open.
This can still be stopped. Quite simply by pillow talk inmv. They must have a personal life. Simply just pay some escort male or female and ethnicmail them to not do the deal. just a thought .but it may work inmho and only my opinion and certainly not any one elses opinion especially the bbc ,
This reminds me of a scene from that old movie The tree had no leaves .
We’re most likely to be well north of here in the next few years even with the deal… it’s so undervalued still, just materially less undervalued than before (I think by 40p overall, but you’ll all have your own estimates).
So, if it does well, as all holders surely expect, let’s just move on and no gloating that ‘it was the deal’ please )).
Could be £1.50 if our underlying commodity prices collapse or we have some operational disasters.
Ceteris paribus, we’ll be ok. Looking forward to what’s ahead.
Oilman -yes probably driven by an IOU from Serica to Mecure of £150m in a locked box.
Norma s choice of words " happily* is a combination of gut wrenching and putting the boot in.
Blind faith and tea leaves springs to mind.
Dickupham - add in an after hours lock in with Upomega to the plan and it might just work.
£1.50 next year
Happily, the deal will proceed unless either party decides to scupper it.
"Can any further action be taken to scupper the proposed deal?"..............
...............threaten to make them spend an hour shut in a room with Greta Thunberg?
...............followed by 2 hours answering questions from NKOTB, Banburyboy & infor???
And after that?
The pièce de résistance:
...............back to Room 1, but this time Greta's got her kit off...............
Should work.
Can any further action be taken to scupper the proposed deal?
The only difference with what happend at Capricorn, is that one II in particular did their homework and were not hoodwinked by the BoD. Im not sure our large/II holders dug deep enough or had the balls/tenacity to unpack this sham of a deal properly.
If they had done their homework / had the balls we would not be in this position