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One of my biggest gains was from RR so I'm not going to say anything bad about AA. It was a great share and AA very aggressive with deal making but people were very quick to ignore the background $760m decommission liability, and let's not forget the Foinaven asset recently got taken offline
early vs expected 2025 end date. BP the operator so can't blame RR but it shows their dead making due diligence was slightly shortsighted, or maybe part of the strategy. Don't want to be negative there some good deals done there but long term they were not easy assets to extract value from. Selling them on was a smart move so credit to AA.
QC,
"The problem with SQZ has always been that they are not proficient financial engineers.."
We have agreed on this point previously, SQZ are still attuned to financial engineering akin to Model T Ford, where as AA is more than equipped to match the requirements of Tesla Model Y.
As for Kiosk Kate, so far has proved to be a disappointment, OK Covid has more than likely hampered any progress, but all O&G are in the same boat, yet many have made progress on M&A front.... so you have to start to question, was this a job for the boys, or a real business need ?
As for "rabbit out of the hat ....", think it's been in there so long its probably got rickets !
I'm looking for an exit strategy for SQZ full sale as it's clear our BoD are 'old skool' in terms of dynamics as ably highlighted by AA and others alike.
With our revenue / profits set to reach all time record high for 2022 and possibly 2021 too, there is certain to be 'interest' in our company..... as mentioned before, Viaro is my front-runner, but at this point, any approach will do me, my worry is ACW et al will want top dollar for us ... nothing wrong with that ... but as mentioned, hydrocarbon businesses are facing ever increasing headwinds. Get R3 flowing and sell ..... fair value ~217p, Hardy's et al would be happy with that imo, I would !
aimo & dyor
The problem with SQZ has always been that they are not proficient financial engineers and could never in a million years pull off a deal like AA did at KIST. As an aside, there is some great analysis of the KIST transaction by Javier Accion on Twitter which is well worth a read.
As mentioned before SQZ management are great operationally but appear not to be great financial market operators. The company’s balance sheet is hugely inefficient (what’s the point of all the cash and no debt if you don’t do a deal??) I had hoped this would change with the addition of Kiosk Kate but she has had her feet under the desk for a good while now and has nothing to show for it. To me this looks like a company that is probably best taken private where they can continue to make incremental operational improvements and not need to focus on landing another transformative deal that the public markets expect and that is also needed for the company’s continued survival as an independent.
Really hoping that we are able to pull a rabbit out of the hat with Shearwater/Andrew. We should hear about this shortly I imagine.
What would really be interesting, and I think this has been already mentioned by others on this board, would be a takeover/merger with KIST with AA taking over. That would certainly wake up this slightly sleepy company.
Happy weekend all. All in my opinion only and do your own research.
Reminder that by standing still we are printing at least £50m annual FCF well into 2020s at decent gas price levels. If anything getting debt will be harder for pure oil extraction but gas assets should fare better. That alone could present opportunity for SQZ to jv into development assets. Ultimately there will always be investors looking for value and value we have here.
Eventually if they don't find suitable target's the best acquisition they can make is buy back shares followed by returning funds to shareholders.
I'd much rather be in our position than minors looking to fund development projects.
All in good time imo
Recently I have come around to this view as well. Going forward hydrocarbon businesses with have a discount applied them similar to tobacco companies. Huge headwinds for the industry
Also, others are getting on with growing their business as seen with numerous M&A's over the past few months. Classic example, newly listed KIST managed not only the get an oversubscribed IPO away and recent placement but also to complete a RTO deal and put on ~90% to it's IPO listing of only a few months ago.
SQZ appear to be going no where fast, there's Steady Eddie... and there's Dead Slow Eddie.
aimo
I believe US still relies heavily on coal, so they need to reduce that significantly. Moving over to gas from coal is also a no brainer
Saying that, headwinds towards hydrocarbons are getting stronger day by day , the US today has pledged to cut carbon emissions by 50-52% below 2005 levels by the end of this decade.
Really do think that SQZ need to execute an exit strategy for sale of the company. Get R3 flowing and sell ... just my opinion, but it appears that macro events are not going to get any better. Regardless of how profitable SQZ is there will be a growing environmental discount built into any sale price compared to years gone by.
aimo
no brainer New, but H&L only offering 114p to sell, p@ss take
Using average 50p/therm, $60 barrel Brent and hedging on net production 27kboepd over 46 weeks SQZ gross revenue will be estimated at £253m ($352m) for 2021, verse 2020 YE revenue figure of £125.6m
You can see where I'm going with this ..... H1 Interim Results will re-enforce the massive bounce in terms of not only revenue but profit too....... with 2022 looking likely to be record revenue and profits with 100% BKR et al .
AIMO