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NEWKOTB , Next week i really expect to see earlier release RNS i doubt SP will break new high. GLA and ATB
Kris,
You are correct as in gas is in GBP, although Serica’s condensate allocation is sold as Forties crude oil and in US$ afaik.
Not sure how SQZ NGL products are sold, guess GBP !
For example, a 10% strengthening of US$ against GBP would result in additional £4.9m profit before tax on crude sales.
Although this is relatively immaterial as in for 2019 accounts and onwards, these will now be presented in GBP and not in US$ to reflect SQZ operational change since BKR transaction. When reading our 2019 accounts, this change would need to be taken into consideration when analyzing against previous years.
atb
The accounts are presented in US$ but surely the underlying revenue for gas sales is in GBP? The 2018 accounts show that $49.3 million of receivables were denominated in pounds sterling....
Yep, looking forward to our 6 months for end June 2019, cracking first 3 months, pressure on oil and gas recently but as mentioned offset by higher production and lower op. costs and hedging BP's BKR 35p/therm. Combine that with revenue in US$ and its relative strength to UK£ will make UK cost / bills so much less. Could be looking at circa $120m CoH for end of June. By the time the account are out, mid to late September, this could be $135m-$140m and looking to YE of c$155m-$165m CoH imo. Looking forward to improve production figures too. All in all, can see no reason why we should be trading as low as 113p. Don't forget results are for FIRST SIX months only, which, I stress again, will be excellent and show how undervalued and cash generative SQZ are ....
atb
"The OFAC issue is currently keeping me from buying more...."
I think most PI's, indeed the world, who 'fear' Trump and the way he acts probably agree, me unless he uses the licence as leverage, ie Blackmail, for getting trade deals done pre Brexit there is no reason not to buy imo.
Our board would be fully briefed and no doubt taking all legal and professional advice to ensure successful renewal. Combine that with another deal waiting in the wings and H2 results, 103p has to be an excellent entry.
Should the BoT take the SP <100p then it will be bought into rapidly imo.
As mentioned in my previous posts, SQZ even without Rhum producing (worst case scenario) are worth way north of current SP 103p with production, excluding Rhum, in excess of >16kboepd, >$120m CoH, 68mmboe 2P and $140m tax pool and no real debt with only 265m shares in issue too.
I've been in this share for many years, so I'm pretty deep in. The OFAC issue is currently keeping me from buying more... Unfortunately, there is little rational reasoning in the way Trump functions. A loose canon if you ask me. H2 results will give a nice boost, but will not be sustained for a long time without renewal confirmation. IMO. I wish us all good luck :)
Xivan,
Those who can see past OFAC are buying now and should a deal land before renewal, the train would have truly left the station. As mentioned before, I can not see any justification in not renewing.
As for getting the SP moving again, our H2 results will address that too.
aimo
Although I largely share your thoughts, sasa and NewKOTB, I do believe the continuation of the exemption by OFAC (ref. US sanctions for Iran), will be an important catalyst to get the share moving in the right direction again.
Yep, can only agree, NewK - especially bearing in mind the currency gain on conversion to £ sterling, as you say - last time, the exchange rate was around the $1.35 mark, I think, so a decent 10% gain or so here, too, can only benefit the numbers to be reported.
The mkt's present anxiety at the macro level primarily (BOT shenanigans aside) is the only constraint on the sp right now that I can think of, vis a vis today's 103p level but the upcoming figs / RNS on the outlook, should reassure peeps and remind them how cheap this is - sasa.
sasa43,
Yep, looking forward to our 6 months for end June 2019, cracking first 3 months, pressure on oil and gas recently but as you mentioned offset by higher production and lower op. costs and hedging BP's BKR 35p/therm. Combine that with revenue in US$ and its relative strength to UK£ will make UK cost / bills so much less. Could be looking at circa $120m CoH for end of June. By the time the account are out, mid to late September, this could be $135m-$140m and looking to YE of c$155m-$165m CoH imo. Looking forward to improve production figures too. All in all, can see no reason why we should be trading as low as 103p.
should be encouraging once again with the lower gas price since last time (partly hedged at 35p helping) being offset by higher production and lower op. costs since then.
The renewal of the OFAC licence to use US equipment in respect of Rhum3 should be forthcoming, since it was granted last year upon SQZ's commitment to keep Iran out of things entirely, despite their 50% ownership of it (no management involvement nor cash receipts paid to them with that being held in escrow while sanctions remain in force) and nothing's changed in that regard.
Ergo, with the US Authorities being happy to issue the permit last October on these conditions which Serica has strictly adhered to, why would they not extend it?
There's likely to be an update on their acquisition programme, too, so the sp should be heading North again shortly; in the mean time, with SQZ currently selling on a p/e of 3 x or so, the overt value on offer is self - evident to me ... sasa.