Serica Share Chat (SQZ)

"While far from guaranteed, the prospect of a company paying a dividend gives investors greater confidence in terms of its valuation versus firms that are reinvesting cash back into businesses for future growth."

I would consider SQZ is unique in applying both these circumstances - grist to the mill. GLA

A little harsh on Malcy. He helps to reduce the amount of research I do with his updates and if anything is of noteworthy I take a deeper look. Malcy likes SQZ and I think SQL is good but it fails to have the x-factor unless it does some serious deals to reduce the Windfall Tax for the next two years... I think it can but time will tell.... I think the market does not think it can.

Could explain recent SP weakness outside of the current market woes and recent WFT, should SQZ want to t/o Chariot's Moroccan assets then either RBL will be required or an equity raise / offer. Our current ~£420m cash will not cut it esp as we have ~£150m presently lodged with counterparties as security, I would much prefer farm-in.
Of course a merger could always be an option, esp as of today ACW has stepped down as Executive Chairman, leaving just two Directors that are non-exec of our board. Both share prices are struggling to gain traction of any sorts recently too and CHAR long awaited CPR that was said to be issued 'shortly' has yet to be released.
Takeover of CHAR would be a massive departure from SQZ path of steady organic growth and certainly very high risk compared to that of BKR but equally could prove to be very high rewards too.

aimo & dyor

Interesting comment about Serica and Chariot, not sure about how factual Jimmy's comment actually is !

"I believe that Serica previously approached chariot about a takeover, with their strong share price, I think they could try again..."

With US markets closed on Monday causes unusual opportunities on Friday. You can see drops in the index such as SPOG and ENGY that both closed down. I had to check the UK upstream gas price, like here:
www.theice.com/products/910/UK-Natural-Gas-Futures/data?marketId=5253322

Echo that, re: CHAR, NewK - on both counts - sasa.

Could be active flows in/out of their funds rather than them changing their view. Funds are generally not permitted/inclined to ‘trade’ sticks short term. Could, of course, be something entirely different. BlackRock is a beast and involved in multiple activities, including portfolio transition management.

See BlackRock are doing their party piece, 'Oh the Hokey Cokey ....'

Back above 5%

"Maybe Chariot's Anchois developmnet would be tempting......"

Agree, we have discussed that very option here before. As a farm-in for sure as there is no way CHAR would let that go for less than $1bn imo once CPR has been released.....
Also hold CHAR so would be no complaints from me.

aimo & dyor

Serica were in both Foum Draa and Sidi Moussa in Morocco 8/9 years ago. Maybe Chariot's Anchois developmnet would be tempting....

Couldn't agree more, NewK - 'value always outs in the end', as they say...

Interesting that MF is now considering other acquisition / 'farm in' areas as well as the NS, presumably if Nth Eigg doesn't deliver. Such a policy revision looks commendable, imv and if Serica announced a decent deal, either domestic or elsewhere, it would surely wake up Mr Market and get the ball rolling at last! Hope springs... sasa.

Economy means nothing to Putin, people mean nothing to him, lives mean nothing to him .... it's all about wining and KGB tactics used to do so.

aimo

Double edged sword as presumably his sales and revenues implode, he hasn’t exactly got a diversified economy

Uh-oh, not the Oil Walrus again. His analysis is paid for and meaningless.

"Two very confident AGM statements that endorse the view that Serica is amongst the best companies in the sector with absolutely top quality management. Unchanged guidance, cash with lodged cash of £396m at the end of May and with news of an interim dividend of 6p come September. At these prices SQZ is a gift….."

https://www.malcysblog.com/2022/07/oil-price-san-leon-hunting-serica-lamprell-and-finally/

Used current DA average @ 160p/therm

How did you work out your conversion NewKOTB?

NBP sat at ~$114 boe, Brent ~$111 with NBP futures for winter 2022, ~$268 boe.

I make it £1.25 therm = $100 boe, think I took that from Harbour's results in April? That would make it $200 now and over $300 in winter.

MOSCOW. July 1 (Interfax) - Nord Stream AG will shut down both strings of the Nord Stream gas pipeline from July 11 to 21 for scheduled repairs, the operator said in a statement.

LOL, what are the chance Putin will make sure it doesn't comeback online as scheduled. Last thing Putin wants is for EU to build up its stocks ready for winter.

https://interfax.com/newsroom/top-stories/80867/

PBJjr > PBLJr ....

See our three ATHS are only minutes away from commencing operation with PBJjr

https://www.marinetraffic.com/en/ais/home/centerx:-4.073/centery:57.684/zoom:14

Thx for this Nick. Excellent write up.

Thanks for your reply NICK.

Sasa, "Bear mkts are invariably indiscriminate", sure are !

NBP sat at ~$114 boe, Brent ~$111 with NBP futures for winter 2022, ~$268 boe. OK futures are just that, but it does signal prices to be much higher than current $114boe imo. SQZ was a mega cash machine before WFT now it's just a great cash machine. Mr Market will see what's right in front of them .... eventually !!!

aimo & dyor

as most seasoned investors on here will know.

The present inability (for now, anyway) of Serica to reflect anything near its true value owes more to peeps securing gains on the few remaining profits they'll have on the likes of this one to offset growing losses elsewhere. It's human nature to lessen the pain of it all by doing so, regardless of value; they just want to get into cash for the duration as they're scared, especially those who've over extended themselves / borrowed money to get on board the earlier 'gravy train' when it was so inviting...

Seen it many times before in my time but many newbies haven't and they panic. For the true investor, however, it's just a 'waiting game' for the inevitable recovery to get going at some point and when it does, the strongest growth situations, will be in the vanguard to handsomely reward their patience.

Serica must rank amongst the best of these, given its financial strength / burgeoning revenues this year and being heavily into the right sector of the energy market with the latest interim divd intention to usefully boost the yield clearly being a testament to that.

Finally, it's worth remembering that bear mkts savagely sort the 'wheat from the chaff' bringing many more acquisition targets / 'farm in' possibilities into view and thus Serica's, albeit frustrating conservatism hitherto, could yet pay off to major advantage.

So, no worries, me - just stick with the healthy 'tortoise' - sasa.

There were lots of interesting questions both during the meeting and after. In summary, the board are mainly old, I like this because age increases experience! Some of the Executives are younger I.e. 50 plus. The hedging strategy is a good one, they limit hedging since the price of gas has gone from 10 pence a therm to over 500 pence, i.e. excessively volatile, therefore difficult to predict. They played down the chances of a strike at the next drilling in the North Sea, and, rightly so. If successful, this could increase the reserves quite significantly, however, it would not be too serious if they don't. They have a 170 employees and are 85% gas, albeit the boe equivalent is usually quoted. Most of the healthy balance sheet has been created over the last four months (for obvious reasons). Smaller companies are better equipped to ensure greater production of existing assets, whilst, larger companies tend to go for the big ticket items e.g. Gulf of Mexico and can't be bothered with the hassle of aged wells. The government taxation of 65% initially caused concern, however, with aged wells, investment is required to keep them going, and, provided the 3 year taxation promise is kept,then, this will not materially alter Serica. Hope this post is of interest.