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sasa,
Just off out .... but on first reading, yep, appears to be ballpark afaic.
atb
Yep, wouldn't disagree with that and one can also include the minimal decom liabilities Serica has v KIST, too.
Have been having a stab at what SQZ's earnings might be at this Y/E. For Serica to have already announced their intention to pay an interim divd for this H1, targeting 6p ps, that's quite upbeat for them, so one could reasonably conclude that last year's annual of 9p ps might be at least maintained for this year's final (quite possibly more) to make for a minimum 15p ps for 2022.
When they introduced divds for the first time, they conservatively went for ample earnings cover (leaving aside the 2020 'blip' year) of some 5 or 6x and if they maintain that unnecessarily hefty safeguard, the inference would be a likely trebling of earnings for this year say, around 90p ps which, if gas prices remain this high or more for H2, wouldn't seem too far fetched.
Pure conjecture on my part at this stage, of course, given the many variables involved but if the guesstimate of the 2022 Y/E Nos are not too far off in the event, then a well covered 5% + yielder for this year, selling on a prospective 3x eps multiple is cheap indeed and renders it vulnerable to an industry or PE approach, as you've long suggested.
Would your eps calcs broadly coincide with mine or do you think I'm being too optimistic vis a vis their earning power for this year? - sasa.
What would BOE have been 'worth' only a few years ago when NBP was 8p/therm ?
What should North Sea BOE reserves be worth when NBP is 300p+/therm? Of course these BOEs now come with 65% marginal tax rate (assuming no investment which is unlikely going forward). But probably these BOEs should still be valued higher than they have historically.
Also, at £600m would still only value our reserves at ~£10boe, considerably lower than historic going rate and lower than AA's latest deal that came in at ~£14boe. The CoH for SQZ at 450p/s would represent around 30% of the deal, so only paying for ~70% in net terms. Deal could of course be an equity / cash offer, which no doubt AA would have ran the figures to ensure his personal equity remains substantial.
450p/s would see an ATH for SQZ holders, proving a healthy return for all holders plus represent a bargain for KIST and yet another great deal for AA to grow his reputation and that of KIST.
Of course, 450p/s math would work the same for anyone interested in SQZ atm utilising our own cash to fund our own takeover..
aimo & dyor
sasa,
Also, 450p would represent a net cost of ~£600m come completion date, would he be able to pull that one off, could well do as we don't know how much deferred cash he will get from the West of Shetland deal, effective from 1/1/22. During which time when we experienced unprecedented rise on commods, of which vast majority of revenue will be ring-fenced from WFT .
aimo & dyor
sasa,
"for him but using our cash to defray the net cost.."
That has been an issue afaic for some time ... many months ago I posted, in depth, how 'cheaply' you could get SQZ as currently ~55% of the equity of SQZ consists of cash. Remember, we have zero debt which makes a massive difference when putting an approach package together ... An acquirer would be buying cash with cash, or even buying cash with debt. Not something AA is afraid of doing as he has shown in the past. AA is a master of the financial markets and seeing deals that others can't. But as you say "Intriguing rise for KIST today.." atb
aimo & dyor
"AA would work wonders with the resources available at SQZ" - interesting comment there, NewK, with today's sharp rise in KIST's sp suggesting something could be afoot there.
Those resources obviously being larger cash generating production / reserves / licences and, of course, their 'embarrassment of riches' accumulating rapidly in the current climate.
Such a 'reverse' approach would be quite a 'mouthful' for him but using our cash to defray the net cost , not a 'bridge too far', possibly, even around 450p which I guess would be the minimum required to gain some traction.
With Serica about to 'spud' Nth Eigg, a commercial discovery would materially increase the value of SQZ and put that notion beyond his reach and with that outcome due within the next three months, I guess both parties would wait and see what difference it makes or otherwise...
Intriguing rise for KIST today, nevertheless - sasa.
Quote from Beryl - Not another leadership challenge lol
KIST are acquiring assets in the West of Shetland from Total - 20% - could be more, effective 1st Jan 2022, this was RNS back in Jan-22
Aren't their operations all in the Netherlands? If so that makes them materially different to Serica's as not in the UK North Sea and therefore not subject to windfall tax. Is that not the difference here? Having said that. Most other oil and gas producers globally have been smashed recently, regardless of jurisdiction. So KIST has done well.
It just doesn’t make any sense the only reason I can think of is that I’m invested in SQZ but not KIST so it was bound to happen
Well, this morning KIST blasted through to a new ATH, (£380m MCap), whilst SQZ need to gain +48% to return to our ATH.
Is it time for our own leadership challenge at SQZ, now ACW has stepped down .... AA would work wonders with the resources available at SQZ.
aimo & dyor