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Comrieman,
Share buyback are generally an admittance of BoD failures in my book for any company in SQZ position even more so with Rishi's Levy.
Companies are not valued against 'current' O&G price as that would be ridiculous but on going NS rates for boe reserves (which has remained fairly flat over the years ) plus usual CoH, debt etc etc, going NS rate would be around ~£15boe to buy / farm-in to a producing asset.
For the very reason you state "Value will be through success with the drillbit with the WT in place.." is the reason why BB are not the way forward unless of course our SP sinks to silly price, imo that's well below 200p as it stands. SQZ need to make use of the WT allowance in full or return cash to shareholder, not artificially inflate SQZ performance figures with BB.
If, as you say CoH will be in the region of 60-70% net cash against MCap at YE, then why not keep it at current levels ie ~50% cash and return difference ie ~20% to shareholders, that would be around 30p/s dividend. I would add that a 'value' instantly accretive acquisition would be much preferred.
Yes, cash is king but there's a point when it also becomes a drag on the SP and the market sees it as a failure of the company to deploy it in an accretive manner ... I think we are already at that point so you could argue as I do, dividend payment of 9p/s for 2022 is woefully low.
atb
aimo & dyor
I've got to disagree on a couple of things.
SQZ should not be making any large aquisition at the moment, there is no value on buying production with gas and oil above $100. Value will be through success with the drillbit with the WT in place, it's almost free drilling.
As for share buybacks, with the market-cap on track for around 60-70% net cash by year end, then there is no better value out there, none whatsoever than for them to buy their shares back at anything under £3.50.
These views might not suit short term traders but those hapopy to stick a lump sum in and wait, they will be rewarded unless all the drilling fails.
If you listen to one or two of the recent interviews with Serica CEO, he makes it very clear that the proposed dividend is about a progressive, regular dividend and being able to reward shareholders with some income, including through times of lower commodity prices. So it's very clear that with todays very high free cashflow generation, an exceptional dividend could be declared on top of the standard (progressive) dividend of 9p/share. I'm not a big fan of buybacks, not least because the rationale for the buyback is rarely explained. At least with a dividend you can choose to purchase more SQZ fi you want, at a price and time that suits you. I have no issue with the concept of buybacks but the company needs to clearly demonstrate that the purchase of shares is well timed, opportunistic, is a better use of cash than other investments you could make, and will result in incremental shareholder value over time. (Also, the comment that you get an immediate 10 percent EPS gain on 10 percent buyback fails to note that you've just spent 10 percent of your MCap to do it, and still the question remains whether those 1.1x concentrated earnings are the best use of the cash attributable to your holding).
Agree , bigger dividends rather than share buy backs which would waste of money IMV, however the real SP mover will be a big acquisition , pretty sure AA at KIST would one done if he ran SQZ !
Newkotb
I'm with you on that. There is no reason as to not increase the dividend. Why don't you email the company using your example as they could address this at the agm
Good chance management will do whatever they think is most likely to get them their LTIP awards. That's what they are incentivised to do.
Dividend, is 9p/s enough !
Given current cash situation and failure to show any interest at all in an accretive acquisition, I would say no, it's not enough.
I know it's not quite apple to apple, but here we go !
GKP have just announced an increase in dividend that would yield ~26% pa vs SQZ of ~3%.
GKP had as of 23rd June ~£200m CoH, vs SQZ of ~£398m 31st May (probably closer to ~£420m as of last week)
Cash flow generation in 2022 YTD for GKP ~£222m vs SQZ ~£200m
Like SQZ all revenue is country specific so risked aligned, with no known plans for acquisitions, hence GKP have taken the route of returning significant cash to shareholders.
SQZ produce ~60% boe to that of GKP guidance of 44,000 – 47,000 bopd although the mix is quite different.
As I asked at the start, is 9p/s dividend enough !
aimo & dyor