We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I was day-dreaming of us having a VAST time, +300% in two days off 12 month low !!! Then Kylie rode in, full Lady Godiva style, "I Should Be So Lucky"..... !
Come on Mr Market, you know Mercuria's plan now so lets have at least a glimmer of our re-rate.
aimo & dyor
NoQuestionMarks, I'm sure BOD will try and get their hands on some of BP's assets at favourable valuations (to BP). After all BOD have recent form in negotiating deals that are favourable to the vendor.
Apologies for my cynicism which appears to betting worse with age. But remember a cynic is a man who know the price of everything and the value of nothing.
I'm going into mourning about all this now so will keep quiet for a while in case anybody thinks I've got an attack of the sour grapes
I agree it is protection in one sense, but also a handbrake on progress given the risk-free rate is lower than our ROC and that represents a massive opportunity cost.
Dana operate the Triton FPSO and they have been trying to sell their UK assets for a while.
NKOTB,
BP has plenty of superb assets that I hope we can get our hands on at favourable valuations.
I am simply looking for further rationale for the Tailwind transaction, picking up the rest of the hub is the only one that strikes me as mildly positive.
I forgot to list Bittern as the other Triton hub asset that we could acquire from KNOC and Waldorf.
We would then own 100% of the licences and 100% of the FPSO.
It doesn't make the deal 'a good one' but it would make more sense if we were to proceed with mopping up the Triton assets
https://www.offshore-technology.com/marketdata/bittern-conventional-oil-field-uk/
NQM,
For sure deals will follow, just how much will they 'cost' us SH is the question.
Yes, picking up more of Triton would make sense but I see SQZ taking over un-wanted BP's assets first both NS and world-wide.
aimo & dyor
Banbury - cash generated since 1st Jan 2022 is not the important metric, as we already know net debt was £277m in Nov 2022. The only metric that changes any valuation of this acquisition is "leakage".
We already know a huge dividend of $95m was paid on 12 Jan 2022 straight after the lockbox date. Based on very limited knowledge of "leakage" in the circular (in legal terms, we are provided no real definition of leakage), most investors would assume this $95m would class as a "leakage" and will be paid back by Mercuria to Serica. Unless the SPA has a far more detailed definition of "leakage" with caveats and carve-outs? It seems bizarre that a leakage that happened over a year ago and known, is not taken account in the final agreement in Jan 2023. For example, why is SQZ paying TAIL £61m (£57m + interest), when there is already a known leakage of $95m as far back as 12 Jan 2022, a year before the final agreement is drawn up.
The other question is has there been any other leakages from Jan - Nov 2022 impacting TAIL's Net Debt metric of £277m? All other metrics are known so does not matter if there is any leakage post Nov 2022, as we have £277m Net Debt baseline to work with and TAIL's production numbers and cost per boe thereafter.
Maybe now is the ideal time to buy the remaining Triton hub assets.
52% of the Triton FPSO from KNOC and the other 2% from Waldorf.
90% of Guillemot West from KNOC
90% of Guillemot North West from KNOC
As operators and 100% equity owners we would receive full benefit of any efficiencies, field life extensions and tax allowances.
Erskine 2.0?
https://www.offshore-technology.com/marketdata/guillemot-west-conventional-oil-field-uk/
https://www.offshore-technology.com/marketdata/guillemot-north-west-conventional-oil-field-uk/
We still have cash, could be a good NS golden egg..
Loving that purchase of a single share at above the current rate earlier today. "I've put 10k in your account to use to support the price of SQZ - do what you can. Yes I know I should have read the stuff from Mitch about the deal before I told the boss that we should support , but WE need it to not sink otherwise he might go and look at the chat boards and then it will hit the fan. And if I go, i'm taking you with me. Work with a couple of your mates, there are others in the same position. Come back to me if you need a bit more."
sadly North Sea is now a Red Flag for any investors except, of course, Serica who not only have acquired another North Sea operator to boost their exposure in this area when savvy companies with alert BODs are doing the opposite.
Just my opinion of course and what do I know
Have you looked at the markets today and our share price to see what they think about the crummy deal you negotiated on behalf of the shareholders you're meant to represent?
*1st January 2022
Cnooc’s $3 Billion UK Portfolio Sale Has Stalled on Valuation Gap .....
"Cnooc Ltd. has paused a planned sale of its UK North Sea portfolio, which could have been valued at as much as $3 billion in a deal, according to people familiar with the matter.... from initial $10 billion sought by the sellers"
https://uk.finance.yahoo.com/news/cnooc-3-billion-uk-portfolio-033359007.html
Yet Serica manage to do a deal that pays a premium to the seller ...
aimo & dyor
Zebo two considerations for me
- the surge in Tailwind production continues
- the locked box has Tailwind cash generated from 1st Jan 2021 In it. £150m would seem reasonable.
If both happen £3.50 possible but no guarantees
Re rate will be interesting and from what level will we re rate ....any ideas
48 million shares held voted against the deal. Even if only 10% of those decide to throw in the towel now, it will keep the share price depressed for quite a while. I would envisage the number would be higher than 10%. Either way, by the time the selling has concluded, I would hope we have stopped arguing about lock boxes and can see what the future outlook is going to be and that the share price can re-rate a bit.
Huge support........hmm feels like huge background seller, selling into any strength, such as it is
Huge support, no movement - strange
Well that’s nearly £80k he’s put in last 3 weeks
Where are the other pair buying who forced this deal through? On the beach is my guess
15k, major vote of confidence...lol
dickupham:
"What has concerned me all along - and continues to do so - is the control that's been given to Mercuria and its founders. Shareholders are clearly at risk of M taking the enlarged SQZ private for a derisory price. For ACW and MF to have basically just said: "we trust these guys" is imv a dereliction of duty to shareholders at large that exposes them all to risk of significant loss."
Absolutely. In his next update, Mitch needs to spell out how extant shareholders are protected (if at all).
I wonder if it was a requirement in David's contract! Mitch has to announce the share buyback and generous dividend to maybe get a 5% movement.
NS - the way I see it is that, on completion, SQZ gets to pick up Tailwind's net assets except the cash on hand at 31/12/21 (c.£58m), plus any increase in the period between 01/01/2022 and completion date. Thereafter SQZ (combined with Tailwind) is a much bigger fish, banging out more production and bottom line profit that turns into cash. It's common in M&As (as you of course know) for vendors to retain pre-acquisition cash; in this case the date set was 31/12/21, which is presumably when some kind of commitment was made that a T/O would follow.
None of the above changes the measurements the market uses to determine if a deal represents value. "Rule of thumb" multiples are applied in the O&G sector, the most important of which, to me anyway, are the price paid per boe and extraction cost. O&G companies aren't generally valued on their net asset value "NAV", although it's in SQZ's favour that it will be getting the benefit of any increase in Tailwind's NAV between 1/1/2022 and completion date, subject to the £58m adjustment for cash. No adjustment is proposed (that I can see) for longer term debt, said to be £272m at 30 November 2022. Cash in hand and debt (combined) on completion will refect the cash that's been generated between 1/1/2022 and completion date. Given Tailwind is generating a fair amount of cash, it's reasonable to expect a reduction in debt between 30 November 2022 and completion date (April 2023), plus maybe an increase in cash as well, given capital spend in the relevant period hasn't been highlighted.
So, what what is (or will be) the true acquisition cost in April when the deal is signed? In reality, the dilution shareholders will have suffered on the issue of 111m shares @£2.78.
I'm probably miles out with my thinking but that's how it looks to me. The market is probably factoring the increased number of shares in issue, along with SQZ's reduced cash and assumption of debt into its valuation of SQZ shares. But does this take into account the significantly increased profits that are expected to accrue, the improved management of risk and the opportunities SQZ's directors have told us the acquisition of TW will provide?
It doesn't look that clear cut to me.
What has concerned me all along - and continues to do so - is the control that's been given to Mercuria and its founders. Shareholders are clearly at risk of M taking the enlarged SQZ private for a derisory price. For ACW and MF to have basically just said: "we trust these guys" is imv a dereliction of duty to shareholders at large that exposes them all to risk of significant loss.
Not sure any of the above is either totally valid or will be of interest to the average investor.
jmofwiwdyor
PS NPV is the measure that is usually applied in this industry. It's main failing is that values depend on assumptions used, all of which are in the future. Regardless, SQZ should have asked its brokers to come up with some numbers - both before and after
RNS:
London, 30 January 2023 - Serica Energy plc (AIM: SQZ), confirms that David Latin, non-executive director, purchased 15,500 ordinary shares in the Company at an average purchase price of 247.177p per share.