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Even in a tight capacity market, I'm unfortunately of the view that Mitch Flegg has the capability to drive this company further into the ground. The Mercuria tie-up is a governance issue for small shareholders insofar as this significant shareholder has written itself an option to buyout shareholders at some point. In the intervening period the price continues to deflate, possibly aided and abetted by this significant shareholder and a SQZ BoD whose focus on shareholder value is not readily discernible.
A poor investment on my part, where my turnaround strategy is little more than 'hope'
The largets trading houses have pledged investments in the green energy transition, but returns there are very poor, as the integrated oil and gas supermajors have seen first-hand over the past years. We borrow much less from banks and are waiting for good investment opportunities. But those are slim in loss-making green energy an executive at one of the top trading firms told Reuters.
Low returns from renewables have prompted oil and gas giants like Shell and BP to streamline and/or reduce exposure to renewables and clean energy solutions and pivot back to their core business of oil and gas
Oil and gas provide profits unlike renewable projects where losses have been at multi billion dollar levels over the lat year, investment will only go where profits are available.
Https://www.malcysblog.com/2024/02/oil-price-dec-jog-serica-i3-molecular-energy-and-finally/
Jersey Oil & Gas has announced that, further to the press release issued on 23 November 2023, the Company has now completed its farm-out of a 30% interest in the Greater Buchan Area licences to Serica Energy (UK) Limited and received the associated milestone cash payment of $6.8 million.
...
For JOG this is another amazing milestone to have passed, apart from the legal certainty of closing, it puts JOG in a very strong financial position so that now they and their exceptional partners can take this project on to become one of the biggest, and low carbon developments in the UKCS.
For years I have been impressed by the way that JOG have moved forward and now that they have two high quality partners with Serica now formally on board (see comments below) they can kick on with certainty. My Price Target has been £10 per share for a long time now and at the current share price exhibits a material discount to the core NAV. JOG remains an outstanding investment in the sector.
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Another great addition to the portfolio for Serica as completion of the farm-in to the GBA is announced. The GBA will define the future, low carbon and emission levers whilst being a big provider for the country, its oil workers and fiscal income.
My post is to add some more to DennisThepennis and surprised ideas re educating people and politicians.
Maybe the industry could start by doing lectures at Colleges and universities. As this would at least educate young voters. They could also fund a documentary or two for National television together with greater press coverage. Also is there any reason as to why they could not simply do a type of party political broadcast on main stream television.
While official data indicates an oil glut, the physical oil market is experiencing significant tightness, as evidenced by soaring spreads, contrary to market expectations.
Factors contributing to the physical market's tightness include supply issues in various regions, including vessel diversions, freeze-offs in the US, worker protests in Libya, and logistical constraints in the North Sea
https://oilprice.com/Energy/Crude-Oil/Short-Sellers-in-Trouble-As-Physical-Oil-Market-Defies-Data.html
''Short Sellers in Trouble As Physical Oil Market Defies Data''
''EIA (Biden's dept) has done everything it could to indicate there is a glut of oil, Biden fears inflation before the election, the physical market is sending just the opposite signal, with spreads showing screaming physical tightness.''
https://twitter.com/surprised_trade/status/1762530470191939606
Once again we have a party threatening to undermine the energy sector with a position on oil and gas that is not grounded in the reality of how net zero will be delivered. Labour has fallen into the trap of presenting the switch as a binary move from one source of energy to another, and suggesting that 200,000 plus workers will simply hop off their oilrigs and into a new green energy job.
The reality is far more complex and requires a pragmatic approach to domestic oil and gas production — one that is realistic about the time it will take to build projects and jobs in renewables, and one that is honest about the energy we use.
Our politicians consistently forget the “net” in net zero. We will still need oil and gas beyond 2050. And if we are to do that in the most efficient way possible, we need new North Sea fields. Labour’s wrong-headed position on new development is unsurprising, given it has been drawn up without any engagement with the industry.The price of getting the energy transition wrong is huge. Labour needs to reflect hard on these numbers, talk to the people and companies and come back with a sensible position.
Siemes and Orsted have suffered $4 -$5 billion losses on wind farm projects this year and it is clear Labour and Starmer have no idea about the energy industry economics, wind or oil. The labour stance on windfall tax and allowances displays their total lack of business acumen and the lack of understanding of the impact of their policies. For a government in waiting displaying such ignorance of the UK's energy sector is a concern and it is clear that North Sea operators will begin a transition away from the UK in 2024 leaving less tax take for Labour and less energy security for the UK.
Labour have a short window to develop a plan in conjunction with the Oil and gas sector or see a complete collapse of their 'energy polcy' .....SQZ can still make a profit in the North Sea due to their nifty operation, however, they must surely be poised for operations beyond the North Sea and away from both Tory and Labour tax grabs.
I was on Twitter a couple of days ago despairing at some of the tweets posted by Labour affiliates boasting how they’re going to confiscate the ill-gotten gains of greedy oil companies like Shell, BP and Total.
The level of ignorance is staggering and I’m amazed the industry isn’t doing more to educate the general public. It’s no good posting statements on the OEUK website. They need to get on mainstream TV channels.
Offshore Energies UK issued a post-
CEO, David Whitehouse said: "Labour either can’t do the maths or haven’t considered the alarming jobs impact that will be felt up and down the country. With no new investment, 42,000 jobs will go, and we could start to see the effects as early as this year. These are not faceless numbers but decent, hardworking people working across the UK to provide the energy we will need today and in the future.
The impact of no new investment will be felt across the whole economy – today we estimate the UK will lose £26 billion of economic value. It will undermine the very industry which can and must play a critical role in delivering a homegrown energy transition.
Last week I listened carefully to the Shadow Chancellor promise that Labour will work in partnership with UK businesses. We’ve always said the path to net zero is through working together between government, business, and people, ensuring no individual, community or sector is left behind – that’s not what we’ve had from Labour. The least this industry, our people, and our communities deserve is an urgent meeting with Labour leadership."
I just wish all north sea players would stick together. Inmv they should mothball everything until these idiots realise that they will have no tax revenue until they see sense. As for milliband and it's cronies. Well look what happened when he became labour leader in the past.Maybe he is hoping to run again in the future .
Milliband has confirmed that a Labour Govt will remove all investment allowances for N Sea companies. No wonder SQZ is at a one year low.
Mitch Flegg, Chief Executive of Serica, commented:
"We are pleased to have completed this transaction which creates the possibility of adding a third production hub to Serica's North Sea portfolio. As a potential domestic source of oil and gas with a low level of production emissions, a provider of quality jobs for UK workers and a generator of much needed future tax revenues, Buchan is the sort of project the UK needs as part of the energy transition."
Article cont'd............... ''its short- and medium-term prospects are good, and at this yield and valuation we would buy''
Peel Hunt says'' it is important to state that we believe the business remains in a very strong financial position and is funded for all planned work programmes and shareholder distributions."
https://twitter.com/surprised_trade/status/1760730520952967248
For anyone who missed the article Friday, IC and brokers have a positive outlook despite public sentiment being low currently for North Sea operators as the actual metrics look attractive.
Of the UK-listed mid-cap energy companies, Serica Energy (SQZ) is an inexpensive option. The North Sea-focused group sits on a forward enterprise value/Ebitda ratio of less than one times, with a dividend yield of around 12 per cent.
Serica's metrics look so attractive because its share price has fallen by 60 per cent from an August 2022 high of 450p. Even a cash-and-shares deal that doubled production has not been enough to bring shareholders back. The group could be due a rebound, however.
Serica’s low enterprise value (EV)/Ebitda ratio is driven by its high cash profits and small pile of debt. Ebitdax (‘x’ being exploration costs) for 2023 is forecast at £401mn. This is a drop from 2022 due to lower oil and gas prices, but still represents a cash profit margin of 63 per cent. Broker Stifel thinks this margin will climb to 70 per cent in the current year, implying Ebitdax of £612mn.
Peel Hunt analysts Werner Riding and Matthew Cooper remain bullish, however. “Despite lowering our numbers, it is important to state that we believe the business remains in a very strong financial position and is funded for all planned work programmes and shareholder distributions."
The Tailwind deal increased Serica's production from an average of 26,000 boepd to a forecast 40,000-45,000 for 2023. The thinking behind the deal was the same as that behind the BKR acquisition: add mature production.
The broad idea is that mature fields that aren’t large-scale enough for the majors to take an interest in or to hold onto for the long term will still have reserves large enough to provide positive cash flow for at least a few years.
Much of the appeal of Serica lies in its low operating costs, although these have climbed a third from $16 (£12.70) per boe in 2022 to around $20 per boe now, according to Peel Hunt forecasts. They are expected to stay around that level in the medium term, however, and margins are already ahead of peers'. Gross profit per barrel (or netback) is around $40/boe for 2023, which Stifel forecasts will rise to $49/boe this year.
Chris Wheaton, an analyst at Stifel, sees net cash rising from £81.4mn at the end of 2023 to £449mn two years later. This is more of a rebound than a turnaround, given the use of £58.7mn in the Tailwind buyout and a cash outflow in the second half of last year (as per Wheaton’s forecast). But it does leave management with some firepower, even alongside its work to get more barrels out of existing wells.
Serica’s portfolio offers balance between energy scenarios with 55 per cent gas and 45 per cent oil production. The reserves life is slightly less than a decade, so further deals will be needed to keep the company going. But its short- and medium-term prospects are good, and at this yiel
Alas we will soon be importing even more from overseas thanks to the idiot politicians .While in the process not selling much of our own home grown .inmho dyor
Maybe UK hmg are all secret c...my agents. The new hmg could even add I...Lynn agents. Minute Britain were getting. Who knows we may even produce a new car on the back of all this and export it somewhere. Not sure where,but you just don't know.
Better still let's start a new strain of c......v.d
Is it possible that when prices normalise for oil and gas that a legal challenge could made against the wft, if not then this does not bode well for any investment in the UK if the government decides upon a political stance against any industry it chooses to demonise then who or what will be next.
I see Norway have subsidised EVs to the of £4B with discounts to buy free parking and tax concessions etc yet ice vehicles have still increased in number in Norway this tells a story when Norway is held up as the poster boy for EV adoption.
Oil and gas even though out of fashion is still seeing increased demand which shows no sign of decreasing.
Five AIM income stocks for your ISA in 2024
https://www.ii.co.uk/analysis-commentary/five-aim-income-stocks-your-isa-2024-ii530851?utm_source=newsletter&utm_medium=email&utm_campaign=Weekend%20Newsletter%2020240224&utm_content=newsletter&utm_source=sfmc&utm_medium=email&utm_campaign=Weekend+Newsletter+AMP&utm_term=%25%25%3dRedirectTo(%40article2URL)%3d%25%25%3f%25%25%3dv(%40UTM)%3d%25%25&utm_id=151180&sfmc_id=5902060
Labours manifesto states they will increase EPL in line with Norway. They will also remove investment allowance. So unless we can complete workovers by the summer then it will be pointless inmv. The industry estimates forty six thousand job losses together with twenty six billion lost during the next few years.
The only glimmer of hope is conservatives are elected and remove EPL inmo
The fact that three directors have recently bought shares suggests that a transformational change isn't imminent otherwise they would be guilty of insider trading. I assume they're investing based on long term prospects. I don't see this personally but hopefully all will become clear when they release their next update.
Usually a buy recommendation in IC causes a short lived bounce, but its had no impact to the SQZ share price, just continues its decline
It’s the EPL and Labour that are killing this Company and others
With gas prices there lowest since 2021 before the Ukraine debacle and prices set to fall, the winter has been mild and gas stocks throughout Europe are at there highest for this time of year, oil prices are hardly breaking all time highs so is the wft due for renewal or challenged as it only supposed to be for gains which are deemed extraordinary to normal market conditions.
IC also has a page write up on Sqz and has it as a buy, which is better than hold or sell, perhaps the worm is turning.
Seems were in the same boat chinch,but I'm still holding a few awaiting some kind of bounce. Having said that it could once again be a interesting buy ,but alas not at this level inmv, dyor