Member Info for DennisThePennis

Not convinced these new board members have the necessary experience or clout in the industry. Then again, none of the board members except ACW (now retired) seem to have done anything exceptional. Serica’s main achievement to date by far was the BKR deal, delivered as a result of ACW’s connections and BP’s desperation to offload Rhum.

Our market cap is now sitting at around £766m which is considerably lower than before the Tailwind deal. Our share price has plummeted 25 percent since the deal was announced. At that point, oil and gas prices were already dropping and the windfall tax was already in place, so these factors can’t be held up as excuses.

MF promised shareholders will see accretion. Can he update us to clarify when this is likely to happen?

In the meantime, hopefully he won’t be announcing any further UK NS deals.

Now we're roughly 50/50 oil/gas, it seems a drop in either commodity instantly translates to a drop in share price. Unfortunately gains don't seem to work in the same way.

Https://www.agcc.co.uk/news-article/apache-wants-to-end-forties-production-11-years-early

How much tax revenue will this lose UK PLC? How many jobs in the oil and gas supply chain?

Another nail in the coffin of UK energy security, courtesy of our esteemed leaders at Westminster.

The only deals that make sense in the UK North Sea are those "short cycle" projects Mitch talks about, i.e. low cost brownfield development with a low degree of uncertainty and rapid payback.

Large capital projects are going to be off the cards for sensible companies.

Generally the next few years isn't going to be good for O&G in the UK but Serica might be an exception.

Just IMO of course.

Sasa, that's what I've be been thinking all the way down from £3.20. Trying not to think about the paper Ioss and not feeling confident about investing even more, despite it seeming like a rational thing to do. Rationality has evaporated in the current political climate.

I think the BKR deal was a one-off, achieved partly as a result of TCW's BP connections and partly since BP wanted to offload Rhum due to the Iranian complications.

Having said that, I think there will be plenty of further opportunities for Serica to expand and improve shareholder value, hopefully outside the UK North Sea. Despite market sentiment, this is a strong business with a lot more potential. The TW deal wasn't perfect - arguably we overpaid - but it has resulted in some valuable benefits as outlined in yesterday's presentation, namely technical diversification, resource diversification, reserves growth, production growth, tax benefits and respectable cashflow.

GLA

I knew the SP would drop a bit today but wow! This significantly exceeds my expectations.

The results are pretty good and fundamentals of the company are strong but clearly sentiment is extremely negative.

I think this underlines the need to use our cash to expand outside the UK.

Looks like some sort of fiscal review is taking place.

https://www.nstauthority.co.uk//news-publications/news/2023/north-sea-can-support-energy-security-net-zero-and-thousands-of-high-skilled-jobs/

"The NSTA will also work with the government and industry on an upcoming review of the oil and gas fiscal regime, which is expected to give companies predictability, further supporting long-term investment, jobs and the UK’s security of supply."

Hopefully the government will come to its senses but I'm not holding my breath. Even if they recognise the enormous damage they're doing, I doubt changes will happen quickly.

The BoD needs to do something to protect shareholder value. The dividend is nice but limited compensation for the ongoing share price rout.

Share buybacks may be a good short term option.

Hopefully they are also (urgently) looking at investment overseas since the UK is now hostile for O&G.

The government stance on the oil and gas industry is pretty despicable, and Labour will be even worse when they get into government next year, but I think there may be opportunities for companies like Serica who specialise in mid- to late-life assets.

If Keir Starmer is to be believed, a Labour government would ban further exploration drilling which would dramatically accelerate the withdrawal of operators from the UK. This might provide Serica with an opportunity to buy assets at rock bottom prices, produce for a few years at low cost, then abandon. They would just need to be careful about decommissioning liabilities.

This could result in considerable free cashflow and respectable profits, even with high taxation.

There would be nothing stopping them from investing overseas in parallel.

Hunt has pleased no-one with this floor. It's highly unlikely to make any difference to oil and gas companies - they'll still get taxed to the hilt - and the JSO nutters will see it as a concession to the greedy, polluting oil companies and a move even further away from a "proper" windfall tax. What is the point?

This new cliff edge floor for the EPL is patently ridiculous.

As others have pointed out, a very small drop in O&G prices could result in a dramatic increase in profits, and conversely a tiny increase in prices could trigger a massive drop in profits.

Totally and utterly absurd, demonstrating that Hunt et al don't have a clue about business and aren't fit to run a banana republic. Hopefully they'll have another rethink once the penny drops. In the meantime, the industry needs to keep up the lobbying.

Investing more in the UK North Sea might pay off if politicians see sense but it's a high risk strategy. The safer bet would be expansion overseas although this would offer its own challenges. They'd be wise to finish the integration with Tailwind first and use it as an opportunity to hone their M&A skills.

Clive Moffat makes some good points but on GB News he's preaching to the converted.

Politicians don't care about delivering any of their pie in the sky promises as long as they can hoodwink enough of the electorate to win the next election.

In 2025, PM Starmer will admit net zero by 2035 isn't achievable. Maybe with a new sense of realism, he will propose an approach to achieve NZ by 2050. This is what the Tories should be doing now.

I'm hoping (probably naively) that the government will see sense to reduce/remove the WFT once it is politically acceptable to do this, i.e. once domestic energy bills start dropping. It's insane that bills are still so high when wholesale gas price has dropped through the floor.

Mitch is doing very well for himself. It's a shame the same can't be said for shareholders in the company he's running.

Https://www.energyvoice.com/oilandgas/north-sea/505816/outgoing-serica-chairman-decries-unsustainable-tax-on-north-sea/

Modern politics is more about marketing than delivery. None of them actually deliver anything but aim to make themselves look more virtuous than their opponents. Personally, I think they would all be happy to sacrifice economic stability on the altar of net zero.

With oil and gas prices returning to normal and a 75% windfall tax still in place, it doesn't take a genius to work out why companies aren't pursuing licenses.

If companies don't invest in exploration and development, production will decline even faster.

The donkeys in charge don't seem concerned about acting in the national interest.