Member Info for DennisThePennis

BanberryBoy, I agree that sentiment is against SQZ due to board apathy and inaction over the past few years. The company's fundamentals are strong despite the WFT, and some evidence of growth plans might be a catalyst for SP movement. Without this, they should let the cash pile grow for another 6 months then return most of it to shareholders as a special dividend.

This government is clueless. They have no energy strategy and no transition plan for net zero. They make moronic knee-jerk decisions and will continue to stumble from one crisis to another.

This is why I'm holding and bought another batch a couple of days ago. Given the cash position and long term gas price, I think this share is massively undervalued, despite the WFT. The fundamentals improve day-by-day yet the SP is down again, and I don't believe it can go much lower. AIMO of course.

Yes, Serica's BoD has been asleep at the wheel and no doubt missed opportunities, but they can't be held responsible for the appalling and hugely destructive tax changes imposed by Sunak and Hunt. A few months ago, no-one in their right mind would believe a Tory government would implement a WFT in its current form.

With investments being pulled and companies boycotting the licensing round, we are now starting to see the consequences of Hunt's socialist policies.

I agree - operators should boycott this licensing round. With its new punitive and unpredictable tax regime, the UK is now one of the least attractive places to invest in the world.

It seems to me that the SP is being brought down by the market manipulators. Maybe something's on the cards.

Hunt is more interested in securing populist votes in the next election than establishing a sustainable energy strategy for the UK. He thinks all voters are stupid.

I reckon this well has cost about £75m to drill.

My back-of-a-***-packet calculation...
Rig rates are currently around £450k per day and this rig has been on hire since July, i.e. 5 months => 150 days x £450k => £67.5m. Add some extra costs for well services, supply, logistics, etc., and I think £75m gross is a fair estimate.

Cost will be around £30m higher than planned due to the technical challenges encountered and the 2-month delay.

AIMO

Not surprised about North Eigg which has been overhyped. It was always more likely to fail than succeed.
What's important now is that the company demonstrates it has a future, otherwise they should return the cash pile to shareholders through special dividends. The BoD has had ample time to evaluate commercial opportunities.

From the Moram article:
"Serica’s management team gives NE a 20-33% chance of commercial success."

North Eigg is an exploration prospect with a low chance of being developed. I think Serica's success is more dependent on commercial deals and possibly expanding outside the UK (if WFT persists in its current form).

Soon our cash in the bank will exceed our market cap and we have zero debt. Even with tax at 75pc of profit, the cash pile is only going to grow, especially with c. 92pc tax relief on investments. Sooner or later our share price will reflect our true value. IMO, DYOR.

I don't think they want the likes of Shell and BP to shift their HQs out of the UK but they're happy to whack domestic producers with eye watering tax to appease the red wall and the green lobby. They probably think they can offset lower domestic production in the future with LNG imports. Obviously that's insane.

"All politicians are corrupt"
I agree that some are corrupt but most are just ignorant.

Some people seem to understand the new investment allowance but for me it's as clear as mud. In my mind, tax rules should be clear, and ideally simple.

Unfortunately our tax system keeps getting more complex and punitive. The opposite of what businesses need.

It's not explained very well but the new investment allowance provides £91.40 tax relief for every £100 invested. Previously it was £91.25.

See:
https://www.gov.uk/government/publications/autumn-statement-2022-energy-taxes-factsheet/energy-taxes-factsheet

Maybe there's an upside.

For the next few years, gas prices will remain high, profits will be modest, but cashflow will be plentiful. If they invest wisely, cash-rich, debt-free companies like Serica can grow their business, grow their revenue, and grow their profits.

The investment allowance provides an excellent opportunity for growth which could pay handsomely from 2028.

AIMO.

If Hunt extends the WFT period to 2028, this indicates the government expects gas prices to remain sky high until at least then. Assuming he keeps the investment allowance in place, the outcome might not be too bad for SQZ. No debt, plenty of cash, very strong cashflow for investments (which won't be taxed), and a steady, respectable profit. Probably better than the extreme volatility of recent years. IMV.

Maybe gas producers should shut down for a while to catch up on all that maintenance they missed over the summer to maximise production, as requested by the government. Not a great look for the government if people can't hear their homes in winter.

The industry is in a very strong negotiating position if they have some balls.

I still find it very odd that the UK government hasn't sought to secure a deal with the UK industry, fixing prices at a reasonable level for 3-5 years to provide stability and certainty for both parties. They seem to prefer doing deals with other countries while taxing domestic producers out of business.

The Rhum Iranian money won't be accessible to the UK government. It will be held in some sort of ringfenced escrow account.