Member Info for dickupham

No doubt BoA and other "City vermin" are crawing all over this share, remorselessly driving the price down using their toxic swaps and other derivatives. Virtually all trades are 'A' trades. Can't quite get my head around how the mechanics work but it's in vogue for these low-life thieves to establish a (typically) 5% holding, then sell down persistently with the aim of reducing confidence in those who get panicked into selling before they go any lower. Then it's back in to top up to the 5% level and rinse and repeat.

Saves on the borrowing fees.

12.2% yield if the divis are maintained at 2023 levels .............

HBR has (effectively) committed to maintain the divi at last year's level + 5% following the WD acquisition announcemment. No such luck here. I share your suspicion, QC but hope I'm wrong. Much will depend on FCF in the months leading up to the shares going XD I guess?

"i dont get why he is buying, he is leaving anyway".............

.................maybe, like us (presumably), he thinks the SP will go up?

The $64k questions is: if you were obliged to sell your entire holding in SQZ today and told you had to reinvest the entire proceeds tomorrow in any stocks you like, would you reinvest the lot in SQZ?

If the answer is "no", then take the emotion out of it and follow the steps you would have taken in the circumstances set out above. I know...........it isn't that easy.

The answer to that, of course, is: "yes it is".

:-)

Sian Lloyd-Rees now following suit.

Willing to risk £4k. Total holding now £4k

Why bother?

https://www.investegate.co.uk/announcement/rns/serica-energy--sqz/pdmr-dealings/8029063

"I do believe in fairies, I do, I do…"........

.............and I believe in NHS dentists. You don't see many of them either (not original - courtesy of The Spectator).

There are plenty of fairies around, come to think of it. You're just not allowed to call them that.

What are chutney ferrets?

Crikey - they must be oversold.........

.......and by a long way. I begged and borrowed enough to buy 10k @ 178p yesterday. Ordinarily I'd be feeling smug but I'm not, for some reason.

Now watch it crash. MMs and Bank of America are bound to find ways to feather their own nests at our expense. Crooked low-life s.cumbags

JMO

dyor

............unlikely to be a sale...........price would be through the floor if it was........

jmofwiw - mbw

Re the HBR/WD deal, HBR stated: "(the acquisition) adds 1.1 bnboe of 2P reserves at c.$10/boe and more than 300 kboepd of production at c.$35,000/boepd."

A similar $35000/boepd would value SQZ at around £4 a share. Seems closer to fair value to me than the concocted numbers the fraudsters have got us to today.

Like NK, I'm expecting SQZ to be added to Mercuria's collection of other assets reporting privately to Switzerland or the BVI, SQZ having been handed to them on a plate by directors of questionable (either) intelligence or integrity, with a dim-witted significant shareholder and a mountain of questionable proxies behind them. It has all gone wrong for us as a result. I doubt we'll ever find out how well it went for those with an enlightened self-interest in the outcome of negotiations that can only be described as 'baffling' as regards outcome.

I immediately spotted the reverse takeover nature of the deal, mommur. I wrote to ACW expressing my disquiet, explaining to him how shareholders were severely exposed to SQZ's potential acquisition at less than fair value by the new 25%+ holder. He did no more than tell me I should be happy with the deal because he and his family were. I can't stand being treated as if I'm a cretin. I suspected skulduggery, or the onset of dementia.

Like you, mommur, I had a much bigger holding here at one time (450k shs @ 22p avge) but I decided to start taking profits when they passed through 250p on the way up. I hated selling, because I couldn't see any particular reason the price progress should stop. How little we know. My best selling price was 440p. I'm glad I did sell now, as I put a lot of the gains into my home, in which I will see out my time and greatly enjoy occupying, whereas I hate owning the 80k shares I've still got in SQZ, although the dividend is welcome.

Not sure what to expect from here. This doesn't follow conventional rules. I just hope the dividend is maintained.

GLAL

dyor

.......just food for thought.

What are the odds on Edwards being found to be "a cut above" other applicants for the CEO role in SQZ "after an exhaustive search"? The Carlsberg among the candidates...........

The rat is pretty smelly

On the face of it (without attributing any value to TW Energy's tax losses) SQZ paid $21pb for TWE's 2P producing reserves. This is difficult to come to terms with.

There are many ways to value O&G companies. NPV and NAV are two of the most common, but the most practical (and appropriate) one to me is to look at recent M&A activity and compare the ppboe paid for reserves, then make any adjustments (up or down) to reflect known differences (eg geography, tax rates, tax considerations etc) and apply that figure (pb) to the company you're looking to value.

It's difficult to find any deals similar to SQZ/TWE. One I can find is Harbour Energy's recent acquisition of Wintershall Dea's oil & gas assets - a transaction that dwarfs SQZ's acquisition in size and covers 7 different territories. The deal excluded WD's assets in Russia. Not sure if WD had any UK interests, but they were excluded if it did.

HBR stated:

"(the acquisition) adds 1.1 bnboe of 2P reserves at c.$10/boe and more than 300 kboepd of production at c.$35,000/boepd."

The relevant bit is the $10pb HBR agreed to pay for all WD's 2P producing reserves.

I won't go into any more detail as it's not directly comparable. But the differences in ppb for producing 2P reserves that are evident here suggest two things to me:

1 SQZ paid too much for TWE

2. The market is undervaluing SQZ at a present m/c of c.£700m. SQZ told us it had 130mmboe of 2P reserves at 31 Dec 2022. Deducting 13mmboe for 2023 production, using an exchange rates of $1.25/£1 and with shares in issue of 391m, gives us a ppb of SQZ's 117mboe of 2P reserves of $7.50pb.

Something else to ponder re the TWE deal:

20 Dec 2022:

"Combines the two companies’ complementary leadership, technical and commercial expertise

• Tony Craven Walker and Mitch Flegg remaining as Non-Executive Chairman and CEO respectively

• Steve Edwards and Jacques Tohme will be joining the senior management team"

Result?

ACW and MF? Gone or going

SE?

JT?

From Linkedin:

J Twomey

Experience

Finance

Serica Energy plc

Mar 2023 - Present

Serica is a nimble, dynamic and experienced company, now one of the UK’s leading mid-tier independent oil and gas companies. In March 2023, Serica completed the acquisition of Tailwind Energy.

S Edwards

The sun set on #Tailwind Energy today and congratulations to #Serica Energy on the acquisition of our stellar company. 7 years ago from an (modestly brilliant😉) idea to 31,000bbl/d of high value production. We initially acquired 6,000bbl/d and went from there building the team and business into a truly great story. We simply got after things, always on our toes and treated any naysayers as simply rocket fuel to better and better things. Too many people to namecheck but that old cliché of people being your best asset is never more applicable than what we had going in our company. You all know who you are and you are a cut above. If Carlsberg did Oil Companies...

Just food for

Thanks for that, MPO818 - interesting reading. Some have questioned why SQZ doesn't use a part of its significant cash pile and buy JOG outright. JOG and its people would be included in the deal, so there'd be an existing CEO with a good track record within the enlarged entity, who SQZ could do worse than considering as a successor to Mitch Flegg. I don't rate MF as highly as some others. The Tailwind acquisition was strange (I'm being reserved).

We'll probably find out more on Monday morning. I'm hoping we'll at least get confirmation of the legal completion of the SQZ FO, which will put a further $6.8m in JOG's bank account and perhaps provide a boost to the SP.

Malcy's most recent commentary on JOG went as follows:

"This is a fantastic state of the nation update from JOG who are making huge progress at the Greater Buchan Area where following a double farm-out with highly respectable partners the company is fully carried and shouldn’t need to raise any more money in the foreseeable future.

Indeed the longer term outlook for cash is extremely promising, JOG has 20% of a very substantial project which will generate a highly satisfactory free cash flow, this from a low carbon development at Buchan which will lead the industry in returning cash to the partners.

With a target of first production in late 2026 CEO Andrew Benitz and his team has given shareholders a huge value proposition that with all that cash will undoubtedly make for a very decent proposition and be attractive on value grounds. JOG shares are amongst the cheapest around and with such a massive upside on the books I am solid in my Target Price of £10 per share, it might be more… "

dyor

See last sentence below. Might JOG get a mention in SQZ's trading update?? Haven't so far been able to decipher the code re MF's departure

" (Sharecast News) - Serica Energy announced a significant leadership change on Thursday, with Mitch Flegg set to step down from his role as chief executive officer and director.

The AIM-traded firm said the transition was expected to happen after the publication of its 2023 full-year financial results.

Flegg would continue to serve as an advisor to Serica until after its 2024 annual general meeting, expected to be held in June.

In the interim period, David Latin, the current chairman of the board, would assume the position of interim CEO until a long-term successor was appointed.

The board said it had initiated the search for a suitable successor with the requisite skills to lead Serica through its next phase of development.

It said the search was being overseen by Malcolm Webb, chairman of the nominations committee and senior independent director, with the support of external advisors.

"It has been a great privilege to lead Serica since 2017 and to be part of building a strong platform with a great team," Mitch Flegg said.

"Serica is firmly established as a leading listed UK E&P company and in a strong position following the Tailwind acquisition and planned changes to executive and board positions.

"Now is the right time for me to help support the handover to a CEO to lead the next phase of Serica's growth and development and I believe there is an exciting future ahead."

Serica said it would release an operational trading update on 5 February".

dyor

Ran out of road.......................DCF/NPV, NAV, recent deals – you decide

dyor

...........interesting thoughts, dgdg1. I get where you're coming from but it seems to me that if someone was asking: "what is the difference between the net of tax amount we retain out of the profits from oil costing us $20pb with a tax rate of 75% ......and the net of tax amount we would have retained if it had still been 40%", one way answer it might be:

With tax at 40%: $20 x 0.6 = $12pb

With tax at 75%: $20 x 0.25 = $5pb

Difference: $7pb

$20 minus $7 = $13pb

Is $13pb (vs your $8.33) a "fair" price to pay today, or is my logic flawed?

One can’t make an “actual net of tax profit achievable, before and after the EPL was introduced” comparison, because the industry as a whole is materially worse off as a result of the Govt’s grossly unfair and unjustified tax heist, which the rhyming Hunt euphemistically calls an “Energy profits Levy”. There’s a lot less money in the industry because the Gov’t has stolen it. “Windfall tax” my a.rse. If the EPL was a windfall tax, only windfall profits would be taxed, not the whole lot. And what does Jeremy HtC have at his disposal that allows him to work out that “windfall profits” (the subject of “the heist”) will continue until 2028? Cheats and liars, the lot of them. Labour is worse.

Say 2P reserves of 1m barrels were changing hands in the NS. The scene might be as follows when looking at net cash returns for the producer that bought the 2P reserves at $20pb. Assume BC at a constant $80pb? I’m ignoring Opex and amortisation of Capex as it’s irrelevant here. Also, to avoid further discussions about “discounting” etc let’s assume the entire 1m barrels was sold in a year:

Before EPL

Revenue: 1m barrels @ $80pb = $80m

Cost of oil: 1m @ $20pb = $20m

Pre tax profit = $60m

Tax @ 40% = $24m

Post tax profit = $36m

After EPL, with tax at 75%, what would a NS oilco have to pay for the oil to get the same post tax return as it had made with tax at 40%? The answer is that, even if the reserves could be bought for nothing, the best post tax return achievable is $20m. The money's gone – into the coffers of the Treasury, before being dished out to Britain’s deserving ”experts on everything to do with entitlements”.

I’m a simple type. On a net of tax (“show me the money”) basis, I reckon $13pb today, with tax at 75%, is justifiable if $20pb was a fair price for 2P reserves when tax rates were 40% (producing reserves were selling for more than $20pb). JOG has 20% of what should by end of 2026 become 2P producing reserves (Buchan – JOG share 14mboe producing JOG 7kboepd). Plus 36mboe of discovered oil in Verbier & J2 AND 133mboe in Verbier Deep, Cortina and Wengen – all regarded as “strong prospects”.

Give me an overall ppb for the lot. $5pb for 48mboe (JOG share) converts to 550pps fully diluted? Add on the cash and the capital allowances (tax losses) and it always seems to end up as "plus or minus £6ps". DCF/NPV, NAV, recent deals – you

I wasn't a clever accountant, Einbert, I just happened to be good at lunch.

Don't really want to waste any more time on a subject that challenges most accountants, never mind people with little or no background in finance.

Just a couple of observations before I go, however. I think the $500m you refer to is gross revenue in the years 2027-2029. G&A and tax reduce this to $220m. Let's call this "net cash". Furthermore, JOG assumes effective tax rates of: 75% 2027; 49% 2028 & 40% 2029. That's just wishful thinking. Can anyone see Stoma announcing a 35% reduction in tax for those hateful polluters? 10% discount for risk is the industry norm ('ve used this because I'm an optimist). While Stoma, in full leftie green-mode, preaching Britain's virtue to a world that doesn't care , Britain will be crashing and burning - ok it wont be burning as there'll be nothing flammable left in the land). He's either delusional or doesn't understand what Sunakhunt's actions and his promises will do to our country (Cyril2 gets it, although as the NSTA is a Government quango, imv it will do as its told by Stoma and other Labour cretins).

Re NPV, when does the risk start? Certainly not in 2027. It is here and now - and all JOG's assets are at risk. So is there a case to be made for the first year's DCF projection being 2024? And for the discount rate to be a lot higher. At a more likely tax rate of 75%, the $220m discounted (cumulatively) back to the present, even using a discount rate of 10% for risk and 5% for money, the $220m soon disappears.

I don't want to continue as there's no point - JOG will sell (imv) on a $pb basis, plus cash. A buyer might be willing to pay for 25-50% of the capital allowances on top.

Who knows what will happen? Things on the political front might turn out better than expected or Greta Thunberg might get laryngitis.

The brokers don't seem to be far off the mark to me. I'll take £6ps - preferably this year.

The end.

dyor

"So come on Dick, what do you estimate as JOG's NPV"...........

......... you can work it out for yourself, CHF - go on; give yourself a challenge.

I'd have to charge an unholy amount to tell you. I seldom charged clients my full rate as they might have cut short the lunches. Where's the incentive for me here? No-one seems to pay any attention to what anyone (including me) writes anyway and sense of humour on this blog is a distant memory.

The following should allow you to get somewhere near what I came up with (for illustrative purposes only). If you don't like what you get, just reduce the discount or make some other pretence.

https://www.investopedia.com/terms/n/npv.asp

Here's a starter: I used a discount rate of 5% for "cost of money" (some call it interest, others inflation) and 10% for risk.

Whatever NPV number anyone comes up with won't change the price an acquirer pays for the shares. This will be determined by negotiation. Poker skills are sometimes involved. PPB most recently achieved for similar oil in the same general location is probably the best measure of value to use. Not that long ago producing reserves in the NS were changing hands for $20pb or more, but that was then and now is now.

Let us know what you come up with.

GL

dyor

"What has changed for the worse for you ?"..............

...........life?

Perhaps at the time I didn't think Rachel Reeves would be as big a disaster as I now think she will. Or Stoma. Or Sushi. Or the rhyming Hunt.

My intention is only ever to give a ballpark figure that people like you can dissect and make your own adjustments to. I can tell you for nothing that valuing shares in more of an art than a science. I did enough of it over the years to allow me to make this comment. What I might (and very often did) have thought a particular holding of shares was worth, when I was called upon as an expert witness to value. There was always someone on the other side of the transaction with a different expert witness and his/her assessment of value was rarely the same, although on one or two occasions the judge instructed the two exerts to go to a quiet room and agree on a number.

How much is a share worth? What someone is willing to pay for it.

Alternatively, the sum total, at today's prices, of all the (net) cash which that share delivers to its owner over its lifetime (or period of ownership, if that is different. It is called Net Present Value and is the result of aggregating discounted cash flow projections into the future for as long as the asset (in this case a share - you can extend this to a whole company).

It's best you don't push me on JOG's NPV as you wouldn't like the answer. Sunakhunt halved net cash returns to JOG (from Buchan) in the stroke of a pen. The industry norm for the application of a discounting factor for risk is 10%. I would assess the risk of Stoma doing something outrageous and destructive at a lot higher than 10%. Discount for the cost of money is higher now than it was before inflation struck and interest rates increased significantly. And there's the fact that no cash to speak of will be generated before 2027.

But I still like JOG's prospects because the likelihood of politicians deliberately crippling an industry vital for Britain's security seem relatively low to me.

Sentiment plays a big part in setting share price levels. Sentiment in the O&G sector is rock bottom for all the reasons we know about, very few of which make sense. It's ludicrous that 2P reserves in the CNS with a 33°API rating are presently fetching only $5pb, when JOG has only lifting costs (c$15pb) to deduct from BC prices the oil is likely to sell for. There is no deduction for amortisation of Capex because JOG is fully carried through to production. So $5pb buys the right to make ($75 minus $15) pb.

Tax is the killer.

Make whatever amendments to my c.rap valuation that you want, CHF. I don't give a flying F

"What, in your view would these director/employees be doing during this period?"...................

............rumour has it JOG has rented a couple of chalets (one in Verbier and the other in Cortina) to help alleviate the directors' boredom while they wait (along with the rest of us) for someone to come along and offer something impressive for what JOG has to offer. The Board (and their wives) will have sole use of the super-comfortable accommodation. Cunning move, because if they should slip up and carelessly make reference to their new arrangements, they are unlikely to be caught out because they can quickly add a reference to Aberdeen or The Moray Firth and no-one will be any the wiser. I've always thought of JOG's directors as smart cookies and this proves it. I'm jealous but, hey, they deserve it after putting up with all the abuse they've had on here these past years because they haven't turned water into wine on the UKCS as quickly as some who post on here would have done if they'd been in charge of something as simple as a NS oil junior with no money.

It is my further understanding a former council flat in Bermondsey (recently converted for use as "serviced offices" - if you know what I mean) will be available for JOG's people below director level to spend their time in (this will include the cleaner and the handyman who mainly washes the directors' - and their wives' - cars when called upon to do so and polishes JAB's shoes every hour or so).

Hopefully, between the 10 of them they'll be able to find a NS punter willing to pay £5 or more a share for JOG pdq. Then we can all head for Buchfastleigh and those who imbibe alcohol can get on with the business of getting rat-a.rsed, or for the non-imbibers like me, sip at a selection of alcohol-free Buckfast Abbey wine cordials, after sating ourselves on the renowned house speciality: "big fry all-dayer" @ £3.95 (£4.95 with an extra sausage and fried egg).

Should they be doing something different?

................inc the directors (all 5 of them).

Greener - I didn't intend to cause offence - you fooled me by posting on a thread with the title: "RNS today". I thought you were referring to the directors disclosing additional holdings today. Should I have concluded differently?

Lots of things might happen between now and late 2026, springwater. JOG has sufficient cash to take it through to first oil, but not that much would be left over. Decisions will have to be made about existing prospects. It's not inconceivable the JV partners (with or without JOG's support - this wouldn't affect JOG's liability to meet 20% of the costs) will decide to drill an exploration well at Verbier Deep and Wengen, as Buchan works its way towards production. Both are strong prospects.

The most likely scenario as I see it is that JOG will seek a buyer post FDP - preferably immediately post FID, when NEO and SQZ are fully committed to Buchan. My understanding is that JOG has reduced its personnel from a max of c.30 at its peak to 10 people today, inc the director. This hardly indicates an expansion of operations in the foreseeable future.

So............what might JOG be valued at by the industry with its (say) 25m barrels of (mostly) 2P reserves in one of the UKCS's best postcodes and with a number of promising prospects and leads adding more than the same again in whatever category (2C??) Verbier Deep, Wengen and Cortina happens to fall? $5pb? If an interested party really wanted the reserves, they might pay more. Working on $5pb and adding the forecast cash of c.£30m, plus (say) 25% of JOG's b/fwd losses, I get to a price per share in the range 400-500p. $7pb would produce 560-700p.

Am I being pessimistic? Or the opposite? A number of respected analysts reckon between about 600p and 800p is the right price to target. I bow to their superior crystal balls. I bought mine in Woolies decades ago.

Reference a market cap in the lower range above, JOG's market cap in Feb 2016 (8 long years ago) was £675k. A sale producing (say)430p per share implies a market cap of £150m - 222 times its market cap 8 years ago. Not a bad return on investment for those who managed (had the balls?) to buy when the overwhelming sentiment was sell - and then hang on or add at opportune times thereafter. 444 times would be even better - and a site fairer looking at the likely longer term thinking on what makes sense for the UK ref the UKCS. All things considered, I make JOG at least a buy at present levels. Labour remains the biggest threat.

jmofwtw

dyor