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Jefferies raises Serica price target to 190 (185) pence - 'buy'

Interestingly this years half year results are very early when compared to previous years.. 2024 : 10th September & 2023 : 19th September… I appreciate this years figures will be affected by the Triton issues & they may want to get this out of the way & move on so to speak, however they generally announce the interim dividend within this announcement… gives them the opportunity to cut it to the mentioned 6p (Auctus Advisors predict this..). - on the positive - it could be quite an update with production back online & over 50,000 boepd…. plus any news on M&A…

Good to see…. 👍🏽

Serica Energy plc (AIM: SQZ), confirms that Martin Copeland, Chief Financial Officer, purchased 45,000 ordinary shares at an aggregate price of GBP£1.614 per share in the Company.

Interestingly Mitch Flegg almost broke even on the only shares he purchased (felt like he was somewhat pushed too purchase at the time by David Latin..) 75,000 shares at £1.89… a few days ago…. so close Mitch .. & Chris Cox will of held office for exactly a year beginning of next week…. definitely not the start he would of wanted… let’s hope the next 12 months are more positive!!

You do realise there’s 30 days in June… meaning Monday of next week also is covered by ‘around end of June’ …. also a few days either side of this..

You’ll be saying tomorrows expected drop on ex-dividend is down to Triton also…. 🧐

CAML notes the announcement made by NWR this morning where it confirmed that it had received an unsolicited, non-binding, conditional and indicative proposal from Kinterra Capital GP Corp. to acquire all of the shares in NWR that it does not already own for A$0.057 per NWR share in cash via an off-market takeover offer (the 'Kinterra Offer'). CAML is currently considering the implications of the Kinterra Offer and will notify the market of any further developments.

David Latin on Radio 4’s Today programme earlier today :

https://www.linkedin.com/posts/serica-energy-plc_serica-chair-david-l-appeared-on-the-today-activity-7341704280829026305-6Kir?utm_source=li_share&utm_content=feedcontent&utm_medium=g_mb_web&utm_campaign=copy

From The Times yesterday also, sounding a positive change coming.. :

However, if Starmer has indeed been persuaded that the North Sea is worth saving, he will have to address the fiscal elephant in the room: the 78 per cent windfall tax on oil and gas profits. With the world market price of oil falling, companies like Harbour Energy are pulling out of the North Sea on the grounds that it is no longer commercially viable.

The case for punitive taxation on oil and gas companies, if it was ever justified, no longer applies. BP, Shell and Chevron have already largely pulled out of the North Sea. Those Big Oil profits, much quoted by climate activists, largely derive from fields elsewhere in the world.

Anyway, Labour desperately needs the revenues generated by the North Sea, just as it needs those Reform votes lost in constituencies like Hamilton. So don’t be surprised when No 10 discovers that, like the defence industry, oil and gas aren’t so evil after all. Perhaps he’ll start talking about a North Sea dividend. You read it here first.

https://www.thetimes.com/uk/scotland/article/labour-will-surely-tap-into-growth-available-in-the-north-sea-pv99gj2f5

Interesting article from earlier today.. could be signalling a move in the right direction…

‘Will the North Sea oil and gas industry be Labour’s next U-turn?’

Industry sources believe ministers may be poised to give the green light to new North Sea projects from this autumn. The Guardian understands that senior government advisers have told North Sea investors that new drilling could still move ahead despite the election promise, provided the projects are close to existing pipeline infrastructure and do not extend into “greenfield” areas.

One energy investor said advisers in the Treasury and No 10 had “quite openly” signalled that the door would be left open for new oil and gas projects to proceed despite climate commitments. “Myself and a number of colleagues have been told that the government is moving towards the idea of allowing new licences,” the source said.

https://www.theguardian.com/business/2025/jun/08/will-north-sea-oil-and-gas-industry-be-labour-next-u-turn

Recent Serica Linkidin post :

The COSL Innovator rig has now left the Triton area having completed drilling operations, bringing the Triton Area Wells campaign to a safe and successful conclusion.

The five well programme was delivered ahead of schedule and under budget, and the new wells have the potential to add significant production once maintenance work is complete on the Triton FPSO.

Prior to operations commencing back in April 2024, Serica, Dana, COSL and Petrofac, along with our service partners, set the goal of a One Team approach to apply continuous learning throughout the operations on the COSL Innovator to deliver a performance we could all be proud of.

Through these collective efforts by all, drilling performance was maximised across the wells to deliver continuous performance improvement. Coupled with excellent operational efficiency and attention to detail on emissions reduction management, these wells have been drilled and completed with the lowest CO2 emissions in Serica’s history.

Thank you to everyone involved throughout the campaign to deliver this HSE and operations performance, which truly shows the value in a campaign approach by operators here in the UKCS.

Our Well Operation Lead Derek Harrold visited the rig last week (see image) to thank the team and pass on his congratulations.

Petrofac COSL Drilling Europe AS Dana Petroleum Limited

https://www.linkedin.com/posts/serica-energy-plc_the-cosl-innovator-rig-has-now-left-the-triton-activity-7335597333671256064-szGP

The following from the latest trading update & chairman’s statement stood out for me…. he could just be referring to current assets we own (from BP etc..).. but could also be suggesting going forward….

Our strategy for shareholder value creation is clear and unchanged. It entails using our subsurface expertise to unlock reserves and optimise production from unloved mid-to-late life assets acquired from the 'majors', combined with disciplined investment in new opportunities.

Ithaca Energy still see value :

Acquisition of additional interest in Cygnus Field

20 May 2025

Ithaca Energy, a leading UK independent production and growth company, is pleased to announce it has signed a sale and purchase agreement to acquire an additional 46.25% stake in the Cygnus gas field from Spirit Energy for a purchase price of £116 million (approximately $154 million) (the "Transaction"), based on an effective date of 1 January 2025. The Transaction, which is subject to NSTA consent, will increase Ithaca Energy's operated interest in Cygnus to 85%.

The Transaction is expected to add 23 mmboe of 2P reserves (as at 1 Jan 2025) and pro forma production between 12.5 - 13.5 kboe/d in 2025, enhancing the balanced production mix of our portfolio through additional gas volumes. This Transaction is in line with the Group's strategy to pursue value-accretive M&A, adding high-quality assets in our core UK Continental Shelf market. The Transaction equates to a valuation of less than $7/boe on 2P Reserves, which we believe is good value for equity in a producing field that we know and understand.

The Hardy’s are in for a few more : 50,385 shares purchased…

New holding :

Mr D and Mrs D Hardy* 30,773,588 7.83%

Existing : (11/03/2025)

Mr D and Mrs D Hardy* 30,723,203 7.86%

Information correct as at register analysis cut-off date 30 April 2025 except where TR-1 notifications are made subsequent to that date.

As at 9 May 2025, the Company had 393,568,408 ordinary shares in issue of which 24.78% is not in public hands. Of the issued share capital 541,985 ordinary shares are held in treasury.

Also noted the two Form 8.3 RNS’s by Global X Management ifrom the last couple of days of their share purchases ..

Comment from Malcy…. for what it’s worth….

So on Friday just before the Bank Holiday weekend the potential nuptials between EnQuest and Serica were called off. My feeling is that whilst there was plenty of industrial logic to the deal and also tax synergies to boot they in particular shouldn’t be a reason for doing a deal.

Serica to me seems to have the better long term attributes to be able to cope with the present day problems of investing in energy investments, particularly in the North Sea. They have less debt (no leverage) less exposure to decommissioning and over 50% in gas compared to EnQuest who are 100% oil and with a substantial business in SE Asia.

So now it’s all over and for Serica it is business as usual, and indeed they have a number of near term catalysts with which to move forward strongly. This includes Triton getting back up and running with the addition of exciting new wells, maximising opportunities ahead with Kyle and new BKR wells, and shifting to the Main Board.

Finally although this was the bid situation that took the market’s eye recently I am convinced that the Serica M&A team won’t just have been running the slide rule over Enquest, they have the incentive of being strong, well financed and have been looking at many opportunities and will continue to do so. With a Target Price of 250p I remain very happy to have Serica in the Bucket List…

New Auctus Advisors broker note out :

£2.70 per share price target:

With a final dividend for 2024 of £0.10/sh and with Auctus assumed 2025

interim dividend of £0.06/sh, Serica could distribute a total of £0.16/sh in

dividends in 2025, representing a ~12.5% yield. As we incorporate the

FY25 production guidance, the YE24 2P reserves, higher £/US$ exchange

rate (US$1.30/£ vs. US$1.23/£ previously) and lower Brent price

assumptions for 2025, we have changed our target price to £2.70/sh.

https://www.serica-energy.com/downloads/research/SQZ%2006.05.2025.pdf

Reflections on the merger discussions with EnQuest

Rating & target Old New

Target £3.00 £2.70

Yield 13%

Implied total return 131%

Share data 2024 2025e 2026e

Shares dil., mm 404 404 404

Mkt cap, US$mm $647 $670 $667

EV, US$mm $717 $697 $466

Financial Data 2024 2025e 2026e

Gas, mmcf/d 111.4 110.6 117.8

Liquids, bbl/d 15,394 16,660 22,658

Total boe/d (6:1) 34,600 35,735 42,968

CFO, US$mm $243 $376 $424

Net capex, US$mm $254 $251 $114

Net debt, US$mm* $71 $27 ($201)

CFPS dil., US$/shr $0.53 $0.98 $1.13

EPS dil., US$/shr $0.24 $0.09 $0.75

Valuation 2024 2025e 2026e

Share price, £/shr £1.27 £1.27 £1.27

EV/DACF 2.5x 1.8x 1.0x

EV per boe/d (US$) $20,734 $19,509 $10,853

Net asset value

CNAV, £/shr £2.38

RENAV, £/shr £2.67

Unrisked NAV, £/shr £4.09

P/CNAV 0.5x

P/RENAV 0.5x

P/ENAV 0.3x

All figures in US$ unless otherwise noted

* based on cash rather than working capital

Contact details

Analyst:

Stephane Foucaud

sf@auctusadvisors.co.uk

+44 7854 891249

With higher net debt, decom liabilities and opex/boe than Serica, EnQuest is

likely to face a greater relative negative impact on its cash flow generation

and value in a lower Brent environment. Despite this, EnQuest's share price

outperformed Serica’s during the offer period, causing a divergence that

likely impacted ability to agree deal terms.

Cheers Surprised 👍🏽

Surprised

Do you have a direct link for this broker note that I could have please?

Thanks

Ex dividend date 01/05/2025 …

Hence the drop in share price today reflecting it…

From this morning’s PMG RNS :

The Parkmead Group plc

("Parkmead", "the Company" or "the Group")

Completion of the sale of Parkmead (E&P) Ltd

Further to the announcement on 12 December 2024, Parkmead is delighted to report that all conditions relating to the sale of its wholly owned subsidiary, Parkmead (E&P) Ltd (the "Subsidiary"), to Serica Energy (UK) Ltd ("Serica") have now been met and that the sale has therefore completed.

Pursuant to the terms of the sale & purchase agreement, Parkmead has received a cash payment of approximately £7.3 million on completion (inclusive of working capital adjustments). Parkmead will also receive a further £7.0 million of additional firm cash consideration and up to £120 million of contingent cash consideration, payab

Malcy’s view point on results yesterday for what it’s worth: …..

Although historic results don’t normally add to our sum knowledge of the situation the problems at Triton make a glance behind us worthwhile, after all production of 34,600 boepd last year was 64% gas where the price taken was 76p/therm down from 94p in 2023 whilst the oil price received was $75 pb against $67.

Assessing Serica’s situation is difficult and to a certain extent depends on whether current repair work at the Triton FPSO can be completed swiftly enough to be able to restart production in June as currently estimated. I think that my best case scenario can be achieved especially if you bear in mind that the four wells (with one to come)drilled on Triton so far in the ongoing programme have been exceptionally successful and with full year guidance of 33,000-37,000 boepd given the rider that ‘H2 could be materially ahead of the FY 2025 range’.

In the webcast the CEO acknowledged the fall in 2P reserves but did make a crucial point that 2C resources are materially up and they have an excellent pipeline which they are confident will be able to convert to higher reserves not far down the line so good are the subsea team as we have now been told many times…

The dividend announced is 10p (14p) as part of a rebalancing process and also to be able to compete with peers and as it also provides a huge yield and with the significant potential of another buyback to add to shareholder distributions.

The robust balance sheet, with $141m of cash in it and borrowings of $219m with flat net debt mean that Serica is clearly going to be a key player in inorganic activity and ‘be opportunistic in accretive M&A’ as CEO Chris Cox says and as the M&A team is as good as the excellent subsea team then there must be good news ahead. The trouble is that the ongoing EnQuest situation is still up in the air and until Friday’s deadline the market literally know nothing about the situation and I know that this is inevitably be of some concern to shareholders. However, having seen the management team in action on the call this morning they seem very confident that activity in the coming months can really drive the share price and are focused on adding value for shareholders.

Serica is a favoured son of the Bucket List so with breath being held firmly until Friday, as the second half is looking really promising from so many angles, I remain almost totally confident that my 250p TP will not look silly and holders will be rewarded.