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The options are different now though. As I have stated before, at the time the Kistos offer of 425p undervalued us. Any offer they make now will be much reduced and will still undervalue us considerably. But if the option is giving our shares away on the cheap to Mercuria or giving them away on the cheap to Kistos. I would choose to give them away on the cheap to Kistos as I can see from AA's track record he is a solid reliable driver of shareholder value. I can't say the same for Mercuria.

I agree with a lot of what you say NKOTB in that this is a huge about turn in strategy. Atleast with the WFT one could argue you have gas which, with the day to day volatility, is trading at anywhere between 2 and 5 times the 10 year average price. But to buy oil, with this WFT, when you aren't much above the 10 year average seems silly.

There are a lot of shareholders and I would guess possibly the Hardy's amongst them who are happy to continue to place trust and faith in a board that has taken the share price from 25p to 275p. I think the board are relying on this as their sales pitch to get this deal through. Once the deal is done and everyone sees how bad it is they can't do anything as Mercuria will be calling the shots.

Also, just one more thought. On the 17th of May they issue themselves pretty healthy share options called the Long term incentive plan (LTIP). At the time the share price was around 360p and these would kick in with a 100% increase in the share price if they manage this within 3 years. At the time I wasn't overly happy with this, as these shares are issued at the expense of shareholders, but did feel it alligned their interests to increase the share price and given the momentum, gas prices, the possibility of North Eigg and general outlook at that time, that getting the shares to 720p was readily achievable in 18-24 months, especially if NE came in. However a few weeks later, the first WFT, then the Kistos Approach, then another WFT, North Eigg is a bust and those options are surely now worthless, I can't see us hitting 720p by May 2025 now. So they don't all get their pay day. So is this now the short term incentive plan (STIP) at the expense of shareholders? This deal is the new plan for them to get their pay day via pay increases and awarding themselves fancy bonuses?

I am new to the board prompted by the horrendousness of the Tailwind deal . I agree with Flexmw that an email address set up by someone who is a respected member of the board might be a good idea? Other than that, start up a private community on twitter that we are fairly sure can't be infiltrated. I am not sure if everyone is on twitter though. As an aside, I notice that there is a Hardy twitter account that follows Mitch Flegg which I guess would be our large shareholder, but it is private and looks pretty inactive, so I doubt we could get access to the Hardy's that way.

That is the key point NKOTB. If the tax losses are worthless it is a terrible deal financially. If the tax losses are utilised in full then it is an ok deal. But the tax losses are the red herring. It is the structure, dilution and control given to Mercuria that ring alarm bells about this deal being an absolute disaster.

Dickupham, I had a similar thing happen with JKX. The shareholders took all the risk and just when we got to a point of a spike in gas prices and stable share price and looking like high gas prices for a sustained period around 12 months ago and the future looked bright. The whole thing was taken private by a minority shareholding and there was nothing you could do but sell your shares at the market price they proposed or have no market to sell them in at all. I took that on the chin as part of the risk in being a Ukrainian O&G business.

So I am very wary of this control being given to Mercuria as they could use that really shaft shareholders down the line if they want. Which is another reason I think the reason to stay on AIM is highly suspicious.

I would think a lot of larger shareholders are waiting for the circular and to see exactly what the finer details of the deal are, and possibly talking to the board before they make a final decision on this. There are 1 or 2 I am still looking at to see if/when they come out for or against the deal.

If Kistos come back I think they get a warmer reception than last time from shareholders. Don't forget there were many shareholders who liked the idea but just felt 425p was too low, had they come back with an offer above 500p I think many would have been more inclined to push the board on there stance of not entertaining Kistos at all. But alot gave the board the benefit of the doubt that they knew what they were doing and could move us forward and at that time the board still had credibilty. In hindsight it now seems the board were acting in self interest in rejecting the Kistos deal and with everything that has happened since the board are no longer credible to a number of shareholders.

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The genius of the BKR deal was how it was structured, which was favourable to Serica. This deal is structured terribly for Serica and it's shareholders. Mercuria wanted Serica shares, well good for them, but your job is to negotiate on our behalf, not give them what they want. Atleast structure it so its a better mix of shares and cash, and walk away if they wont accept. You are good at walking away from deals given all the talk of the last few years. You have to look beyond the numbers sometimes and the control being ceded to Mercuria here is far too much. They may be a beneficial partner in it to unlock future shareholder value or they may be in it for Mercuria. I don’t want to take that chance on the later.

I was against the Kistos offer at 425p as I agreed with the board and felt it under valued us. I accept the landscape has changed now with Government policy and can see we need a proper management team who can drive the company forward and can negotiate good deals in the interests of shareholders. So I would be more interested in an approach now that North Eigg seems out of the way, and our management have shown themselves to be poor deal makers. The management thought 425p was a laughable offer we were ‘strongly advised’ not to take. Now significant dilution of the shareholding at 275p is the rocket ship we have been waiting for apparently.

Having said that, I think Serica is hugely undervalued as is and would still be undervalued if this deal goes through, but I just don’t see a huge benefit to shareholders around this deal. I am happy to wait for the circular and have my mind changed or see a much clearer path to create shareholder value, but right now I just don’t see it. I don’t want to knock the board as they have done tremendously, as I say operationally, but I feel we need something different to move us forward as we have drifted along for years now.

I have been a shareholder since 2009 and took on more shares in the placing at 18p way back when and then bought more circa 2014. Operationally the management team have been first class and I have been happy to give them the benefit of the doubt. But strategically I think they have been found wanting over the last 4 years. The strategic mistakes for me are : -
1/ Mitch has consistently said they have been looking at deals over this time but wont over pay. Now you do this deal which is way overpaying.

2/ Not entering into any meaningful negotiations with Kistos.

3/ The timing of this deal. It has either been done over the long term in which case the landscape has shifted considerably with additional WFT and North Eigg being what it is and hasn’t been renegotiated to reflect this, or it has been done in short order with the increase in WFT to take advantage of tax losses and to ward off another approach by Kistos. Also it raises questions on North Eigg, with delays in the drill, wouldn't it be handy if we suspend it while we can get this deal away and then 6 months later a sidetrack well leads to a gusher? Again as a reason to get this deal tied up and ward off Kistos.

4/ Just the response to the ever increasing WFT, it has been weak to say the least. Look at Harbour actually drawing a line in the sand and saying enough is enough.

On top of the strategic mistakes it has been communicated so badly to shareholders what the main selling point of a highly complex deal is. So this has undermined credibility enormously. So with credibility questioned, I just don't believe Mitch when he says about not stopping at Tailwind and that any future deals will be in the shareholder interest. I remember when he was questioned about why Serica wouldn't join the main market, he said they would do this upon the next deal. But again, they want to stay on AIM if this deal goes through, why exactly?

I get the points on the tax losses and the people on twitter saying how much value they could bring, but you can’t be valuing deals on tax losses that can be cut out at a stroke by a Government that hates our industry. This is just such a crazy risk to take in our strong FCF position. And as we can see the share price has been trashed some 40% whilst this deal has been potentially put together. Now I know there is justification that they don’t want to shout about the tax losses from the hilltops as to alert the government, but that is poor. Shareholders need to know the full implications of the deal. I remember underwhelming RNS after RNS trying not to get carried away and trying to underplay our cash position as we don’t want to alert the Government to all the cash we are making. Where did that get us? 75% taxed, that is where!

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