Member Info for NewKOTB

GA,

Yes noticed that, so in effect minus the additional 25% off NBP for this levy, once you take opex etc into account imo we are already back to historic averages or very close, so why the WT.
The bill needs to have more detail than the original gov fact sheet ... for example, how long does nbp need to stay at this 'average', what is this average, over what period are we calculating this, what about Brent, what happen if it starts to rise again after tax levy has been removed before Dec 2025, what happens after Dec 2025 if there is a 'new normal average', is NBP to be calculated that would include inflation etc etc etc ... I think this is when the market will fully understand what the 'ell just happened yesterday as for sure I don't fully. Let's not forget when WTI went negative and NBP down to sub 8p only 2 years ago and companies made losses but kept the UK supplied. ... oh hang on a minute, the gov already have !!!
Complete and utter balls up by Rishi and the No10 clowns ... self-serving idiots afaic.

https://www.gov.uk/government/publications/cost-of-living-support/energy-profits-levy-factsheet-26-may-2022#_ftn2

aimo & dyor

Based on avg production and NBP 100p/therm Brent $114 and expected CapEx of ~£65m for 2022, the change in tax commitment (40% to 65%) increases by ~£73m so actual real hit would be in the region of £14m as we are able to off-set an additional tax relief of 45% (91.25% in total tax relief) under new scheme .... yet our SP gets blasted down on fear and panic PI selling aided by large II shorts open than need to be closed out. Of course as NBP increase so does our tax commitment, but then likewise so does our cash build too.
It's late so figures not to be relied upon, although on first examination things may not be as bad as they first appeared.

aimo & dyor

zebbo,

I mentioned last week that rob Peter to pay Paul will probably occur and that is exactly what has happened. Smoke and mirrors, headliner for Joe Public and super-deductable tax via the backdoor in return for o&g producers .... will SQZ be able to make use is the question. What this has done is pushed back our SP to pre invasion levels although NBP and Brent are still well elevated so cash will still be rolling in ... just need to make use of the super-deductable on offer.
Noticed Harbour closed flat, BP / Shell / IOG all up !!

aimo & dyor

5th option ..... SELL UP

As ACW et al will not over-pay for an asset ... well their lack of ambition has now made sure they WILL OVER PAY one way or another.

Forgot to mention, how have the hedging counter-parties managed to get away scot-free. The purpose as stated by Rishi is to tax those who benefited from unexpected increase in O&G prices .... well our hedging counter-parties certainly did !!

Volume ~7.17m so very high, no surprise there. Total of 3740 trades with low 72% of these BoT's so I guess this reflects PI's panic selling today, just what the bigger plays wanted imo.
Trades over £50k.

tradeTime currency price volume tradeValue type micCode tradeType venueOfPublication
2022-05-26T15:35:29.097 GBX 271.5 174726 474381.09 UT AIMX P
2022-05-26T16:11:15.703 GBX 275.361 151607 417466.5513 Off-Book XOFF TNCP ECHO
2022-05-26T14:15:50.957 GBX 274 130000 356200 Off-Book AIMX P AIMX
2022-05-26T13:23:26.927 GBX 290.071 100000 290071 Off-Book AIMX PRIC P AIMX
2022-05-26T14:43:11.273 GBX 270.25 79228 214113.67 Off-Book XPOL P XPOL
2022-05-26T16:57:34.000 GBX 293.946 64261 188892.6391 Off-Book XOFF TNCP ECHO
2022-05-26T14:22:07.830 GBX 274 66021 180897.54 Off-Book AIMX P AIMX
2022-05-26T15:04:59.297 GBX 273 65000 177450 Off-Book AIMX P AIMX
2022-05-26T14:18:30.377 GBX 273 50000 136500 Off-Book AIMX P AIMX
2022-05-26T12:45:34.000 GBX 278.5 40000 111400 Off-Book AIMX P AIMX
2022-05-26T13:03:47.297 GBX 273 39201 107018.73 UT AIMX P
2022-05-26T08:32:18.660 GBX 310 29506 91468.6 AT AIMX P ALGO
2022-05-26T14:45:39.100 GBX 273.072 32589 88991.43408 Off-Book AIMX PRIC P AIMX
2022-05-26T15:05:55.590 GBX 271.323 30000 81396.9 Off-Book AIMX P AIMX
2022-05-26T13:26:43.263 GBX 270.738 30000 81221.4 Off-Book AIMX P AIMX
2022-05-26T16:27:44.877 GBX 286.402 27723 79399.22646 Off-Book XOFF TNCP ECHO
2022-05-26T16:06:10.127 GBX 271.5 28500 77377.5 Off-Book XOFF P ECHO
2022-05-26T07:53:11.240 GBX 308.75 25000 77187.5 Off-Book XPOL RFPT P XPOL
2022-05-26T07:34:01.673 GBX 308 25000 77000 Off-Book XPOL RFPT P XPOL
2022-05-26T07:34:01.320 GBX 308 25000 77000 Off-Book XPOL RFPT P XPOL
2022-05-26T12:42:47.410 GBX 281.109 26399 74209.96491 Off-Book AIMX P AIMX
2022-05-26T14:21:15.560 GBX 274.598 25488 69989.53824 Off-Book AIMX P AIMX
2022-05-26T14:41:45.803 GBX 266.531 25495 67952.07845 Off-Book AIMX P AIMX
2022-05-26T12:42:59.480 GBX 284 23536 66842.24 AT AIMX P ALGO
2022-05-26T12:35:14.783 GBX 290.326 23000 66774.98 Off-Book AIMX P AIMX
2022-05-26T12:48:33.727 GBX 278.63 22548 62825.4924 Off-Book AIMX P AIMX
2022-05-26T14:47:44.287 GBX 273.5 22833 62448.255 Off-Book AIMX P AIMX
2022-05-26T12:58:30.000 GBX 273.475 21390 58496.3025 Off-Book AIMX P AIMX
2022-05-26T13:15:01.437 GBX 275 20582 56600.5 AT AIMX P ALGO
2022-05-26T16:12:47.857 GBX 304.634 18000 54834.12 Off-Book AIMX PRIC P AIMX
2022-05-26T13:10:22.527 GBX 273.7 20000 54740 Off-Book AIMX PRIC P AIMX
2022-05-26T11:30:33.013 GBX 302.13 18114 54727.8282 Off-Book AIMX P AIMX
2022-05-26T13:26:34.413 GBX 273.574 20000 54714.8 Off-Book AIMX P AIMX
2022-05-26T15:29:28.853 GBX 272.4 20000 54480 Off-Book AIMX P AIMX

sasa,

"If Serica needs a spur to acquire something / utilise their cash hoard to employ more efficiently after this UK disincentive, then they should be seriously looking at such a prospect..."

Don't forget, their gov also offer a 10 year tax free holiday from commencement of production for each field too.

Now, where should a company invest millions ... UK or Morocco.

aimo

PS Not in anyway are all families on benefits spend the cash in that way, but the press will find and headline those that do.

Soder,

The way I look at is anyone acquiring us or indeed ano NS asset for a company that operates in the NS will manage to make this new tax regime work esp ones that have large investment already planned and FID made for CapEx over the next 30 months using cash / debt available to acquire thus offset tax due as normal, however come the sunset clause cash growth will accelerate and full benefits be realised. BP boss stated that invest would not be affected by a WT, as we all know that is because these multi million £ projects get signed off years ahead and not within the window of Rishi's 30 months ... All O&G will be working to make the most of these opportunities, unfortunately SQZ has been caught on the wrong side of the fence that contains a very unhappy bull.
fwiw, I think SQZ should sellout >400p/s otherwise I fear we will need to wait a longtime to return to those levels, unless NE comes in and able to be fast-tracked... given Fleggs' lack of confidence during recent presentation, I'm not holding much hope out atm.

aimo & dyor

"Eight million households on means-tested benefits will get £650 paid directly into their bank accounts in two lump sums - one in July, the other this autumn.."

So that is a good holiday abroad, new hair and nails, several benders and fags galore.... after which Labour and the press will show single parent families with 6 kids burning their social housing furniture to keep warm as they have now spent their free cash and demand more ... Rishi you pl0n£er.

aimo

Soder,

Would it not make M&A within the NS much more likely now, given the sunset clause too.

For me it would for sure, which given SQZ commanding position in terms of CoH and zero debt SQZ we find ourselves in atm combined with the cash generating ability of our producing assets one would think other players, particularly NS ones would want us ..... PE's for sure would like the cash accruing ability of SQZ too, just hope ACW remove their snouts from the trough for long enough to do a deal and sell SQZ.

PS At least the unknown has become the known now .

aimo & dyor

Oh, another good to come out of today is our divi yield now rises to ~3.5% aside from the fact today cost us considerably more.

If we had a pro-active board that could make deals happen I would be too worried about regaining the lost ground of past month ... but unfortunately the chances of any sort of accretive deal being made by ACW et al is near zero. Think we need new blood to drive the business forward .... aimo

One good thing to come out of today .... :-(

Soder,

As I mentioned extra emphasis on NE for sure .... where as before, to a certain degree it din't matter either way, now it suddenly becomes a must .... not what we wanted for sure.

Zebbo,

"at these levels. Be glad you did not buy BPs 5% last month..."

indeed .... makes you think !!

Whoever acquired at 365p ( need ~ +38% increase to b/e atm) must have known or at very least factored in the WT .... it would not of been no Micky Mouse buyer ... so what are they in for one should ask .... short-term gain on sale of company or in for long haul for capital appreciation.... me I would of said the former.

aimo & dyor

A PE overseas entity could buy SQZ invest nothing, zilch, nada and extract the remaining ~60mmboe that net revenue worth has to be in the several £billions£.

aimo

Think we may have just witnessed the biggest possible takeover trigger for SQZ today ..... None UK un-listed PE companies will see SQZ as a must have acquisition now .... lets see how much tax UK Gov recover then.

aimo & dyor

Soder,

Some great and afaic accurate and thoughtful posting on the impact of this WT.

atb

Sonic,

"If NE is a gush then SQZ pay 65% on any of it's profit is a more accurate statement (not 25%)...."

Not quite true as it will be ~2025 when 'profit' from NE starts to flow into our coffers ... at which time the sunset clause will have kicked in and tax will return to pre windfall rates ... in the meantime SQZ will benefit from 91p in tax allowance on the infrastructure and associated costs required to being NE online .... as I said before NE is now much more important than ever before.
So win win for NE as we claim almost full costs and then benefit from return to normal taxation on production for what could be Rhum Mk2. Unfortunately SH will have to wait another 3 years to see the real benefit.

"The new 80% Investment Allowance will mean businesses will overall get a 91p tax saving for every £1 they invest – providing them with an additional, immediate incentive to invest. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax they will pay..."

aimo & dyor

GL,

"I can foresee debt becoming much more costly in the short term, I've a suspicion we'll come up smelling of roses - cash is king....

Agree, but without 'forced' investment our cash will be more of a Queen .... SP will recover, eventually, once the market see exactly how much tax we will need to pay ... but for that you need a dynamic board to drive the business forward and offset investment against tax at 91p in pound... sorry but our board are not up to the job, THE ONLY THING THEY CAN DRIVE IS THEIR OWN GRAVY TRAIN, time for them to move on imo.

"The new investment allowance rate is 80% and means the total tax relief on investment nearly doubles - for every £1 businesses invest they will overall get a 91p tax saving.."

aimo