RE: Cash to MCap9 Feb 2022 08:49
Dickupham,
"Serica would make a nice tuck-in acquisition, highly accretive on pretty much all metrics even with a 40%+ bid premium, and with the potential to offer “stealth” deleveraging for the acquiror given the extent of the cash generation at Serica is not well documented".
That is precisely the point I have been making for ages now, more cash we acquire, perversely the cheaper we become.
SQZ would represent an instance accretive deal that will throw off cash like there is no tomorrow, except there is a tomorrow and one after that too etc etc, with cash continuing to flood in day after day. An acquirer would be buying our massively disproportionately cash hoard for cash, a net equal transaction.
ATM, our reserves are in effect costing around ~£5.90 per boe on current MCap if you include our CoH. That's a piddly amount for UKCS production / operator, as you know KIST the other week paid ~£14.84 boe. With a 40% SP premium, would value SQZ at around 350p, still plenty left for the other guy and that would still only value our reserves at £11.85 boe..... Today's NBP boe is £106.14 atm
Then you have the fact that SQZ have zero debt, which makes any sale so much cheaper not to mention the instant option to leverage our reserves with RBL too, should the new owner wish to do so.
If that is not enough, SQZ deal for BKR left us with very, very limited decom liabilities, another massive plus when making a deal too.
If we are not front and center of Harrods shop window by now, there is something wrong .... with Harrods foot-fall, I would like to think we have several PE backed outfits doing more than window shopping.
SQZ are top prize in Sale Of Century afaic, can ACW be our very own Nicholas Parsons and send everyone home a winner, given the way our SP is once again under pressure today, pinned back to that sticky ~250p, I don't think it will be long ...
Something has to give !
aimo & dyor
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