Member Info for QuintusCurtius

Bingo Norma. Hedging is usually required by lenders for RBL.

All in my opinion only and please do your own research

There are plenty of single family offices that do their own single line equity research in-house and will look at small/mid-cap opportunities because they have less coverage. To paraphrase Buffett, it’s easier to generate consistently high returns in the small cap space than large caps.

All in my opinion only and please do your own research

Our own cash yes but we did not have access to it because of management. AA was unlocking a portion of the cash and was eliminating the SQZ management problem

All in my opinion only and please do your own research

Lol you think it would be hard to find someone if the BoD walked?? Highly unlikely they walk and take their noses out of the trough

All in my opinion only and please do your own research

Yes Flex, my vote was switched from a ‘no’ to a ‘yes’ …

Thanks Dick. This 5% threshold provides options

As a first step I’d suggest we see if we can get to 5%

Great post, Dick. Your last paragraph perfectly captures my view as well (which I have held for a long time now)

All in my opinion only and please do your own research

Gentlemen (and ladies),

I only just got around to listening to presentation and analyst call. Mitch and Andy were absolutely awful (and I have heard many bad analyst calls over the years). They were very sheepish, spoke in generalities, dodged questions and spoke without any conviction or sincere belief. The analysts on the call had a better command of the numbers related to their business than they do.

I think that it is time that we consider what we can do to at the very least obtain more information about this transaction if not block it. Two questions:

1. Does anyone have access to the Hardy's?
2. Dick - Are you sure about the 5% figure for compelling the BoD to have a GM?

All in my opinion only and please do your own research

Visitor,

Pls see my earlier post. The Tailwind Ring Fence and Supplementary losses upon completion of the transaction can be applied against the Ring Fence Corporation tax and Supplementary charges paid by the combined group. The relevant legislation is CTA10\S305(1). You seem to be referencing the PRT ring fence under which separate fields are ring fenced however what is being discussed is the applicability of Tailwind's $1.366 bln of UK Ring Fence Corporation Tax losses and $1.202 bln of Supplementary Charge losses which are entirely different things.

The deal is entirely bonkers but I do think they are correct about the losses (assuming of course that the information provided in the SQZ release is correct i.e. that Tailwind is entitled to this level of losses and they are Ring Fence Corporation tax losses and Supplementary Charge losses).

All in my opinion only and please do your own research especially when it comes to matters of UK tax

GenLevy - Great assets, average management. Wiser to assess management objectively and hold them accountable than give them a free pass based on a single sweetheart deal they did years ago. Wouldn't you agree?

All in my opinion only and please do your own research

My understanding (having reread OT21000) is that both types of losses can be used by the wider group post-completion.

All in my opinion only and please do your own research.

Thanks NewKOTB.

Need to run the numbers to see what Hardy's are diluted down to post deal but I do find it slightly strange that Mercuria did not want more substantial positions on the combined board.

All in my opinion only and please do your own research

II's have not made up their mind yet and many will have formalities before actually pulling the trigger. What you are seeing is retail selling.

Digging into the details this is a good deal long-term but it is based on several questionable assumptions given the unpredictable nature of the current UK tax and political environment. Additional questions/thoughts:

1. What is the strategic rationale (independent of the price paid for the Tailwind assets) for doubling down on the North Sea in the currently hostile environment with Labour knocking on the door? I did not see a single word in either the RNS or the presentation on why UK NS is still investible.
2. We waited more than four years (while listening to the constant refrain of 'we will not overpay', 'we want long-term shareholder value' etc) and this is the best they could do?
3. The losses are the real gem here totalling $2.6 bln. The Tailwind UK Corporate Tax losses ($1.4 bln) be used by the combined group to offset their UK Corporate Tax obligations (but not WFT) as the activities of the combined entity are all 'oil extraction activities' (this is different from the old PRT ring fence which is applied on a field by field basis) which fall within the corporate ring fence. My understanding is that the Supplementary Charge losses of $1.2 bln can only be used to offset SC losses of the combined group.
4. There is an element of management saving their own necks by doing a deal that will make them harder to acquire in the future ... is it a coincidence that the proposed deal closes around the same time that AA can make another run at SQZ?
5. The KIST deal was far better than this especially by removing our unfit for purpose management. They will be harder to dislodge after this deal. At the time of the proposed KIST deal many LTHs failed to fully appreciate the misalignment of interests between management and truly long-term shareholders and the value that good management can bring to the table vs. the long-term value destruction of self-serving managers living of the legacy of landing the deal of a lifetime. You were advised to do nothing at the time of the KIST deal to save their jobs.
5. Mercuria is a sharp double-edged sword

All in my opinion only, please do your own research and please seek formal tax advice on all points related to UK taxation of O&G companies

NewKOTB. I nearly spit out my tea when I heard that!!

But starting Jan 1. No news on extension of investment allowance. Need to wait for the details in the policy paper.

All in my opinion only and please do your own research

That’s if they get to keep it … there is a higher probability than markets anticipate of a backdated WFT as well as an elimination of the investment allowance. The UK political environment is toxic for O&G and I fear that Rishi will make them uninvestable for a generation or more. EM’s now look relatively more stable by comparison.

All in my opinion only and please do your own research

Thanks NewKOTB.

Thinking through all of this and will wait to see the final details of the second round of energy profit confiscations (WFT). Like you I am very concerned about the viability of the NS as well as SQZ’s business model of acquiring NS production assets that have synergies with their existing assets especially if the window for further profit confiscations is extended to 2028.

Needless to say that what is being floated by blue Labour would be worse under tru Labour. Clearly they would do away with the investment allowance (they describe it as a loophole).

Needless to say we need management to be on the front foot developing contingency plans and engaging with the government to spread the message that there is a big difference between the majors who derive the majority of their revenues from non-UK sources and are thus largely outside of the net of the profit confiscation as it is currently structured (thus their share prices largely don’t move) vs UK-focused small and mid-caps who exclusively focus on the UK and derive all their revs there. Additionally there needs to be consistent messaging from the O&G industry as a whole that further profit confiscations will lead to reduced investment in the UK although I fear that the current crop of supine and spineless CEOs are not up to the task.

All in my opinion only and please do your own research

Another point is that the optics of sitting on a cash pile of GBP 500 mln and not doing anything with it in the current environment is begging for a windfall tax. They are certainly not helping themselves!

Agree that the media reporting on profitability of O&G companies and the dynamics of the European gas markets is irresponsible at best.