Member Info for QuintusCurtius

NewKOTB,

The massive decline in day ahead is likely due to increased LNG cargoes arriving in the UK for gasification prior to much of it being sent to the continent via the BBL pipeline. We saw something similar happen to day ahead during the summer. The Freeport LNG terminal reopens in Nov which should provide some additional headwinds when those exports begin to come online again so there is likely more volatility ahead.

All in my opinion only and please do your own research

NewKOTB/Chinch, fully agree with your posts and echo your frustration. The issue here is a lack of engagement in a process that they have indicated is of strategic importance to their own company. If KIST's offers were a joke then what was SQZ's offer to acquire KIST? If it is true that SQZ's BOD failed to engage even in following up their own takeover offer, this suggests they just want to get on with running SQZ as a 'lifestyle' company.

I also do not agree with the line of argumentation that 'they did BKR so they get a lifetime pass on anything they might do wrong' from idiotic hedging to a lack of strategic direction to M&A inactivity... that's not the mentality that has built great companies. If Steve Jobs gave a pass to every engineer who produced a subpar idea merely because at some point he/she did something notable we'd still be phoning each other on Nokias ...

For many years several of us long-time posters gave the BOD the benefit of the doubt when it came to M&A. We ascribed their inaction to discipline and patience where it now looks (to me) like, if I am being charitable, they lack the skills and experience to succeed in the competitive M&A space and, if I am being uncharitable, want to keep their noses in the trough.

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

NewKOTB, last paragraph is spot on. I'm getting out the popcorn as the next few days will be very interesting.

Hope you recover fast and are out of isolation quickly.

All in my opinion only and please do your own research

NewKOTB - impressed that you remember Kambuna. I can't remember the specifics either

Sasa, what I was getting at with my question, and NS picked this up, was that the main driver of the share price appreciation over the last year has been the move in NBP and not the efforts of our BOD.

I do not know if this has been mentioned before, in which case apologies, but this opportunistic KIST approach has many similarities to the failed Rockrose bid for IOG in 2019 (minus the London Capital and Finance debacle)

All in my opinion only and please do your own research

Thank you, Dick. Appreciate the kind words coming from someone of your knowledge and experience. I hope your health improves ...it's not been an easy summer.

Interestingly I was going to add at the end of my post that if our BOD were 'nursing' assets for a private owner their pay-packets would not be anywhere near what they are at the moment. Fully agree that Andy Bell's appointment as CFO was a huge red flag and symptomatic of many of the problems we all have been discussing.

My view is very close to yours, NewKOTB, Sasa, et alia that the offer needs to start with a 5 the vast majority of which needs to be cash (I do like the idea of having some KIST exposure but only as a kicker and not as the core of the offer).

All in my opinion only and please do your own research

Sasa - very thoughtful post in response to Mav the majority of which I am in agreement with. Just one question regarding the idea that the company and SP is where it is today because of all the hard work the BOD and SQZ employees have carried out ... Where do you think the SP (and company) would be if NBP right now is in its long-term historical range of 40-80 pence per therm rather than the levels that we are seeing at the moment?

NormaStits, I think the issue that many posters here have is that our BOD have not been able to close a single competitive deal. BKR and Erskine came via ACW's BP connections. Their mantra of 'we will not overpay' seems to be used to divert attention from their inability to get anything done in the M&A space ... I did not see them closing anything in '20 when Brent went negative and NBP day ahead was in low double digits and sentiment could not have been worse - the media was talking about the end of the North Sea as we know it.

Our BOD are clearly very good operators but they clearly lack deal making verve and long-term vision/strategy (what is our long-term strategy beyond well-work overs and occasional drills?) which is what public markets reward. The contrast with KIST on these two points is striking. Our BOD are far better off running privately owned assets where what is expected of them is to nurse said assets and make operational improvements on the margin (i.e. no transformational deals).

All in my opinion only and please do your own research

I’m intrigued NormaStits. Pray do tell how the narrative on these boards is far from the reality.

Flexmw, I would be v surprised if AA has not at the very least soft-sounded the large institutional investors and the Hardy’s before making KIST intentions public.

Regardless, the KIST offer needs to be sharpened up.

All in my opinion only and please do your own research

Agreed, Soder. If our management actually show some initiative this will also help to close the huge gap between the NAV of SQZ’s assets and the share price. Part of the discount is due to the market’s negative perception of our management team

Thanks NewKOTB and Mav.

NewKOTB - spot on regarding the Hardys. That is my read of their situation as well.

All in my opinion only and please do your own research

flexmw, the main point is that it has been the inaction of our BOD that bought this to pass. The cash pile is what is allowing AA to bridge the gap in the market caps to make a run at SQZ. AA will try to turn the large institutional investors and toss out our BOD who have not been able to win a competitive M&A deal ever (Erskine and BKR were via ACW's BP connections). Their fumbling attempt to bid for KIST shows exactly why and it is telling that in their offer there was no place for any of the KIST management team (seriously?). Remember also that the BOD burned a ton of shareholder cash via their inept hedging via swaps strategy. In public markets it's the rules of the jungle ... eat or be eaten and our BOD are about to be swallowed whole and rightfully so. If a significant part of the story of the next decade of the North Sea is about consolidation via M&A (which I believe it is) then our BOD are not fit for purpose. We as shareholders need to think about that.

Another thing we need to reflect on is the fact that the largest driver of our share price appreciation in the last year has been the movement of the underlying gas price. Lets be honest, this is something our BOD (and we) got very lucky with. It is not as if years ago our BOD outlined a strategy to acquire gas producing assets as they believed that gas would be pivotal in the energy transition. Contrast that with KIST whose motto of 'Energy in transition' clearly shows the path ahead ... they have strategic direction.

As I posted many months ago, we as shareholders owe so much to ACW's BP connections which brought SQZ the Erskine and BKR assets however the current BOD have shown that they are not capable of taking the company to the next level (M&A deal(s), listing on the main market, articulation of a comprehensible long-term strategy, savvy hedging, etc). We have an opportunity to affect this change albeit under significantly better terms than have been offered. The favourable gas price environment will not last forever. Ultimately there will be a resolution to the conflict in Ukraine which will lead to a major gas price (and SQZ share price) correction and it would be very unfortunate if we are still listening to our BOD's usual justifications for inaction 'we will not overpay'.

Good weekend all.

All in my opinion only and please do your own research

Thanks NewKOTB. Doing my best to stay healthy and out of trouble : ) Hope you are as well.

As other posters and the companies have noted there is a clear logic to this deal but the numbers are off. It might be too big a bite for KIST but as a holder of both (66% SQZ and 33% KIST in my PA) I really hope they find a way to get this done as it would result in a phenomenal company with a proven deal maker at the helm (which was always SQZ’s weakness) and a pool of top calibre assets that are diversified between NBP and TTF to draw on. Outside of the numbers, the other threat to this deal, in my view, is which members of management of both companies will find themselves without a chair when the music stops. Reading between the lines of the bungled KIST long term incentive program they tried to implement, the recently added members of the management team (Peter Mann, et alia) don’t have nearly the skin in the game as AA and this could create a misalignment of interest with shareholders a la SQZ. I think KIST recognized this but they want about it remedying it in the wrong way.

Anyway as you say this is about to get very interesting and we will have much to speculate about, think and discuss as a group. Appreciate all the thoughtful posts and discussions from the posters on this board.

All in my opinion only and please do your own research

Gents,

The SQZ share price has reflected a significant discount to NAV for years largely because our management team have not been able to get a single deal across the line post-BKR whereas AA has netted numerous not only at KIST but also RRE. SQZ’s ‘counter offer’ for KIST shows they are totally out of their depth. To be brutally honest, the discount to NAV reflects the market’s view of our management and posters need to realize that it is awfully difficult to dislodge incumbent managers in a situation like this thus the underlying assets need to be marked down.

Another issue is that other than ACW none of the management have significant skin in the game so they will not be compelled by a long-term value creation story for the equity in the combined entity.

The end game needs to be putting AA in charge of SQZ assets as he will sweat them and unlock much more value than our current management team. Lets stop the histrionics about how the offer is so cheap and needs to be immediately rejected out of hand as this is (and should be) the early steps in the dance. We need to keep the parties dancing and, as NKOTB said, introduce another serious suitor.

All in my opinion only and please do your own research

Another issue is KIST is largely out of scope for the levy given the assets of Tulip (co-owned, incidentally, by the Dutch gov’t), reside in Holland.

GL,

Have a look at the charts for NBP day ahead vs TTF day ahead year to date. This explains better than anything else the divergence in SQZ / KIST

All in my opinion only and please do your own research

To add to what I’ve written below … this is an argument for a significant buy back which will reduce the float and should dampen the share price volatility. Lower vol will have a positive knock on impact in that banks and brokers will assign higher LTVs which will support more margin lending leading to more buying.

All in my opinion only and please do your own research

Part of it is 271.74 mln shares outstanding for SQZ and KIST only has 82 mln. SQZ also has a much higher free float as AA and Tulip have more than 27% between them and they are likely not selling anytime soon.

All in my opinion only and please do your own research

This smells of liquidation especially considering the higher than usual volume.

If someone is getting margin called the typical strategy is to sell your winners first … I’m awaiting the TR-1

All in my opinion only and please do your own research