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I see that Shell / Exxon have withdrawn from the highly controversial sale of their Southern North Sea gas assets to Viaro. Whilst they may now retain them, this would be a great acquisition for Serica if on the same terms as the Viaro deal

The Tailwind deal is history - of greater concern is the future and, in particular, the cost of developing Buchan if a "positive" investment decision is made. Serica's 30% of an estimated c.£1BN total cost when the tax rate is so penal surely makes no economic sense whatsoever. I hope NEO knocks this on the head ( sadly costing me my smaller Jersey O&G investment) but freeing up capital that Serica can better use ( e.g. buy Jadestone or similar).

Any overseas expansion needs to be of an existing operator with production. Jadestone Energy looks very attractive - asia-pacific location, mix of oil and gas, materially improved production with lots of capex already incurred, output c. 20,000 boe/d with encouraging forecast.......and all for a current market capitalisation of £146M. Even with the usual takeover premium, this looks an ideal starting point.

The main issue for me is should Serica spend £250-300M (30% interest) on developing Buchan when up to 75% (possibly increasing 78%) of any profit will go in tax (with lower or no relief for capex courtesy of Labour's stated EPL policy). How can this be a good use of company cash ? Surely the cash is better spent remunerating shareholders or on an acquisition outside the North Sea. As things stand, the danger is that tax will take up most of the surplus cash through the next parliament and there will be insufficient left to maintain the dividend at the existing level - the only positive there is at present.

Serica could "do an Ithaca" and bid for Enquest; that would double current production at a stroke. Highly cash generative although loss making on the bottom line and market cap currently £281M. IC says "the good news is that it (Enquest) expects to pay no corporation tax or supplementary charge on UK operational activities “for the foreseeable future”. A bid premium would still leave Enquest affordable / cheap and the commercial benefits could be material. Just a thought.........

My point is that this capex makes no sense. If Labour gets in, I think they'll disallow the relief for 2024 so we spend all that cash and HMRC gets the benefit of the increased production....and the cash has gone. Better to stay at the present scale, preserve the cash and give shareholders the benefit, especially as we've seen the share price drop from 450p to

Apologies if others have posted on this already but I'm struggling to see the rationale for spending £210M on capex in the next year or so. The tax regime is currently unfavourable and set to get much worse if Labour wins the election - increased EPL and much reduced or even zero investment allowances. Why swap all this cash, to which we as shareholders are entitled, for "investment", the benefits of which will accrue primarily to HMRC. Surely it would be better not to spend the money in this way but distribute it by way of special dividend or deploy by way of material share buy-back. I can see this money being spent and the shareholders gaining very little value for it. The current net cash position is already making even the last year-end dividend look stretching

I can't see any White Knight here as the tax regime is now so unattractive - why pay out big money on a company like Serica when 75% of profits (with some investment mitigation) disappear to HMRC. It's all about tax losses to try and materially reduce CT and the Supplementary Charge (EPL set in stone). Serica would be better looking at something like Hurricane - huge losses carried forward and up for sale at a fraction of the price being paid for Tailwind (see HUR RNS postings)

What concerns me is that, per the analysts' Q&A, management can't explain the deal such that shareholders can clearly see the rationale. None of the key questions has been answered

Just listened to it - what a shambles. Can be described as "don't ask us any technical questions because we won't answer them" and we'll just say "ummm ummm" if the questions are too difficult. There was nothing here to inspire any confidence at all that the complex issues around tax losses, asset valuation and best endeavours negotiation have been addressed. I have never been critical of the Serica management in the past given the share price appreciation over time (current fall notwithstanding) and their track record (particularly TCW) but this was simply inept I'm afraid - just not good enough. The impression for me was that Mercuria has driven this deal and our BoD has just gone along with it accepting whatever terms were put on the table

Guessing but I assume they were carried forward on Tailwind's own various acquisitions to date. They do not correlate to the scale of Tailwinds trade as shown in its 2021 audited accounts

Looking at the headline numbers for this deal, I agree it doesn't have much appeal. However, as has been already flagged, surely the mitigant for the price is the tax losses. Like NewKOTB, I do not know how these work but conceptually this must be a material factor in the purchase price. If 30% corporation tax and 10% supplementary tax can be significantly offset, the combined group can materially reduce the overall impact of the EPL. This has to be the rationale here, otherwise why do it. Hopefully the company and / or energy tax experts can clarify this point and restore some positive momentum to the SP

Hi gareth, please don't beat yourself up. When asked the secret of his wealth, Jacob Rothschild replied " I always sold too soon ." There's a Life Lesson ! You could always buy back in ahead of Tuesday.................... !

The problem with break-up value is that you cannot currently value what might be the principal asset i.e. North Eigg. It may prove to be another Rowallan but it could be another Rhum or better. Until that is clear, I cannot see how the Board could effectively engage in discussions with a potential purchaser (were there to be one).

Two things from me FWW. Firstly, anything to do with oil and gas extraction always takes longer than expected - hostile conditions, scheduling equipment, unforeseen problems etc. Secondly, why rush to start pumping from R3 at 60% slice when it's 100% from 01 January - I think the Board has done well to drag R3 on for as long as they have and shareholders should welcome that. The gas isn't going anywhere in the meantime !

NewKOTB - I think it is the case that the hedging protects the downside but does not constrain the upside. in addition, not all the production is hedged

Interesting article in today's Telegraph about the Nord Stream 2 gas pipeline - just an extract set out below to give a flavour. Not a cause for massive celebration if the author's right - bad for UK consumers but potentially great for Serica's cashflow and clearly a good time to be bringing new supply into the market.

Ambrose Evans-Pritchard
Vladimir Putin is playing geopolitical hardball. He is quietly orchestrating a European gas supply crisis by restricting pipeline flows. The Kremlin-controlled group Gazprom has curtailed the summer supplies needed each year to rebuild depleted strategic inventories. Putin's aim is to force Europe’s authorities to rubber stamp the Nord Stream 2 pipeline on his own monopolistic terms, even though this would violate EU energy law, betray the East Europeans, and breach the ‘solidarity’ principle of Article 194 in the Lisbon Treaty. Britain will be caught in the cross-fire. As of this week, UK stocks of natural gas were critically low at 29pc of capacity, compared to 89pc at this point last year, or 52pc in the more normal year of 2019.
“I hope somebody is paying attention,” said Professor Alan Riley, an expert on European energy at the Atlantic Council. “We hardly need a gas supply disaster on top of a delta disaster. One crisis at a time please, Prime Minister.” The whole of Europe’s interlinked system is abnormally short of gas. It is the result of cold weather earlier in the spring; rocketing demand for liquefied natural gas (LNG) in Asia; and a surge in EU carbon prices to €52 a tonne, driving a coal-to-gas switch in power plants. Putin has seized his moment. Gazprom is working to rule, supplying minimal contractual volumes. It has stopped bidding for extra capacity through the Ukraine pipeline (bar a trivial amount), and pointedly failed to bid for any extra flows through the Polish pipeline for the rest of the year. In short, it has cut off the supplementary flows necessary for seasonal rebuilding. The Russian business daily Kommersant cites government and industry sources openly stating that the supply rationing is “an attempt to pressure Europe to speed up the commissioning of Nord Stream 2” and to ensure that Gazprom controls the total flow. European gas prices have spiralled to a 13-year high of $10 per million BTU (British thermal units). They could go much higher if there is a panic scramble for supplies when the first frost arrives. Wholesale gas prices in the UK reached a record 93.22 pence per therm in early July. The public is for now shielded from this price shock. Wait until November.

I'm sure we're all grateful that the SP is at last moving in the right direction although bemused as to the timing after months of flat performance. There has been chatter about a possible takeover on this board - I remain sceptical. What should be borne in mind is that, if Rhum 3 increases production by 50% and then you overlay 100% of BKR from 01 January 2022, you end up with production of c.60,000 boe per day. And that's without Columbus or any other production from a BKR type deal. My view is that this, coupled hopefully with continued strength in the wholesale gas market, will eventually be reflected in a material increase in the SP - not to be lost to current long-standing shareholders by a sale of the company at too cheap a price. I cannot see that happening given the quality of management here

I'm not too worried here. If there is a problem with R3 drilling, the gas remains in situ to be recovered through the existing wells. Any further fall in the SP simply creates a great buying opportunity in my view. Fair value once BKR is 100% Serica has to be north of £2 unless the gas price collapses - again !

Given the sharp movement down in the SP, I wonder if the R3 drill has hit a problem - if so, hopefully not serious. Having said that, the more gas that stays in situ to be extracted at 100% to Serica from 01 January 2022, the better.