Member Info for sasa43

Hi NewK - our sp will fall back, initially, of course , if AA decides to quit, as it will also downward adjust to reflect going 'ex' a hefty 'special divd' if we are to see that.

In the former case, I wouldn't anticipate much of a relapse, perhaps back towards where we were beforehand (290p odd?) as this year should be our best ever and speculation of other interested parties now looking at us, as you surmise, should provide some resilience, too.

In the latter case, one minute many on here were lamenting the absence of a 'special divd' and that the mkt took no notice of our cash hoard, now there's a reasonable chance of one and a bid for us has been tabled to get hold of it all and still opinions are divided; I dunno...

No worries for me on either score, fwiw but DYOR, as always - sasa.

Hi Maverick - it's disingenuous to say that "everyone is assuming that Nth Eigg will be successful" - I haven't, nor has anyone else on here to my knowledge.

We all hope that it will prove commercially successful, of course - yes, Serica has only ascribed a 25% - 30% CoS on it as a conservative estimate as you'd expect but I think the seismics look rather better than that - perhaps a 50 /50 chance of avoiding another Rowallan.

Let's hope that that's the outcome to add further value to this much undervalued share of ours, come October - sasa.

Good Morning NewK, to you, too...

I agree with you (and FlyingF along with others, including myself) that Serica could / should have done a good accretive deal by now but in fairness to the BoD, nobody foresaw this unprecedented rise in gas prices we're seeing now and, having come through the complete opposite situation a while back, their cautious approach was perhaps understandable.

Hindsight, however, never made anybody any money, as we all know. Yes, an immediately accretive deal would be ideal, of course but if, as we all assume, there's nothing to hand right now, then diluting our main attraction forthwith seems more than expedient to me.

If, and you're probably right here, too, we're now on others' radar, then let them offer a realistic price for the business if that's to be the outcome which is worth considerably more than Kistos is trying to get away with.

In todays gas hungry climate, something beginning with a '5' in front of it, for starters, I reckon, would be appropriate and might gain some traction with the Bod and us but, first off, let's get these 'tanks off our lawn'! - sasa.

The obvious solution to Serica's excess cash problem currently, I'd say, is to distribute a good chunk of it to their shareholders while there's still time - like a 50p or even £1 per share 'special dividend' or 'capital repayment' announcement (the latter more tax efficient, possibly) to see off an unwelcome bidder, since that's what they're after right now...

Reducing their cash by such a significant amount would still leave sufficient to fund the Nth Eigg drill and subsequent capex if it's successful, keep their shareholders happy and loyal and, most probably, quell the predator's zeal in the process.

Doing so would enable them to seriously pursue their acquisition / 'farm in' prospects, as recently emphasised, to the benefit of the owners of the company, after all - not others!

That's my suggestion to solve the present 'stand off', anyway - sasa.

"All we're doing is sitting on an obscene amount of cash"...

What a lovely 'problem' to have in today's environment of rising interest rates with debt laden / leveraged companies under increasing strain to survive - something that they, like Kistos, covet large and understandably so, as it's growing like 'topsy', too.

Serica has an attractive portfolio of highly profitable production assets with the possibility of materially adding to those, too, if their Nth Eigg drill comes up trumps - the Kistos approach has surely galvanised their need to be more productive with their huge cash pile to prevent others from grabbing it but will they act in time? The jury's out for now...

Meanwhile, ask yourself one question: 'Would you prefer to be invested in such a valuable enterprise with no debts or one with a lot of increasingly costly baggage to deal with"?

Some of the latest posts on here beggar belief - sasa.

Yeah, NewK - if only I was an insider, I might then be more helpful! - sasa.

Agreed, TDT - all too many of these option schemes are 'in or on the money' whereas these are well 'out of the money' and staged, too - refreshingly incentivising for a change as the mine build gets under way - sasa.

Hi upomega - increasing the cash element would be the normal option, agreed but, unlike Serica, they're rather short of the stuff and even increasing the equity element would be tricky for them given the limited no of shares in issuance / their much lower mkt cap, etc.,

A 'bridge too far' this time, methinks... sasa.

Okay - roger that, NewK ( I shouldn't be on the phone when replying) - sasa.

Hi NewK - interesting quick assessment there based on Kist's recent deal at £14 boe, some 40% higher than this opening gambit of their's re: Serica. Unless I'm missing something, wouldn't that imply a price of 535p to match that evaluation, rather than your 460p calc. leaving aside the Nth Eigg 'gamble' for them or, maybe, your discounted price allows for that?

A Nth Eigg failure would cost Serica around £50m or some 10% of their cash by then, so no real calamity for us other than the initial hit to short term sentiment, of course...

The market doesn't seem to give much credence to AA's deal being done, given the significant discount at 348p and I think their scepticism is justified - sasa.

Hi NewK - well, Serica might yet come out with that firm rejection, 'after due consideration', etc., to avoid it being seen as merely a knee jerk reaction to it; we'll have to wait and see...

I'd certainly agree that any increased offer to Serica's Board would have to be, of necessity, the Kistos equity element but rather more than the 35% hike in it as you mention which I reckon is beyond them - it all depends on how much one thinks SQZ is worth today in the present climate and their likely earning power this year as I tried to illustrate the other day.

I certainly don't think that Serica is now seriously 'in play' from the likes of Kistos but they might well be from another party before too long, especially if they continue to dither over the sensible deployment of their excess cash 'problem', either to us or reinvestment elsewhere in an acquisition or 'farm in' and that's being CHARitable imv, you might say!

Either way, they need to get on the 'front foot' henceforth - sasa.

Absolutely right, RELLIM - sasa.

Hi NewK - yes, quite a morning, as you say...

I don't see this bid / counter bid situation lasting for more than a few days, if that, tbh.. Serica's rejection on value grounds is self - evident, with its token counter offer for KIST being just a 'spoiler' - Kist offers them nothing other than AA's more dynamic management style and offering that 'intangible' in exchange for their tangible assets - image v substance, no thanks.

If Serica seriously wants to expand via acquisition to foster their further development plans / remain independent, there are several opportunities out there that we've touched upon before and they need now to get on with it or, pro tem, pay a 'special dividend' to shareholders in utilising a decent chunk of their excess cash to preserve their loyalty, rather than a 'share buy back' which certainly won't 'cut it' in the circumstances.

AA's forecast benefit of moving onto the main mkt might just re-focus MF's views on this one, probably post the Nth Eigg outcome if it's successful, which is another helpful prompt to come out of this muddle and all to the good, imv - sasa.

Comparing the two, it's like chalk and cheese. imv...

If you don't know the answer to the above, you haven't done any research, I'd say. In short, the only benefit Kist brings to the party is AA's more 'opportunistic' management style and that's something Serica clearly lacks but that can change and probably will now that he's exposed Serica's 'achilles heel' as NewK and others on here have long banged on about.

Other than that shortcoming, Serica is almost embarrassingly cash rich as it grows apace (which is what AA doubtless covets) and MF, along with TCW's urging, will now do something proactive about that, surely? That can only be positive for us shareholders.

Other than that, there's no contest here, imv, given all the upcoming positives for Serica in 2022 as I've long argued on here and Kist can't really afford to pay a realistic price for SQZ even now and if Nth Eigg comes in later on, well, say no more...

Chalk and cheese, as I say - sasa.

their 'hedge Fund' portfolio will be doing much better in these 'bear mkt' conditions as it should do - sasa.

Yep, very weird their 'ins and outs' around 5% again - perhaps they've just spotted Jefferies' revised T/P down by 10p as Flying F mentions below! - sasa.

Yep, wouldn't disagree with that and one can also include the minimal decom liabilities Serica has v KIST, too.

Have been having a stab at what SQZ's earnings might be at this Y/E. For Serica to have already announced their intention to pay an interim divd for this H1, targeting 6p ps, that's quite upbeat for them, so one could reasonably conclude that last year's annual of 9p ps might be at least maintained for this year's final (quite possibly more) to make for a minimum 15p ps for 2022.

When they introduced divds for the first time, they conservatively went for ample earnings cover (leaving aside the 2020 'blip' year) of some 5 or 6x and if they maintain that unnecessarily hefty safeguard, the inference would be a likely trebling of earnings for this year say, around 90p ps which, if gas prices remain this high or more for H2, wouldn't seem too far fetched.

Pure conjecture on my part at this stage, of course, given the many variables involved but if the guesstimate of the 2022 Y/E Nos are not too far off in the event, then a well covered 5% + yielder for this year, selling on a prospective 3x eps multiple is cheap indeed and renders it vulnerable to an industry or PE approach, as you've long suggested.

Would your eps calcs broadly coincide with mine or do you think I'm being too optimistic vis a vis their earning power for this year? - sasa.

"AA would work wonders with the resources available at SQZ" - interesting comment there, NewK, with today's sharp rise in KIST's sp suggesting something could be afoot there.

Those resources obviously being larger cash generating production / reserves / licences and, of course, their 'embarrassment of riches' accumulating rapidly in the current climate.

Such a 'reverse' approach would be quite a 'mouthful' for him but using our cash to defray the net cost , not a 'bridge too far', possibly, even around 450p which I guess would be the minimum required to gain some traction.

With Serica about to 'spud' Nth Eigg, a commercial discovery would materially increase the value of SQZ and put that notion beyond his reach and with that outcome due within the next three months, I guess both parties would wait and see what difference it makes or otherwise...

Intriguing rise for KIST today, nevertheless - sasa.

with a raft of Govt. resignations gathering pace now.

With Nadhim Zahawi now the Chancellor (and new occupants of high office generally like to make their mark quickly with their 'new broom' approach) there must be a chance of him announcing an amendment to the WPT, if not cancelling it altogether?

He is, apparently, very concerned about ensuring our domestic energy investment plans are not jeopardised by Sunak's imposition of the WPT, so hope springs accordingly...

If that happens, there should be a sharp bounce in the sps of those 'oilies' most affected by it currently, with Serica already very cheap right now as we all holders know - sasa.

Hi Jimmy - thanks for your continuing vigilance over CHAR's developments - much appreciated - sasa.