Member Info for sasa43

Thanks, RELLIM - you and me both, then, in the class of '43!
Keep well and keep safe, all of us - sasa.

Thanks flexmw - will enjoy Sunday, I'm sure, with the family all e-mailing / phoning me then...

Re: views on this, just hope that one's own thoughts & expectations prove useful and not too far off reality, in the event - sharing is what life's all about, really... sasa.

Hi NewK, RELLIM & Jack - all useful observations on the SQZ / RRE possibilities and appreciated.
NewK - you make a very valid point about the age of Serica's BoD, notwithstanding their excellent stewardship of the company, especially in recent times.

However, because they're seasoned individuals and know what the company's worth / what it would be to an acquirer, especially in todays climate of many peers getting into serious trouble if the attrition continues, I'd expect them to consider SQZ to be a safer / more productive asset to buy than most others - hence a decent premium to be added to the price you suggest as a takeout level to gain their support. Otherwise, they'll happily pursue their own expansion plans.

That aside, the 300p I intimated is predicated on, say, 30p eps being reported shortly and if achieved, todays p/e of 3 x is no starting point - even in todays conditions and allowing for the usual AIM discount v the main mkt as a whole, a multiple of 5 x looks quite justifiable, so I start from there. Adding in the list of the many other attractions, achieving an exit multiple of 10 doesn't seem too fanciful to me but that's just my take if things crystallised into a serious offer for them to consider; anything much lower, I'd expect the usual dismissive statement of the proposal being issued that, as it 'seriously undervalues the value of the company' etc...

Echo the sentiment about this evil bug reminding us all that good health is the true wealth and to enjoy our families and friends while we can - I'll be the same age as TCW on Sunday, btw, so I can empathise with him on that score! - sasa.

Generally, you're right re: ISA's for investment, sharehunter but if Bramley is a small investor, as seems likely from what he's stated, I don't think it's necessary for him right now.

In an ordinary dealing A/C, you can make £12k gains p.a before running into any CGT liability and you can offset any losses against that in any tax year (you can't deduct losses in an ISA as it's all tax - free, of course) and no ISA fees to pay, either - just sayin' - sasa.

Hi flexmw - roger that...

It has been mooted, of course, that a merger or T/O attempt of one for the other might well be considered, as a 'half - way' house to their expansion plans in this volatile oil mkt, notwithstanding whatever the forthcoming OPEC production cuts are agreed / whether they 'stick' for long, etc.,

Such an amalgam would create a group producing some 55k boepd currently (50% /50% oil &gas) with op. costs around $15 per boepd I calculate, following RRE's revised forecasts yesterday and there must be some merit in that possibly...

However, that highlights two of their differences, though - management style and 'skin in the game' (AA owns 30% of RRE's equity) and he'd want to have the 'whip hand' in such an event. SQZ has eschewed borrowings to fund their growth plans so far, whereas AA isn't phased by it; indeed, we're told that he has already lined up substantial credit lines if the right opportunity presents itself, so I guess that he would be more likely to go for Serica than the other way round.

Which begs the question (which I was asked recently) - what would be required to tempt Serica's BoD to seriously consider an offer and recommend it to shareholders? I reckon 300p ps might be in the ball park, here. If SQZ reports 30p eps in a few days time, an exit multiple of 10 would be about right, imv, given the continuing benefits of the BKR terms / higher prod. share to come from that, inc. operatorship, Columbus coming on stream / a successful side - drill into Rhum 3 (60% of the total gas reserves are located there) and all the other licensed acreage elsewhere to be considered, not to mention their existing £120m cash on hand / prospective cash accruals, etc., - such an offer would cost some £800m (net gearing of 50% for the combined group afterwards?) and be well within reach, given RRE's existing position. He's probably already run the numbers...

All pure speculation, of course but it's an indication of the possible potential for both of them - sasa.

Hi flexmw - I like both; they have very similar characteristics, of course, not least their huge cash accumulations over the past couple of years which is a near unique advantage in this climate.
Just on this comparator, RRE is exceptionally strong with more than 2 x its sp represented by cash in the bank at current price levels v SQZ's sp comprising some 50% cash - both debt free, of course and both on the lookout for attractive deals to exploit - ideal conditions, right now...

The terms of Serica's BKR deal provide more comfort than RRE's marathon purchase and the longer term outlook for gas seems more appealing than oil (80% gas for SQZ v 40% for RRE) and their op. costs are much lower, too ($13 boepd in Serica's case against double that for Rockrose) but both are looking to screw these down even further if they can.

RRE reported good results yesterday with some other positives and SQZ's 2019 figs. are due out shortly and they should be impressive and, one hopes, will include their maiden divd confirmation to join RRE on the divd list.

SQZ 'aspires' to move up to the main mkt at some point, whereas Rockrose is already listed on there. Ergo, many pros in each case, albeit different ones and it's difficult to list all of them but if I had to opt for one over t'other - I'd just marginally go for Serica, I think, as I've been invested there for much longer and know their steady approach / management style better but very little in it, tbh. Hope that helps - sasa.

This seemed a good binary bet and a very laudable one, too - now it looks very much odds - on to succeed on the latest developments - holding 'long & strong' for me - sasa.

Good figs. out today from RRE (as expected+ further positives) with intention to pay their 2nd divd for 2019.

I'd expect SQZ to do at least as well when they report shortly, inc hopefully, following through with their intention to get onto the divd list with their maiden distribution. What they have in common, of course, is an abundance of cash in the bank.

Until very recently, being over capitalised was considered to be an inefficient balance sheet profile but now, everybody is clamouring for liquidity as a form of 'life support' - how times have changed and in so short a time. Both remain amongst the safest havens to be involved with right now, imv - sasa.

Hi RELLIM - yes, it's been a long haul with it only really coming good over the past two or three years or so but it's a completely different enterprise nowadays...
Echo your comments about the outlook; 'every cloud, etc.," re: their acquisition plans - sasa.

Thanks for the warning, NewK - I did click on it before I saw your post but couldn't gain access as I'm not on Twitter, so hope I've not, unwittingly, imported anything sinister by only doing that - sasa.

out in about 10 days time / divd announcement - they should impress, given they cover last year's outcome (prior to all the shambles so far this year) when things were quite different.

Yes, the outlook might well presage a more cautious approach but the sizeable cash pile will engender considerable comfort going forward, quite apart from the range of other benefits SQZ enjoys and the BKR deal terms, etc., - sasa.

Roger that, NewK and welcome to stepping off the treadmill - the last comment made me chuckle..
sasa.

Echo that totally about traders v investors, NewK - sasa.

Hi NewK - like RELLIM, I'm retired, too and have been for a long time now (as you might have guessed) and my retirement pot has been battered significantly, as well but, as it's only on paper for now, it's relatively academic, if one looks at the historic charts on these things - medium / longer term and you don't need the money for a while...

Yes, it's painful while it lasts, of course but therein lies opportunity for corporates and investors alike and SQZ would, indeed, be increasingly vulnerable to an approach if they come in with the 30p eps or more that I'm expecting to be reported (p/e of 2.5 x currently) and such an under valuation would surely command a much higher sp than we see now if a deal was contemplated - sasa.

I guess that I must be a bit older than you, upomega, as I went through the '72 - '74 bear mkt, too (down 73% in 18 months) but you're right, this time it is different. It's different because all the previous 'crashes' were financially driven, whereas this time it's virus driven, bringing a major economic slowdown (at best) in its wake and nobody knows what the ultimate cost will be.

The common factor of all of them, though, is that panics eventually subside and rationale slowly regains its poise - how long it will take for that to happen this time, I've no idea but it will regain the ascendancy at some point. When it does so, much of this 'double whammy' / the dreadful suffering associated with it, will slowly fade away and the rebuilding of lives and the confidence of the mkts, too, will return to the fore...

Meanwhile, I think the best thing to do while we wait this out is to hold the most resilient stocks, like those involved in essential industries (food, drugs, energy, etc.,) and, ideally, those undertakings with good management, strong balance sheets with little or no debt and in our case having lots of cash in hand - the last being the most crucial asset to boost survivorship during this period of financial attrition.

In a fortnight or so, we'll know how Serica fared last year and I expect the results to be impressive and for them to easily afford to pay their maiden divd and gain some kudos in doing so but they might decide to be extra cautious in deciding to defer it for now but, either way, SQZ must rank amongst the safest counters around right now, imv... sasa.

embargo on corporate announcements from 5th April onwards, we should have the 2019 results from Serica out as planned, then, i.e, in a couple of weeks time with the divd question answered one way or the other; today's higher sp being an indicator? - sasa.

Maybe 'cos it's the only one in the FTSE100, Marty - if gold is perceived to be going up, the Instos / trackers will be interested in this, given its status, especially the latter...
Just my take, anyway, fwiw... - sasa.

Echo that, JA - sasa.

Sorry for that typo, Almsivi - the point remains the same though... sasa.

With the oil price sagging around the $27 Brent level right now, the 80% gas exposure SQZ has in its mix looks preferable / fortunate, I'd say...
Once the SA / Russia spat is over and oil production is meaningfully reduced for the economic good, the oil price should usefully recover, of course but for now, gas seems more comforting; RRE favours that fuel looking ahead, too - sasa.