Member Info for Sekforde

We have a spectacular year ahead. The repairs on Triton will be done soon. Gas prices are sky high. Brent absolutely fine at $74. Much better production numbers and many deals to be done.

Megla I agree that it will not make too much difference to the 2025 tax bill. But I suppose the delays mean we are saving up the Tailwind tax advantage to use later. I think the company did pay too much for Tailwind with the benefit of hindsight. But I just do not think it could have known about these problems with the compressor which only emerged this year. We do have to give the new CEO a real chance. He certainly is not responsible for the problems. But it is his job to fix them and soon. 2025 must be a lot better than 2024. But if the compressor issue is dealt with by the end of January there is not too much in the way of a fabulous 2025. I suppose if by March 2025 the compressor issue has been finally dealt with and we are producing at 50k boe a day then the company might look at another acquisition. They must not pay too much this time.

I agree that the performance has been very very disappointing the year. Not only did the company miss its guidance but missed it by a mile. It is all Triton compressor related. Auctus Advisors now have FCF for this year at minus $7m. But dare I say it all we have to do is to get to the end of January and the picture brightens considerably. I think there is a very good management team which has been very unlucky. The markets take time to forgive poor performance and under achievement whatever the excuse for it. The one crumb of comfort is that our tax bill should be a lot less than expected in 2025.

I still do not know how Jefferies gets to such a low forecast for 2025. If the compressor fix lasts until the new unit arrives then surely we should manage around 52k boe for the first six months? Jefferies would then have to assume just 28k in the second half. Must I suppose just wait for the company to speak.

Ah yes thank you I now see the reference. At the beginning of October their forecast for 2025 was almost 45k.

Megla where has Auctus said 41k boe for 2025? That was the figure they gave for 2024 at the beginning of October. At the beginning of October production was 50k and that was before Gannet. So I am hoping for around 52k a day right into the summer and only limited falling off in the second half. 45k a day does not seem too optimistic. They are paid to be accurate and have often underestimated success. The second 30 months to which I refer depends upon not only much better production performance the paying down of expensive debt with the surplus produced in the first 30 months and lower capex. But it is wild speculation on my part. I just maintain it could happen. I will settle for market cap in the first 30 months.

The company is not borrowing to pay its dividend. It has substantial cash on deposit. As of 30th September it still had a net cash balance. By the end of the year it will have a very small net debt. But that is because of all the cash payments made in the second half and the temporary collapse in production. But everything will be paid for by cash earning very little interest held on deposit. In 2025 the net debt position should have reversed by the end of January and there should be a very rapid build up of net cash in making the dividend very easy to fund plus some further buybacks. In the 30 months beginning with 1st January 2025 we should exceed our present market cap in terms of FCF. This is on the assumption of $70 brent and 110p a therm gas and 45,000 a day boe and maintaining current capex. Could make twice market cap over 5 years.

Dennis. I think they are doing the right thing which is to be cautious. They paid too much for Tailwind. But the company now has plenty of assets it can exploit. The focus should be on these rather than buying anything else. At one stage I wanted the company to buy Enquest. But I now think it should keep it simple. I would like to see some further share buybacks in the Spring of 2025. In terms of discounted FCF the shares are super super cheap.

I do not think the trading update was disappointing. Yes production was below expectations for the full year but I feared the repairs to the compressor would take longer. What now matters is production and prices in 2025. We do not know whether the compressor will fail again but the problem will be solved for good in about three months. Gas prices are very good at the moment and Brent ok. We should get back to around 50k boe. The first six months of 2025 should be a period of massive cash accumulation. I have bought into this weakness for the 17% yield which is completely sustainable.

I do not think they should tell us on 29th October 2024 that they will update the market on trading in mid November only then to say nothing until December or even late November. True mid November was last Friday! They need to be reliable about these small things to gain trust on the big things. I am expecting an update tomorrow which is the last possible date in mid November.

Slightly disconcerting that the trading update promised for "mid November" has not materialised. I hope we are not going to be told that the compressor at Triton is taking longer to repair than forecast - two to three weeks. It went down on 26th October so we are already over 3 weeks....

Gas prices are now over 110p a therm.

Megla all your points are right and I think we will end the year with a net debt position of around zero. But production should be much better in 2025 - may be even 50,000 boe a day. Personally I would be happy with no deals at all. They take a lot of time and may not work out. The Board should concentrate on meetings its targets on production and costs and developing its existing assets. The share price is a mystery but it is an opportunity for the Board to plough the substantial surplus money into share buy backs which will cut dramatically the cost of future dividends.

It is truly absurd to think that the President of the United States can have more than a marginal influence on commodity prices. Trump can grant more licences than would a Harris administration but it would be years before production came on stream. And not much extra any way against a daily production worldwide of 100m barrels. He may seek to impose additional sanctions on Iran (which if effective would tend to increase price of oil) but as the attempt to impose sanctions on Russia has shown it is hard to stop oil reaching the international markets. The forward prices did not move on his election. He will be a complete disaster overall and it is truly depressing that the majority of the US electorate fell for his lies and his nonsense.

Any how Serica remains a complete gem of a company. The market clearly does not believe that the now 18% yield is sustainable. But it certainly is.

We are of course more than 50% gas and prices are soaring. Trump is generally a complete disaster for everything. But I do not think he will have much impact on the price of commodities.

It may be that the market is fretting about the Triton glitch. But that is all it is. Yield back to 17%. And Auctus advisors saying that it is completely sustainable. Update in mid November should be interesting and upbeat.

Updated valuation by company's paid advisers has FCF of $271m to YE 25, $258m to YE 26, $396m to YE 27 and $183m to YE 28. So that is $1,108m over 4 years against a current market cap of $735m. The 16% yield in dividends costs $112 m a year so very easily sustainable for the next 4 years. And of course if the company uses the mountains of cash generated in excess of its dividend to buy back shares then the annual dividend cost will come down. We now have stability and a chance to do some really good M and A that could make the above figures very conservative indeed.

290p. Buchan will go ahead.

The budget was as good as it could be. The fact that the first year 100% investment allowance was maintained is critical. The other two changes were expected. Looking forward to the mid November trading update

The board made the most compelling case that even in the worst possible budget they would make at least $500m FCF over 4 years assuming Brent at $75 and gas at 90p. After Israel decided not to destroy Iran's oil terminals (for the time being) the price of Brent has fallen to around $71.50. But gas is at 105p so that forecast remains good. A terrible budget should compel the weaker operators to offload for a song. And with loads of cash and no debt and no decom., Serica is well placed to take advantage. We are now back to an 18% yield and it is here to stay.