Member Info for Sekforde

Megla, given the relationship between Auctus and Serica I rather assume that the figures have been approved by the company. Working out the actual rate of tax after all losses and allowances is almost impossible. But as you say the budget is all important. I am thinking it might be ok after all.

And I do not see any dividend drop happening ever particularly if the company resumes share buybacks which reduces the annual cost of the dividend.

Mega. Have you read Auctus Advisors analysis as of 2nd October 2024. Could not see anything wrong with their assumptions or calculations and they had FCF at $323m for next year.

Megla with Brent at $74.50 and gas at around 110p a therm, 2025 will produce lots of cash to buyback the shares whatever horrors are in the budget. FCF looks like being well over $300m for 2025.

Whenever there is a seller there must be a buyer and vice versa. The stocks bought and sold must always be the same number. The sentiment is however improving as the market realises the yield is entirely sustainable and the budget will not be as bad as feared.

Worth revisiting the Auctus advisors figures produced on 10th September 2024: FCF forecast for 25 $300m 26 $233m and 27 $352m. But this was before the good news on Bittern B6 which they assumed would produce to Serica 3,000 boepd rather than the actual steady production of 5200. None of the other assumptions made seem very ambitious. And clearly plenty to cover $112m a year in dividends (yield 16%) And to buy great chunks of shares. I am sorry but this is an absolute bargain.

There really is no advantage now in overseas investments. They are much more expensive than the uk. Even with the punitive rates of tax Serica is an amazing cash cow with lots of very quick payback options. It should keep it simple. The windfall tax will not last for ever. By November we will be producing over 52k boe per day and opex will be back below $19. Everything is now in place for a golden 2025.

The forecast $500m fcf over 3 years was based on $75 Brent and 80 uk gas. Plus $5 on Brent and plus 5p on uk gas was worth another $90m on a worst case scenario budget wise. Well we are $80 Brent and 100p UK gas just as production hits 50,000 boe. So an absolute bargain and plenty of money to restart the share buybacks in November.

Quite. Tired of the ignorance. Post if you really have some knowledge of science. Or stick to Serica (whose board accepts the science of climate change).

Megla, your figures do not accord with the company's calculations. They have said minus $5 a barrel and minus 5p a therm (from the assumed $75 and 80p) reduces fcf by $90m. So minus $5 Brent alone cannot be minus $96m. But as you say it is impossible to make meaningful forecasts of prices and it will all be swamped by some half decent M and A.

Megla if the board is saying that Brent at $80 (as opposed to $75) and Gas at 85p a therm (as opposed to 80p) is plus $90m then it follows that brent at $75 and gas at 90p is also plus $90m - or more or less. The differential tax has already been factored in. And at the graphs I have been looking at gas futures do average above 90p through to the end of 2026.

Megla, I think we can trust the board to have provided us with correct figures. But if you have done the same exercise and have arrived at different figures you should post them. I think it was immensely helpful to have that 3 year projection based on worst case figures. The key assumption that already seems too pessimistic is the price of gas. It is over 95p a therm against an assumption of 80p a therm. And the forward prices are even higher. So happy days and proof that the current 17% yield is easily sustainable and that the share price is far too low even allowing for an unfair tax regime.

Troubledseller. The price of gas at close was 95p a therm. The minimum at which $500m free cash flow would accrue on a worst case budget on 30th October was $75 brent and 80p a therm gas. Plus or minus $5 brent and plus of minus 5p a therm gas adds $90m to that FCF. So at current prices on a worst case budget we make $620m cash after every cost including tax by end December 2027.

The requirements are set out in Section 19 of the Finance Act (no 2) 2024. Gas must average less than 57 p a therm for two quarters and Brent $74.21 a barrel. Both must be satisfied. Brent is now around $71.50 and gas is now 91p a therm so no chance of the EPL ceasing to apply. But Serica is mainly a gas producer and so is benefitting greatly from the elevated gas price.

But remember we were promised $500m of FCF over 4 years on the worst case. The assumption of $75 brent is being met at the moment and we are 6.5p above the assumed 80p a therm gas price. If we average current prices for both that is an additional $60m. As the worst case is not going to happen, we need to add in a further $100m or so. So essentially we are back to our current market value being generated over just 48 months.

The tax losses immediately accessible are $1.9bn and there is a further potential tax losses related to Bentley of $1.2bn. This is all explained by Craig Baxter in the investor meeting yesterday.

Zebbo what do you mean? Enquest has net debt of over $300m. It has an ongoing share buyback programme of $15m. Megla I think the tailwind tax losses will last 3 years. Buying or merging with Enquest would enable the latter's tax losses to be used until 2030 when the EPL dies a death (supposedly!)

Megla, the net cash will fall and could be zero at the year end. This is due to the payment of the final dividend for 2023, the payment of the interim dividend just announced, higher capex, lower production and much lower oil prices all in the second half. It does not matter. The fcf generated in 2025 and beyond is roughly twice the dividend. Despite having net cash of zero at year end we will have around $200m of cash sitting in a bank account earning around 5% interest. It should instead be used now to buy shares in the company for cancellation saving the company paying an 18% dividend on those shares.

Despite the tiny bounce back the company remains absurdly undervalued. On the most unfavourable assumptions about the budget and 80p per therm for gas and $75 for oil Serica will generate (we are told) at least $500m of FCF over three years. Add that $500m to the net cash as of 30th June and you have our present market cap. No wonder it can afford to maintain its dividend to give a current yield of 18%. An 18% yield or even a 10% yield is said to signal that the market does not think it can be maintained. Of course it can. It is well covered on the most conservative assumptions.

Sasa 43 - The Government do now realise that brent is well below its 20 year average - by about $5. They do realise that without all the allowances investment will dry up next year and tax revenue will be far lower over a 5 year period. They do not want to destroy the north sea. So actually I am quite optimistic. I did say that I thought the dividend would be maintained and it has been and so yes I am generally quite an optimistic person.