Member Info for Surety

Late picking up on this, but issued last week

2 areas of relevance/ interest :

Firstly the headline : Energean (ENOG LN) 1,036p, Market Cap £1.9bn: Looking for new opportunities

Lastly the final paragraph highlights: Following recent unsuccessful appraisal drilling campaign at the Anchois field in Morocco, Energean plans to evaluate opportunities beyond the Mediterranean in the wider Europe, Middle East and Africa (EMEA) region…..There is a reference at the end of the note to potential for transformational M&A

Separately, Berenberg have also issued a downgrade on Energean today (share price has fallen and short positions in place, etc)…

In summary they are in need of a growth story beyond the med.. Personally, I’m far from convinced Morocco is a write off just yet

IMHO/DYOR

I dont see Westland selling either, appreciate you said ‘Is’ Surfit. Volumes are too low.

I also think re: director buys they definitely have to be in a closed period (they know or have a view on - 1. Power funding - due shortly? 2. State of Loukos Farm-Out, or debt funding? 3. Where Enog are on Anchois. Favourable outcomes on any of these should boost the price, same to the negative with selling. They wont be able to buy at the moment if they wanted to.

I re-listened to the Etana Power interview with JMW yesterday. He said next news likely to be power in next couple of months - ie next week (dec 4th)

White knuckle ride though it is, we need to be patient for a little longer I suspect (albeit a very little!)

Good note, btw Ianfer!

IMHO

Https://www.energyvoice.com/oilandgas/north-sea/566021/serica-to-buy-north-sea-assets-as-uk-cant-get-any-worse/

Not sure if anyone can access the article…

Definite ‘Torygraph’ theme here… Nonetheless though - I think this is super valid for Jog, MP. Good find!

Let’s hope the winds of change 😅 (no pun intended) are finally arriving for Jog.

Will be interesting to see if JOG put out an op update this week as per LY timing.

DYOR

If you’re talking to me - HC, I didn’t link it (assuming you mean post it?). I’m sure you realised that .. because you spent a lot of time on this …

Why would Anchois be dead? They need gas and they have state banks funding this dev .. it screams we need more gas and are pro making it happen. Means if anything they are more likely to give on the higher gas price in my view…

We’ll know soon enough

Thanks as always for the meaningful, well thought through contribution HC

Thanks Danno. The bit that stands out for me in this article is :

ONEE will fund 20% of the project, while the remaining 80% will come from loans by Morocco’s largest lender Attijariwafa Bank and Bank of Africa, in addition to funding by two securitisation funds, FT Nord Energy and FT Flexenergy, AMMC said in two recently published documents.

No so much the ONEE part, but the fact that 80% is being funded by debt from a consortium of banks (both of which I suspect are in Soc Gen’s line up for CHAR). We know they were already talking to BOA pre the Soc Gen work.

I imagine that funding a smaller, but still economic Anchois is unlikely to be problematic for Char (especially with the right gas price) in terms of access to funding their share. They simply need partner certainty - which one way or another I think will come.

IMHO

Why would he do that HC, if he’s currently involved in the ongoing analysis/appraisal post A3 and what it means; reworking an A2 development plan and part of a negotiation with the Moroccan govt to secure a better gas price.

Enog need a win at the moment to boost their share price, and that’s beyond Israel. They have stated publicly they are warm to Morocco..

Their statement states it’s still part of their current ops

DYOR

HC - why does their statement say they are still in Morocco then?

The thing that they haven’t said is that they are planning to leave/exiting Morocco, and they had an opportunity to. So what they are telling us right now, is that that decision has not been made and Morocco is part of their continuing operations

There is a point on signing new long term gas contracts to supply domestic - and ‘regional’ demand

Of note, is that under point 2 in Forward Looking Statements they have stated that Morocco is in their ‘continuing operations.’

If they proceed directly to the development of A2 - there may well be limited exploration and capital costs in 2025 itself, as I suspect these would like fall into 2026 with lead times, etc? Opex costs yes..

The thing they have very clearly NOT said is that they are pulling out - and as a FTSE250 company they are required to highlight that. Their next update ins due in March 2025, where I suspect there will be news

In absence of other information the ONLY conclusion you can make at this stage is that they are still in Morocco and discussions/negotations are continuing.

DYOR

This is the point MP - although it was a directional comment. It was less about the specificity of 4 vs 3 but more about an earlier low’er’ ball bid that might look attractive given the hurdles that still need to be cleared, even to the directors, given the ever present risk that we have experienced…

I think an interesting thing for us to consider as a group is how much is held by the directors vs PIs and smaller (off radar) institutions ..

DYOR

Thanks DU. I think everyone knew what you meant and your words were super clear. Your view is helpful as always

On SQZ. Thank you for for setting that out - the tax loss are so key here as you’ve said before. I think the interest bit for me is when you add that together the cash Jog has and will get .. it makes sense to take them out sooner rather than later - particularly if you think that with the current uncertainty they are more attractive now. It could cost a fair bit more in 6 months £4 vs £3? Most would sell at the latter right now I would guess PI wise given the share holder base..

With Sericas CEOs comments in the market it feels he’s nailed his colours to the North Sea mast ..

I’m intrigued to see what plays out in the next 3 months ..

Assume Jog is due an op update soon. They updated end of Jan LY.

DYOR

HC. Are you clear on what the soc gen brief is?

Surfit, I’m not suggesting my view is that they should have been surprised . We bet on something that had approx 60-40 odds and it didn’t come in. It was high risk. But I suspect they were surprised !

I am expecting Power, Loukos and Anchois in that order - albeit hopefully 1 & 2 close together

I keep considering why they are not updating, but I imagine there is little to say other than they are burning cash and making progress on all 3 at this stage.

News soon on part one/two hopefully. Julian’s a few months on power takes us to Feb - hopefully early as he should have been conservative given his recent experience.

DYOR

*whilst they negotiated with enog

Gardie,

Dont know the cost of testing - would guess $1.5-2.5m. They havent tested IMHO because A3 failed (and there was dourbt on OBA1), they had to completely recut their total plan and werent certain enough (I imagine A3 gave them a massive shock) and needed the cash to keep the business from going under - which they negotiated with enog, farmed out Loukos, etc

I am not suggesting I think that's ok btw (at all) - but assuming they now only have $3-5m left (see cash analysis from sunday - totally specualtive) I think they have used the cash to buy runway to recut their plan - which I am hoping we get an update on shortly.

Fundamentally their costs are too high - nothing new. But in the precarious they are in, I am glad they didnt test it post A3 - with the risk that might well have been the end of it..

DYOR

If they are going to do it, now is the time from a value perpsective.

DU - any follow up on your original comment re Serica acquiring JOG - in fairness you called this (or hinted at it), and would be interesting to get your view on it and how you see the possibility (high/medium/low).. and potential timings..

DYOR

Agree on that one, Surfit

JT is right with his assumption on Loukos test following a successful A3 when they knew that they had the security of $15m for fid in the bag.

In the next 3 months we/they need Loukos farm out, with a path and timescale for production (based on succesful testing and further exploration) with some back costs, power funding and a nod to the future on Anchois.

Tick tock..

IMHO

Https://financialpost.com/pmn/business-pmn/uk-north-sea-oil-and-gas-still-attractive-despite-high-tax-serica-ceo-says

....

DYOR

Https://www.globalbankingandfinance.com/SERICA-ENERGY-OUTLOOK-e6178171-4df1-4c81-919d-b06d4f230324

Worth a read, especially the headline.

DYOR

HC - Why, calculations and evidence please.