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20,711 barrels of oil equivalent per day ("boepd"), which represents record annual corporate production and is high end of 2023 guidance, 11% divi.......sp walked down from 18p against backdrop of record production !

https://twitter.com/surprised_trade/status/1762018912021962769

Article cont'd............... ''its short- and medium-term prospects are good, and at this yield and valuation we would buy''

Peel Hunt says'' it is important to state that we believe the business remains in a very strong financial position and is funded for all planned work programmes and shareholder distributions."

https://twitter.com/surprised_trade/status/1760730520952967248

For anyone who missed the article Friday, IC and brokers have a positive outlook despite public sentiment being low currently for North Sea operators as the actual metrics look attractive.

Of the UK-listed mid-cap energy companies, Serica Energy (SQZ) is an inexpensive option. The North Sea-focused group sits on a forward enterprise value/Ebitda ratio of less than one times, with a dividend yield of around 12 per cent.

Serica's metrics look so attractive because its share price has fallen by 60 per cent from an August 2022 high of 450p. Even a cash-and-shares deal that doubled production has not been enough to bring shareholders back. The group could be due a rebound, however.

Serica’s low enterprise value (EV)/Ebitda ratio is driven by its high cash profits and small pile of debt. Ebitdax (‘x’ being exploration costs) for 2023 is forecast at £401mn. This is a drop from 2022 due to lower oil and gas prices, but still represents a cash profit margin of 63 per cent. Broker Stifel thinks this margin will climb to 70 per cent in the current year, implying Ebitdax of £612mn.

Peel Hunt analysts Werner Riding and Matthew Cooper remain bullish, however. “Despite lowering our numbers, it is important to state that we believe the business remains in a very strong financial position and is funded for all planned work programmes and shareholder distributions."

The Tailwind deal increased Serica's production from an average of 26,000 boepd to a forecast 40,000-45,000 for 2023. The thinking behind the deal was the same as that behind the BKR acquisition: add mature production.

The broad idea is that mature fields that aren’t large-scale enough for the majors to take an interest in or to hold onto for the long term will still have reserves large enough to provide positive cash flow for at least a few years.

Much of the appeal of Serica lies in its low operating costs, although these have climbed a third from $16 (£12.70) per boe in 2022 to around $20 per boe now, according to Peel Hunt forecasts. They are expected to stay around that level in the medium term, however, and margins are already ahead of peers'. Gross profit per barrel (or netback) is around $40/boe for 2023, which Stifel forecasts will rise to $49/boe this year.

Chris Wheaton, an analyst at Stifel, sees net cash rising from £81.4mn at the end of 2023 to £449mn two years later. This is more of a rebound than a turnaround, given the use of £58.7mn in the Tailwind buyout and a cash outflow in the second half of last year (as per Wheaton’s forecast). But it does leave management with some firepower, even alongside its work to get more barrels out of existing wells.

Serica’s portfolio offers balance between energy scenarios with 55 per cent gas and 45 per cent oil production. The reserves life is slightly less than a decade, so further deals will be needed to keep the company going. But its short- and medium-term prospects are good, and at this yiel

Https://twitter.com/surprised_trade/status/1760730520952967248

Idea of the week from Investors Chronicle - Serica could be due a rebound, metrics look so attractive-Peel Hunt says'' it is important to state that we believe the business remains in a very strong financial position and is funded for all planned work programmes and shareholder distributions."

https://www.investorschronicle.co.uk/ideas/2024/02/22/this-north-sea-energy-company-is-making-waves/

Part of today's feature ..

This North Sea energy company is making waves

Investors should take note of this mid-cap's profitable growth strategy

.....Serica’s relatively low enterprise value (EV)/Ebitda ratio is driven by its high cash profits and small pile of debt. Ebitdax (‘x’ being exploration costs) for 2023 is forecast at £401mn. This is a sizeable drop from 2022 due to lower oil and gas prices, but still represents a cash profit margin of 63 per cent. Broker Stifel thinks this margin will climb to 70 per cent in the current year, implying Ebitdax of £612mn. .........

Peel Hunt analysts Werner Riding and Matthew Cooper remain bullish, however. “Despite lowering our numbers, it is important to state that we believe the business remains in a very strong financial position and is funded for all planned work programmes and shareholder distributions."

...........

The Tailwind deal was covered with shares – 100mn new shares, to be precise, taking the count to around 380mn – and £58.7mn of cash, drawn from a sizeable cash pile. The deal increased Serica's production from an average of 26,000 boepd to a forecast 40,000-45,000 for 2023. The thinking behind the deal was the same as that behind the BKR acquisition: add mature production.

The broad idea is that mature fields that aren’t large-scale enough for the majors to take an interest in or to hold onto for the long term will still have reserves large enough to provide positive cash flow for at least a few years. ......

.....Much of the appeal of Serica lies in its low operating costs, although these have climbed a third from $16 (£12.70) per boe in 2022 to around $20 per boe now, according to Peel Hunt forecasts. They are expected to stay around that level in the medium term, however, and margins are already ahead of peers'. Gross profit per barrel (or netback) is around $40/boe for 2023, which Stifel forecasts will rise to $49/boe this year.

.......Chris Wheaton, an analyst at Stifel, sees net cash rising from £81.4mn at the end of 2023 to £449mn two years later. This is more of a rebound than a turnaround, given the use of £58.7mn in the Tailwind buyout and a cash outflow in the second half of last year (as per Wheaton’s forecast). But it does leave management with some firepower, even alongside its work to get more barrels out of existing wells. ..........The oil and gas industry has enjoyed a resurgence in government support in recent years, after a long period of investors pulling away. Clearly North Sea players have not had all their wishes granted – the windfall tax still being in place is the key example of this – but forecasts around oil and gas use have been revised as global trade flows have changed. ...........Serica's short- and medium-term prospects are good, and at this yield and valuation we would buy.

100% agree, no right minded person will run a business if there is no profit. The EPL has hit all NS operations and all political parties have demonstrated they have no understanding of business, we all agree on that...The posts below detailed the reasons why SQZ holders held and now it is for SQZ to make the moves that circumvent the EPL and put shareholders, investors and the business on track to greater profits , dividends, growth etc, all the aspects everyone was invested for....the business has the facilities/cash/assests etc to make the right moves, it now requires the BOD to move the business onto a new footing (like HBR) and hopefully a new CEO will lead SQZ from this lull.

Oil and gas are going to be around longer than many imagine and oil shortages are forecast within the next 6 months on almost all analysts projections and with the cost of wind farms deterring even the largest operators gas will be back in play as the economics are likely to outweigh any political views or return on investment as the 'green' iideology hits reality.

With respect DTP, it's the reasons many folk, probably including yourself, hold part or all of a holding in SQZ, the details relate to past and present operations, including the new US $525 million 6-year Borrowing Facility, a very recent event.

January 2024 -- rns - New US$525 million 6-year Borrowing Facility

"I am very pleased to announce the signing of a new RBL facility which substantially enhances Serica's financial firepower. This has been achieved in a challenging market for upstream financing. The standing of the international banks in the lending syndicate reflects the quality of Serica's asset portfolio, strong balance sheet and ambitions for further growth. The new facility, combined with our existing attributes, means that Serica can approach acquisition and investment opportunities from a position of considerable strength."

--------------------------------

That completes some of the reasons many have held their SQZ investment in part or whole....rightly or wrongly, time will tell.

In December (10 weeks ago) -rns

'' I am also pleased to report successful well campaigns on the Bruce and Guillemot fields during 2023. These are further proof of the benefits to be had from low cost, short cycle investments in our existing asset portfolio. The full impact on production of the well work carried out this year is expected to be felt in 2024.....a third campaign in 2024, which will target wells on both the Bruce and Keith fields. ..start of a four well drilling campaign in the Triton area, with the first well on the Bittern field scheduled to begin middle of the first quarter. 2024 is anticipated to be a very busy and impactful year of investments in Serica'

The integration of the Serica and Tailwind organisations and processes has been progressed since the completion of the Tailwind acquisition in March 2023. Steve Edwards, Dave Freeman and Tom Ujejski will be ending their roles with Serica by the end of March 2024. ''

In September -rns -

'The completion of the Tailwind acquisition in March represented a step change in the scale and diversity of Serica, achieving a longstanding strategic goal. We have stated consistently our intention to continue investing in the enlarged portfolio, to add to it in a disciplined fashion if the right opportunities arise and to make further cash returns to shareholders. ...

Profitability maintained with higher sales volumes largely offsetting lower gas prices.

Highly cash generative portfolio of assets

.Average realised gas price of 96 pence per therm and realised average oil price of US$64 per barrel

Work on multiple Bruce and Keith wells being undertaken during remainder of 2023 and in 2024 to boost production performance.''

In addition in May the '' Long Term Incentive Plan Awards

The award has been made to members of the Group's executive team and senior management, based on absolute share price performance over a three-year period and specific performance targets related to carbon emissions from operations over the same period. For the awards to vest in full, the highest average share price must be at least equal to 500p''

Very few if anyone sold out of SQZ as on April 13th 2023 results were announced by Mitch Flegg -

''... another year of outstanding progress for Serica. There was strong growth in production volumes, a significant upgrade to reserves and increased profitability at all levels.

Serica's two-pronged strategy is to invest in our high-quality portfolio of UK North Sea assets to unlock value and prolong their life whilst continuing to target future acquisition opportunities.

We have now completed the acquisition of Tailwind which has boosted production and reserves and provides a number of short-cycle growth opportunities for the Company.

I'm delighted that we can recommend an increased final dividend of 14p per share. The continued strength of the Company underpins the intention to maintain or increase the dividend in future years."

Profits increased at all levels with a 93% increase in operating profit and a 124% increase in profit after tax, boosted by the end of BKR net cash flow sharing, increased production volumes and higher commodity prices.

Serica 2P reserves increased to 74.9 million boe effective 1 January 2023 (1 January 2022: 62.2 million boe) with Group 2022 production replaced more than two-fold.

Final 2022 dividend of 14p per share recommended, bringing 2022 full year total to 22p per share

Completion of the acquisition of Tailwind puts the Company in a strong position to maintain and grow its dividend.

......................................................................................................................................

The above is taken from last years results RNS a lot of reasons no one sold out.

I agree AA does appear a good fit, however, with Kist share price down 75% from highs in the past year, even surpassing the drop SQZ have experienced, they'll be some critics no doubt.

Hi Rich, yup I see Downing appear to be selling down as they close their fund and it is therefore providing a rare opportunity to secure some cheaper RFX shares, seems rude not too 😉

Back in after a year, sp dropped on ex div couple of days ago and now on a 52 week low surprisingly, RFX generates, profits, FCF and organic steady growth plans for 2024

https://twitter.com/surprised_trade/status/1758427520796430647

Part of this mornings broker note -

''Last week we attended a site visit with Serica Energy in Scotland. We toured facilities near Edinburgh into which liquids from the company’s Bruce, Keith, Rhum, Erskine and Columbus assets are received via the Forties pipeline system, processed, and then re-exported to market. We were left with a favourable impression of the scope and quality of these operations, and their positive role in Serica’s business.

Serica produces in the UK North Sea principally via two production hubs: BKR and the Triton FPSO. The company produced at over 40mboe/d in 2023, and guides to 41-48mboe/d for 2024 based on new drilling and lower maintenance downtime. The forward programme includes drilling on the Gannet East, Bittern, Evelyn, and Gannet Northwest fields, and numerous well workovers/interventions, with new development projects also moving forward on Belinda and, more significantly, Buchan. The balance sheet is strong, with net cash of £81m at the end of 2023, and there could be capacity for further acquisitions.

The company is attractively valued, in our view, with an undemanding 2024 P/FCF multiple of 2.8x and strong dividend yield of 12% (all based on consensus forecasts). ''

This report couldn’t be better if I had written it myself and proves what an amazing investment PetroTal is at these levels. The comments above by the CEO sum up all the good news presented in the reserves evaluation, 2P numbers of 100m bbls have an excellent recovery rate and the reserve life of 19 years is outstanding given the upside in both Bretana and elsewhere in the portfolio.

Again Manolo has hit the nail on the head, the market cap is at a discount to the NPV and all these numbers are after several years of increasing production and especially in recent years, substantial distributions to shareholders.

And this is a play for the long term, careful stewarding of the rocks and producing at sensible levels will ‘deliver material cash flow for the next 20 years’. My Target Price of 150p is locked in, for choice I would be increasing it based on these excellent numbers but for the time being this is a huge store of value..

https://www.malcysblog.com/2024/02/oil-price-petrotal-beacon-corcel-star-and-finally/

PetroTal has released its end 2023 reserves update, reporting an increase in 2P reserves from 96.7mmbbl to 100.2mmbbl, and a larger uptick in 3P reserves, from 168.3mmbbl to 199.6mmbbl. In our view, this continues to demonstrate the attractiveness of the company’s Bretana field, and the longevity of this for company growth and cash flows

Current production continues strongly. Average PetroTal January 2024 production is reported ahead of company expectations.

Overall, in our view this represents good progress for PetroTal. Production for 2023 has been more than replaced in the overall 2P reserves number, forward OPEX expectations are reduced (reflecting the company’s ongoing cost saving efforts)

The company has a strong balance sheet, holding US$111m of net cash at the end of 2023, PetroTal establishing a regular dividend of 6c/share from Q1 2023, implying an 11% yield at current levels. As such, PetroTal offers investors regular drilling news flow, strong and growing production based on a material asset, significant cash flows underpinned by the variety of export routes, and an increasingly established dividend.

We believe PetroTal continues to be well set for production and cash flow growth, alongside ongoing shareholder returns, all supported by its strong net cash balance sheet

'Improved Cashflow and Shareholder Return predictability' part of the presentation...

https://www.serica-energy.com/downloads/presentations/Analyst-presentation-Feb%2024.pdf