Possibly a break above someuwin to around the 50p mark with some small resistance around 34p and then a back test to 42p, that is what we are thinking and then a move up from there. This is the first part in a stage 2 breakout from a consolidation at the bottom stage 1 apparently, not my fortee, just what I have been told! |
Chart alone suggests rapid move up to 40p before consolidation |
For individuals that were invested in SQZ during the early days, this reminds me somewhat of that scenario, albeit a mirror opposite of acreage. SQZ divested out of Malaysia and more into the N Sea, in part through shrewd deal making by the them CEO. I recall SQZ languishing around 10p (circa £30M MCap) - they had a small amount of production as well.Entry into the N Sea through the deal with BP was transformational, in part due to the already proven fields. This had the potential to make SEA a similar proposition to SQZ. Patience is required, the price will be volatile at times and pull back. The key is the small incremental steps taken to add value, which may not be realised at the time, but will always win out. |
 Additional info from the Cavendish note...
Country Overview
Malaysia’s E&P industry shares many of the same characteristics as Norway, where a high barrier for entry results in limited competition and a strong, supportive regulator encourages new entrants. The opportunity set in Malaysia is similar to that of the North Sea 15-20 years ago, where the majors/supermajors are looking to rationalise their portfolios to focus on sizeable gas opportunities.
Despite a mature oil & gas industry, Malaysia has enjoyed a huge amount of exploration success in recent years. Of the 16 wells drilled in 2022, 10 resulted in discoveries (a c63% success rate), of which 8 were discovered offshore Sarawak. In 2023, 25 exploration wells were drilled, resulting in 19 exploration discoveries and 2 exploration-appraisal successes (an c84% success rate), which in aggregate contributed more than 1bn boe of new resources.
Seascape’s entry into Malaysia has coincided with a proliferation of opportunities across SE Asia and a shifting attitude of host governments towards small- and medium-term companies, which are now viewed as crucial to maximising value from maturing basins.
Strong Macro Backdrop
Seascape’s entry into Malaysia coincides with a macro backdrop of growing economies with increasing energy demands and an opportunity to help reduce carbon emissions through the development of indigenous gas resources to displace coal-fired power generation.
Primary energy consumption from 2013-23 in Asia Pacific increased by 2.9% pa, the highest of any region globally.
Whilst Coal makes up 47% of primary energy consumption in Asia Pacific, the highest of any regional globally.
Shell, in its LNG outlook 2024, has forecast that global demand for LNG will rise by more than 50% by 2050 to 625-685mtpa (2023: 404mtpa). This increase will be primarily driven by China’s industrial decarbonisation and strengthening demand in other Asian countries, with several countries including Vietnam and the Philippines forecast to transition to LNG importers as domestic production declines.
This analysis is supported by the International Energy Agency (IEA) who estimate that hydrocarbon demand in South Easi Asia will increase by 50% between 2022 and 2050, Additionally, natural gas demand in SE Asia is not expected to peak until the 2040s and beyond. |
Yes, they did say they wanted to avoid equity dilution and I think they also believe that their share price currently undervalues their SE Asian opportunity set. A cash component to their farm out would indeed be the obvious route to avoiding equity dilution.
However, giving up more of Kertang to get cash would also be a form of value dilution. So they'll need to assess at the relevant time in their commercial discussions whether the potential cash component part of the trade with the potential farminee is worth it.
I'm hoping that the expertise and contacts of our new non-executive Geraldine Murphy will help make this farm-out process as competitive and lucrative for SEA as possible.
The presence in the region of big oil companies such as Total (for which some cash component would be a rounding error) which are working on building a position in the Sarawak region and the reported intense interest in Block 2A both suggest a favorable non equity dilutive farm-out result for SEA is feasible. |
Thanks Darcon. Didn't they said in their video that they wanted to avoid further dilution, assuming this would be the obvious route? |
Devonlad - the short answer is yes they could.
Whether they will depends upon the number of participants in SEA's farm-out process and their readiness to compete to acquire the asset and readiness to do so on a timely basis without drawing out the process to their advantage.
A recent example of an exploration play that will receive a cash lump sum as part of their farm-out was that signed by Challenger Energy with Chevron. See: |
Apotheki,Thanks. Will discuss my concerns on that board.Cash |
Question for the educated from the uneducated. The farmout procedure is underway and expected to complete this year. My limited knowledge is that SEA aim to keep at least 15% for a free carry, could they also get some cash to improve their balances and would this be likely? |
Reference your earlier post cashandcard, I have posted on the LSE:DELT thread as I do not want to clog up the LSE:SEA thread [I like both stocks]
Basically Selene is a very different beast as it is near infrastructure plus the operator FTSE100 SHELL have confirmed that it will not require any appraisal wells and will therefore go straight into development.
SHELL obviously have deep pockets so LSE:DELT have already hinted that they will take the money and basically try and emulate the likes of LSE:SEA |
I think what would really top it off would be a near term or actual production asset.Cash |
pogue - I disagree with the conclusions you have reached in your post 164 and in your earlier post. I believe the articles I posted do not support your opinions to the extent you think. Those opinions appear to have been fed by other sources of (mis)information. However, as the subject of Russian gas supply to the EU, the level of transit through Ukraine and disinformation in general is off-topic to this thread, which is on SEA, I will write nothing further on the matter here. |
.... although quite interesting I have to say! Atm Zengas' posts et al are more relevant, don't stop for those of us new to the share Zengas please, very informative I must say. |
Let's keep this BB to SE Asian stuff please. |
Zengas, on a continuing success case, as SEA builds out a full suite of emerging producing assets in SE Asia at low financial and environmental cost, what is the best analogue for valuation comparison? Cove, or RRE, or someone else? |
Last month we were told of 'Multiple, near term catalysts ahead' in terms of value.
We have got the Dewa deal through.
The major Block 2A farmout is due this quarter.
That's 2 and hardly multiples in the near term - so what else to come next 6 months?.
Tuesdays presentation they said they were being brought more than enough opportunities to look over by Petronas. If they are offerring stuff to us in the first place then it's likely something would come our way (if we deem it suitable/right terms).
In addition they highlighted a significant opportunity set across the region.
They also said they hoped to build out a train of more opportunities like DEWA. If so, this alone is building reserves/resources at no drilling exploration cost to find those in the first place with many already covered by expensive 3D.
We are basically skipping two major capital needs steps that most companies require just to get to the stage of having 2C/2P. So this is why there is a huge value lag.
In addition they highlighted a significant opportunity set across the region.
DEWA is only a stepping stone and they value it as a future 75-100p on what is there now - not including the expected upside of some gas reservoirs/faults left untested and further step out.
What value another 1-2 DEWA type deals at zero cost ?
As to 2A we are surrounded by majors such as Shell, Total, Connoco, PTT and others. We have one of the most highly rated deal makers in GM with 35 years experience that has handled major deal advisory sales like Cove Energy, deals for BP, Apache now part of Exxon, Total, Cnooc, Sinochem etc. She arrived in June but was most likely consulted way back as the new focus was considered long before that.
With a farmout deal on such a mega 3d covered and drill ready project likely by year end - and rest of above - i'd think this would be worth a lot more than 50p for starters ie barely £28m which in itself is just too low and a fair but imo understated assessment for the short term and expect a few traders/short termers to move out along the way.
Some of us know (and sufferred for pointing out) the heady valuation of £50m attributed to a Sarawak focussed player awaiting an award of an onshore block at just over half the size to 2A without any 3D, barely 450 km lines of 2D, No CPR, and no ultimate knowledge of what percentage they might have - and no other fall back asset to underpin or seperately grow the company. A valuation comparable would have put us at 100p/£50m mkt cap region. |
Off-topic to SEA, re Russian gas transit via Ukraine in response to posts 158 & 159:
There are some useful tables in these articles showing how Russian gas supply to the EU has reduced in aggregate and also how the proportion of it being sent via pipeline in transit through Ukraine has also fallen. There are options to reduce the Russian gas supply figures further which are discussed in the second linked article. |
Apotheki,There is hardly a queue of suitors lining up to buy NS assets. DELT had to give away their share of the Pensacola gas discovery.Cash |
pogue, I believe a lot of it comes through other routes as well - not least LNG. |
arceryx
you do know that the Russian gas goes through Ukraine don’t you?
It will stop at Xmas Zelensky says as the agreement runs out and he is using it as blackmail to get cash from the countries it supplies. I think it goes to Slovakia and either Hungary or Poland. Going to be fun when that happens to the gas prices in Europe as it will create a shortage mid winter. Sometimes you wonder who your allies are in this world since a Ukrainian blew up Nord Stream. |
Hopefully LSE:DELT can emulate LSE:SEA by selling Selene for circa GBP£20m and re-deploying the cash |
When Europe is still so reliant on Russian gas, filling up Putins coffers for their war in Ukraine(check the figures for continued imports) it's so crazy the opposition to North Sea gas is so strong. But that's the political reality, and why Seascape is now a very different prospect than Longboat was |
Another point, North Sea player HBR, is looking to fully selloff and move on from North Sea. No point wasting time with small fields in an increasingly hostile political and fiscal environment.I think it's a big tick in the box management finally listened to shareholders and let the rotting carcass of the European North Sea assets go from here.The focus on SE Asia makes this a very attractive investment case in more ways than one.Cash |
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