Serica Energy Share Discussion Threads

[undervaluedassets] 13/9/2024 09:18

The "half a billion dollars of cash flow after currently committed investments over the coming three years" has clearly registered in investors minds

How could it not

[waterloo01] 12/9/2024 16:50

Thanks. Interesting input.

[petomi] 12/9/2024 16:45

Good to see the recent recovery as completely oversold on interims day. A few points which struck me:

1 In the presentation they were keen to stress that the maintained 9p interim divi was a signal of their intention to hold the 23p full year total (without of course any guarantees).

2 I don't know if they would normally announce flow rates from individual sidetrack/infill wells but, since as someone noted above, they "eagerly" anticipate the flow rates it would be surprising if they didn't announce them this time given the share price backdrop. FWIW the 'inhouse' Auctus analysis, available on SQZ website, assumes c3k and 2k mbbl/day for B6 and GE-05 respectively, ie combined 5k mbbl/day increasing production by around 10% with others to follow.

(Incidentally I couldn't spot what production assumptions underpin the very powerful slide p6 showing that current MCap would be covered by FCF by end 2027 even under prudent tax assumptions, which rather reduces its impact - has anyone worked this out?)

3 I am extremely cynical about the govt attitude to N Sea tax, especially the idiot Miliband, but there must be some chance, when Reeves and the Treasury see the almost certain downside impact on medium term tax take, that there will be some amelioration against the 'worst case' come the October budget, ie potential upside for the shareholders.
The case was well argued by Offshore Energies:
hxxps://oeuk.org.uk/oeuk-releases-data-showing-impact-of-governments-oil-and-gas-tax-changes-on-sectors-contribution-to-uk-economic-growth/
"The modelling, previously shown by OEUK to the Treasury, shows that the Government’s proposed fiscal policy would generate a loss in economic value of around £13 billion compared to the economic contribution generated under the current windfall tax regime." "The analysis shows that while the expected tax take from UK oil and gas producers would increase in the very short term, ultimately it would result in a £12 billion loss in receipts compared to the current regime."
There is also the political heat in NE Scotland to factor in.

So I remain optimistic, even though the Auctus target of 290p is looking a pipedream!

GL to all LTHS

[upwego] 12/9/2024 09:30

Like I said this should recover a lot in the coming weeks would be nice to see an aquisition abroad of an asset.

[imjustdandy] 12/9/2024 07:05

Oil price recovered nicely

[pol123] 11/9/2024 21:26

I predict 141 being the XD price

[davethehorse] 11/9/2024 15:14

Time to take profits for the traders

[kernelthread] 11/9/2024 12:37

Don't forget 9p will come off on Oct 24th when it goes XD.

[imjustdandy] 11/9/2024 12:26

Looks like we on our way to £2. So mis priced its just hard to believe what a gift this is. Brent motoring now too. All coming together nicely

[roundtheworld] 11/9/2024 12:19

I wonder if this will now drift down to the 103 level?

The chart suggests it will.

[s34icknote] 11/9/2024 12:17

9 p interim div to come as well !!!

[irenekent] 11/9/2024 10:05

Glad I topped up. Will add more on any pull-back. If they join the main market and build an overseas portfolio they can stick two fingers up to the fanatics like Milliplod & Co.

[upwego] 11/9/2024 10:01

The B6 well (formerly B1z sidetrack) on the Bittern field (SQZ: 64.6%) has been tied into the Triton FPSO. Promising data were collected during drilling and we eagerly anticipate initial flow rates in coming days

Do they usually announce flow rates?

[upwego] 11/9/2024 09:05

Think she will rally for a number of days me thinks.

Nice to have found the bottom for a change.

[imjustdandy] 11/9/2024 08:54

Slowly back to 2 quid

[undervaluedassets] 11/9/2024 08:18

from the results statement of yesterday..

"Following the share buyback of £15 million ($19 million), interim dividend of 9p declared today, unchanged on 2023. This reflects the Company's confidence in its medium-term robust cash generation outlook, with the expectation of generating over half a billion dollars of cash flow after currently committed investments over the coming three years at current commodity prices, after factoring in the expected tax regime"

As a reminder ... a billion dollars of cash flow is more than the entire market cap of the company

Tangible proof that that is not just hot air, is the 17% yield that investors will receive this year.

Going forwards, the company made it known yesterday that it is committed to paying dividends out of its substantial cashflows.

One suspects those who sold yesterday may have done so a little early.

[upwego] 11/9/2024 07:27

Agreed Parob - Time to move North.

[parob] 11/9/2024 07:09

Bottom went in yesterday imo.

[imjustdandy] 11/9/2024 07:03

Wooosh time - drop has been way way overdone

[mick_oi] 10/9/2024 20:29

hxxps://www.malcysblog.com/2024/09/oil-price-serica-energy-corcel/

Serica has announced its unaudited financial results for the six months ended 30 June 2024.

Chris Cox, Serica’s CEO, stated:

“I am delighted to introduce my first set of results as Serica CEO. Prior to joining, I felt that the Company stood out due to the quality of the team, its strong financial position, and the opportunities for growth both organically and through acquisition – my opinion of the Company’s potential to create value for shareholders has only increased since my arrival.

Despite an unjustifiably punitive fiscal regime that may make future investment on the UKCS challenging – and with the level of capital allowances remaining uncertain until the Autumn Budget on 30 October – what is clear is that, thanks to our investment in our assets and our lean operating model, our producing assets remain cash generative, even after paying taxes at a rate of 75% today and due to rise to 78% from 1 November.

Our confidence in our cash generation outlook, together with our strong balance sheet, gives us capital allocation options. Paramount amongst these will always be supporting material shareholder returns which is why we are announcing today that we are holding the interim dividend flat at 9p per share. In addition, to sustain the longevity of our model, we want to continue reinvesting our cash flows into our UK North Sea assets. As a reservoir engineer, I am encouraged that there are multiple attractive opportunities to invest in our portfolio to allow us to sustain production and deliver home-grown low-carbon energy in the medium term. However, we will only be able to make these investments if the fiscal environment allows us to generate a fair return on your capital. We also have the option to add to our portfolio through acquisitions and that is why we will continue, intensively but prudently, to seek value-accretive M&A, both at home and abroad.

Whatever the outcome of the Autumn Budget, my focus will not waver from safety, operational delivery, and growth. The potential in the fields we operate is demonstrated by the positive early signs we are seeing from the Triton drilling programme, and I have been deeply impressed by the talented team we have within Serica that will enable us to unlock further value. Serica will continue to pursue a returns-led investment strategy, and I am confident that we are set to deliver materially cash-generative production for many years to come.”

The team at Serica is up and running and this is a pretty good set of results with a few things that can be tinkered with, all of which were addressed on a good investor call this morning. EBITDAX of $279 gives a net profit of $82.5m but what I like the most is the cash figure of $131m and that enabled a dividend of 9p, and a ‘very material yield of some 19%’.

FCF is $98m and the company point out that the way that it is heading that this will be higher than the market cap by 2027 which makes you wonder. The point is more in my view that SQZ has a very strong and highly resilient balance sheet that enables further investment in the UKCS if tax allows, a sensible M&A programme if it does not and either way a proper level of shareholder distributions via dividend or share buy-backs.

One really important thing to look for in the statement is where the company takes an unusually frank view with regard to ongoing cash generation, not seen often in forward looking statements as they say in the trade. ‘This reflects the Company’s confidence in its medium-term robust cash generation outlook, with the expectation of generating over half a billion dollars of cash flow after currently committed investments over the coming three years at current commodity prices, after factoring in the expected tax regime’. Hence the comment about the market cap and this is based on the worst possible tax regime.

Technically Serica has a world class subsurface team which gives the company scope in all these objectives and has recently drilled two wells, the B6 at the Bittern field (SQZ:64.6%) which has been tied into the Triton FPSO and is expected to come onstream any time soon. The second is the GE-05 well on the Gannet field (SQZ:100%), is at TD and all looking good for production in November. Given the high equity stakes in these wells, both could be material and the 2024 exit rate potentially impressive.

The guidance has been lowered, not by much but to the lower end of the existing 41-46,000 boepd and this is due to the unplanned downtime at the Triton hub but there is more here. Talking of full disclosure, new CEO Chris Cox when speaking this morning did say that he was not happy with the guidance offered and I’m sure that is code for a tightening up of this area. Chris also made it clear that he isn’t particularly happy with the asset performance and spoke well about how that can be changed.

The company mentioned its investment at the Buchan field where the development is on hold due to the environmental impact statement, as well as the Government’s tax position. It is a very exciting development and ticks so many boxes, it is a flagship state of the art piece of engineering, will be a model for low carbon hydrocarbon production and helps the UK economy by supplying over 1,000 direct jobs, pays more than fair tax and of course contributes to the UK’s energy security.

As I write completing this article I notice that the CFO has bought some shares for cash, something I always like, it shows that he, like me considers Serica to be hugely undervalued. The comments about free cash flow aside, the fact that the company has a fantastic asset base, a really impressive management team with ESG credentials and that robust balance sheet. Serica is plainly way too cheap, it may be suffering from the political behaviour at the moment but the company is built to last unlike the odd Secretary of State.

[waterloo01] 10/9/2024 15:31

hardly. Not quite back to where it ended last night, although good to see it bounce, a bit.

[creditcrunchies] 10/9/2024 15:12

Looks like high volume buying now

[spawny100] 10/9/2024 14:58

Biggest volume traded today for well over 2 years. Most look like buys so hopefully will see a floor in the share price.

[imjustdandy] 10/9/2024 14:01

CFO / Director buying now. Thats good to know they are free to buy - The CEO purchased £624,000 at £1.35 back in July . Standby for the big one