Serica Energy Share Discussion Threads

[stemis] 02/3/2024 20:06

If you want to be prudent you could calculate a scenario of valuing the 111 million shares issued at 315p (which was the daily moving average price leading up to the acquisition). I bet you won’t because that though because it doesn’t suit the agenda !

I used 218p and 278p because the former was used in the interim statement and the latter in the original announcement of the acquisition. I could have used all sorts of other share prices. The current one of 178p for example, which is the value the vendors would actually have received if they sold now. But I didn't.

[stemis] 02/3/2024 20:01

Serica will also be taking on Tailwind's net debt, which as at 30 November 2022 was c.GBP277 million”

However the acquisition took place on 23 March 2023 when net debt had reduced to £247.235m

You can make all the adjustments you want

I'm not making any adjustments. I'm using actual published figures.

Don’t want to get into a long winded argument Stemis!

Neither do I. You are entitled to your opinion. What you aren't entitled to without rebuttal is to misrepresent what I used as the basis of mine.

[nigelpm] 02/3/2024 20:01

It wouldn't be prudent. It would just be plain wrong.

[oilinvestoral] 02/3/2024 19:54

Also to be clear Stemis ! The only reason our share price was decimated to £2.18 was because of the disastrous acquisition. There's no way they would've been that low without the dilution and the debt taken on! If you want to be prudent you could calculate a scenario of valuing the 111 million shares issued at 315p (which was the daily moving average price leading up to the acquisition). I bet you won't because that though because it doesn't suit the agenda ! Have a nice evening Stemis

[nigelpm] 02/3/2024 19:40

Which is why, all throughout my post I gave two possibilities. One using 218p (which is the share price used in the interim statements) and 278p (which was the share price in the original announcement i.e.

Therefore net cost/mmboe is (551m/55.5 or 618m/55.5) £9.9 or £11.1 depending on which share price you use.

Having thought about this more - I think it makes more sense to go with the price on acquisition date.

Can I also add I think this has been a very useful discussion - I hope others are finding it useful also.

[nigelpm] 02/3/2024 19:35

You have to base it on the day of the acquisition Al.

Any good accountant would tell you that ;-)

You don't acquire a business on the day of the first RNS that sets out the planned terms.

[oilinvestoral] 02/3/2024 19:35

I see the diminutive pugnacious little Moaner is foaming at the mouth with his responses. I can't read them ! Please combust quietly there's a good bean counter!

[oilinvestoral] 02/3/2024 19:33

Don't want to get into a long winded argument Stemis! With all due respect here are the numbers from the RNS: "On the basis of the Serica closing price as of 19 December 2022 of 278 pence per share this would be equivalent to GBP367 million. Serica will also be taking on Tailwind's net debt, which as at 30 November 2022 was c.GBP277 million"£664 million was what was announced! You can make all the adjustments you want bottom line is that the company overpaid and we are all suffering as a result!

[nigelpm] 02/3/2024 19:28

I'd add crazy labour government decisions aside this looks very good value here. Similar to prices around a £1 post bkr.

[nigelpm] 02/3/2024 19:26

You are one of the most patient posters on advfn stemis. You have my utmost respect.

[stemis] 02/3/2024 19:24

My mistake! I was being overly generous. What you actually did was worse! You have calculated the 111,048,124 shares they were gifted at £2.18 and came up with £242,085k.

No, I gave both alternatives

Cash - £61,636k
Shares - 111,048,124 shares at £2.18 = £242,085k
Nebt debt taken on was, in the end, £247,235k (£264,835k debt, less £17,600k cash)

A total of £551m (or £618m if we use 278p as the share price, which it was in the announcement).

Which is why, all throughout my post I gave two possibilities. One using 218p (which is the share price used in the interim statements) and 278p (which was the share price in the original announcement i.e.

Therefore net cost/mmboe is (551m/55.5 or 618m/55.5) £9.9 or £11.1 depending on which share price you use.

[nigelpm] 02/3/2024 19:23

For the record serica has been my single most successful investment ever. I started buying at 5p back before most had heard of it. Loaded up very heavily on the bkr news and never really looked back. Of course I'd have loved to have sold everything at £4 but the real world is harder than that

[oilinvestoral] 02/3/2024 18:47

Evening Stemis My mistake! I was being overly generous. What you actually did was worse! You have calculated the 111,048,124 shares they were gifted at £2.18 and came up with £242,085k. The shares were actually worth £2.78 (the issue price)! In fact 1 week before the deal they were worth over 300p! A few months before that they were worth 455p/ share! What you actually did was akin to financial engineering. Why stop at £2.18??? Why not use today's share price and assume they are worth only £189.6m! That'll make the $/bbl Calc even better LOLZ!

[stemis] 02/3/2024 17:05

Stemis forgot to add the cash that was gifted to mercuria in his figures (hence why they are slightly flattering)!

No I didn't

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2 Mar '24 - 09:33 - 5730 of 5753 Edit 0 2 0
According to the interim accounts the acquisition price comprised

Cash - £61,636k <================================================
Shares - 111,048,124 shares at £2.18 = £242,085k
Nebt debt taken on was, in the end, £247,235k (£264,835k debt, less £17,600k cash)

[nigelpm] 02/3/2024 16:28

Ultimately none of this chatter matters. What's done is done. I'm very happy holding below NAV. I like the business and assets.

[oilinvestoral] 02/3/2024 16:20

Absolutely spangle!!!! Agree 100%! Ticked up the post ! Wish I could tick it up twice! Glad someone here has some technical noise!!!I didn't want to get too technical because the pugnacious one is an accountant with a broken abacus! He wouldn't know what a bbl of 2P reserves looks like if it hit him on the face!

[oilinvestoral] 02/3/2024 16:17

CCPyou're wasting your time! Don't justify your numbers to an imbecile! The pugnacious one was calling the reserves after an American film until a few hours ago (until I corrected him) .... He's utterly clueless! Stemis forgot to add the cash that was gifted to mercuria in his figures (hence why they are slightly flattering)! As you say it is disingenuous to use reserves that didn't even exist at the time of the deal to make it seem better than it was. If the deal turns out to be cheaper , it's by luck rather than by judgement/ design. Enjoy your weekend you won't convince Mr Pugnacious!

[spangle93] 02/3/2024 16:15

Ref 5748

Reserves (aka commercially producible hydrocarbons) also depend upon the assumptions about future costs and commodity prices.

A company with multiple assets can spread fixed costs across its assets thinner than a company with only one or assets can. So for a fixed assumption about oil price, reserves if the first company operated a field would be higher than if the second operated it, even if the volume and recovery factors are the same.

[oilinvestoral] 02/3/2024 16:15

100% agree there Stemis! For sure the valuation isn't just about 2P, but that's the most used comparison / valuation metric they would've also taken 2C into account and dare I say even contingent & prospective resources. The deal was still overvalued based on all reasonable metrics (no matter what way you cut it)! That is beyond any reasonable doubt. You simply have to look at the basic facts:1) The guy who orchestrated the ill-fated has been sacked (allegedly against his will kicking & screaming)! 2) The assets purchased have suffered some shutdowns and underperformed!3) The share price has nearly halved if you compare it to the weeks prior to the deal. 4) the previously bullet proof balance sheet had weekend significantly and oodles of debt have been taken on! #FACTS

[stemis] 02/3/2024 14:57

The fact that 2p increased by 32% from 42mmboe at the announcement of the acquisition to 55.5mmboe in the interims just 9 months later, illustrates my point that valuation isn't just about 2p at one single point in time but also the prospectivity of the licenses.

[nigelpm] 02/3/2024 14:25

My sense is it was a very decent deal at the time with what was known then.

As things have turned out with hindsight as a short term play of course it would have been better to have kept a high net cash position and entered into a large buyback programme or returned capital to shareholders through special dividends.

[nigelpm] 02/3/2024 14:22

More likely coffee as part of the due diligence process Serica will have got closer to a 55m figure.

[coffeecanportfolio] 02/3/2024 13:56

The deal would've been in negotiations for many months may be even a year. I used the 2022 figures because it provides a fairer reflection of what Serica knew when they negotiated the terms and gives a more accurate number of what was being shaken hands on/ merits of the deal. If reserves continue to grow between now and 2027, the deal may very well turn out to be a reasonable one.