Serica Energy Share Discussion Threads

[mr smc] 18/12/2024 17:06

Just imagine if all the companies left for better tax climates!Where would the Liebour government get their tax receipts ?

[yasx] 18/12/2024 10:19

xxn,

That article sums up the absurd approach of this abject Govt - and the previous bunch were exactly the same. That the latter described themselves as Tories is laughable.

[xxnjr] 18/12/2024 05:50

FT - ".....Ineos Energy chief warns ‘punitive̵7; UK taxes make North Sea uninvestable
Industry veteran Brian Gilvary says government policies force oil and gas explorers to seek opportunities in other markets.

Oil and gas explorers in the UK are operating with “hands tied behind” their backs, according to the chair of Ineos Energy, with “punitive̶1; government tax policies forcing them to seek opportunities in other markets.

Ineos Energy, the four-year-old oil and gas arm of chemicals group Ineos, said it had bought $3bn of US assets rather than investing in the North Sea and would continue to look for deals abroad. 

“In our initial strategy we wanted to expand in the UK, particularly gas. And what has happened is that the tax regime makes that impossible,” said Brian Gilvary, Ineos Energy chair and a former chief financial officer of oil major BP. 

The industry veteran described the current taxes on North Sea oil and gas, brought in by the then Conservative government and increased by Labour in its most recent budget, as “the most unstable fiscal regime in the world”.

Gilvary said Ineos Energy shelved a “series of transactions” in the UK after the Energy Profits Levy was introduced in 2022 in response to the jump in oil and gas prices that followed Russia’s full invasion of Ukraine.  

The current government raised the levy from 35 per cent to 38 per cent in October, creating a headline tax rate for North Sea oil and gas companies of 78 per cent, and removed a 29 per cent investment allowance. 

“We’ve done three deals in the US, and those came in pretty quick succession off the back of the EPL,” said Gilvary. “We’ve looked at two potential transactions in the past 15 months in the UK and both of them were precluded going forward because of the EPL. The economics don’t stack up when you have the alternative to move that money to the Gulf of Mexico.” 

He continued: “If you speak to anyone in the industry, everyone is looking for a partner right now, but there’s nothing we looked at that we thought we could move forward on, simply because of the prohibitive tax.” 

US-based Apache last month announced plans to wind up its North Sea operations by 2029, blaming the UK tax regime. Shell and Equinor have merged several of their UK assets into a new company to be more tax efficient. 

“Every oil and gas producer in the UK will be looking at opportunities outside the UK right now,” said Gilvary, whose company has negotiated a deal to buy a share of a Gulf of Mexico deepwater field operated by Shell from China’s Cnooc International for an undisclosed sum.

“The frustration for those players in the North Sea in the UK is we’ve sort of got our hands tied behind our backs because [we cannot get] new licences. So we cannot extend the life of what we have, even at these punitive tax rates. And so you end up in a run-off position.”

“Basically we’ll try to harvest the assets as best we can and focus elsewhere,” he said. 

Gilvary said the government did not “appear to wish to engage” on the North Sea’s fiscal regime, although he expected that the taxes would eventually be cut, but that companies may be unwilling when that time comes.

The market value of the UK’s top 25 independent oil and gas companies has fallen from £27.8bn in 2011, when oil prices averaged $110 a barrel, to £9.8bn at the end of last year, when oil prices averaged $80 a barrel, according to Deloitte, as the sector steadily lost its appeal to UK investors......"

I'm stocking up with candles!

[cat33] 15/12/2024 14:06

Good deal with/for Parkmeadhttps://oilman.beehiiv.com/p/oilman-jim-s-letter-december-15-2024Worth reading

[golfer32] 15/12/2024 08:06

It would be nice to finish this week in the 1.40s

[nigelpm] 13/12/2024 22:24

Everything looks like a cracker to malcy - honestly he just drivels on and talks nonsense.

[mick_oi] 13/12/2024 10:41

Malcy's blog:Whilst this is not a huge deal it looks like a cracker to me, on the face of it it ups Serica's interest in Skerryvore to 70% and gives an interest in Fynn Beauly which is a heavy oil development not even certain of going ahead under current economics but that is not the primary reason for the deal.No, the real reason for this bit of imaginative M&A is that it brings with it a huge pool of tax losses of varying type which amount to '£197 million of ring-fence corporation tax losses, £181 million of supplementary charge tax losses, £1 million of Energy Profits Levy losses and £12 million of activated investment allowances'. It is actually amazing to write up a deal involving Parkmead after years of inactivity, Tom Cross gets to keep the Dutch assets, in themselves of little value to Serica who have nothing in the country and would only be an administrative nuisance. For me, while I am expecting bigger deals than this it should not be written off as just a tax efficient stroke of genius, it is entirely logical, value accretive and unusually a win-win situation for both parties. What is more, should either of the fields go ahead then they will fall into a feather bed of tax losses thus making the development highly profitable. Having said that I am still expecting more, bigger deals from Serica but this is a smart, efficient and fiscally astute gift for shareholders.

[farmscan] 13/12/2024 09:31

Thanks for that xxnjr, looks like that is the case. It appears the website is quite a bit out of date.

[xxnjr] 12/12/2024 21:47

p12 of

suggests their website is out of date. It would seem to be just the UKNS assets mentioned in the SQZ RNS as,

p6 says "The Group has notified the NSTA of its intention to relinquish licence P218, in which Gamma East is located, and this is being progressed."

[farmscan] 12/12/2024 16:11

Maybe I'm not reading this properly or is there more to this deal?

The RNS states that the deal "INCLUDES a 50% working
interest in licence P2400 (Skerryvore) and a 50% working interest in licence P2634 (Fynn Beauly)"

On the Parkmead website their NS assets include West of Shetland, Moray Firth, Uk Central NS and UK Southern NS,

According to the Parkmead RNS It's only the Netherlands assets not included.

[cat33] 12/12/2024 14:47

Nice deal with Parkmeadhttps://oilman.beehiiv.com/p/oilman-jim-s-letter-december-12-2024Jim's summary - worth reading

[oilinvestoral] 12/12/2024 13:52

It's cheap no doubt about it! Much much cheaper than our previous foray into the M&A market ! The only doubt that some of us have is the jurisdictional risk with Eager Ed at the head of UK energy policy ! I would've liked this to be overseas ...

[this_is_me] 12/12/2024 10:47

Having just bought shares a couple of weeks ago my timing, for once, seems to have been good!

[lord gnome] 12/12/2024 08:54

At first read, this does seem to be a very good deal for Serica. Very little cash up front which should be more than offset by tax losses purchased in time to protect this year's earnings. Going forward, buying potential 2P reserves for a projected 80p per barrel is very good business.Parkmead were obviously over a barrel, and unable to fund development, but they retain the prospect of higher returns if development proceeds. Better Serica do it than Parkmead.

[oilinvestoral] 12/12/2024 08:47

Yes like the last set of acquired tax losses did very well for the share price! As they say: Once is a mistake , twice is a decision !

[bountyhunter] 12/12/2024 08:28

Good move re the acquired tax losses.

[xxnjr] 12/12/2024 08:18

So are the sheep required to remain in the ring fenced paddock or free to roam the wider estate?

[ohisay] 12/12/2024 07:59

Auctus today...

We have incorporated the acquired tax losses into our valuation for Serica. We have also moved forward our DCF for the company by one year to YE25. A s a result, our Core (2P) NAV has increased from £2.41 per share to £2.58 per share, and our ReNAV has risen from £2.82 per share to £3.04 per share.
Approximately 50% of this increase reflects the value created by the acquisition.

[washingmachine] 12/12/2024 07:45

I’ve a strong feeling the tax credits were a decisive factor

[sawney] 12/12/2024 07:40

Shedload of tax credits...?

[arlington chetwynd talbott] 12/12/2024 07:30

That seems to make sense.

[captainfatcat] 12/12/2024 07:30

Thoughts on today's announcement?

[sludgesurfer] 09/12/2024 18:15

I suspect that's the wrong way around... :-)

[golfer32] 09/12/2024 08:48

Cannacord unrisked 196
Risked 266
What's not to like