Serica Energy Share Discussion Threads

[farmscan] 03/8/2018 18:02

bounty, I think what almsivi is suggesting is that although the Total deal is dependent on the BP.deal completing, and therefore reliant on the OFAC waiver, Total would not enter into this deal with that kind of precondition if there was not a degree of certainty that they both would complete.

[oilretire] 03/8/2018 18:02

My role has been indirectly impacted by a number of industry transactions over the last few years that hardly ever seem to complete as per the initial time scale given on initial public release. There's a fairly major one rumbling on at the moment, already a few months late and with no clear firm date for completion yet.

Technically we are ready, it just seems that legislative & commercial complexities across all parties involved inc governments mean these things seem to have a habit of being delayed. These departments must all employ hyper OCD staff so there's a lot of dotting of I's & crossing of T's to be done ;-)

So that, together with today's new transaction, the new office in Aberdeen etc leads me to firmly believe the BKR deal will complete..........eventually

[captainfatcat] 03/8/2018 18:00

Almsivi yes my thoughts exactly there would have been some not insignificant costs to broker todays announced acquisition SQZ would have been working on it for many months probably waiting till BKR work around was known.

Its somewhat challenging to consider this would have ever been announced unless SQZ management had a high amount of confidence on a positive the outcome of the original BKR deal.

[fardels bear] 03/8/2018 17:58

The wording of that slide with the word and underlined is very odd. If we concentrate on Rhum and further investment there there are only two things short term that I can think of.One is R3 and the other is IOC buyout. Now, you'd think if they bought out IOC then they wouldn't need the OFAC waiver at all.So I dunno but I'm interested to find out in the fullness of time.Best to longs.

[bountyhunter] 03/8/2018 17:52

almsivi - good analysis although I think I read that the BK deal is dependent on the BKR deal which is dependent on the OFAC licence so there is an indirect dependency

[general george] 03/8/2018 17:11

Almsivi,

As previously pointed out, a work around is already written into UK law. (2013)

That is a copper bottomed fail safe imv.

I emailed Serica on Monday asking for an update. First thing this morning I got a reply from Mitch Flegg directly, apologising for the delay in reply, and pointing me in the direction of the news.

His wording sounded very positive.
He said it had been a busy week!

I think they have had the nod or agreement in principle, and advance talks is detailing it out.

Good weekend all

GG

[farmscan] 03/8/2018 17:05

almsivi, you'd certainly think that was the case. I cannot believe that they would be progressing with the new business centre in Aberdeen (along with all the associated new recruiting and staff transfer) if they were not as good a certain it would complete. It does look like all the messages we are receiving are saying that it will.

[general george] 03/8/2018 17:04

Can I point out that on the new presentation....

Page 6.

Says further investment for the benefit of Bruce, Keith and Rhum.

Why is 'and' underlined....?

What's next?

[almsivi] 03/8/2018 16:53

I have been cogitating on this mornings news with some considerable vigor. Is it possible the BoD are in effect communicating their belief that BKR is a done-deal? Up till now, the spectre of IOC & sanctions have been the principle reason the share price hasn't continued its impressive rise - because the deal could collapse if the OFAC license fails to materialise. But this new deal is NOT contingent on any OFAC license - nor could I see Total entertaining being messed about by a third party who could only buy their share of Bruce & Keith if XY&Z external criteria are to be met. To me, Total & Serica must be confident that Serica will be operator before they've agreed to this which might mean one of two things. The OFAC license is a sure-thing, or there's a work-around where an OFAC license is not needed. Genuinely interested to hear others thoughts on this.

[captainfatcat] 03/8/2018 16:18

Yep I was hoping for a little pull back as well very tempted to add a few more to the pot. Will have to wait and see what Monday brings now.

[fardels bear] 03/8/2018 16:15

If you'd asked me this morning if the increase would hold I'd have laughed. We seem to have said goodbye to some traders and some stale bulls today so it looks like onwards and upwards.Like someone said the other day, if it weren't going ahead we'd have had news by now.

[robo175] 03/8/2018 15:44

The penny is starting to drop.

[dunderheed] 03/8/2018 14:59

Blimey great news 're share price but more expensive for me to buy more damn!!
On holiday now in beautiful Tuscany so best of luck all.

[joestalin] 03/8/2018 14:40

Enthusiasm is good to see...

[robo175] 03/8/2018 13:29

Serica
Unfortunately I still haven’t had a chance to meet with Mitch but this deal announced this morning needs no explaining. Serica are buying Total out of 42.25% of Bruce and 25% of Keith adding to their stakes in these UKCS fields at what might be $20m but whatever it ends up being will be very cheap and as the company says, cash flow and value accretive.

It adds 11m b’s of 2P reserves making 60m b’s and is a low risk, reasonable reward deal which gives SQZ, at very limited cost the opportunity to kick on with the scaling up of the business which is rightly being rewarded in the market this morning. Just the sort of deal that the company should be doing and taking advantage of the M&A situation on the UK North Sea.

[loafingchard] 03/8/2018 13:22

Happy days, another tasty morsel from the majors table . Now just need those nice guys at IOC to offer a similar deal on the other 50% of Rhum. I can dream.....

[general george] 03/8/2018 12:28

Hi Almsivi,

Yes £90m looks good to me. Nice to have someone check and agree with my figures.
This only gets better in 2019.

Year end we should have circa £70-80m in the bank, due to payments for BKR/BK
If valued on 3 x profit (very conservative I know)

We get for 2019 profit of circa £125m (incl Erskine @3000 boepd average)

£125m x 3 = £375m add the £80m cash = £450m mkt cap.

£450m mkt cap = £1.72 a share.

[almsivi] 03/8/2018 12:04

£90m is what my projected 2018 figure for SQZ post BKR minus Erskine is - glad to see I'm not far off your own GG

[steelwatch] 03/8/2018 12:00

Still struggling with a sick PC. I note the BK deal also has an effective date 1 Jan 2018.

[general george] 03/8/2018 11:51

Yes BH,

Add Columbus and Rowallan into the mix.

On BKR and Erskine, we would be looking at £125m profit a year on the 50-50 split with BP/Total. This re-rates completely on completion.

This is looking very good, the waiver must nearly be there.

Office is being fitted out with IT, ready for Aug 18th Handover.
Everything is there. Advance discussions indicates they are finalising the detail.

They must have an agreement in principle imho.

6 weeks away from completion hopefully!

[digbee] 03/8/2018 11:27

• Decommissioning cost of existing assets retained by Total E&P
• Serica to pay Total E&P additional consideration equal to 30% of such costs at time of decommissioning net of tax, capped at Serica’s net cash flows from the relevant Bruce and Keith interests

[bountyhunter] 03/8/2018 11:01

and there should be more to come from Columbus etc going forwards GG

[bountyhunter] 03/8/2018 10:54

not the same share FB as both were buys, which is surely good if any kind of secret signal ;)

[general george] 03/8/2018 10:20

For 2018 we end up with the cash from 8480 boepd from BKR
(16.5k av + 4.7k) - I note BKR will probably be more than the 16.5k H1 average, but will use that to be conservative.

Again I will use all gas at 50p per therm (current 58p)

Makes £245,920 a day - annualised £89.76million

Plus whatever Erskine can muster from September.

This is, or will be an absolute cash cow.............