Serica Energy Share Discussion Threads

[general george] 09/2/2019 13:36

Hi BH.

I hold Amer, that looks great value. I also have some gkp genel and sia.

I agree with ur post the hedging cost is unclear, all we know is sqz sell to a BP entity, which is hedged at a 35p floor.

DH. Not looked at RRE in detail yet. Will do so if my daughter gives me a chance!

[bountyhunter] 09/2/2019 11:48

CFC

"As part of the acquisition, Serica has entered into product sales agreements with certain
BP entities to off-take Serica's share of production of gas, oil and natural gas liquids from
the BKR Assets on market terms. In addition, BP Gas has agreed to provide Serica with a
prepayment facility of up to £16 million to provide for drawings to cover the cost of gas
price hedging instruments which have been purchased by Serica in conjunction with
signing the acquisition agreement and, if required, the initial consideration."

[dunderheed] 09/2/2019 11:43

GG thanks for your feedback.
Did you look at RRE or just discounted because of AA?
Fair enough if that is the case. It's interesting, I like the chap and think he's done exceedingly well at RRE!
All imho of course!

[captainfatcat] 09/2/2019 11:34

Note to self must check SQZ BKR production hedging arrangements.

[bountyhunter] 09/2/2019 11:19

Good post Nigel, agree re HUR and RRE but out of Soco ages ago, although not followed since then. As you will have seen CLNR is my new speculative favourite; also Amer.

[nigelpm] 09/2/2019 11:11

Looks like my ban has finally passed here so why not have a quick post.

Nice call GG. I've sold some of these here but kept a decent chunk.

I'd argue that yes Gas price has fallen and that will impact cash flow but it was probably already pretty well undervalued anyway. Think I'd originally felt that £1.75 area was sensible once everything was confirmed as going well and on track.

Other areas.

Hurricane, Soco and Rockrose look decent.

I tend not to worry myself over macro stuff so much - as you say just make sure you buy decent businesses and you should be fine.

[general george] 09/2/2019 10:17

Hi DH.

I am going to be in cash mainly.
I have bought some Enquest toggle notes at 79p, which i did last week.

I think looking at the Baltic dry index, which often leads, we will have further correction. US is crazy overvalued, if that bombs, so will oil.

I hope to pick up some bargains then. Of course I dont have a crystal ball so nothing is for certain. But if you do buy now, buy quality/value, with downside protection.

[bountyhunter] 09/2/2019 10:13

Stuck in that one like yourself!
How long has that farmout deal been imminent for now?

[dunderheed] 09/2/2019 09:56

Bounty ffs why dudnt you put into Hughs "world class" Irish prospects?! Lol.

[bountyhunter] 09/2/2019 09:54

Good question Dh. Lots of press coverage on the CLNR farmout deal today incl Times, Herald, Mail etc. Topped up my holding there at the close on Friday. Speculative though and still remains a minority holding for me.

[dunderheed] 09/2/2019 09:51

Where r the funds headed GG?!
Best of luck all!

[general george] 09/2/2019 09:46

Tks CFC. I will certainly be popping in.

Its been a great board to be involved with.

I will look to the next update with interest and indeed the Rowallan drill.

I hope SQZ continues to perform well for you guys.

Cheers GG

[captainfatcat] 08/2/2019 23:20

General George well done that's a nice profit to bank. Hopefully you will pop in from time to your input was always appreciated.

[bountyhunter] 08/2/2019 23:18

Good points FB I missed some of those. I guess I picked up some of GGs shares today down to 134p.

Who won the guess the price competition by the way or is that still ongoing?!

[fardels bear] 08/2/2019 23:12

Yes, but we know that 2019 production is likely to be over 30,000 boepd nett to Serica. Erskine condi valuable. We also know that in 2019 we get 50% of BKR revenue and the same from BK. We get all of Marubeni revenue. We knew we were undervalued even latterly. We have a lot of cash at bank and huge tax credits. I don't see the need for PIs to panic sell.

[bountyhunter] 08/2/2019 22:09

Ok say 50m profit for the gas + the up to 20% of oil income. (Gas proportion specified as 80%+ on website not specifically 85%).
All I'm saying is that average gas price this year to date is not all that different from the average achieved last year however the production due to Serica (gas + oil) will be higher than last year, and we all know that the PE compared to piers remains second to none (except possibly RRE which has more liabilities) with no debt.
Also don't forget R3 and Columbus and potential future deals which based on the BP deal could be pretty good.
I see the current dip in the share price as a buying opportunity.

[general george] 08/2/2019 21:45

Roughly the gas portion, 85%

Bkr opex is 19usd pb.
That is £14.69pb

If realised price is 48.5p a therm, that is £28.13 a barrel, which is 58 therms.

Gas profit pb is 13.44

2018 net production av 24k boepd

So from gas
24k/2 x 13.44 x 0.85 = £50m

So still decent. You can work out the condensate as well, i will leave that to someone else. Check my sums too, any feedback welcome.

Obv. Sqz have erskine and bkr condensate to add.

[bountyhunter] 08/2/2019 21:14

Current UK gas price is 48.5p/therm, average price achieved last year was 59p/therm so certainly no huge decrease from last year's average. To date this year the gas price has been above 48.5p/therm of course.
The futures price for winter 2019 is 58p/therm

[bountyhunter] 08/2/2019 20:41

not all gas of course

[general george] 08/2/2019 17:24

US natgas is vastly different prices, depending on where you are.

But you carry on.....

[chestnuts] 08/2/2019 16:31

GG

UK gas is still related to usa gas prices just look at the charts

[general george] 08/2/2019 16:30

I have been selling since 144p and am out now. UK gas prices are back to a more usual range.

My reasoning? I think the 2018 elevated prices were due to nordstream doubts and rhum possibly being offline.

I hope Serica continues to perform well, of course if another aqusition pops up, i will be happy for holders.

This has been my best investment from 22p until recently.

Gd luck all.

[general george] 08/2/2019 16:20

Chesnuts,

US gas has nothing to do with European gas prices.

However I do agree the UK price has fallen alot. Sqz profit wont be around 100m if it drops to 45p and below.

I have been selling out of SQZ. Will re enter if i think it becomes a bargain again.

Good luck to all holders, hopefully the gas price perks up.

If Rowallan comes in a different story.

[bountyhunter] 08/2/2019 15:36

I noticed that as well. Remember what happened last time?
Happy to be back here, I'm not a trader and in for the longer term so minor gyrations won't even bothering me too much .