Serica Energy Share Discussion Threads

[dunderheed] 12/3/2019 11:46

Oh it was for conversation BH (now it's a 3 way between "ourselves" (1 person!))- I think FB had on his watchlist and am interested to see how that "story" rolls out?
Is it a big "con" or is it the "real thing"?
Could be very high upside but very risky imho.

[fardels bear] 12/3/2019 11:42

I did. Glad I sold at 56p.

[bountyhunter] 12/3/2019 11:39

Posted here for future reference, mainly taken from the recent video presentation by Mitch Flegg (CEO)...

1) BKR production increase planned from around 24k boepd to ~30k yearly average

2) Lower opex cost reducing from current $18/b

3) From 40% to 50% share of BKR due to SQZ in 2019 so that's a 25% increase on 2018.
For 2020 that's then a 60% share so a 50% increase on 2018 revenue due to SQZ (more when point 1 is taken into account)

4) Rowallan drill on schedule should hit reservoir early April with TD early May. In the event of success, there is additional upside potential provided by the nearby Dundonald and Sundrum prospects, which are geologically similar to Rowallan. The Rowallan prospect may also extend onto Serica's recently awarded 30(th) Round blocks directly to the south.

5) Columbus development 2020 production 2021

6) R3 intervention should increase Rhum production significantly

7) BKR hub has capacity to handle increased production including from any nearby fields which may be developed by other companies which could increase revenues - BP did not pursue this opportunity for political reasons

8) Looking to extend life of BKR fields and so push back decommissioning - SQZ has lower overheads and is more focused on BKR than BP

9) Decommissioning costs - SQZ will pay 15% after taking into account HMRC's 50% contribution to the initial 30% liability

10) Erskine production restored, 3.2m barrels of oil originally forecast to be produced but 3m produced to date with new CPR indicating another 3m barrels still to be produced!

11) Erskine now producing ~3.5k bopd

12) Post Erskine deal back in 2015 the share price did not fully reflect the acquisition until production figures were released 6 months later, the same may be true of the BKR acquisition

13) Serica's production split is 80% gas / 20% oil

14) Cash rich / debt free

15) Looking for other accretive deals

16) not to forget the Golden Cross on the chart:

[bountyhunter] 12/3/2019 11:37

I've added cash rich / debt free as an additional point, thanks to alloto for bringing that to everyone's attention!
Already have potential further deals which management has mentioned as a possibility. So 16 positives now! Posting again with all 16. Looking forwards to results, when are we expecting them anyone?

[dunderheed] 12/3/2019 11:05

I totally agree with all of the above but we also must always keep our eyes open to "potential" issues.
This is what this makes this board such a good place to post and credit to steely for "keeping" it that way.
Best of luck all.

[general george] 12/3/2019 10:59

Yes lots of positives BH. I look forward to the next update as to ehat production figures are and FCF.

Another aquisition a la RRE would also be a possible..

[manicat] 12/3/2019 10:55

being more positive could be a farm out of namibia to BP or Total another aquistion in the north sea a possible dividend or ineos buying sqz out all are possible

[manicat] 12/3/2019 10:52

its hard to find anything negative about SQZ so lets try. the outage of the forties pipeline a duster in rowallen. weak gas prices can anyone else come up with anything that can put a downer on SQZ because there's not much really

[bountyhunter] 12/3/2019 10:29

What debt?
Maybe I should add
16) Cash positive / debt free

[dcarn] 12/3/2019 10:29

You've missed alotto's debt.

[marvelman] 12/3/2019 10:28

Thanks Bounty. I would suggest that reasons to sell would take up far less space than the above post which is why I believe this share holds it ground.

[bountyhunter] 12/3/2019 10:21

It's not all about the gas price today as the gas price varies and there is a floor, there are many other factors to consider such as:

1) BKR production increase planned from around 24k boepd to ~30k yearly average

2) Lower opex cost reducing from current $18/b

3) From 40% to 50% share of BKR due to SQZ in 2019 so that's a 25% increase on 2018.
For 2020 that's then a 60% share so a 50% increase on 2018 revenue due to SQZ (more when point 1 is taken into account)

4) Rowallan drill on schedule should hit reservoir early April with TD early May. In the event of success, there is additional upside potential provided by the nearby Dundonald and Sundrum prospects, which are geologically similar to Rowallan. The Rowallan prospect may also extend onto Serica's recently awarded 30(th) Round blocks directly to the south.

5) Columbus development 2020 production 2021

6) R3 intervention should increase Rhum production significantly

7) BKR hub has capacity to handle increased production including from any nearby fields which may be developed by other companies which could increase revenues - BP did not pursue this opportunity for political reasons

8) Looking to extend life of BKR fields and so push back decommissioning - SQZ has lower overheads and is more focused on BKR than BP

9) Decommissioning costs - SQZ will pay 15% after taking into account HMRC's 50% contribution to the initial 30% liability

10) Erskine production restored, 3.2m barrels of oil originally forecast to be produced but 3m produced to date with new CPR indicating another 3m barrels still to be produced!

11) Erskine now producing ~3.5k bopd

12) Post Erskine deal back in 2015 the share price did not fully reflect the acquisition until production figures were released 6 months later, the same may be true of the BKR acquisition

13) Serica's production split is 80% gas / 20% oil

14) Looking for other accretive deals

15) not to forget the Golden Cross on the chart:



see

[bountyhunter] 12/3/2019 10:21

I think it's time for a repeat of my reasons to be cheerful post...

[dunderheed] 12/3/2019 10:18

FB - did you see I3E?

[dunderheed] 12/3/2019 10:13

Thanks GG appreciated.
We have to keep an eye on ALL issues that could impact SQZ or are we "falling in love" with the share.

To be clear I'm 100% behind this on a 2 year view - whilst also keeping a very close eye on the oil / gas price / macro economy - however GG is correct to show that potentially revenues could be lower than anticipated which "affects" market perceptions as well and there are quite a few "nervous" sqz'ers here who may look to lock in probably pretty amazing share profits to date?

Really not meant as a de ramp and as ever all imho and dyor folks!

[general george] 12/3/2019 10:05

Perhaps you can point this out on the 2 year chart Fardels?

I dont see it.....

[fardels bear] 12/3/2019 09:41

Yes it does so every year when the weather warms up. Nothing unusual about it and the management aren't going to throw up their hands in horror.Still great prices on condi.

[general george] 12/3/2019 09:39

Gas price is going to dip below 40p a therm soon. Just to bear in mind when calculating cashflow.

Sqz still holding up well.

[bountyhunter] 11/3/2019 18:59

Seems fair steel and will save us some time pointlessly checking dotty posts!

[steelwatch] 11/3/2019 18:52

He's gone (dotty), but allowing the former more rope for now.

[bountyhunter] 11/3/2019 18:20

there goes another, just wastes everyone's time looking for a non existent post, steel may have a double banning order on his hands lol!

[fanshaw] 11/3/2019 17:31

He is trying to wind shareholders up, ignore him he will go away.