Serica Energy Share Discussion Threads

[bountyhunter] 17/6/2019 20:01

You will be able to afford as much as you can drink if Serica deliver on all the points above. If you want free beer then go to the Sound shareholder meetings but don't buy too many shares!

In the meantime I find 10 bottles of Beer d'Or for £3.60 at Tesco's is almost free!

[fardels bear] 17/6/2019 16:39

Bh, could you include free beer somewhere in that list. I find it always Cheers me up...

[fanshaw] 17/6/2019 13:28

bountyhunter

good summary well done.

[bountyhunter] 17/6/2019 13:13

That fit's in nicely with point 1 on my list taken from a SQZ video presentation a few months ago :)

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

2) Lower opex cost reducing from $18/b

3) 2018 results only included one month of production from BKR and less than three months from Erskine

4) Serica will pay contingent cash consideration to BP, Total E&P and BHP calculated as a percentage (60% in 2018, 50% in 2019 and 40% in each of 2020 and 2021, nothing after that) of net cash flows resulting from the respective field interests acquired

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 as 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 still producing ~3.5k bopd

12) Cash balance accumulating - cash rich / debt free

13) Further accretive deals

[farmscan] 17/6/2019 12:03

Having recalculated now after erroneously including IOC's 50% share from the OGA data! It does actually come out at c 30k boepd. Having taken 50% of Rhum production it averages out at 26852k boepd for BKR plus dcarn's estimated 3114 for Erskine is just shy of 30k. None to shabby all same!

[steelwatch] 17/6/2019 12:01

Some, if not all, of it will go on the R3 workover and Columbus production well, subsea completion and tieback to Shearwater.

[gwillerz78] 17/6/2019 11:55

Thanks farmscan. Don't post much but v positive about the future here. V much looking forward to seeing what they do with huge cash they are generating

[farmscan] 17/6/2019 11:45

Ahhh! yes, well done. I couldn't think why the OGA data differed from the presentation data, but that's it.

[gwillerz78] 17/6/2019 11:22

Sorry may be wrong but don't we need to remove the Iranian oil company 50% share of rhum from oga data before deducting % for partner split? Or has this already been assumed?

[manicat] 17/6/2019 10:59

serica will build cash and buy another BP asset only bigger than BKR and onwards and upwards serica will go

[overeager] 17/6/2019 09:48

dcarn, thanks for that - I was beginning to wonder if I've completely misunderstood the available data - you seem to have reached the same conclusions as me, albeit that I assumed a fair hefty capex spend.

Given all this, can anyone suggest some reasons why the market is valuing Serica so lowly? This is a serious question and I'd like to build up a risk register.

[dcarn] 16/6/2019 20:44

Cash at 31st Jan 18 was $55M

Cash at 31st Mar 19 was $91.8M as per the 2018 FY results presentation.

By my reckoning we made about $36.8M in Q1. If production remains stable and not too much fluctuation in oil price over the full year and we are on for about $147.2M in 2019.

That would be cash of $202.2M, not bad for a company with a current market capital of £339.3M.

[bountyhunter] 16/6/2019 18:55

Thanks robo/over

[simplemilltownboy] 16/6/2019 17:38

Thanks all, it looks like it should be a really good couple of years, clearly the current share price is low in line with gas prices, however this won't be forever and gas is a good longer term bet. With the prospect of a new deal at some point and Bounty hunters reminder email last week, I'm in this for the longer term, probably a decent time to buy some more. GLA.

[overeager] 16/6/2019 17:36

I reckon e/o Sept, as per last year, by which time nearly half the current m/cap will be in cash!

[robo175] 16/6/2019 17:26

I would say mid October.

[bountyhunter] 16/6/2019 17:18

when are they due?

[overeager] 16/6/2019 17:14

SMTB - I doubt you're the only one who misinterpreted the results. I, for the life of me, can't understand why the share price isn't significantly higher and always end up thinking that it will take the half year results publication to spell out just how profitable and cash generative the business now is.

[simplemilltownboy] 16/6/2019 16:48

Thanks Farmscan - WOW! Just checked the FY results and i had mis-intrepreted the results. Happy days

[captainfatcat] 16/6/2019 16:47

Nice link thanks.

With production at such healthy levels the production costs must have fallen to record lows?

I believe the BP production is split after costs so Serica will deal with the whole BKR production including IOC share deducting costs then distributing profit to those who hold an interest in the assets. Not sure where the IOC share goes now but guess that's really of little consequence .

[overeager] 16/6/2019 16:38

Didn't Serica mention 30,000 boepd to them at the last update? Can't find my notes but pretty sure that is current guidance.
EDIT: just spotted it in the 17.4 RNS

[farmscan] 16/6/2019 16:35

Yes 50% of BKR is going to the former owners (with the exception of Marubeni), but that OGA data suggests the production is a lot higher than the originally talked about 24k boepd. I don't quite understand why the OGA data up to the end of March differs from that in the Serica presentation.

[simplemilltownboy] 16/6/2019 16:25

Probably a stupid question but isn't the 41k subject to 50% of the revenue going to our partners leaving circa 20.5k plus erskine at 3.5k meaning revenue/production applicable to Serica the year being 24k? If I'm wrong, and production attributed to Serica is indeed 41k plus erskine, tomorrow I will be increasing my holding. GLA