Serica Energy Share Discussion Threads

[stemis] 02/3/2024 19:24

My mistake! I was being overly generous. What you actually did was worse! You have calculated the 111,048,124 shares they were gifted at £2.18 and came up with £242,085k.

No, I gave both alternatives

Cash - £61,636k
Shares - 111,048,124 shares at £2.18 = £242,085k
Nebt debt taken on was, in the end, £247,235k (£264,835k debt, less £17,600k cash)

A total of £551m (or £618m if we use 278p as the share price, which it was in the announcement).

Which is why, all throughout my post I gave two possibilities. One using 218p (which is the share price used in the interim statements) and 278p (which was the share price in the original announcement i.e.

Therefore net cost/mmboe is (551m/55.5 or 618m/55.5) £9.9 or £11.1 depending on which share price you use.

[nigelpm] 02/3/2024 19:23

For the record serica has been my single most successful investment ever. I started buying at 5p back before most had heard of it. Loaded up very heavily on the bkr news and never really looked back. Of course I'd have loved to have sold everything at £4 but the real world is harder than that

[oilinvestoral] 02/3/2024 18:47

Evening Stemis My mistake! I was being overly generous. What you actually did was worse! You have calculated the 111,048,124 shares they were gifted at £2.18 and came up with £242,085k. The shares were actually worth £2.78 (the issue price)! In fact 1 week before the deal they were worth over 300p! A few months before that they were worth 455p/ share! What you actually did was akin to financial engineering. Why stop at £2.18??? Why not use today's share price and assume they are worth only £189.6m! That'll make the $/bbl Calc even better LOLZ!

[stemis] 02/3/2024 17:05

Stemis forgot to add the cash that was gifted to mercuria in his figures (hence why they are slightly flattering)!

No I didn't

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2 Mar '24 - 09:33 - 5730 of 5753 Edit 0 2 0
According to the interim accounts the acquisition price comprised

Cash - £61,636k <================================================
Shares - 111,048,124 shares at £2.18 = £242,085k
Nebt debt taken on was, in the end, £247,235k (£264,835k debt, less £17,600k cash)

[nigelpm] 02/3/2024 16:28

Ultimately none of this chatter matters. What's done is done. I'm very happy holding below NAV. I like the business and assets.

[oilinvestoral] 02/3/2024 16:20

Absolutely spangle!!!! Agree 100%! Ticked up the post ! Wish I could tick it up twice! Glad someone here has some technical noise!!!I didn't want to get too technical because the pugnacious one is an accountant with a broken abacus! He wouldn't know what a bbl of 2P reserves looks like if it hit him on the face!

[oilinvestoral] 02/3/2024 16:17

CCPyou're wasting your time! Don't justify your numbers to an imbecile! The pugnacious one was calling the reserves after an American film until a few hours ago (until I corrected him) .... He's utterly clueless! Stemis forgot to add the cash that was gifted to mercuria in his figures (hence why they are slightly flattering)! As you say it is disingenuous to use reserves that didn't even exist at the time of the deal to make it seem better than it was. If the deal turns out to be cheaper , it's by luck rather than by judgement/ design. Enjoy your weekend you won't convince Mr Pugnacious!

[spangle93] 02/3/2024 16:15

Ref 5748

Reserves (aka commercially producible hydrocarbons) also depend upon the assumptions about future costs and commodity prices.

A company with multiple assets can spread fixed costs across its assets thinner than a company with only one or assets can. So for a fixed assumption about oil price, reserves if the first company operated a field would be higher than if the second operated it, even if the volume and recovery factors are the same.

[oilinvestoral] 02/3/2024 16:15

100% agree there Stemis! For sure the valuation isn't just about 2P, but that's the most used comparison / valuation metric they would've also taken 2C into account and dare I say even contingent & prospective resources. The deal was still overvalued based on all reasonable metrics (no matter what way you cut it)! That is beyond any reasonable doubt. You simply have to look at the basic facts:1) The guy who orchestrated the ill-fated has been sacked (allegedly against his will kicking & screaming)! 2) The assets purchased have suffered some shutdowns and underperformed!3) The share price has nearly halved if you compare it to the weeks prior to the deal. 4) the previously bullet proof balance sheet had weekend significantly and oodles of debt have been taken on! #FACTS

[stemis] 02/3/2024 14:57

The fact that 2p increased by 32% from 42mmboe at the announcement of the acquisition to 55.5mmboe in the interims just 9 months later, illustrates my point that valuation isn't just about 2p at one single point in time but also the prospectivity of the licenses.

[nigelpm] 02/3/2024 14:25

My sense is it was a very decent deal at the time with what was known then.

As things have turned out with hindsight as a short term play of course it would have been better to have kept a high net cash position and entered into a large buyback programme or returned capital to shareholders through special dividends.

[nigelpm] 02/3/2024 14:22

More likely coffee as part of the due diligence process Serica will have got closer to a 55m figure.

[coffeecanportfolio] 02/3/2024 13:56

The deal would've been in negotiations for many months may be even a year. I used the 2022 figures because it provides a fairer reflection of what Serica knew when they negotiated the terms and gives a more accurate number of what was being shaken hands on/ merits of the deal. If reserves continue to grow between now and 2027, the deal may very well turn out to be a reasonable one.

[nigelpm] 02/3/2024 13:42

Great analogy Stemis - it's a truly bizarre argument.

[nigelpm] 02/3/2024 13:41

I am still mystified why a reserves position that is 11 month old at the time of the announcement of the acquisition is seen as more reliable/accurate than one conducted a few weeks later. Genuinely interested in the logic of that.

[stemis] 02/3/2024 13:40

That's like saying that, if you paid £100 for what you thought was an empty briefcase but it turned out to contain £1,000 in cash, it was still a bad deal because you originally thought it would be empty. 55.5 mmboe of 2p is what they got for their money whether they expected it or not (and maybe they actually did expect an upgrade in 2p).

[coffeecanportfolio] 02/3/2024 13:13

To be clear, my figures are based on the deal RNS. The headline 2P reserves announced in December. I feel it would be disingenuous to use more recent upgraded reserves to justify the deal.FWIW I believe longterm the is a good one but I've double checked my numbers and I make it just under £16/bbl or $20.5/bbl!

[oilinvestoral] 02/3/2024 13:07

So you're valuing a deal on a reserves valuation that you claim still "hasn't taken place? That's all I need to knowPermanently filtered!

[nigelpm] 02/3/2024 12:18

Reserves get revalued on an annual basis. At the time of the December rns that revaluation hadn't taken place. It took place after year end and reported as such.

[nigelpm] 02/3/2024 10:26

Thanks stemis. Actually slightly better than I thought.

[oilinvestoral] 02/3/2024 10:10

CCPI'm not sure if you are new here but to give you some background about the Pugnacious Mendacious. His track record is literally worse than Jim Cramer! The pugnacious one turned up at SQZ in 2022 during the gas price boom armed with his trusted abacus. In hindsight that was my cue to leave (having been here since 2015). His track record in the energy sector in recent years includes buying Hurricane Energy at 60p , Cairn Energy at 240p and soco international at 400p +! Watch him claim otherwise and deny it ! His posts are still there for all to see! lolThe company where most of us made life changing money in recent years in the oil sector (Rockrose Energy), was one he continually & incessantly de-ramped on Twitter until it was taken over ! Unbelievable! In non oil and gas companies he was recently seen pumping POLX! I kid you not! So be careful before you start listening to his ilk or taking any investment advice based on his years of untold wisdom!