Serica Energy Share Discussion Threads

[yasx] 13/6/2024 12:33

Kibes,

Sums it up perfectly.

[sawney] 13/6/2024 11:30

That'll be in the small print...

[ashkv] 13/6/2024 11:27

Windfall Tax Investment Allowances will be the key factor - does Labour wish to kill investment or support it!!!

Extension is moot as Tory's had 2024 Spring Budget extended the windfall tax to Mar 2029 - end of next parliament at max 4 years would be July 2029

Hopefully will move to a Norway style system of returning capital investments in new projects etc - THAT IS THE MOST SENSIBLE AND EVEN A NATION WHICH IS HIGHLY GREEN HUGE EV PENETRATION ETC HAS A SENSIBLE BALANCE OF HIGH TAX AND HIGH ALLOWANCE!!!

"To support investment in this plan, Labour will close the loopholes in the windfall tax on oil and gas companies. Companies have benefitted from enormous profits not because of their ingenuity or investment, but because of an energy shock which raised prices for British families. Labour will therefore extend the sunset clause in the Energy Profits Levy until the end of the next parliament. We will also increase the rate of the levy by three percentage points, as well as removing the unjustifiably generous investment allowances. Labour will also retain the Energy Security Investment Mechanism"

[kibes] 13/6/2024 11:27

Starmer's incredibly dull speech was utter twaddle and seems to have spooked the market. I didn't detect anything new with regard to oil and gas. Clearly Capex will cease if it can't be deducted. However, if fields are allowed to decline and no new fields developed there won't be anything left for them to tax. His 'Great British Energy' will end in tears, far from being 'cheap and plentiful' green electricity is actually very expensive compared to gas. Very depressing. Serica and partners are right not to press ahead with Buchan.

[tup2] 13/6/2024 11:22

Labour project all their tax takes from the North Sea without considering the exodus from the same North Sea and likely next to zero tax take.Do they care? Probably not, as long as the optics suit their agenda.
Hopefully the next meaningful RNS is an overseas deal that secures our future away from the NS and this economically illiterate Government in waiting.

[ashkv] 13/6/2024 11:18

The manifesto clearly states that the Windfall Tax is time limited and that it will be on giant firms!!!

Imho the read is that the WFT will be watered down for small to medium UK O&G firms - and possibly SQZ could come under the same!!!

[nigelpm] 13/6/2024 11:18

None of that really impacts Serica - they'll just sit on what they've got, generating cash until the fields die.

[tabhair] 13/6/2024 11:16

"The 3% increase isn't the problem. The problem is the removal of capex deductibility. Investment is going to absolutely collapse. I think lots of producers will become loss making and will get into financial distress."

I have the same reading of the situation.

If you want to put a new field into production, you won't be able to at least claw back the tax from the costs. In a hot inflation environment with lots of cost over-runs, projects that are economically viable today, may not be viable in five years time.

I don't see how new production is viable any more. The producer has to take on even more risk to start a new field while getting even less upside.

There's also nothing to say that the windfall tax could increase either. If it's at 78%, who's to say that they can't nudge it up to 80%. Why not 85% while you're at it. I mean we're dealing with greedy rich oil companies who are killing the planet. They can easily afford it, right?

[34adsaddsa] 13/6/2024 11:16

That's true but I don't think people quite appreciate how bad it is. An extremely high tax rate without being able to properly deduct expenses is lethal.

I think people thought they wouldn't be crazy enough to do it because it means the UK north sea is finished as an investment destination and once the skills/infrastructure are gone they will never come back.

[nigelpm] 13/6/2024 11:11

Nothing new and importantly no issue over utilisation of tax losses

[34adsaddsa] 13/6/2024 10:57

The 3% increase isn't the problem. The problem is the removal of capex deductibility. Investment is going to absolutely collapse. I think lots of producers will become loss making and will get into financial distress.

[ashkv] 13/6/2024 10:51

The Labour Manifesto calls for a Limited Time (Emphasized) GBP 1.2 Bn Windfall Tax on Oil & Gas Giants!!!

Also states it will close WFT loopholes whatever that means... They need to encourage investment in O&G have pledged to support O&G jobs!!! An orderly transition!!!

Does SQZ classify for an O&G Giant? I would not classify it as so!!!

[sawney] 13/6/2024 10:50

Old or new...it's the death of the North Sea....Think they're going to allow existing fields to improve/increase/maintain production..?...Output will fall rapidly from now on...

[gooseman1979] 13/6/2024 10:44

Nothing new. These changes were already announced by Labour long ago

[orchestralis] 13/6/2024 10:38

So EPL will be 38% on top of 40% tax. 78% tax. Serica should starting looking for opportunities in other jurisdictions.

[yasx] 13/6/2024 10:26

The Labour manifesto launch is cringeworthy - they have put up several members of the public complaining about one thing or another - I can see the direction of travel with this Govt - all equality guff, soundbites, climate and so on.

Expect the decline of the UK to accelerate and then some.

[ashkv] 13/6/2024 10:19

Does a project like the below make sense as it doesn't included Decom costs when a firm like SQZ with more 2p barrels and higher production has an Enterprise Value less than the below project!!!



LONDON — Jersey Oil & Gas (JOG) has agreed to farm out a 30% interest in the Greater Buchan Area (GBA) licenses in the UK central North Sea to Serica Energy.

On completion, JOG will retain a 20% stake in the licenses and fully carry on the capex needed for development work to bring the Buchan Field back into production.

The transaction, which has to be ratified by the North Sea Transition Authority, is on identical pro-rata terms to a previously completed deal between JOG and NEO Energy earlier this year, which led to NEO becoming the development operator.

Following the recent acquisition of the Western Isles FPSO from Dana Petroleum, all main components of the Buchan redevelopment plan have now been defined, JOG said.

The field will produce through up to five subsea production wells supported by two water injectors. All will be tied back to the FPSO, which will undergo modifications to be "electrification ready" prior to redeployment at the Buchan Field, with access to a potential floating wind power development in the area.

NEO estimates total capex for the redevelopment at £850 million to £950 million ($1,067-$1.193 billion) to achieve production of more than 70 MMboe, with peak rates of about 35,000 boe/d.

The partners expect approval of the Buchan Field development plan in 2024 and are targeting late 2026 for first production, followed by subsequent phases involving the tieback of the Verbier and J2 discoveries within the GBA license area.

NEO has contracted Apollo to perform a FEED study covering required repairs and modifications to the FPSO, late-life extension procedures and requirements for integrating future offshore electrical infrastructure into the vessel.

[ashkv] 13/6/2024 10:16

:( What did Flegg do to SQZ WITH TAILWIND FOLLY - UNFORGIVEABLE!!!

New 52 week low and with both yearly dividends included yield approaching 15.5%

Net Payout Yield which includes Buybacks at 17.45%

Flegg has inflicted a body blow on SQZ with the Tailwind debacle... shares are nearly half of where they were when the acquisition was announced. And nearly 30% below net cash value at that juncture!!!

SP-> 150.00p
SQZ Current Share Price vs 52 Week low of 150p on 13 June 24-> 0.00%
SQZ Current Share Price vs 52 Week High of 271p on 18 Sep 23-> -44.65%
Brent-> $82.25
British Gas Prices (Next Month)-> £85.50
Shares Outstanding-> 393,468,408
GBPUSD-> 1.278
MarketCap GBP-> £590,202,612
MarketCap USD-> $753,983,837
Cash GBP [Including GBP27.5mn of Decom security deposit reimbursed in 2024] per FY 2023 Results-> £291,000,000
Cash USD (31 Dec 23)-> $371,752,500
Debt (GBP) (31 Dec 23)-> £213,000,000
Debt (USD) (31 Dec 23)-> $272,107,500
NET CASH (USD) (31 Dec 23)-> $99,645,000
NET CASH % of SP/Market Cap-> 13.22%
Net Cash Component of SQZ Share Price-> 19.82p
Enterprise Value (In USD)-> $654,338,837
2024 Mid-Guidance Production [2024 Guidance 41-48kbpd]-> 43,000
SQZ YTD Production [1 Jan to/Including 14 Apr 24]-> 45,400
Production Actual 2023 [Guidance 2023 Mid-Point (40-45kbpd)]-> 40,121
Enterprise Value/Barrel 2024 Mid-Guidance Production [2024 Guidance 41-48kbpd]-> $15,217
EV/Barrel SQZ YTD Production [1 Jan to/Including 14 Apr 24]-> $14,413
EV/Barrel Actual Average 2023 Production-> $16,309
Decommissioning Provision (Per FY 23 Results)-> $148,867,075
EV/Barrel Mid-Guidance 2024 Production including Decommissioning Provision-> $18,679
(9p+14p) 2024 Full Year Expected Dividend Yield-> 15.33%
SQZ Net Payout Yield (Dividend + Buybacks (2024 GBP 15Mn) + Special Dividends) -> 17.45%
SQZ + Tailwind 2P Reserves as of 31 Dec 23-> 140,000,000
SQZ Combined Enterprise Value/2P Reserves-> $4.67

[yasx] 13/6/2024 10:01

This is now getting ridiculous.

Manifesto to be released in a few moments....

[sbb1x] 13/6/2024 09:50

I suppose a mkt cap of 500m could come.125 anyone ?

[lyceeuk] 13/6/2024 09:17

the question is when labour win the election and things start to settle down how long will ed milliband and his lunatic ideas last

[bountyhunter] 13/6/2024 09:16

Maybe Harbour will acquire us when the election dust settles if SQZ remains in the doldrums? Consolidation in the NS must surely be ahead.

[ashkv] 13/6/2024 08:54

At 156.4p SQZ Enterprise Value with minimal decommissioning obligations is USD 687 million for mid-guidance 43,000 boe/d of production with Tailwind production benefiting from huge billion dollar tax shelter!!!

In case of the same it would be a great opportunity to buy back in - as at 130p easily sustainable dividend yield would be 18%!!!

Remember even though Tailwind is a horrible acquisition - it does have its Tax shelter vis-a-vis UK corporate taxes!!

Moreover, SQZ now priced for doom / gloom - absolutely no upside from anything!!!

[croasdalelfc] 13/6/2024 08:21

It's obvious that Farage will be the next Tory leader - if he wins Clacton. 11/1 at some bookies 7/1 at others .They are unlikely to win in 2029 but maybe in 2034 when Farage will be 70 presuming he survives his 40 years or more of smoking