The tax losses weren't the problem. Without them things would have worked out even worse with the Tailwind deal.
Over the last 5 years SQZ has been a clear winner:
but since the Tailwind fiasco all neck and neck: |
And remember Al when you were completely shown up on that point also. |
Absolutely. As much as I don't like the deal, added as it shows how undervalued we are. |
"An additional 2bn of tax losses from Enquest would help."--------Do you mean exactly like how tailwind energy "helped" or in a more constructive manner? Remember when the accountants had their abacuses out telling us that TW tax losses would add value and transform our investment proposition ? £1.28 p is not what I was expecting when the shares were at 300p! No more value adding tax losses for heaven's sake!!! |
Tax losses would be more use to Harbour than Serica surely albeit they seem quite set on no further NS expansion. Don't see any value in this for Serica at all, share price would be £1.40-1.60ish if Triton been online so seems opportunistic to discuss an all share deal at this point. |
As IOG is dead I've replaced the header link & price with ENQ with the link going through to Steelwatch's Enquest thread. |
What this will also do is sniff out any potential bidders for either SQZ or ENQ that might have been lurking in the background - they'll need to show their hand now. |
Indeed bounty and whilst I'm aware that HBR are diversifying from the NS their NS tax rate was horrendous (108%) so they could certainly make use of it! |
Horrible deal. We don't need more tax loses from Tailwind. |
An additional 2bn of tax losses from Enquest would help. |
 Serica and EnQuest explore North Sea merger
Oil and gas producers sketch out an all-share tie-up after years of sliding share prices
Serica and EnQuest explore North Sea mergerPublished on March 7, 2025
by Alex Hamer
The flight of investors from North Sea shares has driven Serica Energy (SQZ) and EnQuest (ENQ) to a potential all-share merger. The companies said on Friday the tie-up would result in greater “scale and diversification”, unlocking “significant synergies and providing a stronger platform for further growth”.
Serica is the larger producer, with a market capitalisation of around £500mn. This is a significant drop from its 2022 peak of £1.2bn, reached as cash flow surged on higher energy prices following Russia’s invasion of Ukraine.
EnQuest’s market value has also tumbled in recent years, going from a peak of almost £600mn in 2022 to £207mn currently. The Energy Profits Levy (EPL) has knocked the valuations of North Sea productions alongside lower oil prices, with Serica CFO Martin Copeland saying in January the 78 per cent tax rate had made it “incredibly difficult” to bring in new investors.
Serica also missed its initial production guidance for 2024 after outages at the Titan and Bruce fields, further knocking the shares.
The proposed merger would see EnQuest take over Serica. Despite being the smaller company in valuation terms, as it has a main market listing while Serica is on Aim. A merger would also bring together both companies' built-up tax losses, seen as an asset given they offset corporate tax. EnQuest has around £2bn of tax losses while Serica had around £850mn as of mid-2024, acquired through the
“Although discussions are ongoing, it is currently envisaged that the possible transaction will be structured as an all-share offer by EnQuest for Serica by way of a reverse takeover under the UK Listing Rules,” the companies said. “It is expected that the possible transaction would involve a return of capital to existing Serica shareholders conditional upon completion…and that Serica shareholders would hold a majority of the shares in the enlarged company.”
The combined entity would produce around 80,000 barrels of oil equivalent per day (boepd). Both own assets directly east off the coast of Aberdeen, although do not have any major holdings together currently. EnQuest chief executive Amjad Bseisu was a Serica director when it was founded in 2004, although only served on the board until 2005.
Analysts expect Serica’s sales to rebound to nearly £800mn in 2025, on higher production, and for a 50 per cent rise in cash profits compared with 2024 to £470mn. Management at Serica has previously talked of adding to the North Sea assets. Chief executive Chris Cox said this fitted with Serica’s counter-cyclical approach.
“People might find that a little bit odd, given where we are with the tax regime and uncertainty over the future [but] my view is it can't get much worse in the UK,” he said. “I think there's lots of companies that either want to exit the UK or reduce their exposure to the UK. And we could be in a good position to take advantage of that.”
EnQuest’s sales have been sliding for some years, impacted by lower prices but also declining production. Output was close to 70,000boepd in 2019. |
Mercuria are running their profit shares in SQZ . Any money they make from deal is pure profit. They did what PE do best and took multiples of their original investment out when they sold us the Triton Turkey ... It all flows to the bottom line for them . Anyone expecting Mercuria to look out for them is naive! They are only looking out for number 1! |
The more I read about EnQuest, its asset base & its balance sheet , the less I want to stay beyond the merger. Holding shares in a combined entity with a proforma net debt approaching half a billion dollars is not something I'm really interested in. Add to that the decommissioning liabilities (which are a BAD thing Adam), and it makes it even worse. Doubling down on the North Sea is not a smart move. This deal (if it happens) will bring to an end a decade long relationship between me and SQZ which started when we only had Erskine. With hindsight I should've sold in 2022-2023 (specially given the reservations I had about the last merger). We live & we learn... |
It's certainly an opportunistic move by Enquest at a chancer's price judging by the unencouraging price action this morning. We obviously need to know the details to understand this but with the price today lower than the recent pre outage price unless the discussions are water tight the price action says a lowball offer so far. |
Same for me. Bought for divi. This is the 2nd time they have done this. We're not even back to where we were pre the production hub update. |
I bought SQZ for the dividend. I don't see any advantage for me in this potential transaction since I can see the dividend being cut to a fraction of our current dividend. |
You can be absolutely certain that Mercuria have been a major part of this and perhaps they pushed for it? They won't take a poor deal. |
Oi
>> Not the best worded RNS statement in the world but I can see how a cash return can be paid.
Yes I agree but my interpretation of a special (or B shares type mechanism) for SQZ shareholders dependent on the deal followed by the shares from a potential Enquest takeover looks quite possible.
Of course the main question is total price and as you say judging by the share price reaction of the two companies this morning that seems to favour Enquest. I hope that Mercuria and co. will push for a better deal especially as in my view we are the better of the two companies. |
Based on market caps pre announcement, SQZ shareholders (mkt cap £469m @ 120p v ENQ £205m @ 11p) would hold ~70% of the enlarged entity. Maybe ENQ aren't too happy at that level and one way of reducing it is for SQZ to pay a special dividend immediately prior to combination. To reduce it to 65% would require a dividend of ~£88m or 22p/share.
Going to be somewhat limited by the fact that proforma net debt is currently ~$457m (£354m). |
Okay, fair play, I see it now. |
nigelpm"There's also little need for the aggressive tone - particularly when you may be wrong."Who is taking an aggressive tone with you? As far as I can see the BB is staying classy. |
The only thing that is silly is your pugnaciousness Nigel but old habits die hard... I still think based on the RNS that the Transaction will be structured as an all share offer by EnQuest for Serica. The only cash capital I'm expecting is the dividend which I have always been expecting. Anything more is a bonus |
Adam Is your point being that taking on additional decom liabilities a good thing ? I rest my case |
It looks like you've edited your post now to avoid looking silly. |
Kind of hard to know who's getting the best deal when we don't know what the deal is...------Re-read what I wrote The market (the voting & weighing machine as buffet put it ) is giving you hints is all I'm saying . |
Register for real-time alerts, custom portfolio, and market movers
Hot Features
Premium
