Serica Energy Share Discussion Threads

[farmscan] 04/9/2024 12:16

Oil producers are price takers not price makers, the oil price is what it is. They can't sell for a lower price anymore than they could sell it for a much higher price, even if they wished to do so.

[tabhair] 04/9/2024 10:21

Brent crude now down to $73.5 a barrel.

Ordinary tax on a barrel is 40%.
The energy profits levy (EPL) is 38% on top of that.

The EPL only kicks in when oil averages a price of $71.40 for 2 quarters.

At current prices, would it not make sense for the company to just sell oil at a max of $71.40 a barrel and totally circumvent the EPL?

If oil averages $75, EPL is $28.5, gross before ordinary tax for SQZ is $46.5.
If oil averages $85, EPL is $32.3, gross before ordinary tax for SQZ is $52.7.
If oil averages $95, EPL is $36.1, gross before ordinary tax for SQZ is $58.9.

Oil prices would need to be $115 a barrel before it would make sense for SQZ to sell at that price and take the EPL hit.

Oil average $115, EPL is $43.7, gross before ordinary tax is $71.3.

I am probably missing something here in the details of the EPL. Maybe the EPL applies on the market value (as opposed to what you can sell it at).

[plasybryn] 03/9/2024 10:39

How is the new CEO doing. £500m to invest i believe. Could be interesting results in my opinion. Time to provide direction and restore confidence. Plus nice dividend perhaps

[plasybryn] 03/9/2024 10:37

Results on 10th i believe

[skyship] 03/9/2024 06:45

Problem is it looked just as compelling at 133p two weeks ago...

[yasx] 03/9/2024 06:41

A very robust, sustainable divide d with a near term prospect of an acquisition away from the NS makes SQZ a very compelling investment at 123p.

[loganair] 02/9/2024 14:58

Except for the very first Labour government, all Labour governments have left the UK economy in a worse financial shape when they left office then when they came in.

[cb7] 02/9/2024 14:22

Yes, I well remember when PM May said (after the Brexit vote), that it was better/cheaper for the taxpayer to take the passport contract away from a UK company and hand it to a French one. A schoolboy who has studied economics for a matter of months will know of the multiplier effect and tell her "no it isnt (you plonker)".
No wonder we are poorer as a nation, we import far too much and create little wealth.
Incidentally the Gateshead passport factory closed a few years later.... a similar situation to the present one that faces the O&G industry.

[skyship] 02/9/2024 13:09

Socialists always financially illiterate and always leave the economy in a worse state when finally booted out. This lot no different.

But a country gets the government it deserves; and too many numbskull voters decided just to give the other lot a chance rather than looking at history and looking seriously at the shadow Labour front bench.

[melton john] 02/9/2024 11:23

Going back to day 1 of the industrial revolution, did Government ever start any wealth creating enterprises. Can anybody name any? Running a bath would be the limit, never mind a business. I worked in the steel industry before and after nationalisation and it created jobs but lost money by over manning. Same with the railways. The present lot seem to think that the point is give people a job, any job and they will pay taxes and spend money and grow the economy. The same money running around in a circle makes no-one any richer. Do they get this, I wonder every time one of them says grow the economy.

[loganair] 02/9/2024 07:44

The vast majority of the time, increasing the percentage paid in taxes actuallly lowers the tax intake for any government - don't governments ever learn!!!

[spectoacc] 02/9/2024 07:41

Why not do both? But spending my money on "creating jobs" rarely works:

"Our plans for a new National Wealth Fund and Great British Energy will unlock investment and create thousands of new jobs in the industries of the future."






"(Alliance News) - Increased windfall taxes on the UK's offshore oil and gas industries would cost the economy about GBP13 billion over the next five years and lead to a fall in tax receipts, a trade body has warned.

According to figures published by Offshore Energies UK (OEUK), the proposed increase in the Energy Profits Levy (EPL) would see investments in UK projects by oil and gas producers fall from an expected GBP14.1 billion to just GBP2.3 billion between 2025 and 2029.

The report added that while expected tax take from the sector would increase in the short term, a rapid fall in production triggered by the loss of investment would result in a GBP12 billion decrease in tax receipts.

Under the government's proposed changes the EPL would rise to 38% from November 1, which the OEUK says would push the headline rate on upstream oil and gas activities up to 78%.

David Whitehouse, OEUK chief executive, said: "The prime minister has said that the budget will be painful. This industry recognises that difficult decisions will need to be made.

"This is a Government that has made economic growth its main priority and yet our analysis shows that its policy will ultimately reduce this sector's contribution to the UK economy.

"This paper shows that proposals to go further will trigger an accelerated decline of domestic production, and a corresponding reduction in taxes paid, jobs supported and wider economic value generated.

"With an industrial strategy built in partnership with Government, the UK can leverage the strengths of its offshore energy industry, put homegrown innovation and technology at the heart of its net zero ambitions, and ensure the UK is globally attractive for energy investment.

"For more than two years UK oil and gas operators have paid three times the rate of corporation tax of any other sector in the economy."

The report warns that projects being cancelled or deferred as a result of the increase would place 35,000 jobs at risk over the period.

It also says the loss of economic value in the sector would impact UK supply chain companies, and that the country would risk losing capability and infrastructure to other parts of the world.

Whitehouse called on the UK Government to work with the sector to find a way to manage offshore energy while protecting jobs.

"Time is running out to mitigate damage that has already been done and to avoid further escalation," he said.

"The prime minister promised to manage the North Sea in a manner that does not jeopardise jobs. We now need an honest conversation on how we can do this and need Government to work with the sector at pace."

Offshore Energies UK is a trade body for the UK's offshore energies industry, and represents more than 400 organisations with an interest in the sector.

A Treasury spokesperson said: "We are committed to maintaining a constructive dialogue with the oil and gas sector to finalise changes to strengthen the windfall tax, ensuring a phased and responsible transition for the North Sea.

"Our plans for a new National Wealth Fund and Great British Energy will unlock investment and create thousands of new jobs in the industries of the future."

Scottish Conservative energy spokesman Douglas Lumsden said: "This report sends a clear message that Labour's abandonment of the North Sea oil and gas industry will decimate both our local economy and our energy security.

"Labour's shortsighted and unfounded sanctions of increasing the windfall tax, ending the investment allowance and opposing all new oil and gas licences means tens of thousands of skilled jobs are now hanging in the balance.

"OEUK is absolutely right to hit out at Labour's economically and environmentally illiterate proposals, which will result in companies walking away from Scotland and taking their investments elsewhere."

By Nick Forbes, PA Scotland"

[frazboy] 02/9/2024 06:47

Note the update from JOG this morning. Buchan to be slowed down as a result of the government/supreme court ruling.Assuming that these projects aren't infrastructure dependent (I've no idea if they are) they all be put on ice in one way or another until the next government comes in. Lots of guesswork there tho.

[sawney] 01/9/2024 14:53

A bit of common sense...sadly on the other side of the world...https://x.com/SStapczynski/status/1830203319001956469?s=19

[brucie5] 31/8/2024 14:46

Mount Teide31 Aug '24 - 12:42 - 6939 of 6939
0 2 0

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MT, once again, lots of interesting data, though not so much on the topic of SQZ. However, of the more tangentially relevant area you cover, I do agree that oil and gas are preferrable to coal. Once again, Germany has provided a salutary reminder in its rush to get rid of nuclear.

But to respond to your O/T concerning growth, it's surely hardly surprising that developed economies grow less than developed ones; and in the case of the US growing more than the EU, that growth has come at the cost of ever growing inequalities and capital has done far better than labour, creating further tensions within that society which are proving difficult to address. As someone seeking to invest your capital to make more, it is not difficult to see where you would park your money: though I take it - and correct me if I'm wrong- that you would prefer to live the in the UK rather than China or India; or West Africa, or the Philippines?

And it really makes no sense to compare growth rates over the last forty years between say, China and the EU, when the former is using capitalism drag 70% of its citizens out of dire poverty, whereas Germany or Holland, notwithstanding their problems, enjoy living standards that are the envy of at least half the world that would quite like to live there, a sign in itself of very great success. Though clearly not for you; because mainly you want to make money.

Finally, growth per se, does not equate to a happier society, nor a more liveable planet. We need to find other ways of measuring progress. But that is indeed O/T so I will leave it there.

I am invested in SQZ and some oil plays because I still drive a petrol car, use gas central heating and can see a provisional need for fossil fuels, which I think the current market has overlooked. I also think we should steward our NS assets while making the necessary shift to renewables. Finally, the high dividend here, if sustainable, is surely a value "outer".

All imho, of course. Of the details of the SQZ investment case I certainly know much less than you - and many others here- and look forward to hearing your/their views. What is the particular investment case here? I suspect that's why most of us are here.

Kind regards,
B5.

[mount teide] 31/8/2024 11:42

Skyship - thanks for your comments.

Global Energy Demand Growth through to 2050 - Also written around 2-3 years ago this too has aged pretty well largely because, again its mostly common sense to any with long first hand experience of the fast growing, huge population economies of China, India and SE Asia:

'Any comparative global analysis of EU GDP growth since 2000 and in particular GDP growth per capita, shows the EU performance to have been poor, and very likely to fall behind much further according to forecasts in Price Coopers Waterhouse's publication: The World in 2050.

PcW - The World in 2050

The long view: how will the global economic order change by 2050?



The 25 year plus EU and UK economic model of managed decline, low growth and the public sector being a far too high percentage of the economy has been an economic disaster and is responsible for the EU sitting at or close to the bottom of most GDP growth league tables.

Using largely capitalist free market policies since 2000, China, SE Asia and India has grown its combined GDP from $2.4trn to circa $36.0trn by 2022, while the EU has grown from $7.3trn to $16.6trn despite increasing its size from 6 founder members to 27 by 2016.

EU GDP growth has been so poor over its history that its actually 'generated' more GDP growth through increasing its membership than organically - lol! - the problem now is the EU has run out of new prospective members other than third world, freeloading economic basket cases.

According to the research by PcW, six of the seven largest economies in the world are projected to be emerging economies by 2050 led by China (1st), India (2nd) and Indonesia (4th)

The US could be down to third place in the global GDP rankings while the EU27 current 16% share of world GDP is projected to fall to just 9% by 2050.

$2.4 trillion - GDP of China, SE Asia and India in 2000

---------------------------------------------------------

2020 GDP

$2.3 trillion - Africa - (52 Nations and pop of 1.34 billion)

$2.5 trillion - UK

$16.0 trillion - EU

$22.0 trillion - USA

$33.0 trillion - China, SE Asia and India

---------------------------------------------------------

2050 GDP - Forecast

$27.0 trillion - EU

$29.0 trillion - Africa

$48.0 trillion - USA

$60.0 trillion - China

$120+ trillion - China, SE Asia and India


Economic historian Niall Ferguson is always worth listening to - he was mocked 24 years ago for offering the view that this would be Asia's Century as a result of economic 'Globalisation' - Asia then had a combined GDP one fifth of the EU and one eighth of the USA. Just twenty years later, it is twice the EU and 1.5 times the US. And forecast by PcW by mid century to be 3 times larger than the USA and 6 times larger than the EU's overpriced, near zero long term growth, highly protectionist, increasingly high cost, little corner shop.

All my investments are in locations where at least 80% of future GDP global growth and 90% of global energy demand growth is forecast to come from: China, India, SE Asia, the Pacific Rim, Africa and S America.

Why? For the Emerging Nations of the world with a combined population some 6 times that of the West, and bolting on growth equivalent to the entire population of the West every 13 years, to grow their collective GDP to be 6-7 times that of the EU and 3-4 times that of the US during the next 26 years will take ENORMOUS amounts of additional cheap, reliable energy.

If the events of this post covid decade is a reliable guide, one thing that can be said with complete certainty is that the overwhelming majority of this additional energy will not come from hugely expensive, unreliable Wind and Solar power.

Why? Check out Enerdata's research on Global Energy Consumption Growth through to 2050:

YR 2000 Energy Consumption - Mtoe
2,172 - Asia Pacific
1,727 - North America
1,305 - Europe
565 - CIS
442 - Latin America
345 - Africa
263 - Middle East

YR 2050 - Estimated Energy Consumption - Mtoe
5,382 - (+148%) - Asia Pacific
1,131 - (+228%) - Africa
1,071 - (-38%) - North America
889 - (-32%) - Europe
690 - (+162%) - Middle East
686 - (+55%) - Latin America
570 - (+1%) - CIS

10,419 Mtoe - 2050 Est
6,829 Mtoe - 2000 Actual

+52.7% Increase in Global Energy Consumption

Source: Enerdata 2021/22 - Conclusion: "Emerging economies will be the main contributors of global energy demand increase." '

The challenge? Poor Emerging economies currently generate an average of 70% of their electricity demand from cheap coal, and post Covid have materially increased their consumption of coal, contrary to the 2050 Net Zero model assumptions.

Additionally, the Enerdata Energy Demand forecast was made prior to Russia's invasion of Ukraine bringing forward a global energy crisis already in the making.......and the catastrophic increase in the cost of unreliable 'renewable' energy from rising global interest rates, near double digit inflation and soaring commodity prices.

Unsurprisingly, the last UK and US round of offshore Wind Farm Licenses put up for auction produced ZERO offers!

AIMHO/DYOR

[undervaluedassets] 30/8/2024 15:07

Well clearly they are going to be profitable otherwise there is nothing here for Labour to tax.

I think the current situation is very much in the price.

[mickinvest] 29/8/2024 11:44

Right someone give me all the bear cases, I've listened to all the recent interviews and read last couple results and directors were very positive in all of them when the share price was about 50% higher.
Two possibles but first one is known.

1. Erskine is still off line but about 1300bopd net

2. Current drilling results poor.

3. Labour reduce investment allowance more than expected.

Anything else?

[loganair] 29/8/2024 08:39

Labour are solid Woke Socialists with Starmer being Stalinist Communism, therefore anything even slightly Right of his hard left, ie centre left, he thinks of as being hard right.

If Starmer joined the Communist party he would be on their left wing side.

[sawney] 29/8/2024 07:04

They're not actually working for the country anymore...they're actually working for someone else.......all roads lead to Geneva....

[bountyhunter] 29/8/2024 06:51

Serica Energy plc (AIM: SQZ) today confirms that it will announce its financial results for the six months ended 30 June 2024 on 10 September 2024.

[holts] 29/8/2024 06:47

They won’t , they are that dim and incapable of independent thought , I would get it if they had the nouse to say we know there is a need to use renewables as much as possible and we will take the income from oil to do this , but we will not discourage the production of oil via higher taxes as it reduces that very income we need to make that conversion .

[fandagle] 28/8/2024 17:17

Its only a matter of time before Labour make a U-turn regarding the Net-Zero expectations! Then they will come back cap in hand begging well run companies like Serica to get the Train back on the tracks....

[skyship] 28/8/2024 13:28

ken - thanks for that. I too now a bull of SQZ, thought pretty limited at the moment.

Mount Teide - thanks for your two superb posts above - 6922/6924. Providing the true facts to my simple headline.

[farmscan] 28/8/2024 12:54

Interim results 10th September it seems.