SERICA ENERGY

Yes, certainly looking as if this has turned at last! Good buying - lets hope for more of the same tomorrow.

High of the day, and not for a piddly amount either.

Time Price Volume Value
17:07:40 28.4999 80,663 22,989

Numerous 200k, 100k, 50k and 25k orders processed over the past few days, with the SP steadily moving in the right direction once more.

MCap still less than cash in hand and tax credits.

PoO back above $50 (+3%) today also .... as the cash continues to build.

Game on, imo

Encouraging post, suki - thanks.

Just noticed on the LSE bb that hallmark on there cites an article in the WSJ just out, that BP is reported to be poised to sell more of its NS assets - maybe that was why TCW chose to pay the third instalment for Erskine ahead of time? Good move if it was... sasa.

You never know.......... I was at the agm and personally met the BOD. They are a very experienced and proven group who have very senior contacts in BP, Shell, Chevron etc. They are also very old school - not interested in lots of communication and social media. They are however very focused on growing the company and delivering sustainable, long term shareholder value. I asked them myself why they were not doing Director purchases - there response was mooted, but left it at 'they cannot purchase if they are in blackout period or under NDA'. We can assume by this they are under NDA and are at advanced stages of a possible deal. Now to valuation. The year end cash position, based on the mid point of company guidance from Erskine will be circa $42m (£34m). The tax umbrella is worth 40% of $160m (£53m). Thus at year end the total value of the tax umbrella plus cash will be c£87m. This is way above current market cap so you can say any future Erskine production, plus Columbus, plus Rowallan, plus other assets are essentially not priced in at all - in essence they are given zero value ! In summary this is probably one of the most undervalued companies in AIM and is only trading at such a low price as some sellers are bored and buyers are concerned about single asset. It appears nobody is looking at the potential of a bid for the company. Any other UK producing company could use the tax umbrella themselves (worth £53m), they would keep the cash the company has and gobble up the assets. I suggest rather than speculate on this thread, that good fellow investors contact the Board members and speak to them and ask questions. At the afm I found the board very approachable. Good luck to all shareholders, you will be well rewarded for your patience in holding/adding to your shares. Now is a time to significantly add as either news of an acquisition this year, or the Columbus FDP and the Rowallan drill will rapidly accelerate the share price. There are very few cash rich companies on AIM, who have a rock solid BOD and have the assets to deliver 'life changing' changes in a companiys value. Best wishes.

Apologies for the middle part of that post - I accidentally posted it before editing fully!

Oil prices recovering nicely, now at $49.6 per bbl Brent.
With OPEC at $14 per bbl, we have a nice regular earner all tax free because of tax losses.

Jimmy

Thanks for relaying that summary, NewK - very encouraging.

Nice to have confirmed by the Group Treasurer that the cash in the bank and the value of the allowable NS tax losses equate to the current mkt cap; ergo, everything else is in for nothing!

That's what I call cheap as chips, especially with the cash growing at nearly 10% per month and all the other promising developments coming down the track - sasa.

Massive thank you to "wahlberg" over on the other board.

I have re-posted, as I guess wahlberg does not have an account here atm.

Without shareholders like wahlberg and others alike it would make our work much harder.

Thanks again.... so here it is :

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


Good morning

Apologies for the delay but I got caught up in enjoying myself in the capital and recovering from such.

I met up with another shareholder prior to the AGM and shared a pot of tea around the corner from Durrants hotel while we discussed a little about the company and it's prospects. We arrived at the AGM around 45 minutes prior to the 11am commencement and had a complimentary coffee or two while chatting to Danny Fewkes (Group Treasurer). He was very welcoming and engaging.

We discussed the current share price and he agreed that the last 2 months had been slightly frustrating in that it had remained around 30p. He was as convinced as us that the market should attribute a higher value based on the company performance and believed too that it was perhaps shackled by the single producing asset. He reiterated that they are addressing this and hope to complete acquisition soon to address this.

I asked a couple questions on the ring-fenced tax losses and how to value them, in order to check my maths, which was simple but turned out to be correct. $165m x 40% NS tax rate = $66m. And available to any suitor, which led to me stating therefore that the company's current market capitalisation was fully supported by the cash position and the value of the tax losses. He agreed.

Another topic we discussed involved PR and whether there were other channels the company could use to raise the profile of Serica and put it on people's radars - Oil Barrel, Vox Markets podcasts, shares magazines etc. In general his opinion was that the company would like to continue to let the results do the talking and they are not into the business of creating volatility to satisfy day traders, but rather see steady share price appreciation for the right reason. He said they will continue to release material news as required.

By 11am there were around 25 shareholders present and the meeting commenced.

Tony Craven Walker (Chairman) welcomed all in attendance, claiming the turn out was much stronger than last year. He introduced those present from Serica and the meeting structure before reading his statement, which is available under the presentations section of the website. The only additional comment to add to this was around the cash balance, in that it excludes June receipt of payment ($2.9m) and that the company decided to repay the third tranche to BP early (also $2.9m) due to the exceptional cash flow. No one asked why but you may assume it could be to enhance the relationship with a key shareholder during negotiations for further acquisition(s).

Another great point surrounding Erskine for me was "Shareholders might be interested to know that, since purchasing Erskine, when it was projected that Serica’s share of remaining reserves was 3.3 million barrels of oil equivalent, we have produced and sold 1.7 million barrels of oil equivalent to end May but remaining reserves net to Serica from June onwards are still estimated to be 3.3mb

The presentation slides began with Danny Fewkes talking through the main financial statements. This was considerate to any guests unfamiliar as he provided a brief summary of what is show on each and what to focus on. The main story was obviously the cash build - $16m since Jan.

Regarding the tax losses he stipulated that they are gaining traction on Columbus.
and ring-fenced tax losses will apply. The company want additional revenue streams to accelerate the benefit from it. Danny also provided a fag packet calculation to determine how the company is doing based on oil and gas prices, being roughly a 50/50 split between oil and gas.

eg
gas
60 therms in a barrel, 40p per t

With £160 million of oil tax losses and $30 million cash in bank growing rapidly, serica are primed for an acquisition in the North Sea.
See
http://www.telegraph.co.uk/business/2017/04/08/serica-energy-eyes-bp-gas-assets-north-sea-hunt/
Last time they did an acquisition prices trebled.
And that's without taking into account columbus final development decision in next six months.

Thanks to lse for reference.
Jimmy

Yep, agree with that need to get more visibility on this, jimmy and once we have talks or developments underway with respect to the acquisition target they're after, the sp should be well over 30p again and trending higher, certainly pre Rowallan....sasa.

Obviously a little disappointed that final investment decision has not been made yet for Columbus. But with rig rates so low and with a huge reduction in U.K. Gas storage capacity the economics of columbus look very good.
At current share price serica is valued £70 million which includes cash of £24 million And a final development decision due on columbus in next six months this share looks very cheap.
Once Columbus comes on stream it's easy to see annual profits of £30 million per year for ten years based on an open of 14 dollars per bbl
Then there is the free well carry on rowallan which could add another 21 million bbls. To serica.

Looks like a lot upside and little downside and a lot going to happen in next six months, they should get a broker report update asap to highlight this reality.

Jimmy

Today's AGM was okay but no news yet on their next investment to augment the single income stream of Erskine.

Allowing for the tranche payment due for it, the cash build has slowed a touch, due to a four day restriction in the flow rate to de - wax the pipeline again (Erskine is in an area prone to this sticky problem) but other than that it's 'steady as she goes' it seems to me - sasa.

https://www.thetimes.co.uk/article/centrica-storage-wants-to-shut-north-sea-storage-facility-t9jspm2hz

I bought these around that time, too, up protherics, (31p odd) but I'm not selling now as this animal is quite different today and certainly not ahead of the next acquisition TCW's working on.

Just my take on the present situation anyway, fwiw - sasa.

Interesting - Chariot have put out an RNS re the Namibian Blocks 2312 & 2412A. A CPR has been done:

"These five structural prospects have been independently audited by Netherland Sewell and Associates ("NSAI") who estimate gross mean prospective resources for each prospect ranging 283 - 459mmbbls. "

This can't do Serica any harm.....

Personally I have held this for over seven years.. I originally bought the stock at its current level.. only to see it fall to, below six pence.

Black Rock sold out at the 30 p level some years ago which inmo the rest of us should have followed.

So to summarise having recouped my investment I will be bailing out shortly.. Hopefully slightly up from my original purchase price.. As the wise old spiv kingpin used to say. Its best to be spiv than not

AGM to be held on the 29th June, Manuel; as these are largely formal events, the hope is there might be an announcement re: developments beforehand to be elaborated upon at the AGM .

The initial sp reaction doesn't seem to be that enthusiastic though but you never know.... sasa.

Just the announcement of the date of the AGM.

Been a RNS there is one shown on the header on lse,but not listed in the news
MD

sorry seem to be struggling to create a link.

just cut and paste the entire string into your browse r and it will work. least it works for me.

That's not making much sense overros can you put a link up ?

https://masterinvestor.co.uk/trading/serica-energy-rising-trend-channel-points-40p/?utm_source=Daily+Bulletin&utm_campaign=ca82aab0fb-Daily_Bulletin_20170523&utm_medium=email&utm_term=0_25eff0bb7f-ca82aab0fb-34938281

Hopefully we get an announcement of a final development decision which was promised in 2017.
Long reach horizontal well looks the best option.
Jimmy

The AGM is usually held in June ...2 years ago I went and an irate shareholder complained about lack of progress on Columbus and lack of info to shareholders ....clearly he will still be irate ! Unless he has sold out it might be worth going to the AGM this year and watch the sparks fly

With cash in hand of some $33m currently and TCW on the prowl for another cash generator to augment our Erskine income, it's rather surprising to see this trading so quietly at the mo.

Yes, the shs have recovered impressively over the past year or so but justifiably so, given that SQZ is a much more valuable entity today. With news of a prospective addition to our income stream very soon, Columbus development plans / Lomond updates shortly, not to mention the first of our 'free carry' well spud getting closer, overt value remains on offer here, even now.

While we await what our CEO has in mind, we steadily accumulate more than $3m cash per month to boost our debt free balance sheet, so for those seeking value investments with considerable potential, is there a better / cleaner situation available?

If there is, I've yet to come across it.....sasa.

Very heavy volume and after hours trades revealed yesterday . Some accumulation happening ! I'm going to top up today ... very cash generative business with great management! What's not to like ?

We are due an update in may

Good luck all

UP.
Of course there would be decommissioning costs, but if it's a long reach horizontal we'll from an existing platform then the decommissioning does not require the removal of of sub sea equipment and pipelines.
Would like to see a brokers value of Columbus.

Jimmy

Before I am accused of de-ramping this

I have been a long term holder of this stock. Its been a shame that this did not adjust sooner, but no doubt some news is about to materialise to explain the sudden price rise.

Long term holders already know about the current assets and their value.

Before everyone gets carried away with Columbus. There will be decommissioning charges when the field reaches the end of its production. There will also be a steady decline in production from Erskine. Which I should imagine will occur during the next couple of years.

I am sure I am not alone in this in that it would be nice to hear Kingpins view on this.

After all he did his upmost to keep people invested hear four years ago

Been wondering about the value of Columbus development.
Back of the envelope calculations as follows.
6.2 million bbls oil equivalent at say $40 per bbl as Columbus is mostly gas so not as valuable as oil. Equals approx$240 million of revenue, less 25 million being half of development cost of 50 million for a long horizontal well, and 50 million of opex being 10 million per year for 10 years at 50% interest and that's approx 175 million usd profit covered by serica tax losses worth nearly 50 p per share undiscounted.
Numbers are very rough but an indication of the potential here, because rig rates have fallen so much.
Definitely not included in the current share price.

Jimmy

Serica report that a final developments not decision on the Columbus field will be taken this year with first production possible in as little as 2019.
Do we know the economics of this. Have serica brokers issued any valuation reports for this potentially very valuable asset.

Jimmy

Final decision on Columbus due this year with first gas possible in 2019.
Serica have a 50% interest and reserves are 130bcf of gas.
Proposal is to drill a long horizontal well from a nearby platform to develop it.
This will substantially increase cash flow and certainly not priced into the share price.

Jimmy

Johan

Don't get me wrong ! I like parkmead's management. Mr Cross is one of the best in the business! He gave me a nice pay day with Dana. I guess I was wanting him to do more with parkmead ! If they start buying more assets I'll give them another look . Not a bad company. One downside is that they produce gas (which is obviously less lucrative than oil).

What comment were you miffed about ?

Series currently producing approx 3800 bbls per day with an operating cost of $14 per bbl so at $56 per bbl oil price they are generating approx £46 million in cash per year and have a market capitalisation of £80 million, no debt and huge tax losses so very tax efficient. Then there is still the value of the Columbus field if it can be brought into production at low rig rates it will be very economical no value given to carried expiration wells, should easily be double the current price.

Jimmy

Thanks for the list... it will take me while to get hrough them all.

PMG loss making is arguable as it is cash positive. Interim period shows a small profit of £0.7 million (from £4.1 million loss in 2015) for the six months at the end of last year where it had £26.7 million in cash and remains debt free. Production of 5000bopd equivalent. PMG's Shetland drill has oil its an appraisal (like it did for HUR) and I hope it will attract a few Hurricane investors with increasing news flow all the way to summer so this is the near term catalyst.

I have followed Hurricane since pre-IPO getting in at 36p so was a bit miffed with your post a few days ago. I can't believe the Miran news came in for Genel when I was out.

As far as your criteria being different to mines , I'm not so sure because we seem to be bumping into each other on the same BBs LOL! From about 6 or 7 years ago AFREN , HOIL, GENL now SQZ and AMER

My criteria is to simply make money whether that's here or elsewhere I don't mind ... hope you don't miss out

Regarding PMG it's essentially a poor mans FPM or a loss making version of IAE or SQZ. They are small and they are North Sea based but that's where the similarity ends . They are loss making . They have been very quiet on the deal making front in recent months and haven't done very well with the drill bit either. If I was looking for a North Sea oily there are 4 or 5 I would choose before parkmead.

On a more positive note I like the management team (ex Dana)

No worries JOHAN! Glad to help !

Like you I have learned major lessons from the AFREN scandal but was probably lucky enough. It have been burned as badly as you were since then my strategy for investing in oilies has been simple ! The first word is cash !!!! My strategy is as follows:

1- Cash rich
2- No debt
3- Good balance sheet
4- Operates in a stable part of the world ( not Nigeria, Russia, Libya, Syria Or Kurdistan).
5- Good stable / increasing level of oil & gas production
6- Good 2p reserves
7- Has planned exploration wells to increase reserves & resources
8- Undervalued in terms of NAV
9- Good management team
10- No skeletons in the closet (no court cases, no disputes with governments , no problems with activist shareholders or suppliers or previous employees etc)

My biggest holdings that meet this stringent criteria are as follows:- (I also hold some blvn and char in smaller amounts)

FPM:- North Sea oily , producing 17k BOPD, £ 100 million in the bank and lots of planned drills in the next 3-18 months.

SDX:- Middle East and North Africa based producing in Morocco and Egypt . Has Cash and no debt. Multiple drills planned and plans to increase production from 4000 to 25000 BOPD. Breakeven price $ 21/ bbl . Recently bought assets from circle oil and Looking for more purchases.

SQZ:- North Sea production base of around + 3000 BOPD. Exploration assets in Namibia and Ireland and Northsea. Good level of cash in the bank, No debt and growing cash balance.

AMER:- producing in Columbia + 5000 BOPD and has pipeline asset .cash rich 50 million in the bank. Buying lots of assets from little cash strapped companies.

SIA:- producing in Vietnam around 10,000 BOPD and plans to increase production by ongoing drills. 150 million in the bank and no debt. Exploration assets in west Africa and Vietnam. Pays dividend. Looking to acquire additional assets with cash.

Free carried exploration wells in 12 months time
This is news to me unless it is  Rowallan just 20mmboe net and it is some time away.

Yes the cash is good but the rest of the catalyst for upside is speculation and the UKCS licensing rounds had been completed without anything here. Lack of near term catalyst is holding me back.

Now I understand your criteria for a good stock. There is stock that combines both or criteria. Small cap, cashflow from low cost income (from ion shore gas), a NS field development plan and a separate high impact summer exploration catalyst. I don’t think you are in PMG. It is very much under the radar until summer.

Its been fun as always chatting to you. My research is complete. I will wait until SQZ do something with their cash I believe in before I buy in. I am sure they will but I hope you understand my criteria is not the same as yours.

Next on the research list is AMER so I will see you there.

Cash is king ! We have between 25-30 million in cash and no debt!
Cash is growing every day and we are currently producing 3000 BOPD!
Free carried exploration wells in 12 months time !
Currently trying to farmout other assets ...
Columbus isn't even taken into account
To put in context AMER produce 5000 BOPD and are valued at nearly 5x SQZ!!!
At £1.5 this would be fairly valued ! At 30p it's a joke !

Give me an example of 5 aim oilies who made a profit in their 2016 accounts ! SQZ has !!!!