Serica Energy SQZ

SQZ has moved up steadily since my post. Looking at the 200SMS and the 26 SMA they are starting to converge. It could be a very positive signal when or if they cross.

I increased my holding steadily since my first post.

Good luck to all holders here.

This share has been on a long downtrend for a number of years.

The main reason has been the record number of consecutive dusters!

I made money here by selling before 4 dusters on the trot. It rose on false rumours one of which was repeated on the Charts View iii BB which earned the poster a ban upon the duster.

Remo joked that if the rumour had been true then they could have stayed.

The company has a value of just over £12m which is around the value of the last placing.

They have a licence in Namibia which they brought BP into and BP paid for a seizmic survey of the licence.

BP then exited as they only found a prospective 300m barrels!

But SQZ did a deal to acquire a share of the North Sea Erskine field a producing Gas and Condensate Asset.

Highlights

The transaction provides Serica with an immediate and long term cash flow stream
Approximately 3.3 mmboe of producing, proven and probable reserves added at completion at a cost per barrel of approximately US$4.0
The effective date of the transaction is 1 January 2014. Adjustments for net revenue, associated liabilities and partial deferment of consideration have resulted in Serica receiving approximately US$9 million cash on completion
13.5 million shares in Serica have been issued to BP who will now hold approximately 5% of Serica's enlarged issued share capital. BP has agreed to hold the shares as an investment for a period of not less than one year
Provision for decommissioning at the end of field life has been provided for on the basis that Serica's estimate of decommissioning costs will be met by BP, with Serica being responsible for any costs above this level. BP responsible for decommissioning costs up to a gross £174 million (£31.32 million net to Serica) adjusted for inflation
Transaction very tax efficient for Serica - uses only part of its US$186 million ring fenced corporation tax losses leaving substantial losses available to Serica for future transactions
Provides export routes via CATS and Forties pipeline systems - additional benefits and synergies with Serica's Columbus field interest
Field production has recently recommenced following prolonged shutdown for major infrastructure improvements downstream. Facilities are being re-commissioned and production is expected to build over coming months
55,000 barrels of Serica's forward entitlement from Erskine condensate production were sold in 2014 at prices considerably in excess of today's spot prices (2014 average sales price of $100 per barrel) thus insulating Serica from the impact of lower oil prices over recent months for this production volume


www.energy-pedia.com/news/united-kingdom/new-163841

Once a positive cash flow is released to the wider market I would expect a change in trend to be confirmed.
But at current market cap it might just be worth an investment.

My strategy will be to reduce and derisk my position as soon as I am able as this company's record on drilling dusters is second to none.

The only reason that they are still in business is that they shrewdly derisk their drilling activities so their partners take the financial risks.