Serica and the asian (AIM) stocks

31st Oct '08 by Jackalope

15 comments 4714 reads

I've lost a fair bit on Serica since buying in earlier this year due to the general crash. Nonetheless I think it (and Salamander) is a good pick especially compared to the Falklands minnows. Why's that? Because it's actually got prospects that are about to start producing and generating revenue. Ok, it may not have the potential of the Falklands, but they need oil, and Serica will be generating really cash soon. Expect it and others in its class to rise significantly by mid-09.

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About the Author

Jackalope

Premium Member

fixed income (EM focused) by day, day-trader by night...

15 comments

stockopede

1st Nov '08

I see that Salamander pulled out of making an offer for Serica... why was that anyway? Did they see something that you don't?

http://www.serica-energy.com/news/wp-content/uploads/2008/10/081021-salamander-proposal-withdrawn-final.pdf

Murakami

1st Nov '08

They were in discussions for most of this year, I think. Salamander bought some Indonesian assets off them back in July and then put a bid in on Sept 26th (1 Salamander share for every 3 Serica shares, which valued the company at £124m). The advance got binned by the Board, and then the Takeover Panel issued a “put up or shut up” notice to Salamander in mid October. Rather than it being anything company specific, I suspect that the general financial meltdown had the Salamander Board spooked so they decided to withdraw. They cited "deteriorating share prices and oil prices" but I guess you never know... Salamander can't make another offfer for 6 months under Takeover Panel rules now but you might see someone else have a pop once the animal spirits come back to the M&A market.

deucetoace

10th Nov '08

They pulled out in part as the Serica directors told them the bid materially undervalued the company - I doubt that they were in talks for any length of time, do you have any source for this Murakami?

Jackalope

10th Dec '08

Their stock keeps falling but look at their latest report (Q3) - they have lots of cash on hand, a large bank facility (mainly undrawn) and thier main asset should start producing in Q1 '09... and I think from memory from something I read that it will be off-taken at a fixed price, so no market risk... surely this stock should rise... but again I ask, in this market is any stock properly valued?

http://www.serica-energy.com/news/wp-content/uploads/2008/11/final-q3-2008-report-combined-front-back.pdf

Murakami

10th Dec '08

The stock shot up 25% on the day of the Q3 results (Nov 28th) because of a significant gain of US$36.6 million related to the disposal of a 15% stake in the Kambuna field. Profit before taxation was US$33.42 million, compared to a loss of US$1.55 million in the comparable quarter last year. However, it's come off since then, presumably because people recognise that it's just a one time gain and real revenues are still a long way off. With its Norwegian holdings sold, Serica is focused with new partner Hansa Hydrocarbons on appraising the Chablis discovery. Serica will initially have a 100 percent nterest in the new Chablis, but Hansa might earn 65 percent under the terms of a farm-in.

Murakami

10th Dec '08

The other news is the appointment of the new COO (since October), Peter Sadler, to the Board. Unclear to me how significant this change is. Sadler comes to Serica with 30 years experience in international exploration and production with oil companies. Until 2007, he was CEO of Indago Petroleum. He then became CEO of RAK Petroleum, a private company, when it acquired the principal assets of Indago.

ryanandbethan

15th May '09

just to update this thread with some of what I see are near term SP drivers:

2009 exploration drilling has potential to add material value from http://www.investegate.co.uk/Article.aspx?id=200904270700131773R

Bandon prospect in Ireland to be drilled in May
Tuong Vi prospect in Vietnam to be drilled May/June
Conan prospect in the East Irish Sea planned for 2H 2009
First production from Kambuna mid year

What I like about SQZ is the Asset Management

Substantial financial contribution from asset disposal and licence farm-out
US$52 million cash received from disposal of 15% of Kambuna TAC
Chablis farm-out raised 56% of well cost (Serica retains 65%)
Vietnam farm-out raised 33% of 3 well programme (Serica retains 10%)
Bandon farm-out raised 100% of well cost (Serica retains 50%)
Contingent payment on first Bream field production (Norway)

deucetoace

29th May '09

Q1 2009 report is out here

http://www.investegate.co.uk/Article.aspx?id=200905291548200515T

Little new news that I can see. snipets include

Terms of a third gas sales contract relating to the Kambuna field have recently been agreed, under which from the end of 2009 it is expected that field production will be increased by up to 10% to allow for the extraction of LPG.

.....further farm-outs are planned for the Conan exploration well in the East Irish Sea and for the wells to be drilled in 2010 in the Kutai PSC, Indonesia.

....the Bandon prospect, which spudded on 11 May 2009 and where operations are ongoing with results expected shortly.

The Tuong Vi well in Vietnam is expected to be spudded in early June and we plan to drill the Conan prospect in the East Irish Sea once a farm-out has been agreed.

In February 2009 the Company agreed an extension of its US$100 million debt facility until November 2009.

As of 27 May 2009, the Company's debt facility was US$45 million drawn out of a total facility of US$100 million, resulting in a net debt position of approximately US$20 million. Further drawings and ongoing expenditure are planned prior to refinancing in November 2009. By this time revenues from the Kambuna field will put the Company in a stronger financial position. Although the refinancing cannot be considered certain in the current environment, the recent extension of the debt facility demonstrates the strong relationship that the Company has with its major lenders. The option of further asset sales is also open to the Company.

doverbeach

29th May '09

yes, nothing jumped out as a surprise. Recent presentation at OilBarrel is here http://www.oilbarrel.com/fileadmin/content/pdfs/oilbarrel/presentations/Seri%20pres.pdf

The AGM is on 25th June, by which time we will know the Bandon result and Vietnam will have spudded.

doverbeach

2nd Jun '09

References to Columbus (Serica 50%) on slides 14-16 and 15mins 30 into this presentation by Endeavour http://www.vcall.com/console/ConsoleFrameset.asp?ID=145167&brand=Vcall&ClickType=&playerID=1&urlID=147347&sessionID=867F5093E28F4223&email=jd@hotmail.com&tck=END (thanks to entrust for the link)

These repeat what Paul Ellis said at OilBarrel - that they (Serica & Endeavour) have looked at the confidential results of recent BG drilling inbetween Lomond and Columbus and they are confident the the fields are not connected so Columbus field development will proceed on this basis.

db (twiddling thumbs whilst waiting for Bandon)

doverbeach

3rd Jun '09

Premier has today announced oil and gas shows in the neighbouringblock to Serica in Vietnam: http://fool.uk-wire.com/cgi-bin/articles/200906030700122664T.html

There is a good map of blocks throught SE Asia and Australia here http://www.psg.deloitte.com/resources/PS_Map_AP.pdf - bookmark this post just for the map! The inset 2 at the bottom of this map shows Vietnam's Nam Con Son basin. Premier's block is 07/03 and Serica's is 06/94 to the north.

Premier already have 2 oil discoveries in 12E immediately to the west of Serica's block. Serica will be spudding the Tuong Vi prospect (oil/gas) in the SW of their block this month. The operator of Serica's block is Pearl Energy, who also have a 15% stake in 07/03.

Serica's block information: http://www.serica-energy.com/operations-vietnam-block06.php

doverbeach

19th Jun '09

Serica picks up new acreage in a new country - Morocco! http://www.investegate.co.uk/article.aspx?id=200906190700111631U&fe=1

Serica CEO Paul Elis said:

'Following our recent oil discovery in the Atlantic Margin offshore Ireland, we are delighted to have secured a large and underexplored area of the Atlantic Margin offshore Morocco. With excellent fiscal terms, comprensive existing 3D and 2D seismic coverage, prospects already mapped by previous operators and several play types, I am confident that Sidi Moussa and Foum Draa will respond to Serica's use of leading edge seismic technology and will provide us with some exciting exploration drilling opportunities.'

AbAngus

19th Jun '09

One might expect SQZ to mention Bandon as a discovery in their Morocco RNS but its interesting that IOG mentions it in theirs:

Island is delighted to be in joint venture partnership with Serica Energy plc in these Explorations Permits, particularly as Serica has recently enjoyed a significant exploration success in the Atlantic Margin offshore Ireland.

Hope so!
AA

doverbeach

11th Aug '09

First gas from Kambuna at last! http://www.investegate.co.uk/Article.aspx?id=200908110700052219X. Initialy producing at 40 MMscfd but they are confident they can produce more:

As the productive capacity of the three production wells has been demonstrated to be comfortably in excess of 100 MMscfd and with capacity in the pipeline and processing infrastructure for additional gas supply, the Kambuna partners, Salamander and Serica Energy plc, intend to market additional quantities of gas following receipt of regulatory approval to do so.

deucetoace

26th Aug '09

I see from elsewhere that Premier have had a success on Bream

http://www.investegate.co.uk/Article.aspx?id=200908260805140059Y

A vertical pilot hole and two horizontal side-tracks were drilled. One of the side-tracks was tested from a limited perforated interval with a maximum flow-rate of 2,516 boepd.

......... suggest initial recoverable volumes of between 39 - 63mmbbl. Further evaluation is ongoing.

Not that significant to Serica but any positive news is helpful.

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Jackalope

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