LON:SQZ | Serica Energy - SQZ.L - What Is Happening To It Today?

7th Oct '21 by njoydev12

8 comments 678 reads

Hello. I was wondering what is happening to Serica Energy today. I had my eye on it and thought it to be a cash generative, no debt, very well run company and today it goes down 8/9 percent. Does anyone know what is happening?

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About the Author

Njoydev12

Premium Member

8 comments

gus 1065

7th Oct '21

It’s revenues are 80% gas derived. Market is incredibly volatile at the moment. After weeks of rising prices (of both Serica Energy (LON:SQZ) and gas itself) news overnight that Russia is increasing output/provision to Europe has knocked the gloss off Serica Energy (LON:SQZ) . Nothing company specific that I’m aware of.

Gus.

BlueFrew

7th Oct '21

The fundamentals are unchanged. It ran up on the massive increase in natural gas prices in the UK. The price of which has fallen dramatically because Russia has said they are going to increase gas supplies to Europe.

https://twitter.com/JavierBlas...

Whilst the gas crisis headlines may fade a bit, the fundamental issue is still there. Our reliance on wind means we can't know when and how much gas we'll actually need ahead of time, so long term supply deals for exactly the right amount of gas is impossible. So when the wind doesn't blow we need to go into the market and buy what we need at whatever price it is being sold at. Using Centrica (and other utilities) as a political football for years hasn't helped either, as when they had to make a decision on investing in Rough (our main gas storage) or closing it, they closed it. Why would you invest when any returns on that investment were pounced on by the Government?

Things get worse next year as Hunterston B and Hinckley Point B are due to be de-fuelled (and are completely worn out) and West Burton A is due to close. So that's less baseload and less supply using an alternative fuel (coal). Our reliance on gas is staggering as is our lack of storage compared to other countries. France hardly uses gas to generate electricity at all, yet has massively more storage than we have.

(Long SQZ)

Rusty2

7th Oct '21

It's not just the UK, Europe has many issues such as switching from fossil fuels but not enough renewables available. Also China is importing gas because it cancelled its coal from Australia. Dispute between EU and Russia which maybe resolved soon.

UK has issues with nuclear power reduced for maintenance, electric supply problems from France due to a fire and maintenance. UK and Europe had lower storage of gas than normal, from prolonged winter 2020/21. Less wind/sun this summer has reduced renewable output. As we head into winter solar output will reduce. These are just some of the issues. National Grid (LON:NG.) warn today there could be power shortages this winter.

KevinS1

8th Oct '21

I took advantage of the drop over the last couple of days and Jeffries the broker upped its target price to 290p today so I topped up with a few more. It's now my biggest holding in my PF by a long way, but I am happy to hold for further growth Serica Energy (LON:SQZ)

Rusty2

9th Oct '21

I’m considering buying Serica Energy (LON:SQZ) but I noticed that the shares did fall on Putins announcement but Diversified Energy (LON:DEC) which I hold hardly went down. I don’t understand the reasons for that apart from maybe Serica Energy (LON:SQZ) shares have risen faster recently so maybe more selling on news.

Rusty2

9th Oct '21

Seplat Energy (LON:SEPL) is looking very good value in this sector. It was in the SNAPS selection last July but shares are about 10% down since then.

With oil and gas prices rising, this does seem odd to me, what am I missing?

Patrickmylnetrade

16th Nov '21

Looks like an institution been selling -- AXA Investment Managers S.A. this will have assisted in the continuous price drop over the last few weeks.

Question is are they finished? todays price movement suggests so ?

Rusty2

16th Nov '21

There is some trouble in Belarus, which may affect gas supplies to Europe, so that maybe part of the reason, for the share price rise.

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Serica Energy - SQZ.L - what is happening to it today?

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Njoydev12

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