Serica Energy - with plenty of news flow to come, Buy says Gary Newman...

FCA prepares for London to join the race to SPAC investor hell as London goes for gold in the fraud Olympics. Read from Tom Winnifrith HERE

The oil and gas market is quite hard to read at the moment, particularly when it comes to individual companies which are producing, as some have seen large share price rises whilst others barely seem to have moved despite the fundamentals appearing to be strong. In general, there seems to have been a bit of a disconnect between energy prices and the way in which the companies which produce oil and gas have seen their share price moving particularly when it comes to oil and if you look back at where they were trading the last time that Brent was at $70/barrel...

I know he is a proven liar but now even Zoetic seems to say its biggest shareholder may not be telling the truth. Read from Tom Winnifrith HERE

Oil prices have slipped back a bit in recent weeks on concerns over further lockdowns in Europe and the US, but for the time being at least it appears that OPEC is keen to maintain high prices, even if it means continuing to restrict output of its members, and alongside that, in the US it looks as though the oil industry won’t have it as easy under a Biden administration as what it has done in the past, in terms of being able to develop new fields – plus access to debt finance is likely to prove tougher as well. Gas prices haven’t quite shown the same sort of strength, but are still a lot higher than they were throughout the first half of last year, and although storage levels have remained high, I’m not sure that will continue to be the case in the future as I see several potential disruptions to supply, particularly in Europe, as well as a good chance of demand strengthening. Relations between Europe and Russia aren’t great at the moment, and a lot of the total gas supply comes from Russia and there has been pressure on Germany to halt the Nord Stream 2 pipeline. In recent years there has been a significant increase in imports of LNG from the US into Europe, but changes to policy in the US by the new administration could well impact upon that, certainly in the longer term. So, I see a decent chance of gas prices in Europe strengthening. If we look even closer to home, there has also been talk of restricting or even banning new exploration projects within the North Sea, and given how dependent the UK appears to be on gas for power - in spite of the talk about switching to renewable energy sources and the like - I would say that this would also seem to be positive for any companies that produce gas in the UK. So if I was looking for a company that produces good amounts of gas, as well as oil, operates in the North Sea, and appears to still be undervalued given the bounce back in commodity prices, then Serica Energy (SQZ) would be high on the list.

Read HERE: Mobile Streams – SHOCKER following recent “Major Contract win” announcement & equity raise...

Currently the company is trading at a market cap of around £313 million at a share price of 116p, and for that I believe that you are getting very good value with plenty of upside potential in the near term. During 2020 the company produced 23,800boepd from its BKR and Erskine fields and operates at a cost of around $14/boe, with around 80% of its production being gas. Last year the average realised price for gas was 25p/th, plus $42/barrel for oil to give around $20/boe overall (before the benefits of any hedging kicked in). Production would have been around 27,000boepd had there not been a 45 day shutdown for repairs to Bruce. By the start of the year those prices had improved significantly, and in January equated to $43/boe. Since then oil has strengthened even more, although gas has been very volatile and has weakened slightly. The company also has a strong balance sheet and is debt-free with just over £100 million in the bank plus it still had around £45 million in previous tax losses that can be offset (as at the last set of interims up to the end of June), as well as having paid out a maiden dividend of 3p/share. So, there is the potential for the company to make further acquisitions, as it has successfully done in the past. In the absence of any acquisitions there is still plenty of growth potential for its current assets anyway, with the development of the 50% owned Columbus field now underway via the spudding of a development well which is expected to bring 7,000boepd gross online by the end of this year, of which around 70% is gas, at a CAPEX cost of £17 million for the year. Undeveloped 2P reserves for Columbus have previously been estimated at around 14mmbbls of oil equivalent and would suggest a field life of around six years. Erskine still provides a useful income for the company, although production is starting to drop off gradually and averaged 2,300boepd, but it is the Bruce and Rhum fields which produce most of its gas and oil, with an average of 21,500boepd in 2020.

Tern – FY Numbers and DA Convertible Loan Extension: Shares Slide. Has Mr Market finally woken up to this POS? Read from Nigel Somerville, the Deputy Sheriff of AIM, HERE

There is plenty of further upside from Rhum via an intervention in the R3 well which has the potential to add significant amounts of production. This well has remained blocked for years but is already connected to the gas pipeline and a successful operation to bring it online could see rates of up to 15,000boepd, based on the what could potentially be produced from the two existing Rhum wells. This would also have the potential to add significant amounts to the 28.7mmbbls of oil equivalent 2P reserves that the field had at the start of 2020. This work is anticipated to cost around £7.8 million this year and operations are ongoing and with news expected at any time. It is also worth bearing in mind the structure of the deal when Serica acquired BKR, and although this year the company only receives 60% of the net cash flow from the assets (the same as it did last year), from 2022 onwards that rises to 100%.

James Halstead: What a solid, family influenced, business. Chris Bailey writes HERE

Based on all of this, not only does the company look strong but there is plenty of newsflow to come – with the R3 intervention; the completion of the Columbus development well; and the full year results for 2020 due soon, which I would expect to be viewed as positive, given the situation last year. You probably aren’t going to see fireworks here or massive share price rises overnight, but barring any really unexpected bad news, the share doesn’t carry the risk of taking a big hit to the price either. On that basis, and given oil and gas price predictions going forwards, I can see plenty of value in the shares from around this level and view it as a strong buy as it continues to build substantial amounts of cash whilst also paying out further dividends.

Read HERE: Zoo Digital – “confirmation of successful fundraising”. Just how successful is it?

Filed under: Serica Energy, SPAC, Zoetic, Mobile Streams, Tern, James Halstead, Zoo Digital

Johnson Matthey - still excited about prospects writes Chris Bailey...

08/04/2021

Rio Tinto - the story remains so much more than just cultural heritage says Chris Bailey

08/03/2021

Metals Exploration - Q2 challenges but a better outlook considers HotStockRockets

08/02/2021

Castillo Copper - further copper intersections & visible mineralisation, Buy

07/30/2021

British American Tobacco shares continue to offer attractive total return hopes says Chris Bailey

07/29/2021

Reckitt - recent share price decline too severe? Chris Bailey reviews...

07/28/2021

Centamin - remains a buy following Q2 report says Nigel Somerville

07/27/2021

Union Jack Oil - West Newton update, clear upcoming catalysts...

07/26/2021

Bluebird Merchant Ventures - operational update shows progress is being made, Buy...

07/23/2021

Saga offers interesting exposure to the travel industry bouncing back considers Gary Newman

07/22/2021

easyJet - ten quid or more share price again by the end of the year? Chris Bailey writes...

07/21/2021

Headlam Group - a recovery buy?...

07/20/2021

Burberry - chav challenges? Chris Bailey reviews...

07/19/2021

Orcadian Energy - a newly-listed AIM oiler Buy suggests Peter Brailey...

07/16/2021

Kosmos Energy - production & share price upside potential says Gary Newman...

07/15/2021

Cairn Energy - a lot to like at this price? Gary Newman reviews...

07/14/2021

DS Smith - further recovery & structural growth potential following full-year results?...

07/13/2021

GlaxoSmithKline - a recovery buy...

07/12/2021

Wm Morrison - recommended offer, but is there still more to come?

07/09/2021

Pick and choose your stocks - and if you need to houses - carefully says Chris Bailey...

07/08/2021

After Wm Morrison, J Sainsbury next? Chris Bailey writes...

07/07/2021

I3 Energy has turned things around - plenty of further potential considers Gary Newman...

07/06/2021

AEX Gold - Nalunaq and exploration update, Buy...

07/05/2021

Impellam Group - a recovery buy suggest Tom Winnifrith & Steve Moore...

07/02/2021

MyHealthChecked - acquisition, building a business of sustainable scale?...

07/01/2021

Burberry CEO deciding to leave a problem? Chris Bailey reviews...

06/30/2021

GlaxoSmithKline - a buy despite the unexcitable CEO? Chris Bailey writes...

06/29/2021

Kefi Gold & Copper - Ethiopia election operational update, Buy...

06/28/2021

Kier - open offer result following subsidiary sale, recovery buy?...

06/25/2021

Ariana Resources - more very positive drilling results. Buy says Nigel Somerville...

06/24/2021

DS Smith - strange name but a great company says Chris Bailey...

06/23/2021

Horizonte Minerals - short-term delay largely irrelevant. Buy says Gary Newman...

06/22/2021

Empresaria - a summer of positive macro-economic tailwinds ahead? From HotStockRockets...

06/21/2021

Pharos Energy - oil discovery and further potential catalysts says HotStockRockets...

06/18/2021

B.P. Marsh & Partners - full-year results, recovery opportunities...

06/17/2021

Serica Energy - plenty to make me think that it will continue to do very well says Gary Newman

06/16/2021

EnQuest - new debt facility, recovery buy says HotStockRockets

06/15/2021

Kefi Gold & Copper - still a risk-reward buy following executive bonus plan victory for investors...

06/14/2021

Asiamet Resources - progressing several key workstreams. Buy says HotStockRockets...

06/11/2021

British American Tobacco - positive pre-close update. Remains a Buy says Chris Bailey...

06/10/2021

Reckitt to sell a business in China but still loves the emerging markets. Chris Bailey writes...

06/09/2021

Bushveld Minerals - vanadium about to enter an up-cycle? Gary Newman writes...

06/08/2021

Anglo Asian Mining - how pleasing and exciting the results announcement?...

06/07/2021

SkinBioTherapeutics - positive study results, still multi-bagger potential?...

06/04/2021

With a new team in place Afentra is a buy says Gary Newman

06/03/2021

Still excited about prospects for Johnson Matthey says Chris Bailey...

06/02/2021

Central Asia Metals - a buy? A review by HotStockRockets...

06/01/2021

Predator Oil & Gas - Morocco and Trinidad updates, more to come from this great share tip?...

05/28/2021

Playtech - good sale & a sensible update. Still undervalued suggests Chris Bailey...

05/27/2021

Smiths Group - CEO change, will the next change be to split the business?

05/26/2021

Biffa loves more waste and more recycling says Chris Bailey...

05/25/2021

Red Rock Resources - Elephant Oil and Juno Minerals investee updates, remains a Strong Buy...

05/24/2021

Power Metal Resources - news flow helps shares, more to come. From HotStockRockets...

05/21/2021

DCC - a compelling medium-term buy suggests Chris Bailey...

05/20/2021

Ariana Resources - more drilling results bode well for Kiziltepe, Buy says Nigel Somerville...

05/19/2021

Sage Group is still a friend of mine says Chris Bailey...

05/18/2021

Touchstone Exploration - Q1 results, an upcoming potential catalysts buy says HotStockRockets

05/17/2021

Predator Oil & Gas - as MOU-1 drilling excitement builds an update from HotStockRockets

05/14/2021

Bacanora Lithium - a buy at a big discount to the possible cash offer price? Gary Newman writes...

05/13/2021

Morrisons is still rudely unloved. A Buy says Chris Bailey...

05/12/2021

Panther Metals - Oz update. Targeting 25p says Nigel Somerville...

05/11/2021

Jadestone Energy - a pleased to announce Malaysia acquisition. We can understand why...

05/10/2021

J Sainsbury - full year results, still income value?...

05/07/2021

Sell in May? Some stocks Yes, gold No, argues Nigel Somerville...

05/06/2021

Centamin - a gold buy whilst its shares are cheap says Gary Newman

05/05/2021

Chaarat Gold - Q1 operational update, share price catalysts imminent says HotStockRockets

05/04/2021

Shanta Gold - Q1 production & operational update. Buy says HotStockRockets...

04/30/2021

Do I panic as Whitbread shares fall? Chris Bailey writes...

04/29/2021

Gold and my favourite gold stocks update from Nigel Somerville...

04/28/2021

How are Ibstock and Taylor Wimpey feeling about their housing market exposure? Chris Bailey writes..

04/27/2021

Union Jack Oil - well testing potential share price catalysts ahoy. Buy suggests HotStockRockets...

04/26/2021

Metals Exploration - Q1 update, clear risks but also clear opportunity...

04/23/2021

I remain positive on Imperial Brands shares following US reports writes Chris Bailey...

04/21/2021

Johnson Matthey shares are worth buying considers Chris Bailey...

04/20/2021

Ferrexpo - still upside potential from this cracking share tip?...

04/19/2021

BP - trading & net debt position ahead of expectations, Income Buy...

04/16/2021

Chaarat Gold - 2020 results, still a buy from HotStockRockets?...

04/15/2021

Golden Prospect Precious Metals - FY20 numbers, shares to double? Nigel Somerville reviews...

04/14/2021

Horizonte Minerals - 2020 results, transformational year ahead...

04/13/2021

SkinBioTherapeutics - new research programme. We are already massively ahead but more to come?...

04/12/2021

Centamin - a recovery buy suggest Tom Winnifrith & Steve Moore...

04/09/2021

Carnival keeps on hoping...and so do I says Chris Bailey...

04/08/2021

Loving the outlook for commodities & Central Asia Metals writes Chris Bailey...

04/07/2021

Predator Oil and Gas - a review from HotStockRockets...

04/06/2021

I do not use Carnival or Imperial Brands...but am still happy to own both shares writes Chris Bailey

04/01/2021

Serica Energy - with plenty of news flow to come, Buy says Gary Newman...

03/31/2021

Are the Chinese chavs of Burberry being told to change their view? Chris Bailey writes...

03/30/2021

Horizonte Minerals - an upcoming catalysts Buy...

03/29/2021

Goldplat - interims, still a value buy?...

03/26/2021

Centamin - full year results. A recovery buy argues Nigel Somerville...

03/25/2021

AEX Gold - development plan and exploration progress, still a buy...

03/24/2021

Caerus Mineral Resources has just listed and is possibly worth a flutter says Gary Newman...

03/23/2021

Fox Marble - legal claim update, Buy to possibly double says Tom Winnifrith for HotStockRockets...

03/22/2021

EnQuest - an oil recovery buy?

03/19/2021

Is the recent share price rise of 88 Energy justified? Gary Newman reviews...

03/18/2021

Ariana Resources - a Buy on its production guidance news says Nigel Somerville...

03/17/2021

Wm Morrison - full-year results, still an income buy?...

03/15/2021

Biffa - a recovery buy?...

03/12/2021

Do not worry about the losses at Ibstock says Chris Bailey...

03/11/2021

Prudential - scope to perform more says Chris Bailey

03/10/2021

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