eagle51
15 May 2018
Re: BKR Deal UP - if America didn't control money flow across the globe I'd agree we should tell Trump to go do one. As it is we have to be diplomatic. With Europe having turned native over Brexit we don't have that many powerful allies and the bond with the US is too important to risk by falling out big time with the current US President, no matter how gung-ho his behaviour might be. Longer term relations are much more important. Trump is the problem - not the US generally. I guess the hope is he doesn't cause too much damage to international relations during what many outside Redneck territory in the US will be hoping is a short term in office.It's in everyone's best interests to find a way around the kind of problems SQZ is facing as a result of Trump tearing up the multilateral agreement with Iran, so let's hope an exception can be made in SQZ's case to avoid serious collateral damage to an entirely innocent party. Wish I had more confidence in UK politicians, working with the public sector and people in Europe who it's clear have no moral scruples, to behave with courage and conviction. It seldom happens, but you never know..........Ever the optimist!!GLimo - dyor
up protherics
15 May 2018
Re: BKR Deal sorry forgot to add.do we really want anything to do with a country that decides to rip up unilateral deals which were based on democracy which they so called hold so dear and not to mention backing a country that shoots protestors who were not armed.
up protherics
15 May 2018
Re: BKR Deal we could end up covered either way.. IF Europe makes a stance the government would surely try and protect the field.If the Iran deal collapses. Then sanctions would be applied to the field . As before the ioc revenue would be held in Escrow enabling the field to still produce.I hate to say this , but Serica could actually benefit if the Iran deal collapses.. Even though I think our so called big allie is most certaintly not..Going forward as a country we should now try to build stronger relations with practically every country other than America.. IN my opinion they are not much better than some of the dictatorships which they have decided that are o.k now
sasa43
15 May 2018
Re: BKR Deal Agreed, up protherics - a good, balanced, post by eagle there, re: the present dilemma.Doubtless, the UK will be lobbying hard for a waiver for us, given it's a UK Co, operating in our own waters, accounting for 5% of our gas production with an already blocked IOC A/C in situ, so that should suffice, logically but a binary bet, nevertheless, given the politics of it etc., - sasa.
up protherics
15 May 2018
Re: BKR Deal Good post eagle . That's where I see it. However Serica did mention in the press that ( I,ll try to find the article. That they will have too now start recruiting wok force outside the u.s ( scotts Herald I think )Also it is in no ones interest if this fails.. I.E Government/BP/Serica.The government will want this field producing.. Especially as it accounts for 5% U.K gas.Not to mention tax receiptsIn terms of expertise.. Why cant we have a agreement with a Rusian company via Roseneft. After all B.P own 25% of them.
eagle51
15 May 2018
Re: BKR Deal Trying to get my head around all this, it now seems to me the stumbling block must be secondary sanctions. Serica couldn't safely proceed if well-head equipment etc was US sourced and requires parts and maintenance involving input from US companies and personnel, inc those coming with the deal. Reference was made in the admission document to the licence BP holds that allows the above to work on Rhum, but it won't be transferable, so Serica would need to be issued with a licence of its own by OFAC, which many probably think won't now happen - at least in a timescale that allows the deal to proceed as intended.My further guess is that any deal will be for all three interests, or none at all. Maybe the deal can be deferred, but i don't know where this would leave BP, with all its interests in the US. It must have seen the writing on the wall when Trump was voted into office, at which point Rhum will have become a hot potato again. Some might think this is why the deal was priced so attractively. On the plus side, companies like Serica are potentially collateral damage, so no doubt everyone is working hard to find a proposed solution - inc OFAC, the Iranians, the OGA and BP. On reflection, I can't see there's any legal basis on which SQZ could hold funds due to INOC in escrow as there are no UK restrictions I know of on trade with Iran that are relevant.It's all outside Serica's control and predicting the future, particularly when types like Trump and flag-burning arabs are involved, isn't something many would claim to be skilled at. The price has, perhaps temporarily, found a level that's great value if a solution can fairly quickly be found, but very poor value if the deal founders. Based on what we've been told so far about the interests being acquired and the terms of the deal, I now get a back of an envelope DCF value of 150p+ for SQZ's shares if the deal goes ahead (I've had to make some fairly sweeping assumptions about well maintenance and the like) but this this drops way below where the price is currently sitting when applying a discount rate that factors in the risks of the deal falling down (which I take to be real).Thinking again about my somewhat harsh comments about the sense of SQZ's management in putting out the RNS last week, I might have missed the elephant in the fridge. SQZ's management might not have seen the need to say anything at all, as the risks were all set out in admission document and Trump made it clear when he was elected that he was going after Iran. There are these people called NOMADs and rear ends have to be covered at all costs.................WDIK? Just thinking out loud (so to speak). I'm hopeful a solution can be found but there are no guarantees. Sometimes fortune can favour the brave; let's hope this is one of those occasions.[link] imo - dyorGL
Franconia
14 May 2018
Re: BKR Deal Well, it looks to me as if, after taking the weekend to digest information available, the market has decided that there is limited risk that the deal wont complete....certainly no sign of offloading of shares....
NoQuestionMarks
14 May 2018
Re: BKR Deal If the deal is cancelled I would think SQZ will eventually fall back to 20-30p.I was hoovering up the shares in the year after Erskine was acquired at 5-10p.Without BKR there's a huge gap in the SP that will have to be filled.I sold out a while back when things were looking toppy.If the deal does not falter then 60p is fair value.Too uncertain for me though.
researchassist
14 May 2018
Re: BKR Deal Casabanker, The value of an E&P company is based on its production capacity and its reserves. Without the deal both are significantly lower. However, if you believe the deal will hold or there is a high probability it will hold then there is value here. IMO there are too many uncertainties outside of company's control on a two year time horizon.
Snowman24
14 May 2018
Re: BKR Deal Im afraid I cant add much re whats in the price other than if the deal fails this clearly is not in the price. However, the likelihood of this I would argue is quite small at this point, most likely is Iran and US find a way to come together, so maybe the completion date of this deal gets pushed out. Otherwise a fix to the IOC position will need to be worked. Holding money in Escrow so IOC does not receive the proceeds has worked in the past. The share price fall however has become technical and you should not underestimate the impact of IG and leverage buyers who are subsequently closed out as the price hits stop loss levels, causing further sales. This can produce outsized movements day after day especially where the bias of the register is towards the private investor. These things do sort themselves out in time though. Good luck.
casabanker
13 May 2018
Re: BKR Deal It's fair for you, researchassist, to state that an investment in SQZ is too risky for you. I wouldn't want anyone to take on any risk that would make them feel uncomfortable. I am just wondering exactly what you are seeing as unacceptable risk? Correct me if I am wrong but SQZ hasn't had any income from the Rhum field. In any case, the price fall takes into account the potential loss surely. Investing in AIM stocks is risky per se but SQZ is about as safe as you will get for a small oily. If you are going to worry about capital loss by buying AIM stocks, then reduce your initial stake to a level you are comfortable with. If the investment goes pear shaped, you won't lose your shirt.Casa.
researchassist
13 May 2018
Re: BKR Deal On balance for me the risks are to the downside. If the deal falls through or production from BKR is lost the drop in total production for Serica will be large. On a two year time horizon it’s possible that there may be no resolution. Hence, the risk reward ratio is not favourable.It’s worth bearing in mind previously in 2010 when the field was shut for a long time for similar reasons. Previous sanctions on Iran were harsh and we are now being promised even harsher sanctions. It’s possible that Trump is bluffing but it’s not a risk that I would wish to take. In times on uncertainty it’s best to protect your capital.
Franconia
13 May 2018
Re: BKR Deal I'm not sure of the wisdom of the last two posts recommending a "sell". I don't dispute that there is now considerable risk and uncertainty regarding the BKR deal, but the way I see it, that is now priced in and there is considerable upside from a resolution to this situation. And then there is Rowallan, activity in Namibia, progress on Erskine pipeline and Columbus news.......Why sell now after the fall has already happened? Yes, it may drop further but I would rather be in than out right now. You pays your money and takes your chance... DYOR!
researchassist
12 May 2018
Re: BKR Deal I really cannot see the situation resolving quickly. There are too many factors that need to fall in to place quickly. I wonder whether the planned sale by BP was in anticipation of Iran sanctions. At the government level we’re in a difficult position where we need greater trade with the US and complying with sanctions on Iran may be the easiest and cheapest way forward. The US administration seems determined on taking a hard line with Iran. This complicates things for serica, particularly if equipment and service suppliers refuse to provide services. As you say our best hope is if Trump changes his mind. Although, I cannot see how that may happen in the short term with tensions in the ME already at elevated levels. Too much risk for me at the current price. Please dyor.
casabanker
11 May 2018
Re: Price fall Thanks sasa. I think this setback is a temporary one for SQZ barring unknowns. The blossoming of this one looks a much shorter time frame than some shares that I have held in the past. Of course it may disappoint but it is full of hope rather than hype. It has income so it does not rely on continual injections of borrowed cash and the inevitable share and sp dilution. Casa.
