Serica Energy’s half-year results outlined development options with the potential to unlock value in assets located in the UK, Morocco and offshore Ireland. All of these options, though promising, are nonetheless pending and investors – many of whom will be nursing hefty ‘paper-losses’ – will require yet more patience.
Serica did reveal that it has reached contingent agreement for a farm-out of its 25 per cent interest in the Foum Draa and Sidi Moussa blocks offshore Morocco. This could potentially result in a two-well drill programme as early as next year, but details have yet to finalised. Discussions are also underway with a number of parties to fund the development of the North Sea Columbus project following sanction being granted by the Department of Energy and Climate Change.
Though the Kambuna field in Indonesia is in a state of natural decline, new compression technology delivered a 19 per cent rise in output between the first and second quarters. However, unit costs and depletion charges increased significantly over the half-year.
Serica’s net cash position was aided by a $5m (£3.18m) contribution from a Namibian farm-out agreement and the company also has a $50m debt facility remains undrawn.
Peel Hunt gives a risked net asset value (NAV) of 46p, comprising a core valuation of 17p and appraisal/development assets of 29p.
| SERICA ENERGY (SQZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 27p | MARKET VALUE: | £47.7m | |
| TOUCH: | 26-28p | 12-MONTH HIGH: | 47p | LOW: 14p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 61¢ | NET CASH: | $23.3m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011* | 15.2 | -2.72 | -2.00 | nil |
| 2012 | 8.5 | -3.55 | -2.00 | nil |
| % change | -44 | - | - | - |
£1 = $1.57 *Restated | ||||
