One of the main reasons we've been bullish on Serica Energy (SQZ) in recent years is that the company has its hands in many pies. Its diverse portfolio includes a producing gas asset, a development project, an appraisal asset and several early-stage exploration licences focused on exciting Atlantic plays. We had hoped one of these would have paid off for shareholders by now, but that hasn't been the case and the company's financial position is starting to look stretched.
At Serica's Columbus field in the North Sea, development plans for the gas-condensate discovery were disrupted by BG Group's (BG) independent decision in March not to build a platform that was to provide an export route. While other options are available, Serica will now have to submit a revised development plan and restart discussions on project financing. Meanwhile, Serica's Kambuna field in Indonesia is rapidly approaching the end of its life - the handover to Pertamina is expected in the next few months. Cash flow from the field has helped Serica cover exploration costs in the past and it will be missed going forward.
Nevertheless, the company remains funded for the rest of the year and has a post-period end $16m (£10.5m) cash pile. High-impact drilling in Morocco is expected to begin in the fourth quarter and continue into 2014.
SERICA ENERGY (SQZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 25p | MARKET VALUE: | £46m | |
| TOUCH: | 25-26p | 12-MONTH HIGH: | 35p | LOW: 19p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 48¢ | NET CASH: | $22.3m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | nil | -0.80 | -0.30 | nil |
| 2009 | 7.60 | 7.30 | nil | nil |
| 2010 | 31.3 | -17.0 | -10.0 | nil |
| 2011 | 27.1 | -11.3 | -8.00 | nil |
| 2012 | 15.4 | -24.7 | -14.0 | nil |
| % change | -43 | - | - | - |
£1=$1.52 | ||||
