Image source: Oleg Gamulinskii/Pixabay

Highlights

  • Serica Energy is an FTSE AIM UK 50 index-listed United Kingdom-based oil and gas company.
  • SQZ marked an increase in the average net production in FY22 to 26,200 boe per day as compared to the average net production of 22,200 boe per day in FY21.
  • In FY22, the company reported a surge in the total revenue to GBP 812.40 million as compared to GBP 514.1 million in FY21.
  • The company’s operating profits surged to GBP 476.2 million during FY22 against GBP 246.1 million in pcp.

Founded in 2004, Serica Energy PLC (LSE: SQZ) is an FTSE AIM UK 50 index-listed United Kingdom-based oil and gas company. Over the years, it has emerged as one of the top ten UK-producing oil and gas players. The company operates exploration as well as development activities based in the United Kingdom, Morocco, Ireland, and Namibia. It holds an economic interest in an oilfield offshore Norway as well.

Serica is marking a strong presence in the industry following a two-pronged strategy of investing in its current assets and prolonging their life whilst targeting major acquisition opportunities.

Compelling FY22 financial metrics

The LSE-listed company managed to increase the average net production to 26,200 boe per day in FY22, as compared to the average net production of 22,200 boe per day in FY21. Also, it reported an increase in the total revenue to GBP 812.40 million in FY22 over GBP 514.1 million in FY21, thanks to the improved average realized prices and higher quantity produced. Further, the operating profits of the company also surged to GBP 476.2 million during FY22 against GBP 246.1 million in pcp and the net cash inflow from operating activities increased to GBP 560.1 million in FY22 against GBP 157.6 million in FY21.

Notably, Serica Energy raised the final dividend to GBX 14 per share, increasing the full-year dividend of GBX 22 per share for the year FY22. This marks a fair rise in the final FY21 dividend of GBX 9 per share.  Here are key positives and negatives of its FY22 financial performance:

Acquisition of Tailwind assets

In March 2023, the company acquired the Tailwind assets, a combination of producing fields tied back to the Triton production hub and Ninian platform, along with few near-term development opportunities. The company is expecting the combined net production to rise to 40-47 thousand boe per day in 2023 and net 2P reserves are >130 million boe (as noted at the end of the year 2022).

Stock price performance

The SQZ stock has witnessed a fall of about 17.21% in the last three months and over the last six months, it has fallen by over 31%. The stock has a 52-week low and 52-week high of GBX 200.00 & GBX 454.00, respectively and was trading below the average of 52-week high price of GBX 1,478.00 and 52-week low price of GBX 910.00 at the time of writing this article on 30 May 2023.

Shareholding:

Top 10 shareholders in SQZ hold 56.18% stake in the company and most of them are institutional investors. Such a high institutional shareholding in SQZ gives confidence as institutional investors do thorough research and due diligence before putting their money in any company, hence it carries a great deal of weight. It is often viewed as a positive sign. However, on the flip side, high institutional ownership may also indicate that the stock may significantly decline if any institutional investors exit the stock.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is 30 May 2023. The reference data in this report has been partly sourced from EODHD/Others.