OTCPK:SQZZ.F

Stock Analysis Report

Executive Summary

Serica Energy plc, an upstream oil and gas company, engages in the identification, acquisition, exploration, and exploitation of oil and gas reserves.

Rewards

Trading at 51.6% below its fair value

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of -20.4% per year for the next 3 years

Shares are highly illiquid

High level of non-cash earnings



Snowflake Analysis

Excellent balance sheet and good value.

Share Price & News

How has Serica Energy's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SQZZ.F's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0%

SQZZ.F

-4.6%

US Oil and Gas

-1.2%

US Market


1 Year Return

n/a

SQZZ.F

-10.1%

US Oil and Gas

22.3%

US Market

Return vs Industry: Insufficient data to determine how SQZZ.F performed against the US Oil and Gas industry.

Return vs Market: Insufficient data to determine how SQZZ.F performed against the US Market.


Shareholder returns

SQZZ.FIndustryMarket
7 Day0%-4.6%-1.2%
30 Day2.0%-5.8%1.6%
90 Day13.5%-2.5%8.8%
1 Yearn/a-6.7%-10.1%25.0%22.3%
3 Year188.5%188.5%-11.5%-19.6%49.9%40.3%
5 Year1495.7%1495.7%-14.5%-26.8%77.6%58.0%

Price Volatility Vs. Market

How volatile is Serica Energy's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Serica Energy undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SQZZ.F ($0.75) is trading below our estimate of fair value ($1.55)

Significantly Below Fair Value: SQZZ.F is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SQZZ.F is good value based on its PE Ratio (3.6x) compared to the Oil and Gas industry average (10.2x).

PE vs Market: SQZZ.F is good value based on its PE Ratio (3.6x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: SQZZ.F's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: SQZZ.F is overvalued based on its PB Ratio (2.1x) compared to the US Oil and Gas industry average (1x).


Next Steps

Future Growth

How is Serica Energy forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

-20.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SQZZ.F's earnings are forecast to decline over the next 3 years (-20.4% per year).

Earnings vs Market: SQZZ.F's earnings are forecast to decline over the next 3 years (-20.4% per year).

High Growth Earnings: SQZZ.F's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SQZZ.F's revenue (0.07% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: SQZZ.F's revenue (0.07% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SQZZ.F's Return on Equity is forecast to be low in 3 years time (12.5%).


Next Steps

Past Performance

How has Serica Energy performed over the past 5 years?

77.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SQZZ.F has a high level of non-cash earnings.

Growing Profit Margin: SQZZ.F became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: SQZZ.F has become profitable over the past 5 years, growing earnings by 77.3% per year.

Accelerating Growth: SQZZ.F has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: SQZZ.F has become profitable in the last year, making it difficult to compare its past year earnings growth to the Oil and Gas industry (-13.3%).


Return on Equity

High ROE: SQZZ.F's Return on Equity (55.7%) is considered outstanding.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Serica Energy's financial position?


Financial Position Analysis

Short Term Liabilities: SQZZ.F's short term assets (£135.6M) exceed its short term liabilities (£109.0M).

Long Term Liabilities: SQZZ.F's short term assets (£135.6M) do not cover its long term liabilities (£197.5M).


Debt to Equity History and Analysis

Debt Level: SQZZ.F is debt free.

Reducing Debt: SQZZ.F had no debt 5 years ago.

Debt Coverage: SQZZ.F has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: SQZZ.F has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: SQZZ.F has a high level of physical assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if SQZZ.F's debt is covered by short term assets.


Next Steps

Dividend

What is Serica Energy's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage4.3%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate SQZZ.F's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate SQZZ.F's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SQZZ.F's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SQZZ.F's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SQZZ.F's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Serica Energy's salary, the management and board of directors tenure and is there insider trading?

4.6yrs

Average management tenure


CEO

Mitch Flegg (59yo)

2.2yrs

Tenure

UK£577,000

Compensation

Mr. Mitchell Robert Flegg, also known as Mitch, has been the Chief Executive Officer and Director of Serica Energy PLC since November 21, 2017. Mr Flegg has been the Chief Executive Officer and Executive D ...


CEO Compensation Analysis

Compensation vs Market: Mitch's total compensation ($USD577.00K) is below average for companies of similar size in the US market ($USD1.70M).

Compensation vs Earnings: Mitch's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.6yrs

Average Tenure

Experienced Management: SQZZ.F's management team is considered experienced (4.6 years average tenure).


Board Age and Tenure

2.2yrs

Average Tenure

69.5yo

Average Age

Experienced Board: SQZZ.F's board of directors are not considered experienced ( 2.2 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Tony Walker (75yo)

    Executive Chairman

    • Tenure: 15.4yrs
    • Compensation: UK£653.00k
  • Michael Renolds

    Exploration Consultant of Indonesia

    • Mitch Flegg (59yo)

      CEO & Director

      • Tenure: 2.2yrs
      • Compensation: UK£577.00k
    • Danny Fewkes

      Group Treasurer

      • Tenure: 4.6yrs
    • Clara Altobell

      Vice President of Technical

      • Amanda Bateman

        Company Secretary

        • Tenure: 4.6yrs
      • Mike Killeen

        Vice President of Operations

        • Tenure: 2yrs

      Board Members

      • Tony Walker (75yo)

        Executive Chairman

        • Tenure: 15.4yrs
        • Compensation: UK£653.00k
      • Neil Pike (73yo)

        Senior Independent Director

        • Compensation: UK£67.00k
      • Ian Vann (70yo)

        Non-Executive Director

        • Tenure: 12.5yrs
        • Compensation: UK£67.00k
      • Trevor Garlick (61yo)

        Independent Non-Executive Director

        • Tenure: 1.2yrs
        • Compensation: UK£5.00k
      • Mitch Flegg (59yo)

        CEO & Director

        • Tenure: 2.2yrs
        • Compensation: UK£577.00k
      • Malcolm Webb (69yo)

        Independent Non-Executive Director

        • Tenure: 1.2yrs
        • Compensation: UK£5.00k

      Company Information

      Serica Energy plc's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Serica Energy plc
      • Ticker: SQZZ.F
      • Exchange: OTCPK
      • Founded: 2004
      • Industry: Oil and Gas Exploration and Production
      • Sector: Energy
      • Market Cap: UK£328.693m
      • Listing Market Cap: UK£429.614m
      • Shares outstanding: 267.23m
      • Website: https://www.serica-energy.com

      Number of Employees


      Location

      • Serica Energy plc
      • H1 Building
      • Hill of Rubislaw
      • Aberdeen
      • Aberdeenshire
      • AB15 6BY
      • United Kingdom

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      SQZAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPJan 2004
      A3PDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 2004
      SQZZ.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 2004

      Biography

      Serica Energy plc, an upstream oil and gas company, engages in the identification, acquisition, exploration, and exploitation of oil and gas reserves. Its primary focus is on the production and development in the United Kingdom North Sea, complemented by a portfolio of oil and gas exploration opportunities, including interests in offshore license blocks in the United Kingdom North Sea, Ireland, and Namibia. Serica Energy plc was founded in 2004 and is headquartered in Aberdeen, the United Kingdom. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/27 00:47
      End of Day Share Price2019/12/31 00:00
      Earnings2019/06/30
      Annual Earnings2018/12/31


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.