Serinus Energy plc (LON:SENX) is the topic of conversation when Shore Capital’s Craig Howie caught up with DirectorsTalk for an exclusive interview.
Q1: Serinus Energy published its Q1 2022 results, what were the key takeaways in your view?
A1: Serinus reported revenues of US$13.4m, operating profit of US$1.6m and a healthy net profit of circa US$1.1m for the period. These numbers represent 25%, 25% and 29% of our forecasts for the full year, respectively, indicating that the company is tracking nicely against our existing FY22F earnings estimates. These are therefore maintained, with extremely strong commodity prices essentially offsetting lower-than-anticipated volumes.
Q2: How do you view the outlook for the company?
A2: A planned multi-well exploration drilling programme in proximity to Moftinu in Romania is now fast approaching and provides excellent scope for the discovery of additional gas resources that can be produced and processed through existing plant capacity. In addition, Serinus continues to actively press on with its Tunisian production enhancement initiatives, an important source of growth going forward given the opportunity to materially increase recoveries.
Q3: How do you view the company in terms of fair value?
A3: We maintain confidence in our last-published 8.5p/share Risked NAV estimate, which implies considerable upside from the current share price. In addition, our forecasts indicate that Serinus Energy trades on a compelling FY22F enterprise value/funds flow from operations ratio of under 1.5x. Whilst acknowledging that the restoration of production growth may be required to drive a stronger share price performance, we see a particularly strong value proposition here – ahead of the Romanian drilling programme scheduled for the second half of this year. This could provide some exciting drilling catalysts, in our opinion, whilst offering the potential for material new gas production.