Serinus Energy plc (LON:SENX) is the topic of conversation when Research Director at Arden Partners Daniel Slater joins DirectorsTalk.
Serinus Energy have published H1 2020 results, Daniel what did you think of the results?
In our view, the results helped demonstrate the strong cash flow generating ability of the existing Serinus production position, with the limited OPEX helping support this even during a period of particularly low oil and gas prices. Given the macro backdrop, we thought it was a very encouraging set of numbers.
How did the company fair during the pandemic?
Serinus has been able to continue production operations largely unaffected, which was very helpful. Clearly the company’s oil and gas prices have been affected, but we are now beginning to see recovery here overall. Coronavirus restrictions have impacted Serinus’s ability to execute its work programmes, with drilling and seismic activity in Romania deferred, but we expect this to be implemented going forward as restrictions are relaxed.
How do you view the outlook?
Serinus’s existing production should continue to generate cash, particularly as oil and gas prices continue to recover. There is then significant potential for additional production volumes, exploration wells and further development activity within the portfolio as and when Serinus is able to bring new work programmes forward. Coronavirus restrictions will be important here, but so will the ongoing debt discussions with lender the EBRD, which could help free up cash flows for reinvestment in the significant opportunities contained in the existing portfolio.
How do you view the company in terms of fair value?
We do not believe that the value of the company’s existing production position combined with the forward potential contained in Serinus’s assets, particularly for new drilling programmes and potential new gas plant developments in Romania, is reflected in the current share price.