Serica Energy shares have plenty of gas
8th November 2022 07:30
by Alistair Strang from Trends and Targets
Share price activity has certainly picked up since the middle of 2021, and independent analyst Alistair Strang expects further movement here.
When reading an article about gas production, an interesting detail was that the UK doesn’t import gas from Russia, while mainland Europe requires it for electricity production. Unfortunately, the UK imports around 60% of its electricity from Europe with the result that obstruction of Russian gas supply will still affect the UK, along with Europe, this winter.
It’s funny how the darker evenings tend to focus the mind in such a direction, especially due to it being almost dark on Monday by 4pm here in Argyll, Scotland. Low cloud along with constant rain saw the streetlights pop into action by 3pm, once again another year when we curse the clocks changing for winter.
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Serica Energy (LSE:SQZ), a company with around 20% of its production being oil with the remainder being natural gas, produce around 5% of the UK’s gas needs. Their website also employs a strong font to boast “Serica is debt free with strong cash flows from production”.
The surprise with Serica is their share price, despite industry members announcing record profits due to taking advantage of inflation, has been in decline since September. Hopefully, we’re seeing early signs it may have bottomed, needing above 329p to suggest imminent movement to a modest 339p next.
Movement such as this shall be viewed as positive, exceeding the immediate downtrend and allowing a secondary, should 339p be exceeded, at a more generous 383p, along with almost certain hesitation due to a history of stutters around such a level. Only with closure above 383p shall we dare admit we can calculate a distant 475p as producing a long term attraction.
Past performance is not a guide to future performance
As always with shares, there’s a fly in the ointment and we’ve circled it on the chart. On 31 October, there was a very deliberate intraday movement below the Red uptrend. The day ended with the share price closing above the trend, creating the impression it was all a terrible mistake.
We dislike this sort of thing and often regard these trend breaks as early warning for some sort of pending future mess. In this instance, below 288p will make a visit to 250p a viable proposition with secondary, if broken, at 192p and hopefully a bounce.
To be fair, even a break of Red at around 300p currently would give early cause for real concern. But for now, we suspect it intends to head to 383p on the current movement cycle.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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