[[Start here]] → [[Journals]] → 2023-06-05 --- ![[north-sea-oil.png]] I've been looking at the UK oil and gas sector. Energy currently suffers from the lowest Momentum Rank of any sector in the UK, while boasting some ludicrously lowly valued, high profitability stocks. While Just Stop Oil is hell bent on stopping commuters from getting to work, the reality is we are going to need oil and gas for a long, long time to come yet. The sector does seem like it's basing. Serica Energy ([SQZ](https://app.stockopedia.com/share-prices/serica-energy-LON:SQZ)) jumped out at me. The stock had an absolute monster run from 2016 at 12p to a 2022 high at 438p or so, but now sits around 234p. StockRank 95. ![[serica-chart-2023-06-05.png]] Digging a bit deeper, forecasts for 2023 seem to be for 100p of earnings. So there's a P/E of just over 2. But half the £863m market cap is currently in cash - £433m. Wow. If the company were to pay all its cash out as a dividend, it would be making almost all the market cap back in free cashflow in the next year. It owns lots of North Sea assets. Keir Starmer has claimed he'd not allow any new North Sea Permits but [the backlash has been severe from unions](https://www.ft.com/content/b5b1ff08-b51f-4cdf-a705-d1e9fbbef436) - so while there's some political risk, it's probably more around taxation than operation. But the continued heavy taxation post pandemic has come under fire by many executives, including [Sir Jim Ratcliffe](https://www.ft.com/content/1e755775-4da0-4507-923b-aec85989a5d2). ![[serica-presentation-north-sea.png]] The shares do look to be creating a new Stage 1 basing pattern. But still well below the 30 week moving average. I think many of these oversold energy stocks could fly given a tailwind. Contrarians can buy now, but I'm personally waiting for confirmation of a change in trend. With so many funds desperate not to offend their green investors, it may be some time for the overhead supply to clear. ![[serica-stage-analysis-2023-06-05.png]] --- This is the [[Journals]] for 2023-06-05. #SQZ