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SeaEnergy (AIM:SEA) A blow in the right direction with backing by the Crown
Posted 08/09/10
In September 2009 SeaEnergy took the lauded, or perhaps audacious, move to sell off its oil and gas investments to focus purely on its conceptual offshore wind business. It now claims to be ‘The only listed pure play UK offshore wind development company, to benefit directly from the impetus behind the UK offshore wind energy market’. We believe that this is possibly a stretch for a company with no revenue, yet with a Heads of Terms agreement with the Crown Estate, progress is clearly being made!
SeaEnergy Renewables Limited (hereafter SERL), the 80% subsidiary of SeaEnergy, is made up of the team which conceived, developed and delivered the world’s first deep water wind farm development - the Beatrice Demonstrator offshore wind farm (10MW). The Group’s experience in drilling from its previous oil and gas ventures forms the basis of its reputation rather than any concrete corporate record or accounts.
SERL has now agreed a Heads of Terms agreement with The Crown Estate (the land owned under endowment by the Sovereign) with the deal suggesting that The Crown Estate will directly invest up to £1.4m in key surveys and reports including scoping reports, geophysical surveys and bird and mammal surveys, to be directly contracted and managed by SERL.
The Crown Estate manages a highly diverse £6 billion property portfolio across the UK, £237 million of which is in Scotland so. Their marine estate consists of over half the foreshore and the seabed out to the 12 nautical mile territorial limit, with right to explore and utilise the resources of the UK continental shelf (excluding oil, gas and coal), including the right to license renewable energy in the form of offshore wind, wave and tidal power.
More recently npower notified SERL and The Crown Estate of its desire to exit the Inch Cape project. This was due to the considerable size of its other onshore and offshore renewable generation commitments. This highlights the non-binding nature of a HoT agreement, which, by definition, is not enforceable in a court of law.
The future may be less blustery for SERL with the Scottish Government posting an ambitious target to generate “31 per cent of Scotland’s electricity demand from renewable sources by 2011 and 50 per cent by 2020” according to Alex Salmond MP, First Minister for Scotland.
The Group has also signed a heads of terms agreement to access offshore wind farm projects in Taiwan with Taiwan Generations Corporation and a Strategic Cooperation Agreement to develop and market steel structures for the offshore wind industry. The region is a good place to develop contracts with Ernst and Young claiming in a report out today (8th September 2010) that China is now the best country to invest in renewable energy projects, overtaking the USA for the first time. Yet is this jumping the gun slightly, and shifting focus elsewhere before UK projects comes to fruition?
It seems this little business has plenty to keep it busy, however, the business appears to remain a long way from generating material revenue, let alone profit. It is surely almost impossible to assess the valuation, which currently appears to be based on the ‘potential’ to develop offshore wind projects and the reputation of the group’s ‘team’, who successfully delivered projects in the past whilst working for others. i.e. they appear to possess several key consultants who could find themselves in high demand over the coming years! However, there is no corporate track record to rely on in respect of this.
The business remains at concept stage and according to one broker the timeline for offshore wind delivery via the Crown Estate 3rd round licensing round is for the first site to be completed in 2018!
This entry was posted 1 year, 5 months ago and was filed under Seaenergy.
