Analysts reports

In reply to djpreston, post #231

We therefore expect a result in the next few days.

Nice to see someone managing to get the planned timing correct......I'm looking for TD this weekend (SW10 issues aside)

ee

In reply to emptyend, post #232

I would suggest whatever the result there is a good chance of a buying opportunity on results,

I guess it will be too early for any TGD way forward decision ?

cheers K

In reply to kenobi, post #233

I guess it will be too early for any TGD way forward decision ?

I'd guess that may be mid/late November.

ee

I can't recall how much we've given up in the past to get a licence extension, but I was just wondering whether, if we decide to drill again on TGD, it would be worth spending the cash to drill now if we can, rather than give up another slug (technical term) of Africa to get an extension.

Or are we not that confident?

Buffy

It does seem harsh to expect soco to pay up for an extension after the amount of money they have poured into exploring the tgd area, especially as they've already given up a slug of the african portfollio to get this extension.

I guess if we look at it from the vietnamese governments point of view they have this expo block, with lots of info showing it's a high pressure oil charged structure, possibly a fan containing 1bln barrels of oil, and it's licence is about to expire so they could potentially sell it on to a major or they could give it to soco for a bit longer for nothing ?

Isn't difficult to imagine that maybe option 2 isn't on the agenda, but lets see what the company come up with, I'm sure if they can do a deal they will, certainly vietnam would get a faster result with soco drilling it, whether they have confidence in soco after these last two wells remains to be seen,

cheers K

I tend to think that the primary driver for governments to issue/reissue licence blocks for exploration is not the up-front licence fees and other payments they receive but rather the desire to push forward the process of discovering, developing and producing oil & gas. Governments make their money by sharing in the profits through the terms of PSC's and by taxing the profit made by producing companies. If exploration blocks are left unexplored the government take is diddly squat. Likewise if discoveries are left undeveloped.

So what drives government behaviour/decisions is the simple question - "what is the best way of progressing exploration activity and of accelerating development?"

In the case of TGD the question is "are there any other E&P's out there who would go faster/further wrt exploration than Soco?"

My own feeling is that it is quite unlikely. Other E&P's will not have the same depth of knowledge and understanding of the block as Soco does. They will however have perfect visibility of the difficulties that have arisen and the disappointments that have accrued in recent years. I have to think that most E&P's are likely to conclude that they can find better risk/reward plays elsewhere and are unlikely to beat down the doors of the licensing authority.

I have no idea if Soco regards the block as worth continuing with. But if they do I'd think they are likely to be in pole position to secure an extension on relatively easy terms. It wouold be quite different if the Soco JV had simply failed to meet the drilling obligations imposed by the licence terms. But they have done the work required.

I think it is interesting to reflect on cases where companies have relinquished licence areas which have then been re-allocated to other E&P's. For example, Dana relinquished its licences over the Deepwater Tano blocks in Ghana and these were soon re-allocated to a JV which included Tullow. Drilling there has subsequently produced spectacular discoveries. But there had been no drilling* at all before the relinquishment/reallocation. So there was no concept of the play being a poisoned chalice. Whereas TGD is doing a fair impersonation of high level toxicity.

Have we all given up on drilling another well on TGD before year end and license expriy? I know timescales are very short but it doesn't sound impossible. Are there weather constraints etc. that prevent it? Maybe that two week delay we had on the last well will become very important.

It seems that we are probably headed down to 300p if the DRC well does not come in and if that happens there won't be a lot of reasons to buy Soco stock other than to wait for a sale of Vietnam which could be a long wait. Looks a bit grim therefore!


Log

Ambrian initiates coverage of seven mid-to-large-cap UK exploration & production companies, which together represent over 75% of the sector by market cap. Ambrian sees continuing positive momentum for the stocks. In the short term it expects oil prices to trade in a tight band around $75/barrel above a floor support of $70/barrel.

Its two top picks are Afren (AFR.LN) and EnQuest (ENQ.LN), both of which are initiated with buy ratings and both with 140p price targets.

Cairn Energy (CNE.LN), Heritage Oil (HOIL.LN), Premier Oil (PMO.LN), SOCO International (SIA.LN) and Tullow Oil (TLW.LN) are all rated hold with price targets at 470p, 475p, 1700p, 380p and 1240p respectively.

(No details sorry)

In reply to tournesol, post #237

So what drives government behaviour/decisions is the simple question - "what is the best way of progressing exploration activity and of accelerating development?"

Hum, interesting hypothesis, so last time we (SOCO) wanted an extension to re drill a well they had already drilled, and baring in mind that it's in partnership with the national oil company so they have a slice of it anyway,
did they

a) say "yep, you guys have found lots of oil which will pay lots of taxes create many jobs, and improve the economic lot of the country, so have an extension, good luck and thanks for your efforts so far !"

or

b) extort a free farm into the drc portfollio for the afore mentioned government owned oil company
?

And lets be honest they probably had to grease palms all over the place to make it happen,

It would be nice if things were as you describe, but the evidence suggests they might not be,

even if there is no visible price to pay for an extension (which would be a great result), you can bet there will be favours and payments made in the background,

cheers K

In reply to loglorry, post #238

Log,

this is a very good question, it certainly wasn't considered impossible previously to have another poke before year end. whether the delays have pushed it a bit too far or whether too much work needs to be done before another poke, is another matter,

I wonder if the licence requires a result or just the start of drilling before the end of the licence period, and even if so, would this be possible before the bad weather arrives ?

cheers K

In reply to kenobi, post #241

I was told by SOCO there was no chance of another well on TGD before year end. We get an extension or its gone.

Unwize

In reply to tournesol, post #237

So what drives government behaviour/decisions is the simple question - "what is the best way of progressing exploration activity and of accelerating development?"

In the case of TGD the question is "are there any other E&P's out there who would go faster/further wrt exploration than Soco?"

My own feeling is that it is quite unlikely. Other E&P's will not have the same depth of knowledge and understanding of the block as Soco does. They will however have perfect visibility of the difficulties that have arisen and the disappointments that have accrued in recent years. I have to think that most E&P's are likely to conclude that they can find better risk/reward plays elsewhere and are unlikely to beat down the doors of the licensing authority.

I have no idea if Soco regards the block as worth continuing with. But if they do I'd think they are likely to be in pole position to secure an extension on relatively easy terms. It wouold be quite different if the Soco JV had simply failed to meet the drilling obligations imposed by the licence terms. But they have done the work required.

This is the key point - and one reason why it would be silly to discourage a SOCO from pursuing further exploration, since they have acquired a great deal of information and experience (thanks to both some successes and some failures).

Whilst SOCO are still in the process of determining their assessment of prospectivity, it remains very clear that a) there is a lot of oil in place and b) it is smack bang next to lots of infrastructure. Accordingly it requires some serious consideration. It is completely and utterly irrelevant at present whether the market thinks it has value at present - of whether the market regards it (though why I cannot fathom!!) as "toxic".

There will be no further TGD well drilled in 2010 - I made this clear ages ago, having enquired within 20 minutes of the last RNS. I don't know why people keep raising the topic, when both unwize and myself have reported the result of enquiries. The key question re a TGD extension is what work obligations it would come with; I don't see any reason to think that the VN government will be other than reasonable on that matter, given tournesolf's point I highlight above.

Host governments are generally not that difficult to deal with....providing that they feel that a company has been straight with them and has done the work more or less as it promised (as far as it can be expected to in the circumstances that prevailed). It doesn't help host governments to be other than reliable partners either, even if some elsewhere seem to have let unexpected riches cloud their judgement from time to time. Frankly I would say that relative to even the British government (where Brown raised taxes twice on the North Sea in the last decade) the Vietnamese seem to have been an absolute model partner.

IMO the massive market over-reaction to the actual facts at TGD will unwind quite sharply at some point. The only questions are precisely when ....and what will trigger it. I'll be keeping my theories on that more or less to myself. I did notice some chunky blocks today though.

ee

This is the key point - and one reason why it would be silly to discourage a SOCO from pursuing further exploration, since they have acquired a great deal of information and experience (thanks to both some successes and some failures).

Soco is a small company that has about 10 employees. They outsurce most of their work and when I've spoken to the management and asked for technical details at times I've got responses where I was told they are not geological experts.

IMO they are just Oil Businessman who are good at doing deals and can bring together a team of people to carry out a drill etc. After about 4 attempts and spending A YEAR re-processing and interpreting seismic they failed to capitalise on their most lucrative asset.

Why should ANYONE give them another chance? Not only did they dilute me earlier in the year but cost me an awful lot of money from this stupid TGD prospect. We could have sold TGT when Oil was over $100 and got a much bigger return then what we are now likely to get.

What price do you put on such a reckless decision to go and spend time and money drilling TGD?

 Cost of TGD + Diferential between what TGT was worth back in 2008 compared to what it is worth now + Opportunity cost + Interest on cash

Petrovietnam as partner of the JV will have access to all the data to pass onto a future explorer. All a future explorer needs to do is pay a small price for this data and get hold of the contractors used to drill TGD and you don't need Soco anymore. I don't think the management team are special in anyway, just a bunch of people who got lucky on TGT. I was dead wrong about their ability in the past.

Whilst SOCO are still in the process of determining their assessment of prospectivity, it remains very clear that a) there is a lot of oil in place and b) it is smack bang next to lots of infrastructure

All this is well and good but what is the point if your management does not have the right skill set to extract the Oil? It becomes pointless in even considering the prospect.

It is completely and utterly irrelevant at present whether the market thinks it has value at present

No it is not. The market is ABSOLUTELY right to trash the Soco share price. The management have lost credibility. They talked up TGD and did not deliver.  Those analysts like RBC who did attiribute any value to TGD as well as experts on these very boards have managed to get egg on their faces.

The management, analysts & experts on these boards were DEAD WRONG. Why should anyone pay any attention to these individuals?

It is why I don't care what RBC say or the management. I don' care what value RBC give to SOCO. They were dead WRONG.

IMO the massive market over-reaction to the actual facts at TGD will unwind quite sharply at some point. The only questions are precisely when ....and what will trigger it. I'll be keeping my theories on that more or less to myself. I did notice some chunky blocks today though.

There we go again. The same old nonsense how the market is wrong, how the analysts are wrong and we will see x y z with time blah blah blah.

I think we have heard enough of this over the years and we always end up with the same result time and time again.

There is no over-reaction, this is an exploration company but has found no Oil in 2 years. The management should resign, they failed miserably.

TGD has no value. Soco failed. And there won't be any upside surprises. People lets get real here and seriously stop dreaming....

I honestly hope Soco miserably fail in their quest to extend the licence. I hope Vietnam.gov sees some light and refuses Soco, maybe then they will get a hint and finally sell up. Just not interested in giving these people another go.

When I started getting frustrated 2 years ago with this company and their ambitious plans, I should have sold out. Never again do I listen to experts on bulletin boards telling us fairy tales that end in tears.

I'm going to listen to my sixth sense in future.

In reply to Isaac, post #244

Isaac,
I'm given you a thumbs-up for making me smile..........

In reply to Isaac, post #244

Isaac,

LOL, There are girls in Pompey who change their knickers less often than you change your mind

'I don't think the management team are special in anyway, just a bunch of people who got lucky on TGT. I was dead wrong about their ability in the past.'

But you make some decent points about TGD, but these are lost as the pendulum swings to over negative from over positive.

repobear

cornichon

I'm not smiling I'm afraid. I'm incredibly annoyed that the management is even considering extending the licence. I'm not a charity case that is prepared to spend my hard earned on ambitious drilling programmes. No one pays me to indulge in my fantasies.....Why should I pay anyone else for it?

What I am finding incredibly frustrating is there are individuals who are in love with Soco and even though the markets have absolutely smacked them round the face with the TGD result they can't bring themselves to the truth.

Which is Soco failed on TGD, no point talking up a share. It won't love you back so what is the point in getting all emotionaly in love?

For some people It is time to get real.....People spent the last decade investing in a share hoping they would become stnking rich from it. But they have'nt, get over it. There are other opportunities to make money.

How many Encores/Sterlings/Tullows/Cairns/GKP's have we all missed pussy footing around with Soco?

Repo,

But you make some decent points about TGD, but these are lost as the pendulum swings to over negative from over positive.

I reserve the right to change my mind everyday of the week as new information is published and there are new developments.

When people perform,  I absolutely love telling them and others what  great job they have done. What we have had is a bunch of directors taking decent remuneration packages the last two years even though they did'nt find huge Oil field they can extract Oil from.

Go and compare their remunertion to what they earned when they discovered TGT. I just can't believe there does'nt seem to be a significant difference despite the performance of TGT being a VERY MATERIAL result in the history of Soco.

Why did they recieve big remuneration packages the last two years? I'm the owner of this company and I don't approve these packages.

If I was a gambler I would bet the management will find another way to give themselves a decent buck for 2010 despite the dismal performance. What will it on the back off? Upgrades to TGT reserves?

There should be a rule where fat cat directors pay back money to their employers when they fail to perform - this should be a universal rule which applies to all PLCs.

I personally am lookng for an exit. Just like I got out of Aminex, I'm going to get out of this. As I no longer want anything to do with this company. I'm a seller on a decent rally. 

In reply to emptyend, post #243

I';d imagine there were some chunky blocks today - people selling out before the DRC well result.

"....I personally am lookng for an exit....."

Steady on, things aren't quite that bad surely?

In reply to Isaac, post #244

I'm going to listen to my sixth sense in future.

Excellent. Please do so quietly.

And, since you plainly don't understand the nature of the risks in the E&P business and have expectations that NO company could consistently deliver, you might consider exiting the whole sector and never returning?

I can't quite work out why you think it better to flip flop from bull to bear and back based on the previous piece of news or drilling....but I can tell you that it just as quick a route to the poorhouse as being continually wrong.