DRC - Congo (K)

In reply to djpreston, post #88

Just one small point in an article from last month which I failed to read completely:

Next month, Soco expects to drill a well in another onshore block, Nganzi, the first onshore drilling in 40 years in the African nation. Eni SpA, which has announced an agreement to help Congo develop its oil, has expressed interest in entering the block, according to people familiar with the matter.

....not that this comes as any particular news, but it is always helpful to see some corroboration of guesses.

I'm expecting an update in the next few days on the Nganga well....presumably this will also include details of an ENI farm-in (if one has been agreed).

LSN just posted the following link on ADVFN : http://af.reuters.com/article/investingNews/idAFJOE66B0NX20100712

"We should be drilling next year but export will still be three years away," Roger Cagle, deputy CEO of LSE-listed SOCO International and non-executive chairman of Dominion Petroleum, told Reuters in a telephone interview.

SOCO is the operator of the Albertine Graben's Block 5, which includes North Kivu's Lake Edward, with 38.25 percent in the joint venture, in which Congo's state oil company Cohydro also has 15 percent.

AIM-listed Dominion Petroleum has 46.75 percent and is also operator of Uganda's Block 4B, which borders Block 5 on the Uganda side of the lake, making Dominion the only company to have a stake in oil on both sides of the border.

I am very hopeful Dominion has a very decent success in the current well, this will help Soco where I actually have a stake.

I have'nt said much on Soco for a while as there has been nothing to say, but I continue to remain bullish and I am very comfortable with the managements execution to date of TGD and hopefully the start of drilling in Nganzi soon.

RNS tomorrow or is my source wrong?

Hi jonnyt,

No disrespect - esp. if your source proves correct !;> - but isn't this the sort of advfn- type 'ramptastic' comment we came here to get away from ?

I hold both DPL and SIA , so am doubly interested , BTW, in any RNS.....

In reply to extrader, post #93

I hold both DPL and SIA , so am doubly interested , BTW, in any RNS.....

I'd doubt that. any "RNS tomorrow" is 90% likely to be about Nganzi, not about block 5!

Decent bet from jonnyt....any "RNS this week" (as I've been expecting) is 90% likely to be either Wednesday or Thursday at this point......I'd guess Thursday  ;-)

ee

Thursday 15th is supposed to be spudding date, according to what we were told at the AGM

Soco to farm-out a 20% interest in the Nganzi Block, to INPEX CORPORATION.Per the agreement, INPEX will fund 40% of the cost...INPEX will fund its participating interest share of all the historical costs certified as cost recoverable incurred by SOCO E&P DRC on the Nganzi Block.

Each well is anticipated to take approximately 40 to 50 days to drill with another two to three weeks added if testing is required. Pre-drill estimates place mean recoverable resources at approximately 200 million barrels of oil per each of the three structures to be drilled.

Drilling of the first well, the Nganga well on previously designated Prospect "B" in the Block,
commenced today.


Ed Story, President and Chief Executive of SOCO, commented:



"We are pleased to have a partner who, with its co-venturers, has successfully produced and exported oil for many years in the Democratic Republic of Congo."



http://www.investegate.co.uk/Article.aspx?id=201007150700123754P

In reply to Isaac, post #96

I'd also add -

Drilling of the first well, the Nganga well on previously designated Prospect "B" in the Block, commenced today.

Great to see no P&A of TDG hidden in there and SIA sticking to the plan from the AGM.

In reply to Isaac, post #96

Per the agreement, INPEX will fund 40% of the cost, with half of the funding
obligation subject to certain caps on cost overruns, associated with a three
well exploration drilling programme. Following the initial three well
programme, INPEX will fund its participating interest share of costs associated
with the Block. In addition, INPEX will fund its participating interest share of
all the historical costs certified as cost recoverable incurred by SOCO E&P DRC
on the Nganzi Block.

The assignment of interests is subject to approval of the appropriate regulatory
authorities of the Government of the Democratic Republic of Congo (Kinshasa).

Drilling of the first well, the Nganga well on previously designated Prospect "B" in the Block,
commenced today.

I've highlighted the spud announcment in case analysts miss it  ;-)

It is also worth clearly pointing out that SOCO are retaining 65% ....which compares with the 40-45% in most analysts' models!  INPEX are committed to "two for one" on three wells....and will be paying 20% of back costs....and it would seem that they are also part funding the carry on the 15% minority.

interesting also to see a "local" partner rather than a major....

Lets see what the market makes of all this!  ;-)

ee

Yes, in terms of partners, SIA seems to have done an excellent job of not being seen to be "JohnnyForeigner only in DRC to steal all their oil on the cheap".

In reply to shanklin100, post #99

On closer investigation of course, INPEX isn't actually local - but is one that is "off the beaten track"...in Japan:

http://www.inpex.co.jp/english/index.html

....and it is also extremely interesting to poke a bit further! This is what they had to say re a recent offering of shares:

As part of the “Mid-to-Long Term Business Challenges”, our mid-to-long-term goal is to achieve net production in the range of 800 thousand to 1 million barrels-of-oil-equivalent per day from both existing and new projects by the fiscal year ending March 31, 2020, so as to establish a firm position as a global independent upstream company with global competitiveness.

...which is very interesting......because one could see both Vietnam and DRC falling right into that strategy!!

:-))

ee

Hi ee,

Of greater short-term interest for me is the claim on website that they achieve a 65% drilling success rate.........So long as that's not the DNX definition of "success", I'm mildly encouraged !'

Sorry guys I was a day out.

Has there ever been a more exciting time to be in Soco with two very material wells now drilling

In reply to jonnyt, post #102

No. Not even in my long experience!

I'm not expecting the market to work it out though. I think we will have to wait for drilling results before it gets the message.          :-)

In reply to emptyend, post #100

I'm sure Inpex figured somewhere in Soco's business way back. Can't think where, maybe Russia pre the Permtex JV or Mongolia? Anyhow, I recall from my distant days of diligent research that many of the Japanese oilcos were intertwined with either themselves, government or multi-national conglomerates. In Inpex's case, they appear to have merged with Teikoku Oil, the latter being part-owned by Nippon Oil. Inpex also have JV with Mitsubishi.

Point here is that Japan Big Oil will have major fingers in pies all over the place through oilcos like Inpex. Note Inpex already has interests in Vietnam Nam Con Son. JVPC (Rang Dong) is a Nippon Oil company. So, yes, certainly interesting as a potential suitor of Soco.

I see (Boa ML note) that Soco is hosting an anlysts trip to DRC next week.

Perhaps that will help change some of their (analysts') minds....

ML's own NAv assessment on the whole nganzi block looks very odd.

In reply to davjo, post #105

I'd also add that Inpex appear to own subsiduaries involved in Investment in pipeline construction and management companies and operation of pipeline businesses

Quite handy if Nganzi comes in :-)

In reply to djpreston, post #106

ML's own NAv assessment on the whole nganzi block looks very odd.

I have seen a figure of 30p risked, 305p unrisked from their Jan 2010 note (i.e pre split), what are they saying now?

As you stated on another thread, very little activity in SOCO at the moment, any views from the institutional side as why the market seems to be ignoring the current state of play?

Very tempted to add to an overweight position.

In reply to davjo, post #107

I'd also add that Inpex appear to own subsiduaries involved in Investment in pipeline construction and management companies and operation of pipeline businesses

Quite handy if Nganzi comes in :-)

From ML's later note of yesterday:

We believe that the farm-out is a key development for Soco’s
ambitions in Congo as it (1) brings a known partner with what we view as an
extremely good understanding of the country – Inpex and Soco are partners in
Cabinda, and Inpex (via its subsidiary Teikoku) has operated in the DRC since
1970; and (2) provides a potential export route – Inpex owns a 32% stake in the
DRC’s existing export infrastructure. Reflecting the deal, we raise our NAV by 20p
to 563p. Reiterate Buy.

(My bold). My assessment is that this is an extremely sound strategic deal, securing a good slice of the upside and giving a decent chance of early monetisation.

ee