Incidental stuff

http://uk.finance.yahoo.com/news/asia-crude-vietnam-sells-tgt-094129781.html

SINGAPORE, Oct 22 (Reuters) - Vietnam's state oil marketer PV Oil has sold 300,000 barrels of Te Giac Trang (TGT) for December in a tender, trade sources said on Monday.
The cargo to load on Dec. 11-15 was sold to an oil major at about $5.40 a barrel above dated Brent,"

Nice to see the premium persisting

Is there a date set for the IMS?

In reply to adam, post #1094

Coincidentally, I just had a reply to that exact question which I had asked yesterday. The answer is no - but it will be sometime next week.

Any more on the timing of the reserves report?

In reply to jseth123, post #1096

No - unchanged.....

So, in December?

Extract of ee's comment from the other thread:

"Still... early December..... IF they go the route of publishing the reserves report"

and

The IMS next week may give some useful steers in these areas......or not........ ;-)"

My own expectations for the above are "No publishing" and "No useful steers"  :)

In reply to Spurticus, post #1099

My apologies. If I'd caught up on the other thread, I would not have asked the redundant question above.

I asked about the timing of the reserves review and was told

" We expect this to be completed by the end of the year."

that's not to say that it won't be early December who knows ? Frustrating to see the date slipping into the future, but better to wait and get the best result,

K

" We expect this to be completed by the end of the year."

I've been assuming not before Q1/2013 for some time now based on the reason suggested previously - simply that these things always take longer than expected.

Frustrating but realistic.

Redhill

Indeed Redhill, ee's comments about whether they might not publish the results until after some negotiations because of some confidentiality agreement has got me thinking.

We don't know what else is going on, what current tgt production is, whether they are talking to anyone about any deals ?

I recall some time back discussing the earliest times we though a deal might take place, 6 months from start of phase 2 was a significant date for me as 6 months production data is reasonable for a buyer, whether it is in this case or not I'm not so sure. As perhaps you'd need 6 months from ramp up ? I guess all that depends on the buyer. Without knowing the details of which zones are open and producing it's hard to say, but It is concievable that they have enough data to make a convincing case, perhaps part of the hold up has been producing from different zones to assess the reserves ?

so many questions, so few answers,

hopefully we won't be having these discussions this time next year !

cheers K

In reply to kenobi, post #1103

We don't know what else is going on, what current tgt production is, whether they are talking to anyone about any deals ?

I recall some time back discussing the earliest times we though a deal might take place, 6 months from start of phase 2 was a significant date for me as 6 months production data is reasonable for a buyer, whether it is in this case or not I'm not so sure. As perhaps you'd need 6 months from ramp up ? I guess all that depends on the buyer. Without knowing the details of which zones are open and producing it's hard to say, but It is concievable that they have enough data to make a convincing case, perhaps part of the hold up has been producing from different zones to assess the reserves ?

so many questions, so few answers,

Well indeed we don't know what is going on - quite correctly! And indeed there are few answers available - and a lot of questions that would be nice to know the answer to but, realistically, we will never know until everything can be disclosed.

TGT production and perhaps future plans will likely be clarified in next week's IMS....but the key questions about the adequacy of production data in relation to a) proving connectivity and b) satisfying a buyer are completely impossible to answer....and yet are very material. Only the independent assessment (and perhaps a willing buyer) can provide the answer on those matters!

People will have to form their own judgement on these things. The chances are that there will be no useful spoonfeeding that the company can possibly provide, until/unless they publish the reserves report.

I agree with spurticus above, incidentally. Those who hope for much pre-deal enlightenment will be disappointed.....and I would be entirely happy if this were to be the case!

ee

ee

Ignoring the potential for something completely unforeseen and negative, and assuming there is none of the hoped for connectivity, what would be your bottom-end figure for a valuation of SIA? Presumably well above the current SP but well below the £6-£8 that has been discussed here at times.

I remember davjo has mentioned a figure nearer £5/share albeit that may be based on fairly conservative assumptions.

My apologies if, based on earlier discussions, you feel this is a superfluous question.

Regards, Martin

In reply to shanklin100, post #1105

Martin,
Davjo has a bet with ee, re takeout price,

http://www.stockopedia.co.uk/content/soco-end-game-timings-and-price-targets-67759/

Indeed! Just for the record, I don't go along with ee's £6-£8/sh sale value for the company but I most certainly don't rule it out. The scope is there but I always take a conservative view based on actual asset disposals made in the past, which as often as not, didn't quite live up to PI expectations. I do recognise however that Soco VN could be very different. It will need a very cool political hand played by Soco to extricate maximum value but I don't see any reason to alter my bet of a pint with him right now, which IIRC, is based on him winning on a SV sale over £5/sh and me winning if it's under....as things stand that is, before any reserves upgrade.

So davjo (whom I have great respect for and has called previous sales like Thailand accurately) ,  is saying below £5,  but based on what we know now in terms of reserves.   Realistically anyone making an estimate based on higher reserves figures is just guestimating what the reserves upgrade might be,  perhaps with a steer from the management bodylanguage.  They certainly seemed bullish about it at the agm,  although I'm not sure they gave an estimate (unless anyone remembers otherwise ?). 

So frustrating though it is,  and with all the if's and buts,  we have to wait for the reserves update before we can more firmly predict this.   Surely even without the connectivity proof,  there is still the potential of a 20% upgrade in reserves,  so it's not all pinned on the connectivity story,  though if this is proven,  then perhaps this leads to a step change in the possible magnitude of any revision.  

Its just frustrating to see the date drift off,  but of course,  always better to get the right result later, than the wrong result bang on time !

cheers K

In reply to kenobi, post #1106

kenobi

Thank you for your post. Interestingly IMHO, it is not necessarily the case that davjo expects £5.00 to be achievable. Hence my question as to what bottom-end number one could be confident in assuming no connectivity,,, ,,, and no disasters.

Cheers, Martin

Martin,

I do feel that is a superflous question. I gave the £6-8 range a long time back, well before the connectivity thesis emerged. At the depths of the financial crisis in 2009 I acknowledged that a deal might only realise c.550p per share for Vietnam, but the buy-backs and the sweep-up of the minority restored my floor to £6.

To repeat a calculation process I've given several times before, if you back-calculate from £6 a share and ignore everything outside Vietnam (and ignoring cash...even though it is substantial - though you can repeat the process and net cash off if you wish!) then that is fractionally under £2bn. Take £2bn, convert to USD at a conservative 1.60 and then divide by a conservative $20 per 2P bbl (per Perenco)....and you get to 160mn bbls of 2P in Vietnam as the number that is implied by £6 per share...compared to 121mn bbls reported at last year-end.....

That would be a 32% increase in 2P since the last revision in 2008. You'll have to make your own assessment of whether that a reasonable expectation in the light of:

• greater areal extent of TGT, following 2009 PSDM reprocessing, since validated by multi-well drilling
• indications that recovery rates could be 45-50% rather than the 30-35% assumption embedded in the 2008 analysis (according to dj)
• 15 months production history from TGT H1 and 4 months production history from H4
• apparent indications of connectivity within the TGT reservoir that have been evident over the last 9 months
• finally getting credit (soon, honest...;-)) for CNV liquids production

I really can't be any clearer about my views and I think they are sufficiently conservative in the light of all the above - but the proof of the pudding will be revealed in the coming weeks by one means or another.  I'd simply note the comments of Ed Story in the RNS relating to the sweeping up of the minority.....

The Acquisition will be significantly value accretive, generating substantial future return for SOCO shareholders.

Couldn't be any clearer, IMO.

And, despite the pop on the day the sweeping up was announced - and the mathematical impact of the elimination of the 20% minority on asset values - I see that the shares have done precisely nothing since then in relation to the wider market:

....so go figure, as they say!

ee

Many thanks ee

I've only just noticed that this was the "incidental" thread - which hardly applies to the posts above!

Turning to the more incidental matter of PTTEP's results today, I see

The Vietnam 16-1 project has successfully started production of the second wellhead platform of Te Giac Trang field. As a result, the project increased its production of crude oil from 41,000 BPD to approximately 55,000 BPD.

Not really news, of course - but a confirmation.

From Talisman's Q3 results:

http://cnrp.marketwire.com/cnrp_files/20121029-1030tlm_pr.pdf

In Vietnam, production has remained steady at an average of 2,000 bbls/d. The HST/HSD
development is progressing on schedule and on budget, with two jackets now installed and the
drilling rig on location. Pipeline tie-ins and development drilling are in progress. First production
is planned for the second half of 2013.

Dare I mention that Soco is at a 52 week high having broken the dreaded 350 ceiling at least for now anyway?