SOCO International (LON:SIA) closed the day up 8.8% to 1761p, the second-biggest gain in the Stoxx 600, after it saw two positive broker upgrades in as many days from US investment banks, Morgan Stanley and Goldman Sachs.
As part of a European review of Exploration and Production companies, Goldman Sachs yesterday raised its rating on the oil explorer from "hold" to "buy". Christophor Jost, an analyst at the broker, highlighted the scope for upside from a successful drilling in Vietnam and the Democratic Republic of the Congo later this year along with the potential sale of the company's TGT asset in Vietnam. The research noted that the stock was the least recommended in Goldman's E&P coverage universe by other sell-side analysts. Despite bid rumours in the past, the Goldman report said that it did not expect takeover activity to be a major driver of the share price until more drilling has been completed. Goldman Sachs also upgraded Tullow Oil Plc (LON:TLW) to "buy", arguing recent underperformance provided an attractive buying opportunity for a company with "world-class" assets, while the broker's top pick was Dana Petroleum Plc (LON:DNX) , up 1.4% on the day to £11.25.
In other Soco International news, research analysts at Morgan Stanley, Theepan Jothilingam and Haythem Rashed, issued an update today following a recent management presentation which confirmed their bullish view on the name. This update highlighted the upside potential from the drilling campaign which should begin early next month, the company's funding position (with cash of $420mn), and the perceived scope for early monetisation (via a sale of Thai assets and a sale of the Vietnam TGT asset after drilling).
By way of background on Soco and its activites, Stockopedia News recently interviewed Roger Cagle, CFO in a "Meet the Management" podcast. To listen to it and/or read the transcript, please click here.
