Detailed discussion of Soco's assets should take place on other threads, but this thread is to discuss the latest valuations both by ourselves and analysts, sentiment (ie will the shares go nowhere because there's not much upcoming news) and likely moves in the share price in the next six months. How should the shares be valued? How reasonable is it that any drilling without a firm commitment further than several months away is ignored by the market?
I haven't seen many recent analysts' reports on Soco, but I have one from Cazenove with a core NAV of 1370p and no doubt considerable explo NAV on top of that. I imagine that's approximately concensus, but maybe with crude rising again these concensus NAV figures will start to rise. Has anyone any other recent broker estimates?
My view, as stated elsewhere, remains that in the absence of much to get the market excited the shares will wander aimlessly for the rest of 2009. I've previously guessed that if crude were $65 at Christmas 09, then Soco's SP would be somewhere near £13 then, and I'm still very happy with that guess. What does anyone else think?
Of course unexpected bids and other events may overtake this, but these sort of events may happen to any company, and perhaps Soco (where management seem unlikely to accept bids since they believe there is considerable value not recognised by the market) is one of the less likely companies to be affected by the unexpected. The key new news for Soco might be (a) a bid (IMO unlikely), (b) some sort of presentation by management of the drilling data they claim to have that demonstrates a significant strike has been made at E, currently ignored by the mkt, or (c) possibly hitting oil off the Congo.
Moderation note: posts will only be deleted from this thread by the site admins or by agreement from at least three of sirlurkalot, emptyend, djpreston and doverbeach. If three of this list agree to delete a post, the names of those three and the reason for deletion will be noted in a post on this thread so everything's completely transparent.
Disclaimer:
As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.
SOCO International plc is an international oil and gas exploration and production company. The Company has oil and gas interests in Vietnam, which includes Block 9-2 and Block 16-1; Republic of Congo (Brazzaville), which includes Marine XI Block and Marine XIV Block, the Democratic Republic of Congo (Kinshasa), consists of Nganzi block and Block V and Angola, which include Cabinda Onshore North Block. The Company's operations are located in South East Asia and Africa. It holds its interests in the Republic of Congo (Brazzaville), through its 85%-owned subsidiary, SOCO Exploration and Production Congo SA (SOCO EPC). It holds its interests in the Democratic Republic of Congo (Kinshasa) through its 85%-owned subsidiary SOCO Exploration and Production DRC Sprl. The Company’s net entitlement volumes were approximately 15,500 barrels of oil equivalent per day. more »
1122 Posts on this Thread show/hide all
In reply to flyinghorse, post #362
Just to comment on a few of these points:
Completely correct. However, at least one of the main people who would usually be involved was away - and it is clear that they needed to get the information out quickly before people disappeared on the Thursday (otherwise they would have been accused of trying to slide it out in the last half-session before Christmas).
Quite possibly correct - though, as I know from experience elsewhere, it is utterly meaningless if one produces averages for periods that including lengthy downtimes. It is perfectly reasonable, during testing of the various facilities and the flow capacity of each of the wells, to have long periods of downtime - and they may well have concluded that giving a spot number (which quite possibly included some downtime) was less misleading than including an average for the few weeks previously which may have contained a great deal more downtime. Only time will tell whether 55k bopd remains a reasonable expectation for the plateau production....though every indication I have seen from the company still says that it is.
I'm not sure either what this comment relates to. Perhaps secondary recovery data from the Oligocene is needed before they can make a final determination of oligocene capacity - in which case they won't want to open the Miocene beforehand (and the secondary recovery data will be an input into the reservoir management plan)
Yup - super-smooth startups are indeed rare. Everything is spec'd and built for the expected characteristics and volumes of the materials being handled, so any deviations from expectations may lead to a need for new equipment, systems or procedures...all of which take time to design (and agree).
I'm very relaxed about it though. The flows achieved under test from the explo wells give plenty of room for tweaking the optimal set-up, IMO.
ee
One other thought came to mind.
The 2011 TGT production target was reached 21 days early-2011 goals in the bag.
This would then be a good time to gather the required data/make adjustments etc-not be doing this in 2012 where you would want to hit the ground running to achieve 55kbopd in Q1 2012 (I also note thats real barrels and not stated as boepd)
FH
New corporate presentation here, given yesterday
Got to go out now so can't discuss - but there is a very very interesting slide on TGD as well as a complete and detailed drilling schedule which suggests they have only a couple of H4 TGT wells left to complete over the next month.
In reply to emptyend, post #365
Link didn't work for me, but this works ok:
http://www.socointernational.co.uk/presentations
In reply to emptyend, post #365
Thanks ee and Spurticus.
I am delighted to see that TGD is back on our agenda again, and the map looks very encouraging, especially that we have not drilled the most promising parts of the fan yet.
I am looking forward to your return to your screen, ee!
MD
In reply to emptyend, post #365
Thanks EE,
Slide 13 looks very interesting - they clearly seem to be building up a much more detailed model of the structure. If it's correct then it suggests that none of the drilling has gone near the most promising bits, and they are promising!
Also liked slide 10. Good to see a bit of graphic depiction of where the perforations have been. I'm presuming phase 2 has yet to happen, and will, hopefully, form part of a ramp up to full production over the next few months.
Peter
In reply to peterg, post #368
Hello Peter,
I especially liked the +400 meters for the inner fan, and the fact that the best part of the fan is closer to the path of the sediment, the mouths of the canyons, than the previous drilling.
I have some practical experience of sedimentation, my family firm made several million 1950s and 1960s pre inflation pounds sterling, using it to separate different micron sizes of diamond powders, mainly for the Swiss watch jewel industry. Some of us will remember 18 jewel (synthetic ruby) Swiss watches. Close to the place where fast moving water becomes slow moving, is the place where the largest particles settle out first; and the biggest have the largest spaces between them, ie the most likely place to allow oil to move freely.
I never understood why the Soco drilling was done a long way, many kilometers, from the source of the sediment.The further it travels, the finer the remaining particles which can stay suspended in the water. No wonder the original drill holes were tight.
MD.
PS. Maybe I should have asked Soco about this. I just assumed they knew more about their business than me, and still do. Maybe we could ask why they chose to drill where they did, and learn from them.
ee, thanks for spotting the presentation.
Soco don't seem to be presenting on the 14th, only one-to-one's. Would be great to hear a recorded commentary with the slides (I'm thinking of past presentations from the likes of Sterling).
Some thoughts:
p6... 2P reserves ...unchanged 2009 vs. 2010....... update seems likely / overdue
p11.. 2012 VN drilling schedule.. previous slides had an H4-15P, but no longer planned (though I doubt this is significant)
p12/13 TGD.. ... looks encouraging to me.. my money's on them having another final go at this one
p20. explo schedule ... nothing until Q3 (TGD)
p21 revenue profile chart .. no mention of production rate assumption for Phase I, I assume it's 55k... add in Phase II and 120/bbl
p23... "Considerable amount of near term newsflow"... presumably updates on the above by March? Assuming no further explo for at least 6 months, then this is TGT plumbing/reserves/corp.stuff..
Spurticus
In reply to Spurticus, post #370
Hi Spurticus
p23... "Considerable amount of near term newsflow"... presumably updates on the above by March? Assuming no further explo for at least 6 months, then this is TGT plumbing/reserves/corp.stuff..
I think there may also be significant updates on plans for Congo and TGD in due course, reprocessing of data on both is ongoing (I assume). There's also seismic planned for Nganzi in Q1. And possible news of new ventures in SE Asia and elsewhere in Asia
Plus of course there's that imminent offer RNS just waiting to appear:-)
I'm interested in the plan to get production up to the target 55k per day and beyond as discussed at the agm.
this is now penciled in for Q1 2012, I don't know what the issue is exactly between the partners about perforating the other zones and getting production up, but this has to be a priority. Its all very well them telling us they hit their production targets for 2012 10 days early or whatever, but the target I'm interested in is this 55k per day, which is what the market has been lead to expect. phase 2 is only 6 months away, and I would be disappointed if this additional capacity is not bought on line before then.
At least some explanation of what further info they are expecting to get from producing just the first zones would help. Its great that soco have managed to buy back so much stock cheaply, but as discussed it's hardly that material, and I'd like to see some progress in getting tgt1 fully on line.
I hope this doesn't sound unreasonable, if there are good reasons for not doing this, then that's another issue, which the market should be told about. But the real measure of performance is matching the market expectations (set by soco, nothing else), not hitting some internal production target that I at least know nothing about,
Good to see lots going on in the future, the big one is of course TGD, I would be happy to see perhaps a 2 well drill program there, on a couple of the most promising spots before the licence expires, so we're not in the position of having to negotiate further extensions. With TGD it's always seemed to be a last min dash to get the drill done on time. Hopefully things will be better this time.
here's hoping that 2012 will be a great year for SOCO, don't care if they get taken over, just hope they make progress and the shareprice begins to reflect the value we believe is there.
cheers K
Now back - and Virgin have also stopped pretending there was no problem with internet service and instead have actually fixed the problems that prevented me posting earlier!
Some comments on the presentation:
The prelims are pencilled in for 14th March, so I'm also wondering if they may break with past practice and make a pre-close statement.
ee
A lot of good quality analysis and common sense.
emptyend is first class.
Re: TGT Reserves
I tried to compare the new "TGT-H1 cross-section" slide vs. older slides from earlier presentations (containing PSTM-2006 / PSDM-2009 cross-sections).
I'm unsure if the new slide is just the 2009 slide drawn to a different scale, but it does appear to have some differences.
Bad - The '2009' Lower section beneath "2p" looks a lot thinner, it seems that almost everything below '2U' is gone?
Good 1) -The current slide's "West from 2X" (both Upper and Lower) section looks to extend quite a fair distance beyond the 2009 pic (which was just an extract)
Good 2) - ISTR current 2P reserves are based on the 2006 slide?
http://www.stockopedia.co.uk/content/so-whats-soco-vietnam-worth-excluding-tgd-49397/?comment=157#157
Would be good to get an update some time soon :)
p.s. TGD, I might email SOCO and politely suggest they drill in the middle of the BIG YELLOW BLOB .. just as a suggestion of course
In reply to Spurticus, post #375
I'm not sure that you can compare the cross -sections at all....one reason being that the latest "cross section" isn't actually a straight line but is adjusted to go through all the well-control points
Glad to see that others aren't forgetting that....or that post!
Earlier today I had cause to look back at Slide 8 from the 2010 Interims presentation....and it is striking how big some of the differences are with the 2009 PSDM seismic (eg on the H3 fault block). Of course the outer extremities of the areal extent of the field haven't been drilled and won't be any time soon - but it would be interesting to know how much of those light green bits around the edge could be drained by the wells that have been drilled since the last estimate of 2P was made back in 2008 (no additional 2P reserves have been booked in VN since the end of 2008...since when 8 development wells have been drilled and (largely) brought onstream and a further 5 are in progress).
Yup - it'll be a big step-out to the north. I like the idea that there could be 400m+ of gross pay, compared to the 50m ish of net fan pay in TGD-1X for a well they now think was drilled on the distal margin. I also like the idea of the size of the fan structure......has anyone else played with a ballpark estimate for the area shown as potentially having over 400m thickness??? ;-)
ee
Regarding slide 13, it shows the location of TGD-1X-ST1 but why isn't the location of TGD-2X, which was the last well that flowed at sub-commercial flow rates on TGD, not shown on this slide?
In the RNS after drilling TGD-1X and before drilling TGD-2X, it was mentioned:
http://www.investegate.co.uk/Article.aspx?id=200808280700031676C
The main objective of the well was to identify the presence of a working hydrocarbon system, and this was achieved, confirming a high pressure environment necessary to recover hydrocarbons at these depths. Therefore, appraisal drilling will commence following the well data analysis and seismic reprocessing. The well design and drilling programme will also be revised to allow a better evaluation of each of the hydrocarbon bearing formations.
So, without 3D seismic data on TGD but with some seismic reprocessing, did they drill TGD-2X so far away that they are embarrassed to even show it on slide 13? Although the RNS on TGD-2X being P&A did mention:
http://www.investegate.co.uk/Article.aspx?id=201010120700042158U
The TGD-2X well was drilled on the flank of the structure, whereas both the TGD-1X and TGD-1XST wells were on the crest of the structure. However, the oil leg on the flank of the structure lacked the gas content encountered on the crest, thus there was insufficient reservoir energy to generate acceptable flow rates. Post drilling analysis continues as the well is being prepared for abandonment and a decision as to the future of the TGD appraisal area will follow.
PS:
Also, I must say SIA's slides are very poor. The other other day I had a look at Premier Oil (LON:PMO) 's 3 recent exploration PDFs for analysts and they go into great detail. Also, PMO have links to Web/Podcasts for a few of their presentations. I hope SIA decide to do this too especially being a FTSE 250 company and in this day and age.
http://www.premier-oil.com/render.aspx?siteID=1&navIDs=19,320,323
In reply to uncommon13, post #377
Think you've been working too hard on conspiracy theories. The 2010 half-year results showed TGD-2X drilled c 2km north of 1X and slide 11 gave quite a detailed plan of the way they saw the fan structure at the time. Slide 13 in the latest presentation though is merely a first-cut schematic diagram of the way they now interpret things - they are still crunching the numbers on it all - and will be for a couple of months yet! What would you prefer - and outline sketch or nothing at all? They can't publish what they don't yet have.
ee
Thanks for the pointer to slide 11 in the 2010 half-year results presentation showing TGD-2X with reference to TGD-1X. :)
No conspiracy theories from me but strange that if it was a first-cut schematic diagram of TGD, why wasn't the location of TGD-2X not shown on the map when the locations of numerous other irrelevant drill locations are being shown on it? Anyway, may be as you say it was a simply an oversight or something on the first cut draft map.
In reply to uncommon13, post #379
It is all work in progress for now. There isn't much point in trying to be precise about things when the precise data to support a detailed map/chart doesn't yet exist in a form that can be rendered in a slide.
Anyway - do have a stab at my size question. If they are right and can get it to flow then...... ;-)
In reply to emptyend, post #380
Anyway - do have a stab at my size question. If they are right and can get it to flow then...... ;-)
I'm very excited by the huge area of this 400+m fan pay too :)
Again, let's hope it flows and if it doesn't flow as in TGD-2X, I hope the oil is light enough to lift it out somehow (I think there was a reference to it being similar to CNV oil?) or the managers are researching numerous ways to make it flow commercially before the actual drill takes place, for example:
http://www.glossary.oilfield.slb.com/Display.cfm?Term=enhanced%20oil%20recovery
PS:
I don't work in the oil industry so my above link may be stupid with respect to getting commercial flow rates initially..
Alright, last post from me for a while...back to lurk mode :)
In reply to emptyend, post #380
Anyway - do have a stab at my size question. If they are right and can get it to flow then...... ;-)
Just back from the pub, so...
I'd guesstimate the size of the "inner fan" on slide 13 as being approx a 6km diam circle (using the scale on slide 11 of the 2010 half year's). That's an area of 28 million sq m. Assume 400m thick throughout gives 11bn cu m. Allow 30% porosity gives 3.3bn cu m of oil/gas. If it's oil then 1cu m = 6.3bbls.
So that would give you 20bn bbls!
That assumes that the proosity is an even, or at least and average 30%, which may well be unrealisitic, that the structure is filled, ditto, and that it's filled with oil, ditto again. For it to be any use it also needs to be mobile.
Probably worth a stab though!