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.
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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. Te Giac Trang (TGT) field’s Phase I production began on August 22, 2011. Total production net to its working interest from continuing operations, during the year ended December 31, 2011, were 5,437 barrels of oil equivalent per day. more »
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In reply to GulfTrader, post #921
Hmmmm
I'd be quite happy if it was walked down to 305 or so as I'd be picking some more up to add to my nice pile
I've been thinking of adding at current levels, the strong move up signalling some confidence. A drop back to 305 would see some serious take up. Must be getting close to level at which soco and a prospective buyer can agree a price on a reasonable premium.
IMS out.
One or two minor items, such as a new interest off Congo and the fact that production at TGT has exceeded 60,000 at peak. Cash numbers lower than one might have expected (though can't tell why from the info provided - possibly drilling costs on development wells).
The elephant in the room remains the upcoming reserves report - and there are no clues there.....
It would certainly be interesting to see a cash flow breakdown for the last few months.
Nothing much new and nothing to get excited about unfortunately. I'm puzzled why cash flow wasn't stronger. Hey ho bit dissapointing.
In reply to shanklin100, post #926
Agreed. Seems a little lower than I was expecting.
Anyway, production well on track as expected and cash flows can be lumpy quarter on quarter so generally positive.
In reply to nigelpm, post #929
RBC note that cash is "flat quarter on quarter despite acquisitions totalling $104mn" (though in fact it was $178mn at the half-year).
As you say, they can be fairly lumpy - and you can't tell from the outside exactly when cash calls are being requested and paid for things like the development drilling on TGT which has just finished (and which I omitted to allow for anyway in my earlier comments re cash).
FWIW the RBC headline is:
IMS Confirms Steady Production Growth And An Eye For A Deal
In reply to emptyend, post #930
Just revisiting the RNS, I note that WI production was 18,824 BOEPD week ended 26 October
......quite respectable, considering H1 production was 14,375 boepd.
And, at TGT: production for the last 24 hour period reported (30 October) was 58,867 BOPD (gross) ....and ....16,317 BOPD (net) for the week ending 26 October 2012. If nothing else this indicates that they are doing a fair amount of playing around taking wells on and off production (the net number for w/e 26/10 is around 53,500 bopd gross).
This is also an important comment:
...which suggests that they wouldn't necessarily hold back from putting well combinations onstream that produced at even higher rates.
They also flag a well on the H5 fault block "early next year".....which I assume would imply a spud after the weather clears. Not clear from the RNS whether this is a certainty at this point.
I'm also interested to see Fox Davies' comments:
....I don't think they have a clue about the outlook or the company's agenda!! ;-)
I've yet to see any analyst speculate on the upcoming reserves assessment (or even pay much attention to it!)
ee
no,really?
must be netting $300m+ p.a. at current production levels.
I think that is significant, given management has been so open about the assessment taking place.
It would be a brave analyst that stepped out from the rest and put a figure in print - especially if that meant suggesting anymore than, say, +15%.
What they tell clients in conversations is another matter. Especially as we are so often told that the research reports are just a fraction of the service that the analysts provide.
Asagi (long £SIA)
>> I think that is significant, given management has been so open about the assessment taking place.
well yes and no, they raised it at the AGM, and have answered questions about it since. BUT if they were being so open about it, would you not have expected a mention of it in todays IMS ???
if they wanted analysts to talk about it, I wonder if there was some way they could have reminded them that this was going on, and we're not sure when it'll be finished but maybe by year end say ??? hum, how could they have bought it to their attentions ? if only there was some kind of document they periodically release, where it could be snuck in just to get people thinking on those lines ......
ok, sorry about the sarcasm, you know what I'm saying, they obviously don't care if the analysts are talking up the stock or not, or they would have put this on the radar ? unless they think they're a possibility the outcome will disappoint so they prefer to under promise and over deliver ?
anyway, joke/sarcasm aside, I think they could have mentioned the review and expected date as part of the ims, especially as it's probably the most significant issue at the moment,
still, what do I know ? (answers on a postcard as they used to say)
K
Fair post kenobi.
Asagi (long £SIA)
well yes and no, they raised it at the AGM, and have answered questions about it since. BUT if they were being so open about it, would you not have expected a mention of it in todays IMS ???
FWIW, I still don't think we will hear anything on the reserves update this side of the year end despite the teasing hints from the company at different times over the last few months of something sooner.
My guess is a reserves update will be mentioned as part of the Operational Update within the Preliminary 2012 results (for 2011 these were announced on 15 March 2012).
But who knows.........?
Redhill
In reply to redhill, post #936
They'll be hearing from me if we don't! They've been pretty clear on at least a couple of occasions that something can be expected by early December.
Kenobi:
I would, TBH......but OTOH there is virtually nothing that could be said without giving a hostage to fortune (which is something that companies generally try to avoid doing in RNSs!! ;-/)
Asagi:
Yes - I'd agree that analysts are unlikely to be brave enough to hazard a guess in print. However, I'm surprised to see virtually no references to the review, especially since the company seemed to be confident enough about the reserves outlook that they swept up the minority first!
However, kenobi has probably got the gist of matters here:
...why would they, given that the views of analysts will make no difference to the final outcome?
ee
In reply to emptyend, post #937
I still don't think we will hear anything on the reserves update this side of the year end
They'll be hearing from me if we don't! They've been pretty clear on at least a couple of occasions that something can be expected by early December.
As of 6 weeks ago, when December 1st was first mentioned, the company also said that the form of what we release (i.e. SVn as a whole or TGT and CNV individually) and the timing (i.e. on receipt or 2012 Prelims) is as yet undetermined.
I'm not aware of anything changing since then.
In reply to emptyend, post #937
They've been pretty clear on at least a couple of occasions that something can be expected by early December.
And before that they suggested September, then it was "the Fall", then it became November, and more recently apparently December.......To me that implies they didn't know and were talking without having any certainty.
I hope it is soon (i.e before year end) but I can see that it may not be, whatever the company's current intentions. In the absence of any other catalyst, as yet unknown, I can see the logic of waiting until the Preliminaries.
Redhill
In reply to redhill, post #939
Redhill
I think your comment is a bit off target
at the AGM they said that
1) they would need to resolve the connectivity question before they could confirm reserves
2) they would need 6 months production in order to draw reliable conclusions about connectivity
the inference is that the earliest that reserves can be restated taking into account any potential connectivity is 6 months from the start of production - which is December
I asked if that inference was reasonable and they said yes
Seems crystal clear to me
In reply to tournesol, post #940
Tournesol, thank you.
I wasn't at the AGM but noted one attendee reported at the time that September was suggested. And someone on this BB reported subsequently that he'd just been told November by the company, Hence my doubts about hearing it will be December.
I want to make it clear I am not criticising Soco for how long the update may take. We'd all agree that doing it thoroughly and comprehensively is more important than doing it quickly, and as I've said before I know from experience that such projects almost invariably take longer than anyone involved reasonably anticipates at the outset.
I'm simply saying I'm not banking on any announcement in December and wouldn't be at all surprised if it's Q1/ 2013. We'll find out in due course.
Redhill