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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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. 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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Quite a good time (from a UK shareholder perspective) to be monetising USD assets, IMO:
...though of course the flipside of the currency move is that the spot USD oil price is under pressure
- but I doubt that would have much impact on the dollar price of a deal for long-life assets.
ee
Quite a good time (from a UK shareholder perspective) to be monetising USD assets, IMO:
If Soco do announce a dividend policy in respect of £-deominated shares how much forward selling of US$ would you then be advocating? (Assuming of course that things are taken over by events.)
In reply to gibson330, post #583
I wasn't thinking about dividends in the context of my currency comment - I was thinking that it would be a useful time (from an FX perspective) to be selling out.
As I've noted yesterday, I don't expect any regular dividends to be very large - so frankly any forward selling of USD to cover them would be pretty immaterial and quite tactical.
Brent crude now down another $2 at $96 and falling............................................
I've made this point before and I will make it again. What is the point in developing a field if in the process the Oil price drops significantly?
It has been over 4 weeks since we walked away from TGD, it is a lot easier to value the company....So why not market the company and do a deal FFS!!!!!
Soco appear to have a track record of bringing online oil fields when the oil price is falling and selling production assets just as the Oil price takes off................
In reply to Isaac, post #585
What is the point in developing a field if in the process the Oil price drops significantly?
No point at all for people gifted with hindsight.
MD
In reply to Isaac, post #585
Their view of "the right price" won't have changed. The oil price pullback merely makes it easier for the acquiror to sell the deal to his own stakeholders.
The other thing the oil price pullback may do is to pile the pressure on PV to step up production (since I believe their budgets are struck in terms of cash targets and not volume targets).
Its an ill wind that blows nobody any good....... so lets not pretend there is any sort of material impact from a short-term fall, just as there wasn't from a short-term rise. Its all "noise" in the long-term context.
The oil price has recently benefited from geopolitical events such as the Libyan revolution and increasing tension between Iran and the West. It seems natural that the oil price would ease as Libyan production increases and the likelihood of war with Iran decreases ( at least during the year of a US presidential election).On top of tha tthere is reduced demand due to the worldwide slowdown in economic activity.
Isaac points out that Brent crude is now at US$ 96 /bbl and falling.However I wonder how much further it can fall bearing in mind statements by the Saudis that they are looking for an oil price of US$ 100 / bbl and the marginal cost of production in most non OPEC countries.
I remember hearing Ed Story quote very low production costs for TGT at one of the recent AGMs so I consider that Soco is better cushioned than many against lower oil prices and makes them more attractive to potential suitors although as ee said its all " noise " in the long term.
In reply to highgate55, post #588
A few hours later, of course, it has reversed course and closed at around $99. Timing is always a guessing game, but I made similar points to Highgate this morning elsewhere.
Current costs are under $20 per bbl and I'd expect it to fall to under $15 as production reaches 55k bopd (at last).
ee
In reply to emptyend, post #587
Sorry, I just can't get my head round that statement :-/ Must be missing something obvious!
In reply to swanvesta, post #590
It is very straightforward. Short term moves in the oil price (whether up or down) have no impact on the actual price at which long-lived assets will be bought and sold. OTOH, a move down makes a marginal difference to the buyer in PR terms, because they are less likely to be accused of "buying at the top of the market".
In reply to swanvesta, post #590
OTOH, a move down makes a marginal difference to the buyer in PR terms, because they are less likely to be accused of "buying at the top of the market"
Conversely they could be accused of overpaying if the oil price at time of acquisition is low........both views are equally valid in PR terms.
This seems to be what Isaac is concerned about - that a potential purchaser of Soco's long term assets may pay less because the price last Friday was lower than it has been. In reality of course, as emptyend says, the current oil price should have no impact on the price at which O&G assets are sold - we all know it is the anticipated/projected/estimated future price of oil during the extraction period that matters.
redhill
In reply to redhill, post #592
Just on that point, the numbers that have always been quoted in relation to value per bbl (c $20) in an M&A context were first quoted some years ago when the oil price was c. $75 (sure davjo can confirm that) - and they have recently been given additional credence by the terms of the Perenco deal with ConocoPhillips.
In reply to emptyend, post #593
Just on that point, the numbers that have always been quoted in relation to value per bbl (c $20) in an M&A context were first quoted some years ago when the oil price was c. $75 (sure davjo can confirm that) - and they have recently been given additional credence by the terms of the Perenco deal with ConocoPhillips.
IIRC, ES made an off-the-record AGM comment to that effect about 4 or 5 years ago. I think it was poste the Yemen sale, which again IIRC, was sold at an o/p valuation of $70/bbl when the spot price was c.$90. Yet again IIRC, RC also made the $20 reference a couple of years back in his Stockopedia interview. He subsequently confirmed that this was for 2Ps'.
That's a lotta IIRCs' :-)
Davjo
Using 2p reserves of 123m * $20 = $2.46bn convertyed to £ using 1.537 = £1.6bn / 333m = £4.80/share
That excludes Cash and African reserves and excludes any upgrades in Vietnam bbls.
Using 2p reserves of ee = 160m * $20 = $3.2bn = £2.082bn / 333 = £6.25/share excluding cash of $200mn + African reserves.
Cash is worth about 39p/share.
So we are looking at a price between £5.19 - £6.64/share
Soco keep buying back those shares, they are adding a lot of value! :-)
PontOil buying... :-)
("SOCO" or "the Company")
HOLDING(S) IN THE COMPANY
The Company has been notified by Pontoil Intertrade Limited of a change in its holdings in the Company due to:
(a) An acquisition of voting rights in the Company, and
(b) An event changing the breakdown of voting rights.
The following acquisitions of voting rights have been notified to the Company:
Date of notification Number acquired Date acquired
31 May 2012 360,000 30 May 2012
1 June 2012 147,764 31 May 2012
5 June 2012 660,000 1 June 2012
As a result, Pontoil Intertrade Limited now holds 82,029,896 voting rights, representing 24.66 % of the Company's total voting rights.
http://www.investegate.co.uk/Article.aspx?id=201206060700157315E
In reply to Isaac, post #595
Yup.....
Pontoil can also run the numbers - which is why they've added over 1mn shares recently and now own 24.66%.
485K is now our buy back limit fwiw
Does anyone know if we can expect a reserves update at the AGM?
So if Pontoil have bought 1.1m shares in the last 3 sessions and Soco have bought approximately around about the same there must be a big seller in the market since the price hasn't moved a great deal. We haven't seen any RNS announcements though that suggest any of the big holders are selling down their stake so one has to wonder who is selling?
Log
In reply to loglorry, post #600
No one doesn't. It is clearly people who have some sort of macro view on the markets, given the general price moves and volatility in recent days.....or people who simply need cash. There are probably several residual eurozone institutions for a start....
Basically there are happy sellers of risk assets right across the markets.