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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In reply to Isaac, post #595
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
This calculation doesn't take the minority interest in SV into account. For which, IIRC Davjo estimated a discount of 12%.
After Roger gave the interview to Stockopedia I rang him up to ask what OP he was basing his $20 a 2P barrel value on, the reply was $75 long term.
Unwise
In reply to unwise2, post #602
True. The value of that is a matter of some debate (given that the recovery of the carry of the minority is likely to take a year or two yet). A 10-12% discount is probably about right (I've been using a similar number for some while, based on having a c.27% economic interest in TGT - versus 24.5% net WI and 30.5% WI gross of the minority).
I'd also, for simplicity, guess that the value of the minority is roughly equal to the present value of the African assets....on which basis Isaac's sums are more or less right (IMO, given my view on effective reserves).
In reply to Isaac, post #598
485K is now our buy back limit fwiw
Great call Isaac, 479,974 today.
In reply to tiswas, post #604
It'll be going up by the day, too, given recent volumes. Question is - will it be utilised now that we're back to the old range?
It'll be going up by the day, too, given recent volumes. Question is - will it be utilised now that we're back to the old range?
Probably not, but it is a bit of a conundrum in that if they want to keep buying decent quantities of stock they are going to have to keep the volume up which means that they are going to have to keep buying ...........
I guess if Soco have an idea that production ramp up is just around the corner then they might want to buy as many as they can at these levels. If they announce 55K/bpd then I can't see the price staying under 300p unless we get a big macro meltdown.
I still think 55K/bpd is a bit disappointing though!
Considering that Soco went as high as 290.9 and Soco did'nt buy any shares at this price it appears 290 is the top of their target.
A shame really as I was getting quite excited with the news of PontOil buying more shares recently.
If your a near term seller of the asset at trade value then it makes a lot of sense to scoop up as much of the company as possible for a decent profit over the next few months....
In reply to Isaac, post #608
Lets wait and see before rushing to conclusions.....
...especially since there is an AGM next week, at which a new authority will be granted
Isaac
So we are looking at a price between £5.19 - £6.64/share
Puts that bonus equivalent to £0.0028/sh paid to ES and RC last year into context eh?
Unwise
After Roger gave the interview to Stockopedia I rang him up to ask what OP he was basing his $20 a 2P barrel value on, the reply was $75 long term.
Interesting. I'm not able to access my NPV model at the mo but it strikes me from memory that $20/bbl at $75/op must mean something like a 6% discount factor. Not unreasonable in the present environment, particularly for NOCs', but would be a most enlightening marker if it comes to pass.
No buy backs today.... the purpose of the buy backs is to support the share price at a certain level and keep it there in order to maintain a constant price for a bid.
I would have thought that the main purpose is to reduce dilution at a substantial discount to the likely sale price, and that price support is a side benefit which could help a bidder justify the premium as well as keeping a few angry shareholders off their back....
Hi all,
Just booked my train to London for the AGM - who else will be attending this year? I'm particularly interested in hearing what is said about TGT and relations at the HVJOC that might not have made its way into RNSes.
Best,
JS123
Disappointed to see the buy back stop at around 290p. One would expect that if management think TGT is worth $20/bbl or £5+ share price they'd continue buying. Furthermore, if the company knows that production ramp up imminent surely they'd want to get in more shares now rather than later at a higher price.
I suppose there could be "another reason" to stop the buy back but it seems unlikely just now.
Having said that the stock is weaker again so we'll probably see it restart today.
Log
I couldn't give a fig about the SP.
Well, on second thoughts, if it went to new lows it would tempt me to buy even more -:) I really shouldn't do that.
What I do care about, with TGT 2 completion almost a given, is whether total output from TGT 1 & 2 is capable of achieving the 90k BOPD forecast at this time last year or whether the total stays at 55k that's being settled on recently; that the CNV wet gas apportionment and valuation are concluded, and that the overall vietnam reserves position is determined.
It's these value issues that need progression to a resolution. The price will follow, and if the prevailing short term financial context keeps the quoted SP down, any buyer using this as a metric will not be welcome in such a tightly help company. (on that side I was delighted to see Pontoil adding over the past week). I don't want to see the company "putting a floor under the SP". Their track record in manageing the money has been first class, so I'll leave them to make the judgements in that respect.
I trust their judgement on the buyback programme.
fuiseog
Log,
I thought that a couple of months ago - that I wished they'd start buying back at higher levels but when the general market sell off came and the company were buying back 0.1% of the shares per day below 280p, I thought that vindicated their position. On the other hand, I do agree that if they think it's worth £5+ then this is a low valuation to stop buying at...let's hope they are setting their limit at some fraction (half?) of NAV! ;-)
Best,
JS123
If you have a load of cash to spend and you can swap 50p's for £1's then it seems obvious you just get on and do it. You hardly want to hang around to see if the 50p's turn into 40p's and risk loosing the opportunity.
Coastal hasn't hung around much with its share buy back it has been buying like crazy along with a few director buys too. Which management team looks most confident in their companies assets?
Log
In reply to fuiseog, post #615
What I do care about, with TGT 2 completion almost a given, is whether total output from TGT 1 & 2 is capable of achieving the 90k BOPD forecast at this time last year or whether the total stays at 55k that's being settled on recently; that the CNV wet gas apportionment and valuation are concluded, and that the overall vietnam reserves position is determined.
I don't have any real doubt that TGT1/2 are capable of well over 55kbopd, probably 90+. The issues for me are will PV go along with such rates of production (- almost certainly, given time) and how will they handle 90k? Can they/will they tweak the existing FPSO to handle that, or nearly that, level of production. What permanent solution wil they go for - Bach Ho tie in, 2nd FPSO?
In practice I doubt very much that we will see 90k this year (or in Soco's hands?) Producing at those rates will involve planning, engineering and capex. However, what I do expect, and is critical in terms of SP (which may be irrelevant short term, but it would also have bearing on the longer term sale price) is to see 55k or so once TGT 2 is online. Anything less once phase 2 is fully bedded in (say 2-3 months) would be a serious worry. What I also want to see, and I'm hoping that those who are lucky enough to be able to get to the AGM may be able to elicit some hints, are signs that real planning for how to handle rates of over 55k. Put both of those two in place and the SP wouldn't be anywhere near it is now (if any logic prevails in the markets), and a sale of SV at a good price would look imminent.
£1 for 50p, 60p, 70p...where do you draw the line?
Which management team looks most confident in their companies assets?
Which management team needs to be most concerned about how the market views their assets? It doesn't matter one iota what I, you or anyone else in "the market" thinks TGT is worth... other than the buyer and Soco management, who have control over any deal being accepted or not.
For clarity, my point above is that the exit for Coastal is not so clearly defined and market price is more important for shareholders there; and also that the management control of the register is not as tight.
If I only had a penny for every time an investor on a BB ranted on about how it doesn't matter what the current share price is and it is just a matter of waiting and value will eventually come to fruition!
I'm afraid it does matter. It is very hard in this market and generally for a bidder to pay much more than a 30% premium to the current price. The reason is simple because they don't want to look like they over paid. I'm sure many here will come along and try to dispute this fact but I'd like to see some evidence if that is the case. Sure Soco shares are tightly held which means that it is likely then no such bid would succeed but how does that help? It just means the asset stays as it and we stay where we are for more years to come. Not many here relish the idea of TGT not being sold as most don't want to wait 10 years for their money.