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 fuiseog, post #781
Thats my guess too - and one reason why I expect a deal soonish. Why would a buyer want to wait until all decisions are taken by other people?
All very sensible comment, fuiseog.....which makes a pleasant change from some of late ;-)
In reply to fuiseog, post #781
Thanks fuiseog,
If I'd been convinced earlier that JV partners will now work to maximize value of the asset _over the license period_, I wouldn't have worried half as much. But what I was hearing did not seem at all compatible with producing upgraded reserves in the 450-500mmbbl region! I think the fall out with PV has made everyone a bit nervous, so it's not surprising we're looking for reassurance, which I think you have supplied.
Cheers,
Tom
In reply to kenobi, post #778
Well I don't appreciate being called a moron for expressing my views.
The only two questions my mind is focused on is when will a sale happen and why has it not happened already?
The truth is there will always be something left to do and another tick box to tick but at what point do you say we leave the rest for the next man? How about now when it is in shareholders interest to do so?
Soco can realise my cash and let me Invest more cash in the likes of HOIL, GKP, WZR, PCI, TPL, PMO, IAE, SLG, PTR, SOU & make me ALOT more money then what Soco can offer me by ticking more boxes.
If Soco was sold today at say £5/ share I would be better of IMO then if Soco sold a year later at £5.50
Booth did'nt have to sell Encore at 70p but he did so at the time because it was in the best interest of shareholders to do so.
I am ANGRY because I don't feel the management are working in my best interest or the best interests of the majority of the shareholder.
They are an emotional bunch of people who want to finish their 'lifes work' whilst in the process the Oil price declines.
Quite frankly I don't care about bringing on phase 2 and H5 etc etc I am only interested in a Sale that lets me realise my investment at a significant premium to the current share price which in turn allows me to Invest in other cheap stocks.
In reply to Isaac, post #784
If Soco was sold today at say £5/ share I would be better of IMO then if Soco sold a year later at £5.50 - isaac
That probably goes for most of us too, but I doubt that they could sell for £5 without more evidence of production from TGT. However, if the choice was £4 now or £5.50 - £6 in a year, then personally I would rather wait.
ET
Isaac
Management have a lot more skin in the game than normal shareholders, so, its fair to say that they will be very interested in getting what they feel is the right value for their holdings. That alignment if interests is a big reassurance here.
ET
Why?
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
We should be able to get atleast £5/share NOW.
In reply to djpreston, post #786
Which is why I am totally baffled.................But then again SIA management don't Invest in the stock market apart from Soco itself, I know because I asked them about their portfolio's.
Therefore I find it frustrating that most of us have different goals to them.
If the management were to communicate with shareholders better using the appropriate medium i.e. RNS then I may be more relaxed. Instead I feel there is quite a lot going on behind closed doors but they don't talk about it to the wider shareholder base.
In reply to Isaac, post #784
I somewhat regret the tone of some of the posts on this board recently,
Well I don't appreciate being called a moron for expressing my views.
Ok, and that's one of the many bad tempered and intolerant posts I'm talking about. (BTW, you're replying as if I had posted this, it wasn't me). Look we can agree to disagree without the tone that we've had on this board for the last week or so. I truely do not understand your postition, you seem to think they should sell up now so you can go and invest elsewhere. Do you think this is the view of the majority of shareholders ? I very much doubt it to be honest. You keep saying they should have sold months ago, putting aside whether such a thing was possible at all since we had partners who wouldn't increase production beyond 30k or so, but lets put the reasons aside for a moment. The management own a lot of the company, they are insofar as we know backed by blackrock and the other institutional holders. We are riding their bus. And we're going where they're going. If we don't like it we can sell, but of course we all see value here so we don't want to. Your views are perfectly reasonable. There are different strategies you could take, and different exit points. They could have done an encore and sole tgt before putting it into production, they'd have got a dire price, like encore did. Encore had no choice. Thanks to the outstanding financial management of SOCO, they had funding to bring the field to development. They had the money to drill TGD multiple times, it came to nothing, well these things happen. Now we're in a better position. The management say they'll be working on $20 per barell. They may get that they may not, we'll see. I can't see anyone paying $20 times the number they have in mind until a reserves update for instance.
It'll be a real pain if when they sell out, we've missed out on buying other cheap stocks, I agree. But you're not driving the bus , nor am I. We're hitching a ride on the soco bus, and while we all have a vote, you'll recall from the agm that every motion was passed by a big majority on proxy votes alone. So until the big share holders start tapping management on the shoulder saying do a deal, or they decide to do a deal, all we can do is wait. Personally, while I feel it reasonable to ask questions, sometimes questions that others think are stupid. I'm willing to go along with the management as I know there is no alternative.
You have been baning the do a deal other stocks are cheap drum on and off for months. How has that worked out for you ?
Quite frankly I don't care about bringing on phase 2 and H5 etc etc I am only interested in a Sale that lets me realise my investment at a significant premium to the current share price which in turn allows me to Invest in other cheap stocks.
since we're being frank, why does your oppinion about this count above the management ? or the institutional shareholder, I notice that ES holds more shares than LG for instance.
The management know they are secure from a low ball offer, so they'll do a deal as fuseiog quotes ES, when someone elses valuation matches theirs, there is no reason not to do a deal.
we can argue here whether they should try to do a deal, or how much we'd accept or how much we'd rather wait for, and it's interesting and passes the time. Shame the management didn't give us any ideas about what their magic price is, but then even if someone had asked I'm sure they'd be playing their cards close to their chest.
I am ANGRY because I don't feel the management are working in my best interest or the best interests of the majority of the shareholder.
Sorry you're angry, to paraphase you're quote to me earlier, it doesn't matter one bit what you feel.
They are an emotional bunch of people who want to finish their 'lifes work' whilst in the process the Oil price declines.
again, just your oppinion, and who knows by the time their lifes work is finished perhaps the oil price will be significantly above where it is now ?
K
In reply to fuiseog, post #781
If I was taking a 20 year perspective I might have an interest in the FPSO capability/capacity, and or the cost/logistics of the Bach Ho alternative. But I won't, and neither will ES and RC.
True, but the JV has to be planning, soco only has a 30% stake of the JV so neither soco nor the person who buys soco will be deciding on what to do here. And there should be plans in place incase a deal cannot be done, for whatever reason. ES was very clearly highlighting the EZ as an issue going forward at the AGM, who knows what will happen there ?
SOCO have to be planning as part of the JV, whether or not they plan to sell out before the field comes to full production or reaches any other milestone. It wouldn't come as a massive shock to me if they had plans to float SV as a separate body, and perhaps retain a portion of the shares.
So while they may sell soon, part of getting the best price is not having to sell soon, just like they didn't have to sell TGT before going into production because they had options.
Fuiseog, we had a great chat in the pub after the agm, and we didn't agree on everything, but you are a great bloke, and it was a pleasure. I can see a perfectly valid point in what you're saying here, and you may well turn out to be right. I think there are other possibilities too.
Cheers , (and look forward to a beer at the next AGM ! ;-) )
K
In reply to Isaac, post #788
Which is why I am totally baffled.................But then again SIA management don't Invest in the stock market apart from Soco itself, I know because I asked them about their portfolio's.
Why would you be baffled, they don't want to cash in their shares and buy shares in something they don't control, they only hold shares in soco. If you controlled the company you'd do what suited you. They are doing what suits them. Perhaps they want to keep working anyway ? as ES says while you're having fun.....
Relax, all the ranting in the world won't change what they're going to do,
K
If there's one thing fly fishing for salmon teaches you, it's patience.........and that you can't catch the fish of your dreams if your fly's not in the water
Kenobi
I find it difficult to read your posts as they don't seem to be concise.
My view is if you want to make a lot of money over the next several years then TPL is one to look at. I think it has the potential to multi bag many times with reasonable risk.
I personally want to own a larger shareholding and that would happen via the sale of Soco.
In reply to Isaac, post #793
sorry you find my posts difficult to read,
If you get on a bus, expect it to go where the driver wants to take it, it's no good being a back seat driver, because as you have found the driver doesn't listen.
no matter how much you shout, and rant, they aren't going to sell out to please you. If you really think that you are in the majority you might consider mobilising the like minded. I suspect you will find few takers.
hope that's concise enough for you, genuinely no offence intended,
K
In reply to Isaac, post #787
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
We should be able to get atleast £5/share NOW. - isaac
There are a couple of reasons why I disagree with that. Firstly if we want to sell NOW then we will get a worse price than waiting for the right buyer to make the approach in much the same way as if you wanted to sell your house within a week, you would be forced to accept perhaps 30% less than a keen buyer would pay.
Secondly, I don't see the reserves upgrade being as nailed-on, or coming as soon as most others do. I was interested to hear the reports from the AGM of a fall/Sep upgrade, but it differs from what I have been told and I generally expect timeframes to slide. Management, particularly ES, tend to paint a very optimistic view of the future, and while I don't feel that they intentionally mislead, I don't think they should be taken as a neutral viewpoint. An example is the TGT production figures discussed at the 2011 AGM. I would be glad to be proved wrong about this, but I don't see any upgrade happening until Q1 2013. I therefore don't expect a buyer, particularly one faced with a selller wanting to sell NOW, to give much value to the future potential upgrade.
And finally, production from TGT has been at a level of about 30k bpd. I am very relieved to hear that the main obstacle (PV) has been overcome and production is being stepped up, but I wouldn't expect a buyer to pay a full price while we haven't seen the outcome. If we hit 70k with phase 2, and even the suggested 90k peak, than this won't be an issue.
Having been invested here for 8 years, since soon after reading ee's post in 2004, I would prefer to wait another year (or two) than sell at a discount, which is what we would probably have to do if we wanted to sell NOW. If a sale happens in the next few months, against my expectations, then that's a bonus.
Isaac, your Jekyll and Hyde attitude to SOCO's progress suggests to me that you are seriously over-exposed to this company's performance. We would all like to see a sale, but not at any price.
ET
In reply to kenobi, post #794
I am hungry to make money, sitting in a share whilst it goes sdieways for 5 years is unacceptable.There comes a time when the management needs to start delivering.
In reply to ExTownie, post #795
ET
Using 2p reserves of 123m * $20 = $2.46bn convertyed to £ using 1.537 = £1.6bn / 333m = £4.80/share
They are booked reserves, i.e. a price Soco can be sold at.
In reply to Isaac, post #797
Isaac, if there was no doubt that SV alone was worth £4.80, the shares wouldn't be trading at £3.
Over the next few months we are likely to see production volumes increase sharply which should narrow the gap. An independent assessment of reserves will also narrow the gap between management's view and the market view, one way or the other.
Right now it seems that management believe the shares are trading at somewhere in the region of 50% of their value. After both of these steps, the gap should be a lot less, paving the way for a sale. After all of these years, it would be an odd decision to sell right now with these two steps not completed, unless a buyer appears who believes these two steps are a formality.
ET
In reply to Isaac, post #784
Tough. You should be grateful I was concise ..... ;-/
There weren't "views" in the post referred to - the comments were simply wrong.
I'm only sorry it has all spawned several days of pointless rants and wittering.
I am hungry to make money, sitting in a share whilst it goes sdieways for 5 years is unacceptable.There comes a time when the management needs to start delivering.
Well I don't think it's what anyone expected to be honest, but thats the risk with expo companies, it's great when they find oil, when they don't you don't get great leaps forward in valuation.
I'll try to be concise,
So since the share price hasn't performed well are you suggesting the management to sell now at the best price they can get so you can get onto your next share ?
according to http://lt.hemscott.com/SSB/tiles/company-data/forecasts-deals/major-shareholders.jsp?epic=SIA&market=LSE
which may be out of date, ES owns 12Million shares, so he should sell them for say £5 and be worth £60 now, instead of hanging on to try to realise what perhaps they think they might get 6-7 depending on drilling results in Africa, and give up a possible 12-24 M pounds. We owe it to Issac really.
Perhaps thats not really very realistic ? Encore didn't sell out for the good of the shareholders, they sold out because they didn't have the cash to go forward, and couldn't raise cash with xeo to fund it. And they sold out for 70p per share, when the share had been at over 150p in the previous 12 months.
K
Agreed that Encore was a completely different situation. In any case they sold to PMO and as memory serves PMO share price climbed somewhat afterwards so investors could have taken more like 80-90p/shr.
Issac is just frustrated and I have some sympathy with this - the ramp up in production has been painfully slow and Africa has not gone well. I don't think that is managements fault though but one has to remember that they are ultimately responsible. Meanwhile Soco provides great risk/return compared with other companies mentioned. It is a pity we have backed off from the slow and steady recovery above 300p but I'm pretty confident we'll climb back up again. That will likely make us all feel a bit better.
Log