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. The Company’s net entitlement volumes were approximately 15,500 barrels of oil equivalent per day. more »
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In reply to Isaac, post #842
...you haven't allowed for cost recovery in H1. I'd reckon that is around $30mn.....hence $220mn*5 is the right read-across. However......they say
....for very good reason !!!!
I think the deal for the whole of SOCO VN will now clearly be over $3bn.
ee
My question is why is there no reserve upgrade?
How comes they have published reserves as of 31.12.11 with no reserve upgrade - Does that mean there is not likely to be one?
In reply to Isaac, post #844
For heavens sake!
Why would you finalise a reserves upgrade BEFORE buying out the minority?
In reply to emptyend, post #839
ps....I meant to highlight the fact that this is a "conditional" agreement.
Whilst it is possible that there are a number of inconsequential conditions, I can also envisage that there may be one extremely crucial condition......
20% of SV in one bite, this sounds like a much more effective method than the share buyback, perhaps this is why it has stopped lately, thought there might be other reasons too I guess.
This Tallies with ES comments that they were interested in increasing their stake in some of the assets they already have. I was thinking of increases in wi in fields, but this is just as good, as has been said it is probably easier to sell 100% of SV than 80%.
I wonder if there are other chunks like this that the company is considering ? perhaps increased wi in africa ?
It is obviously much more expensive to increase wi in assets that are proven than speculative ones, but at the same time much less risky.
K
20% of SV in one bite, this sounds like a much more effective method than the share buyback, perhaps this is why it has stopped lately, thought there might be other reasons too I guess.
I would guess that the buy-out of the MI might constitute price sensitive information (today's market reaction strongly suggests that that is the case!) and therefore that they were prohibited from buying back shares. It would have been interesting to see if the buy-back might now resume, but I guess not at the current share price!
The strong market reaction suggests to me that the market is reading this in the same way as emptyend ie that another of the pieces of the endgame jigsaw has slotted into place.
The strong market reaction suggests to me that the market is reading this in the same way as emptyend ie that another of the pieces of the endgame jigsaw has slotted into place.
Agreed, that it might be, but buying 20% of an asset for around $200M if you believe that 100% of that asset is worth, perhaps $3BN has got to be a good deal regardless, just from a earnings and nav pov regardless of whether this moves you any nearer to an exit. Mind you, I would guess most of the movement is due to people believing this moves things along significantly,
K
Some comments here from an interview with RC:
"we’ve paid about half as much for this interest because of our majority interest," is this an indication of the takeout price? $2.2bn rather than $3bn. I guess we are trusting management that their assets are worth more than others because of the licence terms. Time will no doubt tell. But I doubt we will see $3bn this year. Unless the reserves report is very positive. JL
I'm tempted to wonder if they are now continuing with the buybacks at a higher price level. We are only 10 days away from start-up at H4 (in theory, anyway).
If one was looking only at the VN assets, then this could very easily be justified because we have effectively increased our interest by 25%.........
ee
Hi ee,
On the buyback theme, you recently posted (at a point where there'd been no action for a few days), that you could think of 3 reasons for said lack of activity, one negative and two positive.
Have we now seen one of your three (possibly with a more favourable outcome than you'd expected) or did/do you have other scenarios in mind ?
ATB
In reply to emptyend, post #852
I'm tempted to wonder if they are now continuing with the buybacks at a higher price level. We are only 10 days away from start-up at H4 (in theory, anyway).
Definitely possible given the "sand lines" at 310p!
In reply to extrader, post #853
More or less. I do have another scenario that hasn't yet occurred though......
The point is that the deal today most probably explains the lack of buybacks last week - but the question (again) is "now what?"......
ee
5 years of hurt appears to be coming to an end............Hopefully.
It also feels like a whole load of people have jumped on the Soco train the last two days and LTBH have increased their stakes....
Rather difficult to get a sensible handle on current price movement. On the one hand chatter here (ranging from Isaac's acquired-taste volatility to emptyend's deniable bluster) to real-world corporate manouvers.
A delicious case of choosing to risk personal assets on a takeover play.
Hmmmm. Interesting............................
just seen details of the date and location of the EGM re the minority stake in SV
http://www.investegate.co.uk/article.aspx?id=201207041742569571G
Company today announces that a General Meeting of shareholders will be held at 10.00 a.m. on Friday 20 July 2012 at the offices of Pelham Bell Pottinger, 6th Floor, Holborn Gate, 330 High Holborn, London, WC1V 7QD.
I guess I was right again....If Soco did a deal 1-2 weeks ago we all would have been better of with putting the proceeds into the E+P sector.
GKP up 50% in the past week and TPL up 20% today in London and 45% in Canada. E+P's were cheap and with the recent bounce back in the Oil price the sentiment has improved considerably.
Hi Isaac,
And if you'd sold Soco 2 weeks ago (as I believe was recommended to you) and invested in GKP/TPL, you could sell out now and buy back 40-50% more Soco....with the best yet to come.!
Now THAT would have been a guess worth being right about.
But I suppose that (like most of us ) , when it gets down to cases, you lack the courage of your convictions.
And, of course, talk is cheap and hindsight a wonderful thing.
ATB
In reply to extrader, post #861
I don't need anyone to tell me how I should Invest my money. I worked hard for it and I will do what I like with it.
Soco management are very good deal makers, one thing I can be reasonably confident about is they will get a good price for shareholders.
My view is I'd rather they did a deal now then a later date in the future as I think as an Investor I will make more money.
Nothing wrong with that.