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 emptyend, post #881
ee,
Perhaps you can put 2 + 2 on some of your other holdings, LLOY or BG or say something you don't hold like GKP or TPL and we can see how credible your post above is.
You are the only poster that comes out with things that the majority have not thought of, consistently.
I've also wondered for a long time why you don't invest in other E+P's, there are plenty of other success stories but perhaps it is because you don't have the same 'edge' elsewhere that you have with Soco.
The two most recent significant pieces of news is
a) Buyout of lizeroux
b) Ramp up of TGT
So if we read between the lines of the NEWS ... at the time of the acquisition you said
2 Jul'12 - 08:37 - 8708 of 8930
Effectively this is buying out a "sitting tenant" before selling the freehold...
If neither is true, surely they'd hold and wait for a bid like the rest of us? Not convinced that they'd have anything like the leverage of a sitting tenant, though. Threatening to remain as a minority with no future exit route doesn't sound like much of a threat.
...err.....my guess is that they may ALREADY have done precisely as you suggest. An exit route has finally presented itself.....IMO
I'm not going to elaborate further - but I think there is quite a decent chance of several upside surprises in these areas in the weeks and months ahead, especially taking acccount of various matters raised at the AGM and subsequently.
Watch this space....
Effectively this is buying out a "sitting tenant" before selling the freehold...' and you say that there is going to be "upside" surprises in the months ahead when only a few weeks ago according to you Soco should be sold in July.
Hi Isaac,
If, as a result of mooted connectivity between H1 and H4, there's more evidence available/to become available re reserves increase, that would justify - in BoD's eyes- a reappraisal of 'realistic' takeout price.
If, as a result of proving up seismic re H1>H4, there's more plausibility - in BoD's eyes - re reserves potential for H5 ("the big one", IIRC ?), we could be looking at a modest TGD Mark 2.
In which case, the case for an early (relatively speaking !) sale is lessened somewhat.
Maybe this is about managing expectations ?
Suggest you focus on TPL for a while (good call, btw) and await developments !
ATB
This was all known at the time of ee's post on the 2nd of July .... nothing new has appeared in this area, yet ee's view appears to have changed - So I don't buy the reading between the lines point.
Hi Isaac,
You've overlooked the second part of ee's comments, which noted the question of spare capacity, going forward, at Bach Ho.....Remember too the questions (raised here and elsewhere) as to whether Soco VN would have time enough, in remaining concession life, to fully monetise what they believe is down there ?
I'm guessing a fast-track of H5 and an early hook-up to Bach Ho may be the straws in the wind that ee's picked up on...
Time will tell.
Hi Isaac,
I don't think a forensic examination of the posts anyone makes to these boards is fair.
EE seems to be on the receiving end of a number of these examinations because he is clearly knowledgeable on SIA. My view is that forensic examination of anyone's posts is 'bating' and is behaviour likely to drive expert posters away from these boards. Most of us know what Hemscott or iii boards are like and because we know what they are like we do not visit the boards. Please let us not let this board drop to that level.
TomKe
In reply to Isaac, post #882
Please don't misquote me so blatently. If you can't be arsed to read precisely what I wrote then it is no wonder you are so easily confused. This is what I said:
No I haven't.
Pathetic...just pathetic....
ee
In reply to TomKe, post #886
couldn't agree more Tomke,
K
Anyone attendingthe EGM?
http://www.investegate.co.uk/article.aspx?id=201207201515011897I
resolution passed as expected, I wonder what the next steps are now ? (did anyone go ?)
K
I attended today's EGM , one of maybe 5 or 6 private investors, and met up with Norman 115 and marvo38 who may be known to some readers.
The meeting was chaired by John Norton with other non execs inattendance ( ed and Roger being on holiday).
The formal business was very quick - resolution to acquire minority interest in Soco VN passed with 292 m votes for 0.29 m votes against.
As expected there was no formal Q & A session but I was able to have a good chat with Antony Maris ( VP - Operations and Production). He said production is currently around 51,000 bopd and they should achieve the planned 55,000 bopd by end August.
In answer to my question about testing the capacaity of the FPSO , Antony said they planned to see if the system could process more than the name plate capacity ( 55K bopd). They would then like to identify the bottlenecks at various throughputs and the costs that would be incurred in removing the bottlenecks. Antony said that in some cases although the capex needed to remove a bottleneck may be minor it might require a long shut down and loss of production which would render it un economic. Antony did opine that he thought the system probably had some excess capacity already built in .
From the way Antony talked about developing drillling plans for 2013 and even 2014 one could conclude that an early sale was unlikely , but then he would talk like that wouldn't he ?
In reply to highgate55, post #891
Well done Highgate :-)
That is certainly my understanding. However, I suspect that things may have moved on.
Well operationally one would expect all such planning to continue without any regard at all to any corporate action.
........uh huh........ Are you sure about that? ;-)
I wonder if they are taking "holiday" somewhere with RdS? ;-)
ee
ee - being a simple chemical engineer ( or maybe just simple) it didn't occur to me that both taking holiday at the same time might be odd .
In reply to highgate55, post #893
Fair point. Perhaps I'm too devious ;-)
Having the two key execs on holiday, and the Chairman away too, seems to me to be the corporate equivalent of the Mary Celeste .....
Still, perhaps they are amongst the minority of over-60s who pick school holiday periods for their vacations and then choose to return to experience London in the grip of the Olympics ;-)
In reply to highgate55, post #891
highgate,
I wondered did you get any idea how they have raised production to 51k ? have they opened up any more zones in the phase 1 or is this adding capacity solely from phase 2 ? and any idea how many zones there are in the phase 2 wells and how many are currently open ?
thanks very much for your feedback, very enlightening,
K
Hello from a lurker to these boards.
I would be grateful to recieve the views of those more closely alligned with Soco's affairs then I might be to the the following extract taken from todays company announcement:
".......... Completion is expected to occur shortly and in any event by 23 August 2012."
Now why specifically mention 23 August? Could it be that it is a condition precedent within the Heads of Agreement outlining the buy back of the shares that the transaction is completed by this date. Such an arrangement would allow Soco (should they wish) to announce a first interim dividend at the time of release of the six monthly accounts and trading statement in the knowledge (assuming the transaction has been completed) that they would not have to make a distribution to lizeroux.
All views appreciated as I may just be reading too much into this!
In reply to kenobi, post #895
Kenobi,
Sorry but I don't know the answer to your questions.
From the way Antony talked about developing drillling plans for 2013 and even 2014 one could conclude that an early sale was unlikely
Agree ee's comment that one would expect all such planning to continue without any regard at all to any corporate action. However, it is interesting to look at 2013 drilling plans in relation to the TGT north/south connectivity issue reported at the AGM. That presentation on P.9 indicated wells targeting H2S-H3-H4S-H5. If you turn to P.27 of the 2011 Results Presentation you'll see all the prognosed hydrocarbon columns in each of the fault blocks. It's noticeable from the graphic that any communication between H1 and H4 is evident only via a thin interval in the upper BH 5.2. This is very clear in H3. Seems to me that drilling H3 in 2013 could be very important in establishing the presence or otherwise of flowing oil in that fault block at the lower BH 5.2 interval. Why else would they drill H3? I'd have thought connectivity has driven their reasoning to drill. Similarly H4S only shows piddling quantities of oil but is also targeted for 2013 drilling...presumably for the same reasons.
It strikes me that the connectivity issue is potentially opening up a lot more prospectivity and the JV is bringing forward drilling to test this potential. As noted previously, drilling of the 200mmbbl OIP H5 has also been brought forward to 2013. So the 2013 drilling campaign could be transformational in terms of reserves build. What CoS though? My feeling is that Soco wouldn't sell in the near term unless a buyer was prepared to pay a premium to their CoS estimate. An early SV sale is still possible but I'd guess that Soco will prefer to see the results of what I see as the all important 2013 drilling campaign first.
All supposition of course ;-)
In reply to tichie, post #896
Yes I'd expect the reasoning to be something along those lines. The notice for the EGM suggested completion around the end of July though, and I'd still expect that to be the case.
In reply to davjo, post #898
I think the central issue here is just how conclusive the production data can be in establishing communication and the size of reserves. It is impossible to know from the outside. Obviously undrilled blocks such as H5 would need to be drilled before being proved - but that is probably only 25-27mn bbls or so in net recoverables (200*0.305*0.45), and would warrant some sort of reasonable risked value right now in any case.
It seems to me that connectivity can fully derisk large parts of H3 without the need to drill it (though ultimately one would drill it for production efficiency).
Aye there's the rub. As I have always said - it only takes ONE buyer to see eye-to-eye with SOCO on valuation....and a deal can be done. Does anyone fall in that category? Tough to know - but I'd think there is enough data available (or available very shortly from H4 production) to get a deal done.
ee
In reply to emptyend, post #900
I think the central issue here is just how conclusive the production data can be in establishing communication and the size of reserves. It is impossible to know from the outside. Obviously undrilled blocks such as H5 would need to be drilled before being proved - but that is probably only 25-27mn bbls or so in net recoverables (200*0.305*0.45), and would warrant some sort of reasonable risked value right now in any case.
Interesting in the context of this discussion that H5 appraisal got moved forward from 2015 to 2013 between the prelims presentation and the AGM. A 2015 appraisal would clearly be in the "for the new owner" category, that's not quite so clear cut for 2013. Since I think we can assume that they became aware of the possible communuication, and potentially much larger possible reserves upgrade than originally envisaged, during that period it's not an enourmous leap to think that the additional planned appraisal, and inclusion of H5, for 2013 may reflect a view that those issues are too significant to a valuation to put on the back burner?
Of course, assuming that is correct, 2 conclusions can be drawn, firstly, that they want to be more sure of what they have and probably no sale for another 12-18 months, or secondly, that they can say to potential suitors "if you don't come up with a decent price now you may find yourselves having to pay 50% more next year".
Peter