Vietnam Assets

Govt approval of TGT development finally announced.

Govt approval of TGT development finally announced.

Yes indeed....together with a spud announcement on Viodo, which finishes....

The spudding of the Viodo well is the second well in the most active drilling
programme in the Company's history, which includes a 12 month drilling campaign
in the Cuu Long Basin, offshore Vietnam, one exploration well on the Marine XIV
Block, offshore Republic of Congo, a further exploration well on Marine XI, and
two exploration wells on the Nganzi Block, located onshore the Democratic
Republic of Congo (Kinshasa).

Obviously a good slice of that is development drilling for TGT.......and it is also noted in the TGT announcement that

This positions the Company for significant production growth when this major field
comes on stream."

....whixh remains mid-2011.  The clock is truly ticking......

ee

More minor TGT contracts news

.......awarded international technical assurance and consulting company Germanischer Lloyd (GL) with both certification and quality assurance and quality control (QA/QC) services during all project phases from design and procurement to final documentation. "These two contracts are the largest ever awarded for inspection and certification services to GL Vietnam," Raymond Haveron, GL's Country Manager Vietnam for Industrial Services, said proudly.

Together with Dr.Ngo Huu Hai, General Manager of Hoang Long JOC, Raymond Haveron sealed the deal at an official signing ceremony in Ho Chi Minh City.The contracts concern the project's two wellheads (H1 & H4), in-field pipelines, flexible riser, pipeline end manifold (PLEM), and moorings.Amongst others, GL will perform design certification; source inspection; survellaince during fabrication, installation, hook-up and commissioning; issuance of Certificate of Safe Operation in conjunction with the Vietnam Register; as well as periodical inspections during operational life and a renewal of certificate every five years throughout the design life."Generally, we will provide all necessary inspection personnel and coordinate all inspection activities of the project," states Raymond Haveron.

....shows things continue to proceed.

ee

There was a curious little column in Friday's Investors Chronicle, dealing exclusively with SOCO in Vietnam and tucked away in the section on takeovers (and there seems to be no website link either). I discovered it earlier today whilst out shopping.

The article's writer claims to have spoken to three sources "close to SOCO". One of these suggested that "progess" won't be made on takover discussions until towards the turn of the year. And another suggested that the drilling activity at TGD would commence in February.

Now this last point is clearly an important one and  I have to admit that the suggestion of February is entirely consistent with what I was given to understand on Friday (wholly coincidentally....as a result of investigating the Citi note's errors). It is my belief that they will be doing the site survey for the well as soon as the weather clears (probably December, if I understand the weather picture correctly)  and they are expecting to be drilling TGD in Q1 or Q2. It is entirely likely, on my understanding, that February is the target for the spud...with the caveat over timing resulting from the usual potential for delays and unexpected issues.

Whatever turns out to be the case (and perhaps there will be more clarity in the IMS?) it is completely clear to me that Citi and others who were/are expecting no drilling action on TGD until Q3 2010 are going to be embarrassingly wrong.....and, though it would also now seem that the reprocessing cards will be kept very close to the chest until the wells are drilled (which I was not expecting), I would say that .....coupled with the expectation of a drilling start early in the New Year and the idea floated in the IC that the "process" may progress around the turn of the year..... this is non-negative for the near-term outlook. Quite the contrary, in fact, IMO.

ee

Hi ee,

Thanks for this 'nugget' - it's amazing what you can pick up when out shopping......;>

Now the clincher : did the 'Chronic Investor" reach any conclusion as to investment implications of these developments ? I ask as IC has an unfortunate rep as something of a contrarian indicator !

In reply to extrader (post #11)

Well.... I am extremely aware of IC's rep - which goes back at least 25 years to my personal knowledge!

I think the conclusion was simply "watch this space" - which seems fair enough to me in the circumstances! ;-)

Here's another space to be watched: http://www.upstreamonline.com/live/article187596.ece 

....though other sources have it that Vietsovpetro might be taking PV Drilling II on the two-year contract mentioned (as well as PV Drilling III on the five-year contract).

Time will, as ever, tell.

ee

Just going through the Tristone and Bank of America buy notes of the summer. Both price targets were short term £16 but an allowance for significant upside with regard TGD. We did reach a £15 intraday high a few days back which is of course no interest to long-term investors.

Both notes emphasise seismic on TGD being revealed September/October. We are currently awaiting drilling news from outside Vietnam but with an upcoming IMS due are other investors also expecting the seismic data to be revealed? Am I right EE that you of the opinion that reprocessing data might be kept close to their chest now that drilling on TGD may be earlier than previously thought (ie February rather than Q2/Q3 '10)?

ArtN

(purchased another 1000+ at £12.70 on Friday, order took 20 mins to fill, this is now my largest single holding)

In reply to ArtNouveau (post #13)

Both notes emphasise seismic on TGD being revealed September/October. We are currently awaiting drilling news from outside Vietnam but with an upcoming IMS due are other investors also expecting the seismic data to be revealed? Am I right EE that you of the opinion that reprocessing data might be kept close to their chest now that drilling on TGD may be earlier than previously thought (ie February rather than Q2/Q3 '10)?

Prior to Friday, my expectation was certainly that the same as indicated in the notes to which you refer - ie that the seismic would be revealed very shortly. It is indeed my view that there is not much point in doing so, now that TGD drilling would appear to be ......err.....more imminent than some have been expecting.

There is also a "need to know" aspect here. Shareholders (especially those who attended the AGM) are well aware of management's views on the potential of TGD. Doubtless any parties who have expressed an interest in SOCO's Vietnam assets are in a similar position. Why bother trying to convince people who remain sceptical and reluctant to be convinced, when one expects to be in a position to drill in the next few months and remove all doubt?.......especially if there is a strong confidence that management expectations will be fully justified by the outcome! There is no need to allow any "uncertainty discount" - nor to bother too much with what the City happens to think - if they are rapidly putting themselves in a position to prove their point via the drillbit!

ee

I've been thinking, in recent days, that there are a few "odd things" happening. For example:

a) SOCO's recently appointed house broker hasn't published any note for some while, even after the IMS (AFAIAA)

b) The plan to drill TGD in February/March isn't being "bigged up" as one might expect. Indeed most analysts seem to have paid it no heed at all!

c) There has been no revelation of what the TGD seismic shows (contrary to my expectation)

d) There are no plans to brief analysts this year. However, there is a "US Roadshow" planned for next month.

e) Some fairly clued-in investors (both retail and institutional) are returning to the stock on the quiet, so I understand

f) I note the appearance of apparently-co-ordinated negative postings (based on CNV production issues that are well-known and acknowledged by the company) on second-tier discussion boards

....and I wonder why these things might be.

As someone who misread the signals a year ago, I am loth to raise the thought of M&A again.....but I DO wonder if something might be afoot prior to drilling. I also note, for example, that Chevron seem to have been making progress on their gas disussions in Vietnam (and am reminded that the gas sales price is due to be arbitrated on around now, I think).......

....I wonder (pretty idly, at this point) whether those who are looking to the east for bid prospects may be facing in the wrong direction? Certainly one should note that SOCO have never disclosed who it was that made the approach back in October 2008, so all options remain open.....

OTOH perhaps JPMC are merely waiting until the result on Viodo before writing a pre-roadshow note? Who knows?

ee

I followed Emerald for a decade and noticed before the takeover an almost 'lock down' on news flow. So much so that several 'forum' groups ceased to exist.Yet the price very slowly and very quietly increased.

If you want to see ramping and deramping in action go to http://www.lse.co.uk/ and watch the Tower forum. Prior to Iti 1 was the most disgraceful exhibition I've seen yet.

In reply to kobb33 (post #16)

If you want to see ramping and deramping in action go to http://www.lse.co.uk/ and watch the Tower forum. Prior to Iti 1 was the most disgraceful exhibition I've seen yet.

Over here and elsewhere we were always pretty clear that, in relative terms at least, TRP was over-valued! There's no interest in ramping SIA round here - but it IS merely a question of time in VN (and if we could predict exactly when then we'd all be rich!). Actually that isn't quite the whole story......

....because it is a question of time AND money! If buyers wish to wait for greater certainty, then that will undoubtedly come with a greater price (relative to whatever the assets at the time are considered to be worth).

ee

emptyend,

If a bidder has waited this long what is wrong with waiting another 3-6 months to drill a well? You pay more for certainty that is for sure but when you have already had 2 wells that have not been commercial surely it is wise to just wait for this next well before making a move ?

Why has Soco never revealed anything on the potential bidder ?

Why do you think Soco are keeping "low key" - the TGD dril in Feb? Also how comes you are now saying March? Where did you hear March from ?

Why has the company chosen not to reveal anything regarding TGD ? What are the possible reasons ?

How do you know Institutional Investors are returning on the quiet?

Hopefully we will see some results on Viodo this week.

Putting it milldly Soco has had a Sh1t year in terms of Share price performance compared to the wider market. But next year will be different, that I'm sure of.

In reply to Isaac (post #18)

Sigh. Life is just too short.

ee

Sigh. Life is just too short.

Damn right. It is why it is bloody frustrating the time taking to realise the value from Vietnam. As i said before we would have made alot more money if they just sold up a year or even two back and not entered TGD when Oil prices we very favorable.

All those lost profits the past year from the general stock market. And not forgetting the time value of money etc.

Sirlurk, Beerpig etc did very well.

People like me and you are well behind the curve and have no option but to wait for these people to sell up.

I hope the management does not take any bonuses this year. They may get a good well result from Viodo but that in my books is not justification to take a bonus.

The last 2 years have been a complete waste of time and we won't get that back. It's gone forever. Life indeed is too short.

Evening all,

I think the quotation you're thinking of is "life is too short to be small"....

People like me and you are well behind the curve

Well, yes and no.......

ee,

Why it would be in Soco or JPM's interest to keep things low key if there really was any further expressions of interest? I'd guess they would be keen to get the drill bit into TGD before any real negotiations start but with the directors' holdings a hostile bid wouldn't suceed so there'd be no point in playing things down. Since it comes down to a company offering what the Soco directors believe it is worth they can just say no and don't need to spend time trying to prevent an opportunistic bid.

I personally reckon JPM are just waiting for Viodo, brokers generally don't like to look stupid getting a short term price movement wrong even if its due to an unexpected result...although nobody seems to have explained that to Citi when they issued a friday sell rec a few weeks ago when Viodo was drilling and the IMS was due detailing Soco's busiest ever 12-month drilling schedule!

Danger

In reply to dangersimpson (post #23)

Why it would be in Soco or JPM's interest to keep things low key if there really was any further expressions of interest? I'd guess they would be keen to get the drill bit into TGD before any real negotiations start but with the directors' holdings a hostile bid wouldn't suceed so there'd be no point in playing things down. Since it comes down to a company offering what the Soco directors believe it is worth they can just say no and don't need to spend time trying to prevent an opportunistic bid.

Managements can waste an absolutely vast amount of time responding to market enquiries if something is put into the market that grabs people's attention. For example, the error-strewn and ill-timed (assuming, for the moment, that the timing was coincidental - which I don't actually believe!!) Citi note on Friday 31/10 took up swathes of management time in fielding (understandable) investor queries caused by errors and inconsistencies in Citi's note. There is a good deal to be said for keeping things quiet and being able to simply get on with the job!

The other point, of course, is that stuff getting into the public domain is unlikely to help any deal that might be under discussion. In my experience (including with my new hat on) it is rare for market rumours to be both accurate and complete - and therefore why would Soco wish to encourage something which is virtually certain to have random, but probably non-positive, consequences? And why would JPM, as it might prejudice their fees?

As you say, though, thanks to the control over the shareholder register they can just say no to an enquiry from a bidder....... and the corollary of that is that anything they say that affects the market in the shares won't have the slightest impact on where a deal can be done!! This last point is important - but is also quite unusual, as the market tends to think in terms of "bid premia" not in terms of absolute figures [for the good reason that, with most companies, if enough of an instant profit is thrown at institutions then they will simply roll over and cash out].

ee

Contracts reportedly signed on Friday re TGT.....though I'm not sure all the figures quoted can be relied upon  ;-):

Malaysian firm Bumi Armada snd Vietnamese-Russian joint venture Vietsovpetro have been awarded contracts to operate a new oil field called White Rhinoceros in the Cuu Long Basin of coastal Vung Tau City.

The Hoang Long Joint Operating Company signed three deals with the Malaysian firm and the joint venture Friday (Nov 20), which established an alliance to run the field also called Te Giac Trang (TGT) for seven years, with an option of yearly extensions to 15 years. The deals have a total worth of US$700 million. Bumi Armada would be responsible to supplying alliance with a floating production storage and offloading vessel which has a capacity of 45,000 barrels of oil per day and a storage capacity of 100 million barrels of processed oil with water and gas injection, said Hoang Long’s chief executive officer Ngo Huu Hai. He said the joint venture would conduct offshore installation and subsequent maintenance of the vessel to operate the field.

In reply to emptyend (post #25)

...slightly more accurate figures in the Upstream version of the story..... capacity of the FPSO will be c1mn bbls (c 20 days phase 1 production)

ee