Vietnam Assets

In reply to emptyend (post #26)

Thanks for the presentation link & comments on the "sentiment" thread, ee. However, I am wondering how the company is progressing with preparation for development of TGT? I thought a rig contract was due to be signed by now to do the development drilling?

Cheers,

Mark

In reply to marben100 (post #27)

I am wondering how the company is progressing with preparation for development of TGT? I thought a rig contract was due to be signed by now to do the development drilling?

That is one of several likely news items that I would categorise (advisedly) as "imminent". They put the tender docs out in November.

ee

In reply to emptyend (post #28)

On the rig front, the recent RNS said that tenders for the two rigs were received on 14th Jan and were being evaluated......

......I doubt that it is a coincidence that Rigzone's database lists both PV Dilling I and PV Drilling II as currently being "ready stacked". Either that or they've just been docked during the monsoon. Whatever is the case, since the monsoon should end around the end of this month, I think rig contracts can't be much more than a week or two away.

ee

ps....worth noting from here that the rig utilisation rate in South East Asia is one of the lowest at 67%, with 58 of 87 rigs currently being used. No doubt some of this spare capacity is weather-related.

What the neighbours are up to..........delaying the 'complex' basement development it seems.

http://www.upstreamonline.com/live/article206060.ece?

The $1 billion Hai Su Trang (HST) and Hai Su Den (HSD) oil project in Vietnam has been delayed by 12 months while the development is redesigned

The Canadian company said it had chosen to write off a number of exploration and appraisal wells in the HSD basement area, all of which are outside the main development area. These wells had hit hydrocarbons but were not commercial.

 Talisman said it was reviewing the timing of sanction for the HST field and an early production scheme for the HSD discovery in Block 15-2/1 in the Cuu Long basin.

Chief executive John Manzoni said a planned wellhead platform for HSD would be slimmed down, but still tied in to the HST field, and still be used as an EPS “to fully assess the reserves in this complex fractured basement”.

“We have pushed back the project by 12 months, and it is unlikely we will sanction in 2010 as previously planned.”

“This is disappointing but I would rather delay sanction and get the right development scheme.”

In reply to oilretire (post #30)

Sceptics might think that there would be other, more relevant, reasons for the delay - to do with developments planned to the south. With a production hub being provided at H1 on TGT, and another probable in phase 2 at H4 (IIRC - perhaps also serving TGD), using the TGT infrastructure must surely be reconsidered if HSD/HST is being slimmed down?  A delay must be prudent if a change of partners is on the cards?

ee

Good call on the shared infrastructure, ee:

From Upstream:

http://www.upstreamonline.com/hardcopy/news/article214958.ece

Shared FPSO on cards off Vietnam

Two joint operating companies in Vietnam are in discussions about a potential agreement to share a floating production, storage and offloading vessel that one of the operating groups is already building......

The Thang Long operating company and its Hoang Long counterparts are in negotiations on the terms of such a deal, but it will take some time before it can be completed, said sources.....

Thang Long had planned to put a standalone FPSO on its two fields, but PetroVietnam instead wants Thang Long and the Hoang Long group to use the same FPSO that Hoang Long is about to start building at Singapore’s Keppel Shipyard.....

In reply to Gooseman, post #32

The Thang Long operating company and its Hoang Long counterparts are in negotiations on the terms of such a deal, but it will take some time before it can be completed

Thanks. Worth noting the timeframe though - I'd guess the terms might get rather tight for Talisman in the event that the FPSO also has to handle output from TGD ;-)  [though to be fair, that would be phase 2 of TGT, so the FPSO use wouldn't arise?]

ee

ISTM that the VN govt will be rather keen to increase their US$ earnings, to help bridge their trade gap: http://www.ft.com/cms/s/0/7fc0cc76-aab9-11df-80f9-00144feabdc0.html

Vietnam must have hoped that Tuesday’s devaluation of the dong would stem the downward pressure on the currency, but on Wednesday it was trading even lower on the black market suggesting the possibility of further devaluations.

The central bank moved to devalue the dong by two per cent to 18,932 against the US dollar in a bid to stem the country’s ballooning trade deficit. On Wednesday, however, the dong traded even lower in the black market, falling to 19,480 from 19,320 the previous day...

Won't do Soco's popularity with the VN govt any harm, if Soco brings home the bacon. Hope it might increase keenness to expedite development/production licensing, as and when appropriate, thus increasing VN's future dollar earnings & facilitating inward investment. ;0)

Could it also be an ideal time for VN's Chinese neighbours to "come to the rescue"?

Cheers,

Mark

Half year report out this morning......I'm sure it is quiet on here because everybody is reading it...:

http://www.investegate.co.uk/Article.aspx?id=201008260700196579R

The drill bit edges ever closer - TGD:

Drilling of the TGD-2X appraisal well is continuing. The well is currently at approximately 4,390 metres and is anticipated to reach the objective section within days.

Nganga:

The Nganga-1 well spudded on 15 July 2010 and following various mechanical and software issues on the rig is expected to reach the objective reservoir shortly. Testing, if required would add another two to three weeks.

A very strong outlook statement including:

There is no question that the drilling programmes currently underway offer more upside potential than any experienced previously by the Company.  Should we have success in all phases, the Group could expect net reserves to more than quadruple.  Even with modest success, there could be a significant impact on reserves.

Regards

Impvesta

In reply to Impvesta, post #35

..I'm sure it is quiet on here because everybody is reading it...:

in my case it is quiet because I was out yesterday and then got stuck on a train until 2am........only just surfaced but, strangely enough, my skip-reading of the RNS took me to exactly the three passages you highlighted! In the context of those, little else much matters for now....

regards

ee

Presentation on the website. Pretty well as before EXCEPT P.11 Structural/Stratigraphic Map

TGD-FAN-1X
Drill Q2 2011

TGD-3X
Drill Q3 2011

Longer sale horizon in prospect them....assuming of course!

In reply to davjo, post #37

Good spot - haven't yet caught up.

Longer sale horizon in prospect them....assuming of course!

I don't think there are any conclusions at all to be drawn on sale timing. It will be when it will be. As we know from Dana*, every E&P has a forward drilling programme - and sometimes it is prudent to ensure it is laid out well in advance in order to ensure that discussions start from a sensible point.

*See this post

ee

Ohh come on ee ,

You''ve seen how cheaply people want to buy exploration prospects. Do you really think a deal will be done without proving up 600mbbl oil when Soco have control of the shareholding?

The changes I noticed are 600m bbl instead of 300mbbl fan potential page 17 and the full 58.5% TGD working interest page 7

The TGD fan will get drilled with SIA on board if the news from the current well is positive.

http://www.socointernational.co.uk/temp_downloads/f145p92u116k79m117l117m64x22k125c84h68r105e50j18r64/10.0826_Half_Year_Results.pdf

repobear

In reply to repobear, post #39

Do you really think a deal will be done without proving up 600mbbl oil when Soco have control of the shareholding?

Yes of course!   I wouldn't have said it otherwise.

What they WON'T be able to do is to buy it "on the cheap" - but it doesn't necessarily follow that the strategy that maximises shareholder value demands waiting for TGD-3X to be drilled before a sale is done, even if that might appear to be the most likely on a superficial external inspection of the facts!

There are plenty of scenarios under which an earlier sale might make sense, even if one wouldn't want to specifically bet on any one of them actually happening.

ee

ee,

Well it does necessarily follow that until someone has succesfully poked the drillbit into something as massive as the TGD fan a couple of times, at least, little value wil be attributed by potential buyers to the fan.

The journey Soco has been on in Vietnam has been a long one. The fan could treble or quadruple the reserves, but noone will pay anything like it could be worth until the drillbit has done the business. Like Anne-Marie is for Dana, but much more significant. Another year on a journey of a decade, is nothing to grab the main prize, if that is what it is.

Only the drillbit can close the valuation gap to a degree large enough for the deal to be done.

Disappointment with the current TGD drill and the lapsing of the license is the only scenario under which Soco VN gets sold in the next year, imv

Correspondingly success wih Anne-Marie looks to be th best hope that Dana have of squeezing past the 20 quid mark.

repobear

In reply to emptyend, post #40

it doesn't necessarily follow that the strategy that maximises shareholder value demands waiting for TGD-3X to be drilled before a sale is done, even if that might appear to be the most likely on a superficial external inspection of the facts!

Agreed. Others should note that a lot of wells have been drilled in the fairway and the data set compiled over the whole area will be pretty elaborate by now, hugely improving the understanding. Bearing in mind that TGD-2X could provide a fairly reliable pointer to the fan channel prospectivity, an earlier deal couldn't be ruled out.

Hi davjo,

Well you've agreed to differ with ee on how the market values Dana's exploration prospects. Are you now saying that a share of an oil field worth potentially upwards of $10bn can be sold on 'a fairly reliable pointer'? Can you tell me how this might work.

If that's the case why haven't the Vietnam government granted the license for the area yet?

The stock market doesn't place much value on exploration otherwise Soco's price wouldn't be languishing where it is. Likewise the trade buyers don't place much value on them. The more I read Soco's presentations the more I get the feeling that management just don't give a monkeys any more.They'll just carry on proving up, and even producing from the assets, until someone makes them an offer they can't refuse.
,
I can see Vietnam being sold H1 2012. Africa is years away, imv, but personal matters might kick in before then.

repobear

I really can't see a deal being agreed without the drill bit providing more data on what's in the fan.. TGD-3X is a different matter.

I can't think of one scenario in which we could get anywhere near full value without doing so; and that includes a buyout from extremely knowledgable partners...

Buffy

In reply to repobear, post #43

Repo

Well you've agreed to differ with ee on how the market values Dana's exploration prospects.

Have I? I think I've expressed a similar view as SirL that KNOC's bid includes an element for explo. I've not tried to guess what that is, nor have I tried to guess what the 2Ps are worth.

Are you now saying that a share of an oil field worth potentially upwards of $10bn can be sold on 'a fairly reliable pointer'? Can you tell me how this might work.

If that's the case why haven't the Vietnam government granted the license for the area yet?

Not sure such a sarcastically phrased question deserves a response really, nonetheless... Firstly, I did not say an earlier sale was likely, indeed I don't think one is at this point. I simply agreed with ee that one couldn't be ruled out. Let me reiterate there's a world of diffence between wildcat drilling and explo in an established basin where a couple of hundred wells have been drilled and a billion plus barrels produced. As to TGD, the 2X well has the potential to be hugely significant in de-risking the fan...hopefully demonstrating that the nearby fault is not a sealing fault. As you well know, the licence only becomes relevant with 2X success. In the case that it is successful, you don't seem to have grasped the significance of the government granting the whole area up to and abutting TGT, a development licence. Yes, that means 20 years. That is a very different kettle of potentially valuable explo fish in its own right.

ISTR that Soco had a shortlist of about eight potential suitors. Each one of those is going to have a varying explo/appraisal view ranging from bear to bull. Out of those, it's always possible the most bullish might fancy striking early. Might seem unlikely but given the above, as said, one couldn't rule it out.

In reply to davjo, post #45

I did not say an earlier sale was likely, indeed I don't think one is at this point. I simply agreed with ee that one couldn't be ruled out. Let me reiterate there's a world of diffence between wildcat drilling and explo in an established basin where a couple of hundred wells have been drilled and a billion plus barrels produced. As to TGD, the 2X well has the potential to be hugely significant in de-risking the fan...hopefully demonstrating that the nearby fault is not a sealing fault. As you well know, the licence only becomes relevant with 2X success. In the case that it is successful, you don't seem to have grasped the significance of the government granting the whole area up to and abutting TGT, a development licence. Yes, that means 20 years. That is a very different kettle of potentially valuable explo fish in its own right.

ISTR that Soco had a shortlist of about eight potential suitors. Each one of those is going to have a varying explo/appraisal view ranging from bear to bull. Out of those, it's always possible the most bullish might fancy striking early. Might seem unlikely but given the above, as said, one couldn't rule it out.

Perhaps I should make it clear that I am in 100% agreement with davjo on all the above. For some reason people seem to be looking for differences where none exist.

Well you've agreed to differ with ee on how the market values Dana's exploration prospects.

Have I? I think I've expressed a similar view as SirL that KNOC's bid includes an element for explo. I've not tried to guess what that is, nor have I tried to guess what the 2Ps are worth.

Similarly I don't disagree with either davjo or SirL that KNOC have probably included something for the explo potential in Dana - though I have simply indicated that they haven't included enough ....and would suggest that the list of major wells planned for the coming year goes a long way to bearing that out!

ee

ps.....there are some studied ambiguities in Ed Story's comments here which seem to me to be clearly pointing to the possibility of a deal late this year or, more likely, next year at some point! If SOCO found themselves in the happy position of sitting on c 700mn bbls of fresh reserves awaiting appraisal and development in a few months time, would they necessarily want to sit on them whilst waiting for a weather window to drill the fan, rather than sell the whole thing to someone who found the seismic (and the potential fan upside) compelling?

I really don't think one can be certain either way!