Analysts reports

Thursday, Aug 06 2009 by
27

This thread is intended solely as a place to discuss analysts' notes on SOCO.


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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 »

Share Price (Full)
327.1p
Change
4.4  1.4%
P/E (fwd)
8.3
Yield (fwd)
5.4
Mkt Cap (£m)
1,071



  Is SOCO International fundamentally strong or weak? Find out More »


736 Posts on this Thread show/hide all

peterg 18th Jun 717 of 736
7

In reply to emptyend, post #716

Regarding Kenobi's question about why we aren't producing 60k in total, when we know that can be done, I suspect the answer may be as mundane and irritating as insurance on the FPSO.

That had been my assumption, but ES appeared to say this wasn't an issue, and that there were no issues other than oil in the pipe, when I asked him about it at the end of the meeting - it was a very quick Q&A, as he was being called away to the board meeting. I will see if I can find out anything more.

Peter

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kenobi 18th Jun 718 of 736
5

That had been my assumption, but ES appeared to say this wasn't an issue,

I can confirm this, he went on to say that the owners of the fpso were happy with higher production as they get paid higher fees.  He seemed pretty clear to me that this wasn't the issue.     I think if the issue issue was insurance or owner permissions, (as has been reported on boards in the past) he would have said when asked,  rather than saying we don't have production to bring on line  ( within the limitations of production plans / what we can agree with the joc ). If we accept that it is not to do with insurance/ ownership/ boiler plate numbers, what can the reason for not producing 60k be ? Perhaps it just is that we need more wells, like Ed told us. If they have a production plan, which they are following to maximise recovery rates (agreed by all the partners), it may well be the case that this requires opening up zones in some sequence. Whether the limitation is geological or political or even the insurance etc reasons that ES denied doesn't matter too much in the short term. What matters is what can be done to remedy the situation. Remember this is the JOC that was producing tgt 1 at about 25k, before tgt 2 came on line. We always assume soco are right and PV are wrong, perhaps the more conservative approach to production rates is the right one (at least to maximise recovery rates ?)

k

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emptyend 19th Jun 719 of 736
16

I can confirm this, he went on to say that the owners of the fpso were happy with higher production as they get paid higher fees.....what can the reason for not producing 60k be ? Perhaps it just is that we need more wells, like Ed told us. If they have a production plan, which they are following to maximise recovery rates (agreed by all the partners), it may well be the case that this requires opening up zones in some sequence.

OK - I've now made my own enquiries on this point. The above is broadly correct, save that one point is omitted (highlighted below). The situation is this:

  1. As Ed said in his presentation, the drilling and extended testing of TGT-10X on H5 meant a consequential deferment of a number of planned development wells into 2014. Production from existing wells/horizons has declined as expected, but the wells expected to replace those declines are now later than expected - and are being drilled now. No new wells have been drilled for 18 months as a result of drilling TGT-10X and being unable to source additional rigs last year (a situation remedied this year by having up to three rigs working). I do NOT infer from this that they would be unable to produce more than 40k bopd if required (though of course it isn't clear precisely what the productive capacity from existing wells currently is). But, importantly, there are other production-constraining factors too:
  2. Production is sold 3-4 months ahead of actually being produced, so "fiddling around" with production levels to fill relatively short-term opportunities might mean they were forced into either panic sales of an "excess" or might have to curtail production anyway if the FPSO filled up some time before the contracted off-take time. It is therefore operationally easier to keep production steady and to hit a known and pre-determined off-take schedule.
  3. The FPSO has a rated capacity of 55k bopd, based on which the FPSO owner has committed contractually to operating safely with over 98% up-time. The owner sees this contractual obligation as potentially being prejudiced by a higher production rate and so wants to raise the charges if more is actually produced. There have been various discussions on this matter, but the conclusion has been that the partners cannot reach agreement on such additional payments, presumably because the commercial terms would signficantly raise the cost of producing the marginal increment over 55k bopd....eg perhaps the owner is seeking an increased tariff on all of the 60k production in compensation for taking the additional 5k and accepting the additional risk to his up-time obligations (the exact commercial terms aren't disclosed to me, for obvious reasons). Accordingly, it has been agreed that the partners will seek to reach agreement on the payments issue when the FPSO capacity issue has finally been resolved by further testing.

The contractual/commercial/partnership issues described in the last point above are the missing link in Kenobi's puzzle. My personal opinion is that the FPSO owner is shooting himself in the foot in looking for higher fees, because that will simply make it more likely that all production will get switched to Bach Ho. 


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rhomboid1 19th Jun 720 of 736
4

Thanks EE , very informative, the slightly "dog in a manger attitude" implied by the above is all the more odd as they only have 5 FPSO's ;

http://www.bumiarmada.com/102_119_117/Web/WebPage/List-of-FPSO/List-of-FPSOs.html

You'd have thought trying to deter any BH tie back plan would be high up on their priorities as it is one of only three double hull vessels they own.

Alternatively they've seen day rates for similar vessels rise markedly since they signed up with the JOC and they might be more than happy to redeploy?

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peterg 19th Jun 721 of 736

In reply to emptyend, post #719

The contractual/commercial/partnership issues described in the last point above are the missing link in Kenobi's puzzle. My personal opinion is that the FPSO owner is shooting himself in the foot in looking for higher fees, because that will simply make it more likely that all production will get switched to Bach Ho.

Thanks EE, that makes things a lot clearer! As you say - the FPSO owners attitude seems mistaken - unless they think they can easily release it, which is possible.

Peter

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kenobi 19th Jun 722 of 736
1

Thanks EE,
Does put a question mark over what we were told at the agm, and highlights that if they can't agree to run it at 60k, not much point spending effort and money upgrading it to 70k, unless a deal can be done in advance.

I wonder if the sudden change over the last 12 months, putting bach ho tie in back on the agenda is down to the terms being demanded by the fpso owners ? Does indeed sound like a counter productive stance. Perhaps they should be compromising by paying them the a similiar tarrif but relaxing the uptime requirements at least for an initial period while any issues were teased out.

It's a shame we didn't get this reply to Peter's question at the AGM,

K

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emptyend 20th Jun 723 of 736

Does put a question mark over what we were told at the agm, and highlights that if they can't agree to run it at 60k, not much point spending effort and money upgrading it to 70k, unless a deal can be done in advance.

You seem determined to take a negative view. I don't see why you think there is a question mark over what was said at the AGM - you seem to have got 90%+ of the full picture, but perhaps not understood how it fitted together.

As for the other bit, you will find that simple maths tells you that 70k gives 3x the incremental production that 60k does and that, ceteris paribus, increased costs/tariffs would have a lower per barrel impact.

Not for the first time, your conclusions seem not to follow from the facts.

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kenobi 20th Jun 724 of 736
3

Could be I'm just not understanding, or could be I am,

The facts are these as I understand them,

1) production is at 40k for our bit,
2) we don't know what talisman production is, but it's quiet possible it's below 15k, as they weren't producing that when we wanted to test.
3) Peter asked, why aren't you producing 45 k on the fpso ? - we were told they didn't have capacity due to lack of drilling, because of h5, so not enough capacity.
4) after the agm, speaking to ES, I specifically asked him if there were any other issues with the fpso, insurance, fpso owner consent etc. I was assured, and I'm sure that there were others there, that no there were no issues the fpso people were completely on side, as high production meant higher fees for them.

5) now we hear the fpso owners and joc are unable to agree terms on operating above 55k.

so
regardless of whether 3 is true, (and goodness knows you've questioned it in posts here since the agm), 5, the no deal with fpso owners, is pretty much in contradiction with 4, that the fpso owners are completely onside, yes in everything except agreeing a deal with the joc.

Now last agm we were told of extending capacity to 60 then 70, and I think even the agm before that there was talk of it. So I'm sorry if I'm missing the point, but I've become very nervous about the things we are promised that soco cannot control. I think PV have control of the situation, and we are left as minor partners, going along and trying to convince them to do what we would like. The fact that after all these years we're still not getting paid for the liquids in the cnv gas, shows that PV aren't particularly interested in soco or in treating them fairly. So I'm happy to hear your positive views of how capacity will be increased at the fpso and then they'll build a pipe line, I, and mr market will believe it when they rns it. Because while it's entirely possible that you're right, it's by no means a certainty, and we're hearing it from the monkey not the organ grinder.

I don't mean to be negative, I left the agm thinking that an increase to 60k was in the bag by the next agm, possibly to 70k even, I don't think that now. As for the no brainer of the pipeline, we'll see if PV think its a no brainer. Ironically the fpso empasse could well be due to the owners wanting an extension to the lease as a condition of increasing capacity, and the joc wanting to do something else. The worst case scenario would of course be to not increase fpso capacity and not get agreement on pipeline/ bach ho .

I would be nice to conclude that they'll do a deal on fpso at 60k, spend money upgrading and then move to 70k. I've heard this story before though, so I'm going to need a bit of convincing.

K

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emptyend 20th Jun 725 of 736
9

In reply to kenobi, post #724

4) after the agm, speaking to ES, I specifically asked him if there were any other issues with the fpso, insurance, fpso owner consent etc. I was assured, and I'm sure that there were others there, that no there were no issues the fpso people were completely on side, as high production meant higher fees for them.

5) now we hear the fpso owners and joc are unable to agree terms on operating above 55k. 

I wasn't party to that conversation, so don't know precisely what was said. However, you've referred somewhere in one of the posts above to the partners needing to reach agreement - was that something that was said? 

I should also point out that the "lack of agreement" relates specifically to whether to pay the additional fees needed to produce at 60kbopd. You simply cannot just jump to the conclusion in your point 5), which is very much broader and open-ended.

while it's entirely possible that you're right, it's by no means a certainty, and we're hearing it from the monkey not the organ grinder.

Firstly, I am most definitely nobody's monkey.

Secondly, I invited both you and Peter to ask the "organ grinder" yourselves - and you seem not to have bothered to do so (or at least haven't indicated here that you enquired!). I therefore think it is more than a bit rich to criticise me for doing something you couldn't be bothered to do yourself, despite having a perfect opportunity to follow up on your own discussions from the AGM.

I've become very nervous

In that case you should be following the advice of someone elsewhere and selling your shares. 

People on bulletin boards seem to have some sort of bizarre view that the oil exploration business is a simple one - you get prospects & money,  you drill a few holes, you find some hydrocarbons - and it is immediately "happy days". The reality is that there is a highly complex web of partners, governments, contractors, and many others, all of whom have to pull broadly in the same direction and avoid the pitfalls of geology or the predations of competitors. NOBODY in these processes has precisely the same agenda as another party - which is why NOBODY is actually in control of the process (save that operators have more control than non-operators.....and in the case of SOCO International (LON:SIA) 's JOCs this is decided by voting power between the three parties). It therefore comes with the territory that "sh*t happens" in various guises. What matters most of all is that partnerships should operate for their common good - and in the case of TGT, the partners have a shared common interest in raising production if this can be done a) safely b) at reasonable cost and c) without prejudicing overall recovery from the field. And SOCO's management have a shared common interest with shareholders, by virtue of their own very substantial stakes.

This may not be 100% perfect - but it is a helluvalot better than the profile of the majority of companies in the sector!

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peterg 20th Jun 726 of 736
6

In reply to emptyend, post #725

Hi K,

Having been party to the conversation with ES after the AGM, I have to say that I find the answer that EE got from the company pretty convincing. As someone who had intended to enquire further by email, but was slow about doing so, I'm very grateful to EE for eliciting the response. While I agree that there is an apparent difference between what we were told at the time and the later response to EE, I think you also have to remember that ES's response was a very rapid one made as he was supposed to be leaving for the board meeting. I'd be inclined to attribute a lot more weight to a more detailed answer written under presumably less pressured circumstances. It's also strictly true that, as ES said, there is nothing stopping them producing more, from the ownership/regulation side - they would just have to pay for it at rates that may seem prohibitive for a relatively small quantity. It makes entire sense that they would want to get a better feel for the total possible throughput before agreeing final terms, particularly when they are still working on the best ways of managing the reservoir to maximise rate and recovery.

Peter

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kenobi 20th Jun 727 of 736
5

I wasn't party to that conversation, so don't know precisely what was said. However, you've referred somewhere in one of the posts above to the partners needing to reach agreement - was that something that was said?

Nope that's something I said based on experience and my skeptisim that the no brainer will be a no brainer for PV,

I should also point out that the "lack of agreement" relates specifically to whether to pay the additional fees needed to produce at 60kbopd. You simply cannot just jump to the conclusion in your point 5), which is very much broader and open-ended.

well,  ok pt5 should be can't agree on a charging structure for operating above 55k,  that's what I meant to write,  my mistake.

re monkey,  I must apologise if you thought I was refering to you,  no not at all,  in no way at all,  I didn't mean that  at all and I'm grateful for the enquiry you made.   I was referring to SOCO,  and the organ grinder is PV.

yes you did invite us to enquire futher,  I didn't because I assumed what we were told at the AGM was the whole story.  It seems it's not.  Again,  I'm not critising you for anything,  I apologise if you though I was. 

I had no reason to follow up because I'd been told one thing pretty clearly at the agm,  as I seem to find increasingly with soco over the last few years,   it's not always the whole story. 

Re all rest of your post,   I completely agree,   and that's why I'm being a little skeptical about the things we're being told in full knowledge that they're telling us one thing,  and often in the past and sometimes in the future it hasn't / won't happen,  perhaps for reasons that your suggesting in your last paragraph.  

And yet you seem to not be considering those things and thinking that I'm taking a negative few.   I'm not,  I'm taking a realistic view taking into account some of the things you yourself mention.  If you wish to base your investment decision on the blue sky projections straight from the agm,  then fine,   I'm trying to look at what they're stating as objectives,  and consider the issues and what they are likely to achieve. 

I don't see why in answer to Peters question we couldn't hear that there was an agreement needed between the joc and the fpso owners.   I certainly don't understand why it wasn't mentioned in more detailed discussions afterwards.   

I agree that soco are better than most companies,  but you can't believe everything you hear,   you need to take your own view,  I'm less positive than you it seems,   I'm probably more positive than many others !

This non agreement on tarrifs for production above 55k,  does impact on the whole tie in debate, in ways I've already suggested above,  probably making it more likely,  which is another consideration.

K

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kenobi 20th Jun 728 of 736
3

In reply to peterg, post #726

Hi Peter,

yes I'm grateful to ee for finding this out, and as I explained I didn't mean to insult him in any way.
I would suggest that his answer is the correct one, and what we were told can be disregarded.
I think you are incorrect in your recollection re ES giving a rushed answer on leaving, that was to the question about Cabinda, I asked about the fpso, much before then and some other questions were dealt with after that. I am finding it harder to reconcile the two views as I distinctly remember him telling us they were on the same page/in agreement as they'd get higher fees. I think if he'd said, yes they want to do it to we just have to make a deal on the tarrifs, that would have been consistent with what EE has reported today.
Unfortunately these misunderstandings happen, I'm not perfect (don't tell my wife), perhaps my recollections are incorrect/ clouded, the new info seems considerably at odds with what I came away with. It wouldn't have been unreasonable to mention this agreement being needed in response to your question either would it ? Ie , well we can't produce more for 2 reasons, we don't have the capacity, and the joc need to finalise a commmercial deal with the fpso owners.

Still we are where we are,

K

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emptyend 20th Jun 729 of 736
6

In reply to kenobi, post #727

Kenobi,

re monkey,  I must apologise if you thought I was refering to you,  no not at all,  in no way at all,  I didn't mean that  at all and I'm grateful for the enquiry you made.   I was referring to SOCO,  and the organ grinder is PV. 

Thanks for the clarification - and apologies for grabbing the wrong end of the banana ;-)

I don't see PV as the organ grinder at all. One of the unique features of the JOC structure in VN is that there is no "organ grinder" at all - though plainly PV have multi-layered influences and relationships with the JOC though their various arms and entities, as well as with the government.

that's why I'm being a little skeptical about the things we're being told in full knowledge that they're telling us one thing,  and often in the past and sometimes in the future it hasn't / won't happen,  perhaps for reasons that your suggesting in your last paragraph.  

And yet you seem to not be considering those things.....

I don't think that is quite right. Of course I consider them (which is why I thought that you had a reasonable point and why I made my own enquiries). What I think I do have (with respect) is a better perspective of the complexities of some of the issues - thanks in part to my other role. In particular, I try not to leap to conclusions such as "if XYZ doesn't happen as has previously been indicated then that is because management weren't being honest". Such conclusions are almost invariably wrong.

Shareholder frustrations at falling or "undervalued" share prices....or other matters.... are entirely understandable. But it is important to understand the full context, if one can. 

With regard to your reported incompleteness of the explanation you were given at the AGM, I might also add that I think Ed does tend to gloss over some areas of detail with a pretty broad brush. Perhaps not unreasonably? 

It might also be the case that the situation was (is?) still a developing one, in which case it is frequently very difficult for someone to give an answer which, ex-post, can be considered to be 100% complete. I am aware that many of the negotiating points within and around the JOC are pretty complex and inter-linked - and so it might be that the situation will change/improve if certain other things were to occur or be agreed. But we'd only be guessing at those.

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kenobi 20th Jun 730 of 736
2

ok glad to clear up the mis understanding,

I don't doubt that you have a different, probably better clearer view of things, but I find sometimes not just you, but we as the soco BB, have a very optimistic view of the future, where you say ....

"if XYZ doesn't happen as has previously been indicated then that is because management weren't being honest". Such conclusions are almost invariably wrong

Well  I don't want to argue if they're honest or not,  but to take this example, it seems to me at least,  well shall we say,  broad brush,  and missing what could turn out to me some pretty important detail.  

The problem with these complex issues is that they can hang about for year after year,  like the liquids in the gas issue,  really it's come to the point that is just bad faith,  and you shouldn't be treating partners like that.  Realistically what would this cost PV a few million quid a year,  of which they'd get a third back ?

I think you're being very charitable saying that the situation is/was changing.   What are you suggesting that they did have joc / fpso owner agrement on tariffs and now they don't ?   It's clear from what you've told us today they don't now,  and they didn't then so at best it would have been a wip.  There is no doubt ongoing negotiations,  in which case I,  (and maybe it's just me)  would have been happier if they'd said,  ok  we've not got much more capacity behind the pipe, but there's also an agreement that we're negotiating with the fpso owner.  Rather than what seemed to me to pretend it's all hunky dory.   Following on from this, they could have said,  we've not formalised this deal yet,  we're weighing our options,  and to be honest at the moment we're thinking of the pipe line option because we think we can strike a better deal with them,  and some of the money then goes to PV which might give us leverage to do a grand (ish) deal,  and who knows maybe we'll even sort out the gas issue you've hassled me about for the last 5 or more years (you git  -  and just to be clear this is ed story talking to me !).

Just to be clear my frustration isn't re an low share price although I guess it is that really because the market is valuing soco quiet reasonably.  It's in the lack of progress on reserves upgrades and production increases,  and things they keep telling us which don't happen.   As I've said before I think SOCO are a great company and the way they got tgt 1 and 2 into production on time, albeit producing lower volumes than expected was a great job.   BUT

you have to look at it from the perspect of they promised XYZ last year we've got X .5 Y  an no Z,  this year they're promising ABC,  realistically perhaps we'll get AB but no C. 

I'm not saying they're lying,  though on the production issues,  there is a bit of omission there.   

You just have to temper your expectations of them delivering on promises based on history. 

I think in your view SOCO have much more influance than I believe they have.  They provide the capital so they can veto expenditure,  unfortunately  its usually the last thing they want to do,  like the cnv well,  it's usually soco pushing to do it  for a few years before it happens. 

Maybe PV are right to be conservative and soco are wrong ? 

probably the truth is that they just have different objectives. 

Anyway enough,  thanks for looking into this issue,  I do wish you'd got a different response re this issue,  but that's life.   We have to hope that the management can push the joc in the direction of increasing production whether by the fpso or the pipe line or some other scheme.   We know nothing will happen on the pipeline for a year at least until H5 is ready to produce so lets hope something can be agreed on the fpso before then. 

K

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emptyend 20th Jun 731 of 736
9

In reply to kenobi, post #730

I don't doubt that you have a different, probably better clearer view of things, but I find sometimes not just you, but we as the soco BB, have a very optimistic view of the future, where you say ....

"if XYZ doesn't happen as has previously been indicated then that is because management weren't being honest". Such conclusions are almost invariably wrong

Well  I don't want to argue if they're honest or not,  but to take this example, it seems to me at least,  well shall we say,  broad brush,  and missing what could turn out to me some pretty important detail.

I am not going to sit here arguing the toss on this, but if anyone has the slightest thought that any management is being dishonest with investors, then they should sell the shares. Period.

Not giving the 100% complete version of a story, however, is a different matter entirely - because it can very often be very clearly contrary to shareholders' own interests for sensitive commercial/partnership issues etc to be advertised in public. And I'm not going to sit here and argue that point either - it is simply a fact.

Either you trust management to act in the interests of shareholders or you don't. I do in SOCO International (LON:SIA) 's case, in large part because management are very big shareholders themselves. It is completely pointless popping up from the back seat and asking "are we there yet?" every two minutes. And it is completely pointless hiring a taxi and then complaining to the driver that they are taking a different route to the destination than the one you would have expected - because they have The Knowledge and you, as a mere passenger, do not.

I'm not going to keep on debating a matter that essentially resolves to a question of trust. If you no longer trust the management, then have the courage of your convictions and sell the shares.

Have a good weekend.

ee

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kenobi 1st Jul 733 of 736
3

http://www.wkrb13.com/markets/328646/numis-securit...

Numis re iterates add , and a round up of some other analysts,

K

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MadDutch 3rd Jul 734 of 736
8

Financial Times, 2nd July.

Oil Explorers Hit Rock Bottom. My contribution to the debate.

http://www.ft.com/cms/s/0/a95e039e-fbc0-11e3-ad9b-00144feab7de.html?ftcamp=crm/email/201473/nbe/EnergyMining/product#slide3

Guy Chazan and Michael Kavanagh have today presented a list of misery but have missed the enormous success of FTSE 250 explorer and producer Soco International, with its TGT oilfield offshore Viet Nam. It had a 20% free cash flow in 2012/13, and since this is a company that pays out 50% of that cash as a dividend or tax efficient return of capital, paid a November 2013 10% dividend, which the market missed by failing to see the divi and ticking the capital return box instead.

In 2013/14, the dividend will be 5% (and probably still the biggest % of any oil producer, including BP and Shell) due to a delivery bottleneck at the FSPO Floating Storage Production and Offloading vessel; a problem being solved as I type this. In 2013, Soco drilled the most successful well ever in Vietnam; tested at over 27,000 barrels of light crude per day, and that will be in production in 2015 by pipeline to Bach Ho or another FSPO.

Frankly, I wonder at the competence of the journalists that miss stories like this.

I also thank them, it is very nice to buy shares at today’s depressed price, so thank you, Michael, Guy and others. That is how serious investors make serious money; Buy low, collect big dividends which cannot be taken away by market falls and sell high when the lazy market finally wakes up. Personally, I hope it never does, another 10% divi is probable in 2016 with the 27,000 barrel well in production and many more being drilled now, 10 in the next year extending the edges of TGT. Furthermore Soco’s African ventures are not included in the share price, so any success there will be cost free.

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emptyend 8th Jul 735 of 736
15

In reply to MadDutch, post #734

You may remember that it was Michael Kavanagh who had a large article printed in the FT which purported to be a report on SOCO International (LON:SIA) 's interim results in 2012 - but in fact containing only c. 30-40  words on the figures with the other 94% of the available space apparently being consumed by the contents of a WWF press release and a huge photo of a hippo.

I complained to the Editor in the following terms:

As a subscriber to the FT, I am appalled that the FT could publish such a slanted and irrelevant comment today on SOCO International’s Interim Results (p16, centre).

Michael Kavanagh would appear to have some sort of personal environmental agenda which has led him to:

a)       focus his whole piece on a part of SOCO’s business that demonstrably (from the numbers in the article) represents less than 1% of company assets, and which will represent 0% of revenue for at least the next 5 years

b)       repeat inaccuracies peddled by the WWF. There is NO “equatorial rainforest” or gorilla habitat on SOCO’s Block V in DRC and Kavanagh’s repetition of this suggestion is simply 100% wrong.

You should provide an immediate and prominent retraction (on p16 of the print version) of the erroneous claims about equatorial rainforest and gorilla habitat. Kavanagh has no business promoting ill-researched untruths from environmentalist fund-raisers and giving them fresh currency and unwarranted authority by publishing them in the Financial Times.

Furthermore, I do not buy the FT to have inaccurate propaganda shoved down my throat. I buy it to learn the details about company results. Your Companies Editor has no business devoting so much space to inaccurate irrelevancies and ignoring the very real growth in earnings that SOCO is now making in Vietnam. My own estimate is that SOCO will be making about $150mn post-tax (after production increases that have already occurred in July) in the second half of 2012, and I also anticipate that further production increases in the coming months will take profits towards $500mn pa post-tax from 2013 onwards. Surely these are matters of importance to your readers?!

I would very strongly suggest that the FINANCIAL Times should focus its future “results” articles on the financials – though frankly I would have hoped that it was wholly unnecessary to point this out to you!

I look forward to seeing your personal actions on this as I will be cancelling my subscriptions in the next few days if a positive response is not forthcoming.

Of course I turned out to be wrong about a production uplift in 2013 (even before the big Nganzi impairment cost) but the principle was pretty clear!

The response of Kavanagh's editor was to allow him to write his own rebuttal to my complaint - which was again replete with inaccuracies and sought to blame other editors, so I listed those inaccuracies for his editor and added:

It is certainly correct that the WWF and others have raised concerns about the environmental impact. However, they have repeatedly sought to lie via the internet about the impact on gorillas in order to raise funds from a gullible public to counter the claimed but non-existent “threat”. There is no intention whatsoever by the company to do any work involving the gorilla habitat or the equatorial rainforest (as the company has made crystal clear at every available opportunity over several years) – and in any case such areas lie outside the Block and not inside, as Kavanagh continues to wrongly claim. These repeated lies by environmental lobbyists have caused major distractions for the company out of all proportion to the relevance of Block V to the company, hence the detailed explanations that the company has provided on its website in an attempt to counter this campaign of lies and misinformation. I am extremely unimpressed that the FT and its reporter continue to repeat these lies and to give added authority to them via a prominent article.

There are of course valid concerns over work at Lake Edward, and these are being carefully and responsibly addressed. However, Kavanagh’s piece ran over 40 column inches (24 of which were a photo of a rather photogenic but irrelevant hippo) and 37 of those column inches were spent on inaccurately dealing with false claims about environmental issues that relate to less than 1% of the company’s assets. In my opinion, this is utterly disproportionate and inappropriate for an article that purports to be a commentary on the company’s interim results, especially when there is a strong financial story of substantial revenue growth from operations in Vietnam. That strong financial story was almost completely ignored, with such figures featuring in only 3 column inches (split between the beginning and end of the piece). I find that appalling for a FTSE250 company of over £1bn market cap. In my view an appropriate mix for the story would have been to spend 37 column inches talking about the financials and 3 column inches addressing (accurately) the environmental issue in DRC (which only relate to approximately £8mn  of assets in a company with a market cap of over £1bn).

And the following day I also responded to further (massively) wrong numbers (wrong currency coupled with a numerical error of two orders of magnitude) in the "Company Results table" with:

Frankly if the FT can’t get the numbers right in tables – and then ignores the numbers when purporting to comment on the results in favour of publishing a populist piece about irrelevancies – what on earth is the point of buying it?

If I wanted to see a photo of a naked hippo, I would be buying The Sun, not the FT!

I have it on excellent authority that I was at least the fifth person to complain about the accuracy of that company results table. The editor responded by merely "noting" my comments - and I responded by cancelling my FT subscription.

In the two years since then, of course, SOCO International (LON:SIA) have announced the distribution of some 58 pence per share to shareholders - and, whilst the WWF have been a huge pain in the arse and their mendacious campaign has unnecessarily consumed vast amounts of company and investor time, the DRC situation and the recent agreement with the WWF remain as completely irrelevant to the investment case as they ever were.

Having "done the WWF's bidding" to set the lobbyists' hares running in 2012, of course the FT completely failed to report the recent news of the agreement with the WWF and hasn't published a single word about SOCO since giving 40 words in Bryce's "Markets" commentary on results day four months ago. It has been simply shameful and biased reporting over many years, which the FT seems to have no interest in rectifying.

However,  I slightly disagree with MadDutch in relation to Guy Chazan's article (with "additional reporting by Michael Kavanagh"). I thought the article made some perfectly fair points - many of which were pertinent to investment in the sector. However, I could think of a very long list of ways that the article could have been improved upon - not least by including some additional examples!! It is undoubtedly true that the equity capital market isn't operating as it should - and that is why Roger Cagle (and Merrill Lynch) have suggested that SOCO International (LON:SIA) will be able to pay out substantial amounts over the next 6 years or so, and still have an income-producing asset that is eminently saleable..... which should please MadDutch Mike (and me - now that I've retired).

ee

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MadDutch 8th Jul 736 of 736

Brilliant ee. Classic you!

Mike

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