Analysts reports

Thursday, Aug 06 2009 by
26

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


Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


Do you like this Post?
Yes
No
29 thumbs up
3 thumbs down
Share this post with friends



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)
418.5p
Change
2.6  0.6%
P/E (fwd)
10.7
Yield (fwd)
4.2
Mkt Cap (£m)
1,380



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


673 Posts on this Thread show/hide all

emptyend 16th Feb '12 474 of 673
3

In reply to flyinghorse, post #473

I could be wrong but one possibility is that the delay in comingling the 2 zones is for confirming reserves volumes in each separate system. However there is no statement saying this is what they are doing.
Could a potential buyer have requested this information,or it may be reserevs auditors working on bookings?
Reserves booking these days under PRMS are certainly very strict when stating a 90% liklihood of being produced(P90) so getting data is no bad thing(as long as its supportive!)

Once production is comingled this will be difficult to achieve with compelling certainty.

Yes - that is certainly a possibility. As you say, getting the data is no bad thing - though on balance I'd rather have had earlier production. I expect there to be a lot of detail on the data in the upcoming results.

I suspect that once the PV target was clearly met for last year, there was always a risk that they wouldn't bust a gut to add - but, as you say, better data on each productive horizon may not only lead to better production planning for the future but it might also lead to greater confidence in reserves estimates....which is obviously "quite important" in the context of a disposal.

ee

| Link | Share
swiper 16th Feb '12 475 of 673
5

That would tie in with Ed Story's "information gain" comment back in November

"We can get to 55,000 bopd. It's a very simple process but it really is a factor of the information gain," Chief Executive Ed Story said in an interview with Reuters on Tuesday

| Link | Share
djpreston 17th Feb '12 476 of 673
7

Two new analyst notes out this morning from Cit and Boa ML

BoA ML rate as BUY with 498p objective.

Citi rate as BUY with 377p target

Both focus on the Perenco deal to buy Conoco Philips' VN business yesterday and the read through for SIA's VN assets.

Fund Management: European Wealth
| Link | Share | 1 reply
emptyend 17th Feb '12 477 of 673
6

In reply to djpreston, post #476

BoAML note starts:

Time to revalue Vietnamese barrels - BUY
The market seems to under-appreciate the value of Soco's Vietnam portfolio. The
acquisition of Conoco's Vietnam portfolio (stakes in Blocks 15-1, 15-2. – just North
of Soco's TGT field - and Nan Con Son pipeline) for US$1.29bn by Perenco
announced yesterday fully supports our view. Based on Wood Mackenzie data,
and assuming US$0.2-0.5bn for the pipe stake/working capital, the deal values 2P
reserves at US$14-19/boe. This is 40-90% above the US$10/boe of 2P reserves
that Soco is trading on and should help the market reassess the value of Soco’s
portfolio. BUY, PO/NAV 498p/sh.

.......and even Citi reach the same "Buy" conclusion (calculating an $18-19 per barrel number on the Conoco/Perenco reserves), with a 371p core NAV (471p total NAV).

Neither have anything in the valuation for TGD and both are obviously working from the reported 123mn bbls 2P (which compares to the 58mn 2P in the Perenco purchase).

Assuming this view is shared, I would certainly hope/expect to see a pretty swift rerating.....given the limited supply of stock.....followed by a further re-assessment after the results (and, I hope, a significant reserves uplift).

ee

| Link | Share
loglorry 17th Feb '12 478 of 673
2

Nice to see the analysts coming round to seeing the same sorts of $/bbl prices we have been talking about here for TGT. I've not seen the notes but assuming they are both using $18-19/bbl read-across from Conoco/Perenoco deal and neither are assuming value for TGD why do they come to such a different target e.g. 377 vs 498?

I suppose this just re-enforces ee's point that the analysts estimates are all over the place and this should improve when we get more data in a month or so.

Log

| Link | Share | 1 reply
peterg 17th Feb '12 479 of 673
4

In reply to loglorry, post #478

Hi Log

assuming they are both using $18-19/bbl read-across from Conoco/Perenoco deal and neither are assuming value for TGD why do they come to such a different target e.g. 377 vs 498? 

They both use similar values for core VN plus cash. The main difference is that Citi adds nothing for anything else - risked reserves upside, explo etc

Peter

| Link | Share | 1 reply
emptyend 17th Feb '12 480 of 673
7

In reply to peterg, post #479

In fact total NAVs are as close as they have ever been, at just under £5

Citi's note says:

We calculate a base case NAV of £4.71, which assumes US$110/bbl in 2012,
US$120/bbl in 2013 and then long-term US$90/bbl (real, 2012 money) and GBP/USD exchange rate of £1:$1.58. We have assumed a discount rate of 10% for our field models.This comprises a core value of £3.71 (£3.76 for core reserves minus £0.05/share for financial items), £0.94 of development/appraisal upside and £0.5/share of risked exploration. We set our target price at 20% discount to our base case NAV at £3.77, in line with the long-run average sector discount.

As Peter indicates, Citi's note includes nothing for TGD......so it will be interesting to see what all their numbers look like  when we get updated details on production and reserves - and find out more about the outlook for TGD! And the discount rate and the long-term real oil price assumption both look extremely conservative, IMO.

£6-8 remains my deal target range, depending on the assets included.

ee

| Link | Share
highgate55 18th Feb '12 481 of 673
5

Today's FT ( market report) discusses the Perenco purchase, the disparity in Soco's valuation and the likelihood of much increased production in 2H 2012.

I don't recall ever seeing the FT give Soco such a strong push

Let's see what Monday brings.

| Link | Share | 1 reply
emptyend 18th Feb '12 482 of 673
2

In reply to highgate55, post #481

They were just reporting ML's comments - but you are right.....several inches in the market report isn't the usual (mainly because Bryce doesn't understand E&P very well). No doubt the Bowleven bid situation reminded him.... ;-)

| Link | Share | 1 reply
MadDutch 19th Feb '12 483 of 673
1

In reply to emptyend, post #482

Good morning ee. I cannot find the FT article, any chance of the URL, please?

| Link | Share | 1 reply
rhomboid1 19th Feb '12 484 of 673

In reply to MadDutch, post #483

MD

It is in the stockmarket report section towards the end

| Link | Share | 1 reply
MadDutch 19th Feb '12 485 of 673
3

In reply to rhomboid1, post #484

Which stockmarket report?

I searched stockopedia but nothing there. Can I have the URL please?

Mike

| Link | Share | 1 reply
rhomboid1 19th Feb '12 486 of 673
1

In reply to MadDutch, post #485

Sorry MD

I have a paper version and am not a subscriber to FT.com, it is on p19 in the article headed "CRH spearheads advance as footsie heads higher"

| Link | Share
emptyend 19th Feb '12 488 of 673
4

In reply to salty64, post #487

The print edition also highlights the SOCO International (LON:SIA) price chart for the last year as the only graphic in the column. First time I've seen them do that. Anyone would think that Bryce is, for some reason, thinking that they might be the next bid target  ;-)

 

| Link | Share
emptyend 20th Feb '12 489 of 673
6

In reply to emptyend, post #448

Further on the earnings front, there is this article on iii looking forward to earnings from, inter alia, SOCO International (LON:SIA) and Tullow Oil (LON:TLW):

Easily the most spectacular set of results in March will come from Tullow Oil (TLW). Analysts forecast that pre-tax profits will surge from £97 million to £752 million......

Dramatic profits growth is also in prospect over the next couple of years for SOCO International (SIA), the oil explorer, where profits for 2011 are expected to surge from £19.7 million to £113.7 million.

Soco's discoveries in Vietnam have set it on a growth path, and hopes are high that these will be followed by finds in the Democratic Republic of Congo.

Even more gushing results are in the pipeline for 2012 and 2013, according to City forecasters. They say profits should reach £308 million this year and £400 million next. The shares reached a peak of 400p last year and are now down below 300p, where they sell on just five times expected earnings for 2013.

338mn shares out now (say 339mn average for 2011) implies expected 2011 earnings of 53.5 cents per share (at say a 1.59 average FX, weighted by month of receipt) and the 2012 forecast is around $1.45....so kind of in the range of the numbers I reported 11 days ago.

I'm not sure that TLW's results will be "easily the most spectacular" though - lets wait and see before putting them on the winner's pedestal.

ee

 

| Link | Share
emptyend 21st Feb '12 490 of 673

In reply to emptyend, post #448

ps....just three of the data points in that range. The latest notes I have (Nov) show :

MS......EPS:  2011 22.5 cents, 2012 49.1 cents ..... Revenue: 2011 $199.1mn, 2012 $420.1mn

ML.......EPS:  2011 27 cents,    2012  57 cents........ Revenue: 2011 $249mn ,   2012 $535mn

RBC.....EPS: 2011  38 cents,    2012 147 cents.......Revenue: 2011 $200.3mn, 2012 $768.1mn

I can add another to the above list:

Cannaccord........EPS: 2011 15 cents,   2012 45 cents.......Revenue: 2011 $159mn,   2012 $395mn

As I noted in my earlier post:

"...some reputations are going to be made and lost on this one......   ;-)"

ee

| Link | Share
Fangorn 21st Feb '12 491 of 673
1

Do Cannaccord even have a reputation to lose?
I certainly wouldn't place them in the same bracket as MS, ML or even RBC.

| Link | Share
loglorry 21st Feb '12 492 of 673
1

I'm sure I'll be slated for saying this but I've found Cannaccord almost useless. I'm not just saying this because they are bearish on Soco but I agree with Fangorn they are not teir 1 brokers by any stretch of the mark.

Log

| Link | Share | 1 reply
djpreston 21st Feb '12 493 of 673
1

In reply to loglorry, post #492

Log

And of course Canaccord are taking over Collins Stewart....

sorry for the OT

Fund Management: European Wealth
| Link | Share

What's your view on this thread? to Comment Now

 
 
You are feeling neutral

Use the £ sign in front of a ticker to turn £VOD into Vodafone PLC

You can track all @StockoChat comments via Twitter

 Are SOCO International's fundamentals sound as an investment? Find out More »





Stock Picking Tutorial Centre


Related Content
DRC  Congo K
DRC - Congo (K)
SOCO International 26th May '09

Incidental stuff
Incidental stuff
SOCO International 21st May '09





Stock Picking Simplified

Stockopedia takes your stock picking to the next level with cutting edge Stock Reports & Screening tools.


Get started
or Take a Tour to find out more.