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link doesn't work, pick the first one from here http://www.socointernational.co.uk/presentations
anyone know what to make of slide 11?
db
I guess, to be very technical, that there's more green on the reanalysis than the original, and that green is presumably reservoir? So potentially bigger reserves
db,
Slide 11 remains the same as in the November presentation. I believe Peter's conclusion is correct - which is why I believe there is a material reserves revision pending.
Remember that the company's original opinion (that there would be 500mn bbls recoverable at TGT) was based on the seismic and dataset in existance back in 2007/8.....so IMO the 2009/2010 revisions following the PSDM processing and ongoing drilling results are NOT yet reflected in either the company's published figures OR in the figures being used by analysts (which remain, understandably, based on the 300mn booked 2P and some form of risked judgement about the additional 200mn that the company has always claimed).
To look at a popular analogous situation, Cladhan was thought (by Encore/Sterling) to be of a certain size until they returned to drill it in 2010. Now they KNOW it to be much bigger - but are waiting for the external assessment before they commit to saying exactly how big. It is similar with SOCO and TGT (though less dramatically so)......but the important difference is that the external (and internal!) assessment of the 2P (and 3P) figures remains firmly under wraps for now and IMO is likely to remain so right up until the point when a deal is announced.
ee
FWIW and purely just my smell of the situation I think there is some more upside to TGT. We should know a lot more as development of the field progresses in 2011 but it smells like there is some upside here. Once cash flow starts coming in from TGT with such high oil prices and a bit of a 2P upgrade this should drive the price a lot higher. This is really the reason I'm continuing to hold SIA right now. I'm afraid I've lost faith in TGD and the DRC drilling campaign right here. You never know as there is still one well result to go on DRC.
Log
To look at a popular analogous situation, Cladhan was thought (by Encore/Sterling) to be of a certain size until they returned to drill it in 2010. Now they KNOW it to be much bigger - but are waiting for the external assessment before they commit to saying exactly how big
Sorry but his is just plain wrong in almost every respect.
AB made it perfectly clear after the 2008 drilling that the expectation size range was very wide from non commercial to very commercial, but he did have an idea that it was probably leaning towards the upper end of the scale, imv.
SLG have published a CPR on the results to date. The next drilling campaign will attempt to delineate further the size of the prize by drilling into the central channel and into the fan system and again try to find the oil water contact. An additional campaign is planned to drill the southern channel and further explore the fan system.
These two drilling programmes should allow a CPR to better estimate the size of Cladhan as a whole but they are nowhere near that as yet I feel.
Ayone interested should consult the 2010 operations update from SLG.
http://www.sterling-resources.com/presentations.html
repo
Yes indeed neg recs are the new black .-)
Page 9
http://www.encoreoil.co.uk/assets_cm/files/PDF/encore_oil_presentation_for_iod_hub_22_april_2010.pdf
Issue is size: Range of outcomes is
very wide: sub economic to very
economic.
I can't be arsed digging up the exact references as to the current Cladhan situation. People can believe what they want. If anyone is interested in making a couple of quid in 2011 I would recommend that they DTOR and explore the Cladhan situation for themselves, rather than relying on misguided opinions from others.
I have linked the source of this opinion before, but here it is a second time
http://boards.fool.co.uk/encore-agm-report-11327904.aspx?sort=whole
repo
Cladhan was thought (by Encore/Sterling) to be of a certain size until they returned to drill it in 2010. Now they KNOW it to be much bigger - but are waiting for the external assessment before they commit to saying exactly how big
Sorry but his is just plain wrong in almost every respect.
Only on Planet Repo, I suspect. I was paraphrasing the SLG Investor Relations person quoted here......where he said:
.....we drilled two side-tracks
off that original vertical bore, both of which were very successful
and far exceeded our internal expectations.....The challenge at this point is that we really don’t know how
big Cladhan is because of two factors.....You have to be very careful with Contingent and
Prospective resource numbers because those resource
numbers are highly risked. I reiterate you have to be very
careful. For instance one of the mistakes that people often
make is to take the Contingent and Prospective resource
numbers and add them together which is not the
correct approach because the stochastic probabilities (in
other words, risk) of the two categories are sizably different.
So that’s why I’m giving you such a broad range.
There are people out there who have come out with estimates
that are twice that and we can’t comment on that
because obviously we want to rely specifically on what
RPS says. The 93 million barrel figure that you refer to is
the RPS Prospective Resources (P50) number for the
channels only – RPS’s analysis in October attributed a
further 74 million barrels of Prospective Resources (P50)
to the fan formation at Cladhan. We want an independent
view, not just an internal view. Until we do some more
drilling, we really don’t know how big Cladhan is.
The difference between that situation and SOCO's at TGT is two-fold:
1) the scope for upside from this external assessment is less at SOCO (but is nevertheless very material in the context of the resources and (IMO) timeframe) and
2) SOCO haven't been making any sort of song and dance about what they have (because, IMO, it simply isn't necessary)
ee
Yeah right ee;-)
You've highlighted things which indicate that SLG still don't know how big Cladhan is.
I've quoted AB showing that the expected range of outcomes was very wide. The expected range of outcomes is still very wide, but building from a bigger base;-)
As regards bigging up prospects, there are companies, much more important to your wallet ,who have been world class in bigging up "world class play fairways'' only to disappoint consistently with the drillbit. That may be somewhat relevant to the current 'low communication' stance on TGT, I believe.
As it happens I think most investors in either Sterling Resources or Encore Oil would consider management of these companies to be highly conservative. If you want to believe that they've bigged it up though that's fine by me.
We'll see what the drillbit brings eventually.
repo
By the way....on the topic of reserves upgrades being expected......
....thanks to rhomboid's reminder earlier today, I looked back at the situation with Yemen in 2008. At the end of January we were speculating that a reserves upgrade was ....err....imminent.....
....and less than a week later a deal to sell Yemen was announced - as indeed I had suspected it might be:
I'd be thinking it may very well sell beforehand. They must also have some sort of moderately good production history by now so I don't think there should be too much trouble in agreeing fundamentals, based on a fresh independent appraisal. For all I know, the auction might already be under way.
I don't think things are quite that far advanced this time. Not only is there the TGD issue still to resolve, but the final gas agreement for CNV remains pending. Both, however, are capable of being resolved in a matter of weeks, so I'd think a deal in the next 6-8 weeks remains perfectly possible.
Not, of course, that anyone believes me on that!
It feels very much like my investing time with SOCO (coming up to 12 years on 4th March) has gone through a full cycle. At the start nobody believed that SOCO would amount to anything and (no matter how much I argued they were wrong on all dimensions) it was like pulling teeth to convince anyone...even the likes of davjo were initially highly-sceptical (no surprise there, Ed ;-)). At the top of the market, of course, it was all different - everyone believed everyone and it was all going to be wonderful. And now we're back to where we started in terms of belief - though not, you'll note, in terms of share price! ;-)
This time, however, it is different. I really don't care whether anyone thinks I'm right - and I'm not going to keep on repeating the point, because events will speak for themselves - so this is the last time I'm going to mention timings. I hope those who have been sceptical continue to remain so.
ee
Royal Bank of Scotland adjusts ratings on three UK exploration and production companies today.
Cuts Premier Oil (PMO.LN) to hold from buy, and Salamander Energy (SMDR.LN) to sell from hold. However, upgrades SOCO International (SIA.LN) to buy from hold.
For Premier, says that while it would not be surprised to see further success in the Catcher drilling campaign, the rest of the 2011 drilling campaign now appears priced in.
For Salamander, with shares trading at 2.7x estimated in RBS' base-case core NAV, "we believe too much upside is being discounted in the near term."
For SOCO, however, RBS sees further upside as the onset of production from the Te Giac Trang oil field in Vietnam approaches, "which should transform production and SOCO's financial position." Ups Premier target to 2000p from 1700p and SOCO to 450p from 390p but cuts Salamander to 240p from 265p.
First analyst note out since the rumours broke and its EVO with the title "Take me Out".
BUY and 400p target.
Thats a bit of a change from their note of the 17th (Sell and 340p target).
First analyst note out since the rumours broke and its EVO with the title "Take me Out".
Tells you the sort of TV shows their analyst watches - full of airheads and no substance.... ;-)
First analyst note out since the rumours broke and its EVO with the title "Take me Out".
BUY and 400p target.
I wonder what their target would have been had they taken proper account of the minority interest being worth massively less than the headline 20% ?
and how, precisely would you know what that programme was all about ee? ;-))
I confess to watching the first 5 mins the other week before turning it off when I realised it wasn't a commercial for hair dye.........I was also struck by the thought that my son would probably like it and put up with the inanities rather better ;-)
I should add a bit of colour to the EVO note (errors aside):
Valuation - more than 400p (but probably less than 500p)
"We believe that an offer >400p per share would be a starting point for talks between Soco and a buyer.
The 400p target is based on $80 oil btw, with sensitivities showing:
412, 427, 435 453p respectively at $85, $90, $95 and $100/bbl.
Re that EVO note...I'm sure others have the full note but this summary from DJN...
Evolution Securities raises Soco International (SIA.LN) to buy from sell, and lifts its target price to 400p from 340p. Says the group has a history of monetizing assets through disposals, but now the best way to monetize the Vietnamese assets is through a disposal of the entire company. "With net production ramping up to almost 35,000 barrels of oil per day by end 2013 and little left in the exploration tank, we believe that Soco will be firmly on the radar of national oil companies," it says. Soco has been linked with M&A of late, and Evolution adds with management highly leveraged to the share price through holdings and options, "it could be in everyone's interests for management to entertain offers in excess of 400p."
...EVO look wrong on a number of counts on just that snippet...
I wonder what their target would have been had they taken proper account of the minority interest being worth massively less than the headline 20% ?
Well yes - but that requires the sort of consideration of details that you don't get from Evo. Someone asked me over on ADVFN where I think analysts are going wrong and I omitted that one from my list:
Failure to upgrade reserves estimates (mainly TGT) due to drilling results and PSDM in 2009/10....use of discount rates that are too high.....failure to correctly assess valuation of VN barrels under the JV structure in Vietnam (some of them continue to get the government tax take wrong).....failure to correctly assess the value of the wet gas reserves at CNV and failure to acknowledge that management are positioned to extract a substantial premium for control from a NOC buyer.
That'll do for now - though I could also nit-pick if pushed..... ;-)
As you can see, I also omitted the value of accelerated cost recovery and various other things. I've long since stopped bothering to try to do my own detailed analysis, even though the market and the analysts have been so far out. I'm expecting a competitive bid situation to do the work for me in due course....
ee