This thread is intended solely as a place to discuss analysts' notes on SOCO.
Is my maths correct?
$328.5 - $215.3 + $47.8 = $161m
$161m net since year end (135 days) implies $435m on a prorated annualised basis - all else being equal
Assume half paid out as dividend
Thus $217m into 331m shares
Gives $0.65/shares
= 42p
while there isn't anything bad in todays ims, except the sale of cabinda not going through,
I'm a little surprised by how positively the market has taken this rns,
especially as the analysts haven't been especially impressed so far.
(btw, thanks to whoever gave me a negative for posting a link above, sorry I didn't have time to comment,
but I won't bother next time),
K
http://www.dailypolitical.com/finance/stock-market/soco-international-given-outperform-rating-at-rbc-capital-sia.htm
Well RBC still have an out perform, with a target of 4.50, although after this morning's move that's only 10% upside. Still weeks away from drilling H5 now, hopefully that will spur more upward movement !
K
while there isn't anything bad in todays ims, except the sale of cabinda not going through,
I'm a little surprised by how positively the market has taken this rns,
especially as the analysts haven't been especially impressed so far.
(btw, thanks to whoever gave me a negative for posting a link above, sorry I didn't have time to comment,
but I won't bother next time),
The links you provided are auto-generated by a copy-writing bot. Not really "news" as such and always reiterate previous out-of-date references to superceded research...and since the only note that triggered the article in the first place was the RBC "first impression" note I had already referenced in detail in #631 nothing new was being added - which is why I gave it the thumb down.
Re Cabinda, I don't think it should be assumed that it won't happen. There appears to be no reason for a hold-up other than the ability of the purchaser to locate a reportedly well-stuffed wallet.
As to the "positive" reaction, I guess that a few people have been able to make similar calculations to Adam. But I might note that the actual IMS doesn't say "part of the excess cash" or "a proportion of the excess cash" - it simply says that they will "distribute excess cash". So the only question is how they will actually define what constitutes "excess cash" - and, IMO, one certainly cannot assume that an arbitrary 50% of operating cashflow will be considered to be "excess".
Re Cabinda, I don't think it should be assumed that it won't happen. There appears to be no reason for a hold-up other than the ability of the purchaser to locate a reportedly well-stuffed wallet.
Made me smile thanks, I have a buy to let property, the tenant disappeared off to africa for 2 months and the rent wasn't paid, the agent said, oh the only reason the rent hasn't been paid is because there's no money to cover the standing order ! - well that's all right then !
There must be a question mark over whether the buyer can raise the money now, given that despite giving a non returnable deposit, months after the deadline, they still haven't completed. Does this mean soco is commited to drilling ? might they think they can get a better deal in the run up to the drill ? or after it if it fails ? don't know, maybe they thought they could get the cash and they will at some point, we'll see, not a huge deal one way or the other I wouldn't have thought. Would be amusing if they don't buy it and it turns out to be a gusher !
K
Hi EE,
That would require some guesses on the production plans for TGT - which must be extremely uncertain, pending drilling H5 etc. You will note there was no comment on the updated reservoir modelling - and I would remain of the view that the combination of those two events could trigger plans for a big production upgrade....which in turn might raise "excess cash" substantially.
I have to say I'm rather hoping that the H5 drill leads to a requirement for considerable capex! A tie in to Bach Ho, or even a 2nd FPSO. Clearly either of those will improve the long term flows of excess cash, but they would also tend to reduce them in the short term.
All fair comment.
I'm told that the story is a bit further on than that in that (allegedly) the money is in place and will be forthcoming..... but obviously there is that rather awkward matter of actually managing to cough up. Caveat vendor seems prudent in such circs....
Obviously if the cash isn't paid over as drilling nears then at some point all bets will be off. After all, the minority is being carried at present so it basically comes down to what they think of the two wells in prospect.
I have to say I'm rather hoping that the H5 drill leads to a requirement for considerable capex! A tie in to Bach Ho, or even a 2nd FPSO. Clearly either of those will improve the long term flows of excess cash, but they would also tend to reduce them in the short term.
Yes - though IMO a firm plan to expand capacity would trigger a bid, because raising capacity to (say) 100-120,000 bopd would make the asset much more material to many buyers.
However, even a capex requirement for such a production raise would probably absorb only 2-3 months of "excess cash" (mostly in 2014, when there would also perhaps be a compensating cashflow increase from higher production?) - so it would simply need to be factored in to the decision on the distribution. I'd see the distribution level for 2013 as likely being retained in 2014 and increased significantly from 2015 (if H5 succeeds and if they can raise production capacity materially).
Hi all,
An encouraging IMS.
Any news on monetisation of CNV byproducts ? I thought this was 'close to resolution' a few months ago....
TIA
Any news on monetisation of CNV byproducts ? I thought this was 'close to resolution' a few months ago....
Still close, I understand....but with only some technical dotting of i's required. I believe the important bits (eg price) are settled. I'm not sure whether this will address prior production though - perhaps that may be subject to another round of negotiations? That should be a non-trivial amount, given that wet gas supplies now go back nearly 5 years ...(even I had forgotten it was that long!)
Do we have a change in company strategy ?
The long established strategy of creating value and monetising projects to enhance shareholder value and fund/expand exploration and development seems somewhat in conflict with the present emphasis on SUSTAINABLE distributions.
Obviously the stance does not inhibit a Vietnam sale in any way but the thinking does not align with the long established policy.
For my money, the present organic growth prospect including a regular dispensation to shareholders is just the biscuit, even if Ed does prefer cash in the pocket to oil in the ground (as I seem to recall).
With this Milchcow lactating at this rate there's cream for the shareholders, butter to lubricate the drillbit, milk left over to sustain the management engine and casein to provide reserves for the unexpected.
Surely this must be the whey ? !!
On the other hand, the sustainability thing could just be a message to the market that this is what will happen unless a better option arises. any thoughts ? Is there a fundamental change in outlook ?
I suspect that the new policy of sustainable distribution will continue until the management are satisfied that the full value of the Vietnamese interests has been clarified - it is just taking longer than expected. When that happens I suspect the original strategy will be applied. However I would be equally pleased with the new strategy and am in no hurry for a change;-)!
Yes - I think Kinkell is correct on this.
Do we have a change in company strategy ?
The long established strategy of creating value and monetising projects to enhance shareholder value and fund/expand exploration and development seems somewhat in conflict with the present emphasis on SUSTAINABLE distributions.
Sustainable doesn't necessarily mean that they will be sustained - or even start!
I view it as a clear marking of the cards for both industry and the City in relation to the earning power of the assets. So, at the minimum, the thought that the cashflow will be "wasted" on excessive amounts of exploration will be put to bed and the share price should find a more appropriate natural level.
Anywhey, given your metaphors, you can start putting some dates in your dairy from a few weeks time. ;-)
Well I guess that we need be able to convince buyers of the recovery levels the management believe are possible. Whether and when the reservoir model does this remains to be seen.
A good result from H5 won't do any harm either,
K
Well we seem on the way to an upside surprise on H5 but how will next weeks interims compare to analyst expectations?
Anyone got access to a table of current analyst forecasts? I'd like one handy to refer to on the 29th..
Cheers
Not a table, but the FT site should be up to date for forecasts (mouse over chart bars for details)
Currently has only 1 analyst forecast for the half-year ( revenue $317.4mn, EPS 33 cents) but has 15 for the full year ......
.....though a big spread: $614mn revenue (range $382-773mn), 73 cents EPS (range 46-125 cents)
Full-year forecasts from notes:
1) The last JPM piece I saw (mid-May) was suggesting $675mn revenue for the full year, 70 cents EPS and $445mn y/e net cash.
2) FWIW Goldman (from their sector piece of early June) are the top end estimate for EPS $1.25 !
3) Exane (note heading "The Wonga Way" ! ;-)) go for revenue $463mn and 60 cents EPS, with $459mn y/e cash.
4) RBC's March note had revenue of $705mn and a 2013 EPS estimate of 79 cents (H1 numbers roughly half those) - but they assumed a 50 cents a share distribution in H2 (though they were also assuming a Cabinda disposal), leaving y/e cash at $305mn.
5) Nomura's March note had an EPS forecast of 60.4 cents
Amazingly most analyst numbers make no assumptions about the distribution......
35 cents EPS on revenue of about $330mn looks to be "about the mark" for H1
HTH
ee
ps...FWIW I would currently go for about them having about $373mn cash at the half-year end ($415mn on interim results eve), with H1 revenue at around $355mn and H1 EPS around 38 cents. Still expecting over 40p to be distributed......
Hi all,
Hat-tip to ohisay from another place with this link to an RBC update. It's worth following the link to the expanded commentary
https://rbcnew.bluematrix.com/docs/pdf/a1e8a2ec-18e5-4f1b-8c...
ATB
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rbcnew.bluematrix.com!!!
Hi fangorn,
Oops ! Passed on in good faith. - honest !
If you go via the source on TMF, do you get the same result ?
ATB
Postscript : I've just checked - and it works from there. How strange !
