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On the subject of the fpso, whatever has happened to plans to increase it's capacity ? I recall that they ran tests on the fpso at a sustained rate of 60k, and there were plans to get to 70+. Now I know they have been delayed, but why are we not running the fpso at 60k ? is there some non operational reason for this ? for example permission from the owners or insurers of the fpso to go beyond boiler plate spec ?
This is something that's puzzling me. It is quite possible there are regulatory/insurance issues. However, a second set of tests, up to 70k were planned a year ago. One reason for the delay I was given, some months ago, was that Talisman were unable to produce their 15k at the time, and that it was needed to provide the 70k needed for the test. Since it now appears they are producing their 15k - on the assumption that is why TGT is only producing 40k - reasons for not doing further testing seem obscure.
It's quite possible, of course, that the required permissions from insurers or FPSO owners are holding things up, and also that - as your post implies - the FPSO is becoming a side show as plans for H5 development progress - and so any plans for progressing the testing are on hold.
Peter
Re kebobi's comment:
Re Bach Ho tie in, it's interesting to see what the company says at the agm. It's pretty clear and has been for years that more production is possible, whether the expenditure required is justified has probably been the question in debate between the partners. Perhaps the H5 result, is the thing that tips the balance ?.
If we do spend the 100M odd needed to build a pipeline to bach ho, it would seem odd to keep the fpso as well, assuming that there is a relatively cost free way of not renewing the lease.
Dow Jones Newswires reported today that Soco has $270 million in cash.
Is it possible to calculate the 2014 dividend?
MD
No.
If you mean the 2013 dividend, then that has already been announced as approximately $100mn - which will translate to around 18p per share depending on the precise timing etc.
It's not just a news report the $270 million figure was in the IMS
Net cash and liquid investments as at 14 May 2014 were approximately $270 million
Hi MadDutch
It looks like Soco can afford a lot more than 18p.
Not if they stick to the '50% of availabler FCF' apparently.
See advfn for some angel-counting on a pin-head as to what 'FCF' means.......;-<
ATB
Hi MadDutch,
There's a long thread on advfn with ee and others for your delectation/edification.......
ATB
There's a long thread on advfn with ee and others for your delectation/edification.......
Unless the SOCO management define what they mean by free cash flow all other guesses are irrelevant.
Thanks guys for the help, and especially you, Redhill, for making me laugh on this beautiful English Sunday morning.
I don't know how much of the cash pile is currently earmarked for capex, but there is of course the possibility that the bach ho tie in will need to be funded. I don't imagine the partners are going to be interested in paying for it other than in net backs against future additional production, so I would guess in the short term that will come out of the soco cash pile. There were suggestions recently that soco might be looking at raising a bond, we know that they are a conservative organisation and are likely to err on the side of caution and raise money rather than risk runnng out of funding and have to come to the market later at a potentially more difficult time. Personally I would prefer to forgo the divi for a couple of years than see them raise 2-300 Million $ in a bond, which in order to keep the cost down would no doubt entail an option to swop for shares at a later date.
Of course we've all got the option to look at it, and sell shares to buy bonds if it suits our situation. There's usually a 100k entry level into bonds of this kind, no doubt priced in $.
I suspect that the above is because they are considering potential costs of exploring and developing the recently farmed in acarage in africa, one of the congo's. Currently still awaiting administrative go aheads (I think), but I guess there's the chance that might need substantial funds. Having made the commitment to pay divi's I guess it would be very hard to go back on it after one year.
cheers K
Personally I would prefer to forgo the divi for a couple of years than see them raise 2-300 Million $ in a bond, which in order to keep the cost down would no doubt entail an option to swop for shares at a later date.
ee - can I ask why you would expect an issue to be IRO $400m? If there is a tie-in to Bach Ho, I understood that this was expected to cost $60-100m, although that figure was pre-H5 discovery.
Thanks
ET
Only one reason - which is that $400mn is pretty much the market minimum size for a bond (see other recent issues).
I had the same understanding as you re the Bach Ho cost (though I'm not sure that is a gross number and it certainly isn't current - eg it won't have included the cost of the H5 platform.)
Of course there is no necessity to do a bond as opposed to other things (which could be done in smaller size) - but what they do will, IMO, depend entirely on their perceived opportunity set and the capex costs thereof (eg would they need the firepower to co-develop a find at Lichendijili in order to negotiate from a position of strength?)