This thread is intended solely as a place to discuss analysts' notes on SOCO.
In reply to thebuffoon (post #53)
Chance of failure of each well = 85% = 0.85
For the three wells, Chance of failure = 0.85 x 0.85 x 0.85 = 0.614
Chance of a success for the 3 wells = 1 - 0.614 = 0.386 = 38.6% (I think)
Morning all
Moving on from matters statistical, I note that Al Stanton has issued a new note on SIA:
Upgraded to Outperform and Target increased to 2000p from 1600p
Says:
SIA trades at 28% discount to our 2004p NAV
Newflow to pickup from Q2 and this year's campaign could add c1100p or 55% to our NAV.
THe TP assumes successful delivery of 16-1 appraisal will unwind discount to our PV10%.
Ranked by NAV, SIA is the second cheapest stock in our FTSE350 universe, which trades at average discount of 14%. In terms of unrisked upside potential in 2010, SIA ranks behind SMDR and CNE.
Estimates that DRC could add c740p, or 37% to NAV. (assuming they farm out half their 85% stake...
In reply to Impvesta (post #54)
Morning Imp (well, I feel like we know each other..),
Back to a topic that does matter... :^}
I did actually! Although you obviously didn't read my post properly did you?
Buffy
In reply to thebuffoon (post #57)
you obviously didn't read my post properly did you?
Buffy, I've re read it and can't understand the point you were trying to make.
Sadly, that's not the case Marben. Otherwise 10 wells with a 10% COS would guarantee success!
Anyway who cares!
See you at the AGM?!
Imp!!
In reply to Impvesta (post #58)
Hi Imp,
Indeed, who cares?
We're going to do very well out of Soco. So well, I might hire my own statistician. :^}
Cheers,
Buffy
Write up of Soco as a speculative buy in the 'Momentum Investor' today... nothing new but interesting to see the name getting out there.
Soco is clearly at the riskier end of the spectrum but it does have a good record and newsflow from the drillbit could drive the shares significantly higher.
Morgan Stanley adjusts price targets on UK oil and gas stocks... says the E&P companies have largely performed in line with the wider European energy group year-to-date. Morgan Stanley adds that after a relatively quiet February, drilling catalysts should return for the group from March onwards. The brokerage raises Soco International (SIA.LN) target to 1850p from 1800p, saying Soco is among its top picks in the sector; overweight rating.
From the MS note (with grateful thanks to the provider):
SOCO:
We increase our price target to 1,850p/sh from 1,800p/sh to reflect a reserve increase for the Bualuang field (from 20mb to 26mb). In addition, we have re-modelled some of the fiscal terms on Block 16-1 and 9-2 in Vietnam to incorporate the cost recovery benefit SOCO receives during the initial ramp up of the field.
[my bold]
Aha: finally admitting that they had this wrong all along. ;0)
Geez - they put a 163.5p UNRISKED value on TGD and reckon it will be drilled in Q3 - laughable. How do they invent these numbers?
Cheers,
Mark
In reply to marben100 (post #64)
Hi Mark,
Currently idling waiting for a connection in Nairobi......back in "circulation" soon. IIRC I made precisely the point about the fiscal terms to the MS analyst when I ran into him at a SOCO event in December....cost recovery is an extremely important aspect of the valuation and has a major effect on near-term cashflow from the asset.
Their ongoing inability to get the really simple stuff right re TGD though is very puzzling. I imagine that a rig announcement that gives a firm timescale will (once again) prompt an upward revision! ;-)
....and that we'll just have to wait for success before they "suddenly" realise the impact of derisking the fan!
cheers
ee
Macquarie - 1st March 2010 : Target Price 1360p (up from 980p) : Maintain underperform rating.
Comments made when price was 1505p.
Reasons for maintaining Underperform: We are cautious on Soco’s drilling program given other operator’s unsuccessful results near the high-impact Ngazi block and the very high operational risks of drilling the TGD HPHT prospect in Vietnam.
Risks: Nganzi block exploration and the high HPHT TGD well.
Catalysts: Success at Nganzi.
They quote Nganzi as 400mmboe P50 gross recoverable with 10% COS - 98p risked, 985p unrisked.
TGD is described as HPHT, 100mboe with 10% COS - 15p risked, 145p unrisked.
Looks like they need to do some more research on TGD in particular...
Following the results announcement, there has been quite a few analyst reports issued.
There is a conference call at 9.30 (+ 44 (0)20 7075 1520) so there may be more "colour" or clarification of points raised.
Summary of what Ive seen thus far:
EVO - Reduce PT 1225p
BoA Merrill - BUY PT 1950p
JPM - Neutral Core NAV unchanged at 1388p
Morgan Stanley - Buy PT1850p
Citi - "H (Hold/High Risk) PT 1610p
Hi DJ
I think I'm right in saying "Goldman Sachs raises Soco International price target to 2,010P from 1,735P; rating buy " recentlhy too. The highest of the bunch so worth mentioning perhaps :-)
Log
RBC - Outperform Speculative Risk PT 2000p (not sure if that was prior to or after the Conference call) Could well be during knowing the author ;-)
Those prospective NET revisions, from p15 of the presentation....
2010 will be the most prolific drilling campaign in terms of potential NET reserve adds with c600+ mmbbls possible
Nganzi drilling potential adds NET 500 mmbbl
TGD appraisal drilling potentially adds NET 30 mmbbl on the
low case, with upside potential more than 10 fold if current
interpretation is validated
TGT major oil field remains on schedule to come on stream by
mid 2011, potential NET additional recoverable reserves 25-75
mmbbls
A potential ~1 billion bbls NET.
At $10/bbl, that makes $10 billion --> ~£6 billion --> £80 share of upside from here.
That's a lot.
lsn
A few questions from the back of the class, if anyone can help answer?
On the footnotes of page 4 of the presentation, they refer to "US$150 Capex estimated for 2010—US$135 in VN". I thought the Nganzi wells would cost about $60m but the footnote implies that only $15m will be spent outside of Vietnam? Does that figure assume a farm-out of Nganzi?
Also, the 2010 drilling programme (on page 6 of the presentation) doesn't refer to the 2 offshore Congo wells that were in the Macquarie presentation from January. Any idea if these wells have been dropped from the 2010 programme or just omitted from the slide because they aren't as important as the TGD, TGT and Nganzi wells?
Love the thought that the NET reserves could increase by 600mm bbls and that doesn't even include the TGD fan.
Thanks
Lundin Petroleum (21.55% partner in Marine XIV) Operations Overview for 2010 states "Exploration drilling is expected to commence in 2010."
http://www.lundin-petroleum.com/eng/operation_congo.php
In it's Likely Drilling Schedule Chart it shows activity end of Q2 into Q3.
http://www.lundin-petroleum.com/eng/exploration_program.php
That has been on the site unchanged for a few months.
fuiseog
