Incidental stuff

Thursday, May 21 2009 by
25

NO TA ON THIS THREAD PLEASE - (edit) and no pointless speculations either!

I've created this thread just to park stuff in that is only tangentially-related to SOCO's interests and doesn't relate to any of the specific assets.


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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)
330p
Change
-1.7  -0.5%
P/E (fwd)
8.5
Yield (fwd)
5.4
Mkt Cap (£m)
1,095



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


1286 Posts on this Thread show/hide all

emptyend 3rd Nov '11 727 of 1286
2

In reply to nigelpm, post #724

I think it's duff ADVFN data in that case.

MoneyAM reporting trade data has per redhill.

In that case, MoneyAM has the same duff feed as Barclays. The LSE data is here.

...around 130 trades in the first two hours - all pretty normal.

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Spurticus 8th Nov '11 728 of 1286
1

Uncoming elections in DRC, some background on the country here:

af.reuters.com/article/energyOilNews/idAFRISKCD20111108

(nothing specific to SOCO)

Spurticus.

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Isaac 8th Nov '11 729 of 1286
2

Does anyone know if Soco would consider forward selling some of their oil, say 25% and thus locking in the current brent price? i.e. hedge

$115/bbl Brent is not a bad price to lock in some Oil IMO

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thebuffoon 9th Nov '11 730 of 1286

$115/bbl Brent is not a bad price to lock in some Oil IMO

Yeah, we could forward sell Soco's north sea oil.

Bit of a wild goose chase though. :^}

Buffy

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Spurticus 14th Nov '11 731 of 1286
7

At least the good Dr is optimistic:
https://www.honeywellprocess.com/en-US/news-and-events/Pages/PR_14112011_honeywellawardedmultimillionusdcontracttosupplyintegratedsystemforvietnamoffshoreoilplatforms.aspx

“When we reach full production, the Te Giac Trang oil field will be a significant generator of resources for Vietnam and its business partners,” said Dr. Ngo Huu Hai, General Manager, HLJOC. “As a recent discovery, initiating operations quickly and safely in the oil field was of the utmost importance. Honeywell was able to provide a high level of project management, integration capability and reduced schedule risk that we couldn’t find anywhere else.”

“When these wellhead platforms are optimized, the Te Giac Trang oil field will play a crucial role in Vietnam’s energy production and lessen reliance on foreign sources of oil,” said Tony Cosgrove, Vice President for Asia Pacific, Honeywell Process Solutions. “The Hoang Long Joint Operating Company’s decision to award both projects to Honeywell reflects the growing acceptance of turn-key solutions and their importance in helping our customers in the oil and gas industry exceed their business objectives.”

.......When completed and at full production the facility, located in the Cuu Long Basin off the Southern Vietnam coast, will be capable of producing more than 55,000 barrels of oil per day.

Spurticus

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emptyend 14th Nov '11 732 of 1286
12

This piece is quite interesting. I can't tell exactly when it was written, but it includes quotes from within the last month.

“Southeast Asia is my favourite part of the world,” SOCO’s chief financial officer, Roger Cagle, told AfrOil recently. “However, there’s a lot of demand there and a lot of [competition].”
The company is cautious on frontier areas, such as Greenland or the ultra-deepwater, but onshore or shallow-water areas in Africa have many of the characteristics sought. “We still have an interest in Vietnam, that’s where our production is, but by and large we see the opportunity to keep that exploration pipeline from Africa,” Cagle said........

Much of SOCO’s value is tied up with its Vietnamese projects, with little attributed to the African work. Cagle did not rule selling out, either the company as a whole or the Vietnamese assets. “Nothing is ever off the table when you’re a public company,” he said. There are three likely options, keeping TGT and benefiting from the cash flow, selling TGT or acquiring the whole of the company, Cagle said. “One of those three [scenarios] will happen and one of the key elements is that there will be a return to shareholders – I’m a big shareholder so that’s not a bad outcome,” he said.

ee

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oilretire 14th Nov '11 733 of 1286
2

Just a general article on Russian (Lukoil in the main) moves within Vietnam

http://www.upstreamonline.com/live/article288879.ece

.....A senior Petrovietnam official said last month that Russian oil and gas players are expanding their presence in Vietnam with three operating companies - Gazprom, Zarubezhneft and Lukoil -- while TNK-BP is in the process of taking over assets newly acquired from its shareholder BP.

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emptyend 14th Nov '11 734 of 1286
1

Complete aside this time - but there is a major volcanic eruption going on at the southern extreme of Block V in DRC. Nowhere near Lake Edward, where the seismic is likely to be shot in the coming months, but perhaps an interesting diversion for the few tourists?

ee

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extrader 15th Nov '11 735 of 1286
2

Hi ee,

Re your 732, I assume that when RC talks of "acquiring" the whole of the co, he means "selling" - I'm not sure where shareholder return would otherwise come !

Unless it's a Freudian slip - and Soco's thinking of using some of its TGT cashflow to keep/expand that exploration pipeline from Africa ?

ATB

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emptyend 15th Nov '11 736 of 1286

In reply to extrader, post #735

Yes - I imagine it is a misreporting by the journo. The meaning is clear.

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StrollingMolby 15th Nov '11 737 of 1286
6

Another forward oil sales snapshot:

SINGAPORE Nov 15 (Reuters) - Asia-Pacific crude market rose on Tuesday after Vietnam sold Te Giac Trang for January at higher premiums as the grade gained acceptance among end users.

* TENDERS

- Vietnam's PV Oil sold three cargoes of Te Giac Trang crude for January loading to Shell and Taiyo Oil at premiums between $3.50 and $4 a barrel to the Minas formula, traders said, although this could not be confirmed.

The cargoes will load on Jan. 1-5, 9-15 and 16-31. The cargo sizes vary between 200,000 barrels and 400,000 barrels.


http://af.reuters.com/article/energyOilNews/idAFL3E7MF1B420111115

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Spurticus 15th Nov '11 738 of 1286
6

and Minas formula is currently at a healthy premium to Brent, of $3-4:

http://af.reuters.com/article/energyOilNews/idAFSGE7A900U20111110?sp=true

This would put the Minas formula at $3-$4 a barrel above dated Brent, traders said. "Minas must be the most expensive crude in the world," the trader said.

So TGT crude is "probably the most expensive crude in the world." Where's Orson Welles when we need him?

(current sp = 306 pence, I'm Baffled)

Regards,

Baffled

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emptyend 15th Nov '11 739 of 1286
7

In reply to Spurticus, post #738

So TGT crude is "probably the most expensive crude in the world." Where's Orson Welles when we need him?

(current sp = 306 pence, I'm Baffled)

...mmmmmm....it is a puzzle. c$120 per bbl and an entitlement to nearly 60% of TGT production will tell its own story in the figures by the year-end....ballpark revenue from TGT should be running at c. $2.4mn per day (c20,000*120).....maybe $2mn net cashflow per day? Even with production at present of only 35,000bopd at TGT.

$2mn net cashflow per day is a rate of $730mn pa.....which isn't bad for a company with a market cap of about $1.67bn....... ;-) 

ee

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ExTownie 15th Nov '11 740 of 1286
1

Do we have a figure for the recoverable costs which give rise to the increased share of production - In other words after how much revenue does the 60% share of TGT revert to 30 percent?

Thanks,

ET

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Isaac 15th Nov '11 741 of 1286
1

In reply to emptyend, post #739

...mmmmmm....it is a puzzle. c$120 per bbl and an entitlement to nearly 60% of TGT production will tell its own story in the figures by the year-end....ballpark revenue from TGT should be running at c. $2.4mn per day (c20,000*120).....maybe $2mn net cashflow per day? Even with production at present of only 35,000bopd at TGT.

$2mn net cashflow per day is a rate of $730mn pa.....which isn't bad for a company with a market cap of about $1.67bn....... ;-) 

ee

Have you considered emailing that note to Soco?

Just that they don't seem to want to buy back and cancel shares at this silly price. With such a large cash pile on the balance sheet and huge cash flow it leaves me baffled.

It is the single most obvious way to add value to the company without drilling risky wells in the bongo bongo land yet we don't seem to want to buy back shares at the current price!

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peterg 15th Nov '11 742 of 1286
4

In reply to Isaac, post #741

Have you considered emailing that note to Soco?

If you really believe they're not capable of working out the likely cashflow for themselves, what on earth are you doing holding shares in the company?

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Isaac 15th Nov '11 743 of 1286
5

peterg

Let's make no mistake, we have a very capable and shrewd management team.

What baffles me is why they don't buy back and cancel shares at the current prices?

If Readers on these boards & Analysts can work out the NAV with the average price target being £4.70 then surely the management can run the numbers as well and work out the share price is at a significant discount to the underlying value then they should be buying back shares with such a huge growing cash pile?

What would you do Peter if you was in their boat?

I find it disturbing that they keep talking about acquisitions in SE Asia when their share price is trading at a significant discount to NAV!

Acquisitions more often then not tend to be expensive and destroy shareholder value so I don't support this strategy at all.

Please note, acquiring companies and thus being a director of a much larger company should not equate to larger remuneration pots, I repeat SHOULD NOT.

Soco's strategy is to Recognise Opportunity, Capture potential & Realise the value. So I appreciate we are working on realising the value of TGT and this is work in progress but if you buy back shares at a price cheaper then the underlying asset is worth then surely the value per bbl of TGT per Share increases so why would you not carry out such a strategy when the end goal is to realise the value?

Surely this seems very logical?

I think management need to be very clear what they intend to do with the cash as in their strategy I can't see anything about building a large cash pile on the balance sheet from TGT production.

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tournesol 15th Nov '11 744 of 1286
4

Isaac

just suppose that the Euro implodes and there is a melt down in the global economy with oil demand collapsing and oil prices going into free fall. what would you expect to happen to share prices?

just because Soco's SP is below its NAV does not mean that it cannot fall much further. Maybe that's what is in management's thoughts......

buying shares now requires the buyer to take a view that the SP has bottomed and is unlikely to fall further. I do not see it as management's job to make calls like that. Maybe that's what is in management's thoughts......

In the doomsday scenario, a large cash pile would allow Soco to acquire assets/companies very cheaply - even more cheaply than today. Maybe that's what is in management's thoughts......

Fact is that barracking from the sidelines does not help anyone - including yourself. All it does is fritter away energy.

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tournesol 15th Nov '11 745 of 1286
7

Incidentally, I liked Encore's buy back strategy some time ago. They found themselves in a position where net cash per share was greater than the share price. They realised that in that case using cash to buy shares back resulted in an immediate increase in cash per share. So they instituted a strategy of buying back whenever cash/share > SP. That generated an immediate and unarguable benefit. Buy backs simply because management think the SP is over-sold are less reliable as a means of improving shareholder value.

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emptyend 15th Nov '11 746 of 1286
9

In reply to ExTownie, post #740

Do we have a figure for the recoverable costs which give rise to the increased share of production - In other words after how much revenue does the 60% share of TGT revert to 30 percent

Yes. From the last AR. They transferred $313+mn of accrued expenditure and will likely have spent more by now, drilling etc this year. The actual recovery process will surely be more complex than your comment suggests(not least because a chunk of the recovery is from the minority shareholder!) but, on the face of it, it would seem that cost recovery is likely to continue until at least Q3 2012.

As for Isaac's comments, the company are well aware of my opinions. I try to offer my opinions well in advance - and then leave management to get on with their jobs. There are a million possible reasons why they don't pursue a course of action that some outside may think desirable - and it is fruitless to speculate why. For all we know they may have been unexpectedly plunged into a close period .....;-)......but, as tournesolf notes for example, there is plenty of euro turmoil to consider. They are in possession of the full facts and we are not......so why waste time wondering?

ee

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