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)
308.7p
Change
23.2  8.1%
P/E (fwd)
12.2
Yield (fwd)
4.9
Mkt Cap (£m)
1,025



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


1291 Posts on this Thread show/hide all

emptyend 16th Nov '11 752 of 1291
13

In reply to Isaac, post #749

If I were the management and I was 67, I don't think I would want to embark on a new full cycle e+p programme which is kinda what they are trying to do in Africa

This is the nub of your problem. There isn't the slightest chance that the exec management will be doing that. It is ALL about trying to add value to the company.

I would aggresively buy back shares at the current price, I would then look to ramp up TGT production and in the interim I would look to farm down TGD - once that is done I would look to do a deal for the whole company but leave some upside exposure to TGD/Block V, perhaps selling the assets to a company which allow Soco shareholders to take cash and shares in the acquiror.

That is what I would do.

So would I... in every detail. And I have told them that, months ago. However, it is one thing to have a clear idea where one is trying to go - and it is quite another to actually get there. It is like using a taxi.......you tell the driver where you want to go, and you leave him to get you there........you DON'T keep telling him every 5 minutes that he is going the wrong way - he has "the knowledge" and you do not! So you leave the driver to it. And if, due to unforeseen circumstances such as road repairs, gas leaks or the coronation of the Queen of Sheba, it should turn out that you can't get precisely to where you would like to be, then it is the job of the driver/management to get you as close as possible.

That is exactly what they are trying to do - even if it might look at times that they are not going the quickest route to get there. That is life - and nothing anyone on bulletin boards can say will make the slightest difference.

ee

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davjo 16th Nov '11 753 of 1291
4

In reply to emptyend, post #746

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.

In respect of Lizeroux, I was advised some time ago that it was estimated to take 5 or 6 years to unwind their free carry, principally because their costs were being compounded annually at, I think, 9%? Of course, it might take quicker than that in a high oilprice environment.

Of the $313m accrued expenditure referred to, 20% attributed to Lizeroux, I wonder what the actual figure currently owed by them is after interest? Stab in the dark $75m? adding say $40m odd to above figure?

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emptyend 16th Nov '11 754 of 1291
4

In reply to davjo, post #753

Yes - 9%. Must be in the order of 30% of the total (having started at 20% of total), allowing for the fact that the big money has only been spent quite recently.

AIUI the recovery from the minority partner would be included in the total booked at the group level....but, on revisiting the AR, I see that I picked the wrong number out in my haste last night......they transferred $313mn in 2009 - but then added a further $158mn in 2010 (see note 16). So, with the spending to date in 2011, I'd guess there is something like $530mn of cost recovery to come back.

I'd also think that the agreed method of cost recovery won't be the same for PV as it is for the minority - but the bulk of the costs should be recovered during 2012 IMO.

ee

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emptyend 18th Nov '11 755 of 1291
2

Lukoil/PV tie-up...and....

Lukoil has said it was seeking to bid for more offshore blocks in Vietnam

Presumably that means bidding for explo blocks - but some of us will recall that it was Lukoil who bought SOCO's Russian interests 10 years ago.

ee

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peterg 24th Nov '11 757 of 1291
9

In reply to kenobi, post #756

"We are always looking to improve our exploration portfolio and Myanmar is a country that we think could offer opportunities," said deputy chief executive Roger Cagle.

That should make Isaac happy!

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emptyend 25th Nov '11 758 of 1291
7

In reply to kenobi, post #756

I must say that such a move would make absolutely perfect sense! I would think that they would be looking for shallow water acreage with potential for fans, similar to Cuu Long. I wouldn't be at all surprised either if they partner with PV - and perhaps PTTEP. Note that there have been very recent improvements in the politics in Myanmar (there was a recent interview on the BBC with Aung  San Suu Kyi indicating some significant relaxations and it is clear that she and her party intend to run in the upcoming by-elections)  and there is also talk of Shell partnering in some deepwater acreage.

Structurally the way for SOCO to participate would be to interpose (if necessary) an Asian regional holding company between the main Group and SOCO Vietnam. This could then hold all Asian explo assets - including perhaps any future farm-back-in to TGD....and it would continue unaffected if SOCO International (LON:SIA) simply monetised the main SOCO Vietnam interest. I would expect the actual licence-holding entity to most likely be a new local consortium company, FWIW,similar to the Vietnam JOCs.

This would also make sense in the context of the potential Asian deals flagged earlier in the year. No way of knowing whether they would get whichever blocks were bid for - but, supposing they would be partnered with PV and/or PTTEP, I would think they have an excellent chance!

ee

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Isaac 25th Nov '11 759 of 1291

Top up time, £2.76, yes please!

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icemanpip 25th Nov '11 760 of 1291

Would you believe, I had a SB at £1 point that`s modest, with a stop that I thought would never be reached as long as the sun shone of 275p and got stopped out, unbelievable the way this share price is performing.Where will it all end.

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compounder 25th Nov '11 761 of 1291
4

In reply to Isaac, post #759

By putting up more hard cash I guess that means you agree with and support managements plans - hence will stop #####ing every 5 mns!

Back to sleep for me - I'll wake up when the Chinese make thier move.

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WeeEck 25th Nov '11 762 of 1291
4

In reply to icemanpip, post #760

The SB companies do very well out of SOCO. I have seen this so often now. This stock is not very liquid and it does not take much selling to push it down quite hard. I would imagine that quite a few people would have had spreadbets on around the £3 mark and stops 25p below that with exactly the same thinking that you had. As soon as they saw the chance of taking out 275 they would have gone for it. Easy money for them. I would imagine if they have got most of the stops in that region the SP will gradually rise again on even light buying. Unfortunately I am fully topped up and do not really want to buy any more as long as the market is as unsettled as it is just now but for anyone with spare cash these opportunities are welcome gifts.

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kenobi 25th Nov '11 763 of 1291
8

In reply to WeeEck, post #762

The SB companies do very well out of SOCO

I doubt they give a monkeys which way you bet or which way the market moves, they have punters betting both ways which they offset against each other, take the spread and funding costs, then hedge any outstanding position one way or the other. They win anyway, they would prefer it if their customers won too, that way they could keep betting, betting bigger and making more money.

There may well be players with big positions who sell to try to knock out shorts and then buy back in and make a profit that way, but I doubt the spread betting companies do anything other than playing with the spread, to make it beneficial for them.

I could be wrong, but that's my view.

K

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kenobi 25th Nov '11 764 of 1291
5

http://www.investegate.co.uk/article.aspx?id=201111251719548383S&fe=1

another 110,000

I can't help but wonder what price the shares would be at if they hadn't bought half a million in the last few weeks.

Still I'm glad they're letting the price slide while buying up relatively high volumes of them.

Soco have been good an the financial management stuff over the years, so I'm sure they won't spend too much on shares, and leave themselves plenty of scope to buy more if the eurozone goes into some kind of meltdown.

missed out on topping up today , will be following it over the next few weeks,

K

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macroeconomix 28th Nov '11 765 of 1291

NED purchase of £29k worth:
http://uk.advfn.com/p.php?pid=nmona&article=50207882

Also another 90k buybacks today.

Better putting that cash into shares in Treasury than hanging onto paper currency IMV :)

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nigelpm 28th Nov '11 766 of 1291
1

In reply to macroeconomix, post #765

Isn't all currency based on paper?

Yours confused!

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macroeconomix 28th Nov '11 767 of 1291
3

In reply to nigelpm, post #766

Drifting off topic here really...

My point was that it is better to have real assets (company stock & effectively the promise to produce more oil in the future) than to have cash reserves in the event of a currency crisis.

Eric Sprott was recently advising Silver producers to hold more reserves in silver than in cash:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/25_Billionaire_Eric_Sprott_Asking_Silver_Producers_to_Save_in_Silver.html

Same sort of thing applies here IMV - I'd be more keen for them to have less cash on the books and more in the way of real producing assets to hedge against future currency problems (as a result of aggressive bond purchases by the central banks). Though cash does have an "optionality" in times of crises (e.g. ability to buy assets at firesale prices), trouble is the political will to print may develop a momentum of its own at some point.

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kenobi 30th Nov '11 768 of 1291
6

“We are very keen on refreshing our exploration pipeline” and “bringing some projects forward,” Cagle said in an interview yesterday in London. “We’d like to bring larger projects.”

http://www.bloomberg.com/news/2011-11-30/soco-to-focus-on-larger-projects-following-drilling-review.html

Looks like they have plans for at least some of the cashflow. I hope we can get back to finding more oil, we don't seem to have had much luck with the drill bit lately,

K

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emptyend 30th Nov '11 769 of 1291
5

In reply to kenobi, post #768

Interesting. This is quite intriguing:

Soco directors are due to meet next week to examine seven new projects close to existing operations in Congo, the Democratic Republic of Congo and Vietnam, according to Chief Financial Officer Roger Cagle. One drilling project may win approval to start next year, he said, while Soco may expand into three new countries.

I suspect there could be a major with a package on offer. ENI? Unlikely to be 7 completely unrelated opportunities.

I think with the three new countries comment one can assume that Myanmar/Burma is on the list. But which others?

And I wonder whether one project that could be "advanced" is TGD? Maybe someone has a technical edge to bring to the table?

Fun (but fairly pointless) to speculate for now.....

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kenobi 30th Nov '11 770 of 1291

In reply to emptyend, post #769

yes, good news I would say, don't want the management sitting around waiting for a deal !

this could be a good time to do deals, the future looks uncertain, but soco has strong cash flows to
invest. Getting a partner in on tgd would be good, especially if this is a first step to a vietnamese sale,

though if there's any other deals in vietnam, I hope (and am sure), they will be done in another
legal company, so as not to put limits on the sale of soco vietnam.

looking forward to hearing the outcome of this meeting

K

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repobear 30th Nov '11 771 of 1291
1

In reply to kenobi, post #770

There are definitely some interesting opportunities and cash and cashflow are king right now. Soco are well positioned to get some nice deals done I feel.

No doubt Isaac will be along soon;-)

repo

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