Soco AGM reports and discussion

Wednesday, Jun 09 2010 by
7

From 9th June onwards


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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)
413.3p
Change
-8.7  -2.1%
P/E (fwd)
10.5
Yield (fwd)
4.1
Mkt Cap (£m)
1,401



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


42 Posts on this Thread show/hide all

jonnyt 10th Jun '10 23 of 42
4

Imminent I tell you, imminent ;o)

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kenobi 10th Jun '10 24 of 42
1

In reply to emptyend, post #22

Re your thoughts at the end, I think it highly likely that SOCO will be "in play" before the end of this year. Whether anything actually happens before drilling the step-out on TGD and/or first production on TGT may well depend on how good or bad the various drilling results are.

well you may be right EE, I don't know, I thought Ed was preparing us for a longer haul, maybe just setting expectations just in case, we'll see. To be honest if the company is making steady progress, and the share price is rising, I don't mind waiting, because I think the end price would be higher if it's more proved up,

we'll see,

cheers K

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deucetoace 10th Jun '10 25 of 42

kenobi,
I agree. If TGD is a success I can't see them considering anything until they drill part of the fan from what Ed said.

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Isaac 10th Jun '10 26 of 42
7

I have to admit I got the impression that the "directors" were tired. Especially after recent events in the GoM and the recession the past two years. The Oil business is becoming a much more difficult business to work in and make a lot of money.

The low hanging fruit has been caught.

I am convinced once most of the value in Vietnam is realised they will stand down and do something else.

For me Soco is also my last big long term Oil Investment. Any other trades in Oilies will be short term.

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extrader 10th Jun '10 27 of 42
4

Hi Isaac,

Surprised to gather from your comments that you were at the AGM, I thought from earlier remarks that you felt that meeting directors etc in the flesh was a bad idea.....I'm aware from casual discussion that several attendees were rather keen to see you and will be disappointed that you didn't 'out' yourself ...... ;>

Interested , too, to learn of your apparent change of heart and declared interest, going forward, in trading oilies 'short term' in future. What sort of oilies do you think might meet your criteria - and why ?

ATB

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Isaac 10th Jun '10 28 of 42

Surprised to gather from your comments that you were at the AGM, I thought from earlier remarks that you felt that meeting directors etc in the flesh was a bad idea.....I'm aware from casual discussion that several attendees were rather keen to see you and will be disappointed that you didn't 'out' yourself ...... ;> 

extrader - I don't think it is of too much an ask for me to meet the directors and express my thanks for all their hard work over the years. I have been a shareholder for a long time now and I have done OK on the back of their hard work. I felt they deserved my time to say thank you personally. I don't think I will get a chance next year as I don't expect them to be an AGM or for Ed/Roger to be at the AGM if there is one.

Interested , too, to learn of your apparent change of heart and declared interest, going forward, in trading oilies 'short term' in future. What sort of oilies do you think might meet your criteria - and why ?

Lets be clear when I say investing short term in Oilie.. To invest in an E+P one has to think long term, atleast 5+ years as it takes a long time to acquire licences acquire and interpret seismic and, drill numerous wells and then finally realise most of the value. 

The bull market is mature. That is not to say it can't go much higher over the next 5 years, but the risk is much higher buying now then it was 5 years ago when a handful of people were interested in Oil. Read about some of the best business men out there, they buy into an industry early on, they ride the boom and then sell out before boom turns to bust.

Nothing goes up forever. Anyone can make money from a bull market, but only a handful manage to hold onto what they make.

I am not prepared to Invest in an E+P and wait 5 or so years to get a decent return. I am prepared to Buy Dana and say hold 3-6 months making 20-30% on each trade.

I don't invest in small cap Oil companies at all anymore as they are most at risk from a downturn.

Soco should do absolutely fine over the next 6-12 months and I am incredibly excited now that the ball is rolling...

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davjo 10th Jun '10 29 of 42
1

In reply to doverbeach, post #15

Thailand - don't expect this to be around for long. Several expressions of interest. Non-core for Soco.

Good. Don't expect $200m as posted by some analysts though. This is a relatively minor asset with limited upside which buyers won't be interested in at prices reflecting full NPV imo. A big discount, such as was the case with Tunisia, will be demanded I believe. At a guess, I'd say $120m to $140m would be a fair range to be realised. As ever, it would be nice to be proved wrong but at the end of the day, it ain't gonna be that relevant in the big picture, whatever the price ;-)

 

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emptyend 11th Jun '10 30 of 42
1

In reply to davjo, post #29

Hi dj,

At a guess, I'd say $120m to $140m would be a fair range to be realised.

Since I am one of those who thinks that $180-200mn would be the probable range, lets say a half of bitter on whether or not the deal breaks $160mn?

As you say - it isn't a major issue.....but it is one more step on cleaning up the asset portfolio as the final whistle is approached.

cheers

ee

(Adnams please ;-))

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ohisay 11th Jun '10 31 of 42
1

In reply to Isaac, post #28

I don't invest in small cap Oil companies at all anymore as they are most at risk from a downturn.

I couldn't disagree more.

Big or small it depends on the potential impending news flow and if if I had to pick between  a big un and a small un in this particular universe I'd pick a small un.

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davjo 11th Jun '10 32 of 42
4

Evening ee

Since I am one of those who thinks that $180-200mn would be the probable range, lets say a half of bitter on whether or not the deal breaks $160mn?

You're on! Make that half a pint of gin though with tonic thrown in!

( Gordons please:-) )

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emptyend 11th Jun '10 33 of 42

In reply to davjo, post #32

You're on! Make that half a pint of gin though with tonic thrown in!

( Gordons please:-) )

Blimey - what happened that abstemious chap who confined himself at an early AGM to a half of bitter for fear of falling asleep on the rattler back to the south coast ? ;-)

Maybe we'd better make it an autumn lunch when you are next up in Bury?

cheers

ee

ps.....I see that RdS's actions recently are likely to be tied to the exercise of the warrants. He left it pretty late - they expire on 13th July!

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doverbeach 11th Jun '10 34 of 42
11

In reply to Isaac, post #26

I have to admit I got the impression that the "directors" were tired.

Did you? I suppose there was less buzz. And down the pub afterwards it was similar - there was more talk about the GoM than Soco for the hour or so I was there.

But I don't think that is actually tiredness. More that at this moment in time, there is nothing to do but wait.  At previous AGMs we all wanted to know exactly what was going to be drilled and when it was going to start (and finish!) and what the options were etc etc  But this year we knew pretty much everything before we went to the AGM and there were no surprises. 

Ed said "the train has left the station" and that feels about right. Of course as investors we can still take money off the table or put more on, but we didn't learn anything new about the nature of the bet on Wednesday (although "nothing new" is actually new information in itself and well worth going to the AGM to hear!)

The directors of course have 1 big decision still to make - whether to farm out Nganzi and if so, to whom. But that is something they would never have been prepared to be any more open about at an AGM.

I think that the directors were also very comfortable in talking to the informed. They didn't set out to convert any one. It is unusual to see an oily AGM presentation with NO financials (except for minnows who have no money!)  and with no reserves slide. They don't need to raise equity. There is nothing to be gained at this point from bigging up the prospects and speculating on the size of the fan.

But buzz or no buzz, the next few months are going to be a hell of an exciting ride.  Faites vos jeux...

db

 

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Isaac 11th Jun '10 35 of 42

Manzanilla,

I did'nt expect any buzz at the AGM. Infact I did'nt think I learnt much as still early days on TGD. If they spudded TGD 2-3 weeks ago we would have got a bigger turnout. Most people don't need to attend the Soco AGM anyway as a lot of the good stuff is posted on these boards. Sufficient to get a good feel of what was said.

Perhaps there is a better word to use then 'tired'. But I am not saying the directors are tired of Soco assets, far from it. I am saying I got the impression they are tired of operating in a much more difficult Oil environment with political risk let alone drilling risk and actually finding oil, higher costs etc.

Basically it is a lot more difficult today to find Oil and realise big potential and make loads of money from it. These guys are'nt getting any younger either.

I certainly think they will exit on a very high!

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johnnylite 11th Jun '10 36 of 42
6

One other point I picked up that I cannot see mentioned above is that Ed stated there were two possible reasons why they would want a partner in Nganzi - either for the infrastructure as mentioned above but the second reason he mentioned was about a possible exit. So don't rule out a NOC coming in with a view to taking a stake now and then buying the rest after the exploration is done.

JL

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tournesol 13th Jun '10 37 of 42
3

Hi JL

good to meet you at the Red Lion and thanks for the beer.

Re the exit comment - Exit strategy might not involve a NOC. It makes me think of ENI and Mboundi and Burren. As I remember it, ENI started by buying a stake in Mboundi from Burren's partners. Then they bought Burren's stake too. Then they bought Burren lock stock and barrels.

They might have got a taste for that kind of thing.....

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MadDutch 16th Jun '10 38 of 42
1

One of my AGM questions related to the TGD-1X-ST1 well and to the oil bearing layers discovered in 2008.

I asked Ed whether the drill had penetrated basement and he said yes, and page 10 of the presentation shows it.

In 2008 I had assumed there were 3; above volcanics, below volcanics and perhaps in the basement too. From memory, we drilled only 30 feet below the lava layer before drillling was stopped by the loss of control and near blowout.

Does this mean the ultra high pressure and temperature zone is in the basement?

Are there 2 oil bearing layers or 3?

MadDutch

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davjo 16th Jun '10 39 of 42
4

In reply to MadDutch, post #38

MD


In 2008 I had assumed there were 3; above volcanics, below volcanics and perhaps in the basement too. From memory, we drilled only 30 feet below the lava layer before drillling was stopped by the loss of control and near blowout.

Point one, there was no "loss of control" nor was there a "near blowout". The drilling of 1X stopped because it was unsafe to proceed until suitable equipment was sourced when 1X-ST was subsequently drilled down to basement.


Does this mean the ultra high pressure and temperature zone is in the basement?

No, this zone was below the volcanics....a horizon which will not be penetrated with the current 2X well.
HTH :-)

 

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sirlurkalot 22nd Jun '10 40 of 42
5

Has any estimate been stated of how long TGD-2X will take, please? I'm sure everyone remembers the saga a couple of years ago.

Are the 4 development wells on TGT, starting c.end July, to be drilled using the same rig as is currently drilling TGD-2X? [I assume not, will the 4 wells be drilled from the TGT development platform?]

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emptyend 23rd Jun '10 41 of 42
6

In reply to sirlurkalot, post #40

Has any estimate been stated of how long TGD-2X will take, please? I'm sure everyone remembers the saga a couple of years ago.

45 days drilling time - plus testing, if required. Obviously subject to "usual" over-runs.....but this well has had enormous amounts of preparation time as well as benefiting from knowledge from the first well. It is absolutely nothing like the well of a couple of years ago which was more ambitious and dealing with many unknowns, most of which are now knowns.

 

Are the 4 development wells on TGT, starting c.end July, to be drilled using the same rig as is currently drilling TGD-2X? [I assume not, will the 4 wells be drilled from the TGT development platform?]

No. And yes they will be drilled from the platform.

You may find this link useful, as you appear to have missed it:

http://www.stockopedia.com/content/meet-the-management-interview-with-roger-cagle-of-soco-international-plc/39617

Also perhaps worth looking through here as the answers to most questions have already appeared. And then perhaps you might be able to give a bit back to these boards by posting your thoughts?

rgds

ee

 

 

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Murakami 24th Jun '10 42 of 42

Hi, the posts on navigation that were OT for this thread have been moved here: http://www.stockopedia.com/content/site-usability-issues/43665

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