Soco; my current view

30th Jan '15 by MadDutch

5 comments 17949 reads

Positive; (my opinion)
Their cost of producing oil; low $20s /barrel
Market was slightly positive this morning; up 1% after the 5.7% fall yesterday
"conservative estimates of initial flow rates" from the TGT/H5 well. Oh yeah, Pull the other leg!that's the one that flowed at 27,000 bbl / day! Plus a lot more wells drilled since.

Soco hopes to perforate levels in existing wells which have oil but they remain sealed. Why?
"Soco retains a strong balance sheet with net cash of $166 million at year end 2014...to weather the collapse in oil prices and fund its capex program," wrote analysts at Citi.

Negative (my opinion)
Cash value of expected 2015 - 16; production; likely to be 60 to 70% down from 2014, at current oil price.
They still intend to do a lot of drilling in 2015. Probably agreed up to 3 years ago.
Why drill for more oil when productive levels in working wells remain sealed?
Their Vietnam license runs out at some time; when?

MD

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MadDutch

31st Jan '15

Minor correction; -

See more at: http://www.stockopedia.com/content/soco-my-current-view-91170/#sthash.QP6yisB8.dpuf

"Pull the other leg!that's the one that flowed at 27,000 bbl / day!"

I am discussing the flow of the well, NOT the flow of my leg!! :-)

In case anyone is wondering ....

MD

marben100

Hi MD,

Speaking as an amateur but having had the benefit of professionals' views on these types of "behind pipe" situations previously, there can be good, technical reasons why it may be unwise to perforate behind pipe resources too soon.

Basically, perforating & flowing shallower levels in a well can interfere with the flow from the original deeper levels which were perforated originally. Therefore, it is sometimes wise to produce as much as possible from the deeper levels first, and only when the flow from those levels declines significantly to perforate the shallower levels.

Soco & their partners will be keen to maximise the ultimate recovery from each well and not risk some recovery by premature well interventions.

Cheers,

Mark

peterg

Just to back up what Mark says, and without any real personal expertise in the subject, I think it's perfectly clear that where oil is being left in currently unperforated zones there are very good reasons for doing so. The whole point of the recently completed Equipoise study is precisely to be able to develop models to allow maximum recovery (or a desirable balance of maximum total recovery and production rates) from what has proved to be a fairly complex reservoir, with multiple independent reservoir zones intersected by each well. They have put in a lot of time and money (and will continue to do so as the field develops) to ensure that the development and production (including the timing and ordering of perforations) is optimised.

Peter

1st Feb '15

Thanks to both of you for your very helpful additions to our knowledge here.

Does anyone know when our Vietnam licenses expire?

MD

kyu66

2nd Feb '15

MD,

"Potential oil recovery within the expected licence period to 2030, ..." as per http://www.investegate.co.uk/soco-international/rns/updated-tgt-review/201412090700381878Z/

Soco; my current view

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MadDutch

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