Valuation, sentiment, and SP direction

Wednesday, Jun 17 2009 by
16

Detailed discussion of Soco's assets should take place on other threads, but this thread is to discuss the latest valuations both by ourselves and analysts, sentiment (ie will the shares go nowhere because there's not much upcoming news) and likely moves in the share price in the next six months.  How should the shares be valued?  How reasonable is it that any drilling without a firm commitment further than several months away is ignored by the market?

I haven't seen many recent analysts' reports on Soco, but I have one from Cazenove with a core NAV of 1370p and no doubt considerable explo NAV on top of that.  I imagine that's approximately concensus, but maybe with crude rising again these concensus NAV figures will start to rise.  Has anyone any other recent broker estimates?

My view, as stated elsewhere, remains that in the absence of much to get the market excited the shares will wander aimlessly for the rest of 2009.  I've previously guessed that if crude were $65 at Christmas 09, then Soco's SP would be somewhere near £13 then, and I'm still very happy with that guess.  What does anyone else think?

Of course unexpected bids and other events may overtake this, but these sort of events may happen to any company, and perhaps Soco (where management seem unlikely to accept bids since they believe there is considerable value not recognised by the market) is one of the less likely companies to be affected by the unexpected.  The key new news for Soco might be (a) a bid (IMO unlikely), (b) some sort of presentation by management of the drilling data they claim to have that demonstrates a significant strike has been made at E, currently ignored by the mkt, or (c) possibly hitting oil off the Congo.

 

Moderation note: posts will only be deleted from this thread by the site admins or by agreement from at least three of sirlurkalot, emptyend, djpreston and doverbeach.  If three of this list agree to delete a post, the names of those three and the reason for deletion will be noted in a post on this thread so everything's completely transparent.


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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)
424.9p
Change
-5.1  -1.2%
P/E (fwd)
10.5
Yield (fwd)
4.2
Mkt Cap (£m)
1,427



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


1303 Posts on this Thread show/hide all

kenobi 17th Dec '12 1044 of 1303
9

...err....no we don't. We pay management to worry about that for us. All the vibes from mid-year onwards have been positive re the connectivity thesis - and if they now want more drilling to dot the i's and cross the t's for the sceptics, then I'm prepared to back a judgement that it is optimal to delay rather than cash out.

My point is that everything has been pointing to this being proven by now,  (well sept originally but it's slipped), now if they want more drilling to dot i's and cross t's I'd like it explained as to what drilling is needed to prove this theory,  and how come the management is so convinced if they cannot convince the people carrying out the reserves update.   I'm struggling to understand what the issue is at the moment,  and while I'm open to further delays in cashing out,  I'm starting to wonder if they shouldn't announce that the accarage is for sale, and start the process of a sale.   It seems to me if this is the sort of thing that is likely to become clear during the period of a sale, (the block next door took 12 months to sell).   I'm not saying that they don't have good reasons why they want to do this,  they probably have.  But for most of the time I've held soco,  I have had a pretty good idea of what I was waiting for,  usually something to happen to monetise vietnam.  For a long time it was drilling tgd, or getting tgt into production,  or waiting for production data on tgt p2.   Now it's this connectivity proof.  But I have no idea what's required to prove this,  I had until recently thought that they would do the work needed as part of the reserves review,  now it seems not.  or that it will go on for an extended period.   I'm happy for the management to manage the company,  I'll manage my money though,  so all I'm asking is for explanation of what the path from here to monetising Vietnam is,  so that I can decide what I should do. I'm sure others here will want to make the same decisons for themselves.

Cheers K

 

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emptyend 17th Dec '12 1045 of 1303
2

In reply to loglorry, post #1043

Ummm according to what I've found tropical Cyclones are October-early December and .. in April-May. Also Coastal Energy are having no problem drilling wells in the Gulf of Thailand ( a bit further away). They have just taken delivery of a new rig in fact. Could be wrong though.

You are wrong.

The cyclone season off Vietnam varies according to which part of the coast you are on and there is ample evidence over many years that Dec-Feb is the season on SOCO's blocks. Some will recall the delays a few years ago when they couldn't move a rig from 16-1 to 9-2 at this time of year because of the weather...and then there is the IMS statement too.....

The rig has been released ahead of the monsoon season

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emptyend 17th Dec '12 1046 of 1303
8

In reply to kenobi, post #1044

I'd like it explained as to what drilling is needed to prove this theory,  and how come the management is so convinced if they cannot convince the people carrying out the reserves update.

Has everyone here lost their marbles?

The CPR is due in January. It was delayed to incorporate data from 3 wells that were put onstream in October (see the IMS). When the CPR is finished, I fully expect that the company will be very clear on the forward plans, including drilling, proving up (if required) and quite likely issues of monetisation & dividends too.

I'm happy for the management to manage the company,  I'll manage my money though,  so all I'm asking is for explanation of what the path from here to monetising Vietnam is,  so that I can decide what I should do.

What you are asking for is the equivalent of a post-match briefing whilst you know that they are still playing extra time. The 90 minutes may well be up - but the time to ask that question is mid-January, in the unlikely event that there has been no statement by then.

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emptyend 17th Dec '12 1047 of 1303
3

In reply to emptyend, post #1046

ps......I'd also add that 100% of this discussion is based on conjecture. For all we know, they could have been following the "sale route" for the last week or so. I certainly wouldn't want a queue of panting, anxious PIs if I was trying to do a deal - much better to give everyone the idea that nothing is happening.

In other words, the 95% probablity is that nothing is happening - but it can never be 100% probability.

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kenobi 17th Dec '12 1048 of 1303
1

The CPR is due in January. It was delayed to incorporate data from 3 wells that were put onstream in October (see the IMS). When the CPR is finished, I fully expect that the company will be very clear on the forward plans, including drilling, proving up (if required) and quite likely issues of monetisation & dividends too.

well I look forward to seeing this explanation, that's all I'm asking for, 

What you are asking for is the equivalent of a post-match briefing whilst you know that they are still playing extra time. The 90 minutes may well be up - but the time to ask that question is mid-January, in the unlikely event that there has been no statement by then

well, depending on whether they announce the results of the reserves review,  the email I got from them suggested that they might not.   Anyway,  I look forward to an update in January.

 

 

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tiswas 17th Dec '12 1049 of 1303
2

What you are asking for is the equivalent of a post-match briefing whilst you know that they are still playing extra time.

Some people are on the pitch.... they think it's all over..... ...

not yet it's not!

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emptyend 17th Dec '12 1050 of 1303
1

In reply to kenobi, post #1048

well, depending on whether they announce the results of the reserves review,  the email I got from them suggested that they might not. 

I refer you to my comments in 1047.

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peterg 17th Dec '12 1051 of 1303
1

In reply to kenobi, post #1048

depending on whether they announce the results of the reserves review,  the email I got from them suggested that they might not.

Well, it's certainly possible they won't. If a deal is agreed we will never see it. OTOH, if that doesn't happen I'd be amazed if there isn't some information released at least by (or in) the prelims.

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kenobi 8th Jan '13 1052 of 1303
4

Closed period repurchase program announced,

http://tinyurl.com/b9s5yxt

I wonder at what level this kicks in ? perhaps that small buy back before christmas gives us a clue that they might be planning to buy back over 350.
Will be interesting to see if any buybacks take place and at what price,

K

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kenobi 21st Jan '13 1053 of 1303
10

I enquired re progress last week,

I was told that the reserves review is now expected at the end of the month, (I'm assuming January 2013 thought they didn't specify. I was also told that tgt production is running at between 50-55k. I guess this could be because production is being run to get information re the reserves assessment, and it might be difficult to do this and modify the fpso at the same time, speculation on my part. I had hoped that some progress might have been made with this.

Hope everyone is well and having fun in the snow!

K

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extrader 21st Jan '13 1054 of 1303
1

Hi kenobi,

Thanks for doing the legwork for me - I was about to make the same enquiry !

Is Soco expecting the review to reach it ' at the end of the month' - or for it to be available to shareholders by then?

TIA

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loglorry 21st Jan '13 1055 of 1303
1

Reserves review by end of this month? That is surely quite big news! Not many days left in January. Presumably they will release it then too?

Log

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kenobi 21st Jan '13 1056 of 1303

Well yes, I guess how big a deal it is, depends upon what it says. I don't know if they plan to announce the results of the review. The first milestone is to get it to the company. I wouldn't be surprised if it slips a little further. The best possible result is more important than the timing.

Looking forward to finding out more.

cheers K

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Groundhog 5th Feb '13 1057 of 1303

Apologies for what may be a naive question (been away and inattentive). Is there an expected announcement regarding reserves soon? And if so is there an expected date? Or another announcement expected?

(Not talking about a company sale, am aware that's an imponderable)

Groundhog

PS Sad to hear of Davjo's departure, was an impressive poster

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emptyend 5th Feb '13 1058 of 1303
6

In reply to Groundhog, post #1057

Apologies for what may be a naive question (been away and inattentive). Is there an expected announcement regarding reserves soon? And if so is there an expected date? Or another announcement expected?

There is no official "expected date" of any announcement of that type. However, it is my opinion that an announcement about reserves (and about the possible sale in Cabinda) can be expected any day now.....and I'd certainly expect to see something in the next 10 days (because it is widely known that the reserves report was expected by the end of January).

My guess is that it would take the form of a corporate update - and thus the exact timing may depend on the timing of a particular event (such as the signing of an agreement to sell Cabinda). I think there are several news items which could be covered in such an update - including clarification of drilling plans.

So......I'm on watch on a daily basis.

ee

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redhill 5th Feb '13 1059 of 1303
2

In reply to emptyend, post #1058

Producing and completing the reserves update (perhaps internally to the company?) by end of January is not the same as publishing it. Although it would be disappointing, I think we should also be prepared for the possibility that nothing may be announced until the Preliminary Results.

I'm hoping ee is right about hearing something formally within 10 days but let's not forget the reserves update has been anticipated for announcement for some months now, according to some reports.

redhill

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emptyend 5th Feb '13 1060 of 1303
3

In reply to redhill, post #1059

Producing and completing the reserves update (perhaps internally to the company?) by end of January is not the same as publishing it.

Yes of course. And, for the avoidance of doubt, I am NOT expecting it to be "published". Such reports almost never are. But I am expecting to hear a summary of the report's conclusions!

Although it would be disappointing, I think we should also be prepared for the possibility that nothing may be announced until the Preliminary Results.

Well of course if you want to be really conservative, then you shouldn't expect to hear anything until the Annual Report itself is published - because the company have never made announcements of reserves as part of the prelims. My understanding is that they will update on various matters shortly, including the CPR and Cabinda...but of course circumstances could easily change (again).

ee

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loglorry 5th Feb '13 1061 of 1303

Well those last few trades that went through just below 400p suggests someone knows something or is positioning themselves for good news. Volume spike well above the offer suggests someone is paying up to get long.

I suspect we'll have news before too long.

Log

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emptyend 5th Feb '13 1062 of 1303

In reply to loglorry, post #1061

Well those last few trades that went through just below 400p suggests someone knows something

.....sigh. Personally I put it down to credulous TA traders who have read comments on ADVFN such as

Seems we are having trouble getting past about 390p - feels a bit like we've run out of steam. Need some positive news if we are going to go higher.

'snot rocket science. People recognise it is cheap and know that news is expected to prove as much. End of.

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loglorry 5th Feb '13 1063 of 1303
1

LOL c'mon ee lighten up looks like your pay day will soon be here. A bit of frivolity while we wait can't hurt surely?

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