Valuation, sentiment, and SP direction

Wednesday, Jun 17 2009 by
17

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.

 

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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)
416.43p
Change
0.0  0.0%
P/E (fwd)
10.5
Yield (fwd)
4.1
Mkt Cap (£m)
1,401



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


1312 Posts on this Thread show/hide all

D1G3Y 29th Nov '12 973 of 1312

Hi EE regarding the possible timelines around this I would imagine we would need to hear of any decission around this next week to enable an EGM with notice period etc then progress the payments to ensure they would be made this year.

The potential early Christmas present would be appreciated

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emptyend 29th Nov '12 974 of 1312

In reply to D1G3Y, post #973

TBH I'm not sure of the exact rules regarding special dividends. On a quick trawl, there are often EGMs - but then there are also often other matters involving restructurings, which can't be ruled out here either. The notice period for an EGM is 14 days, incidentally, per resolution 18 of the AGM. We'll see.

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redhill 29th Nov '12 975 of 1312
1

In reply to emptyend, post #969

They might hold on to it until the prelims date - but I doubt it.

I don't.

For reasons mentioned earlier, I still think announcing a reserves update with the prelims is quite plausible in the absence of any other catalyst in the meantime (such as M&A), which I think unlikely.

FWIW, just an opinion based on experience - I haven't attempted to extract any comment from the company on the matter.

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emptyend 29th Nov '12 976 of 1312
2

In reply to redhill, post #975

Hi redhill,

Actually I don't think that they have ever made a separate announcement about reserves - or even included the reserves numbers with the prelims. The reserves numbers have been published in the Annual Report - and thats all.

I haven't attempted to extract any comment from the company on the matter.

Neither have I - for the good reason that I wouldn't expect to be told anything.  I'm aware that some have enquired and that those enquiries haven't borne fruit. So I'm guessing. I'm guessing that the reserves update will be sufficiently material that it will warrant a separate announcement once it is finalised and approved and won't be buried in a larger announcement (unless that announcement deals with the future of the Vietnam assets).

All FWIW. It is all a guess at this juncture, especially over matters of precise timing (which is why, incidentally and IMO, the share price has tended recently to drift up towards the end of the week and fall back on Mondays).

ee

 

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kenobi 30th Nov '12 977 of 1312

well we're getting close to December, the last time I enquired I was told to expect the reserves update to be completed in December. I know others have been told early December, but as we have already seen these dates are fluid and they will want to get the right result even if it takes longer. So Realistically we could hear something in the next week or two, or as EE has suggested it might be the new year. I hope that the reserves review will be significant enough (in a good way), to warrant an announcement, which I would hope would lead to a significant re rating. Still I have Spanish blood and there, the gifts are bought in the new year by the kings, so if Santa doesn't bring us a gift, maybe the kings will oblidge.

is it too early to wish people merry christmas ? My little one has started decorating her room with a pink tree and christmas lights!

K

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peterg 30th Nov '12 978 of 1312
10

In reply to kenobi, post #977

is it too early to wish people merry christmas ?

Yes!!!

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djpreston 3rd Dec '12 979 of 1312

You grump, Peter.

My three lads have their rooms decorated with their trees set up, advent calendars all go...it's really starting to feel like Christmas chez Moi.
Just need Roger to leave a little present for me now.....

Fund Management: European Wealth
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kenobi 3rd Dec '12 980 of 1312
2


http://www.equities.com/news/headline-story?dt=2012-12-02&val=780606&cat=energy

Soco International, an oil explorer operating off of Vietnam, is turning into the next takeover target for Asian energy companies as PT Pertamina's bid for Coastal Energy Co accelerates the race for energy assets.

Lets hope Darren !

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kenobi 4th Dec '12 981 of 1312
9

I enquired today re the progress of the reserves review and when an announcement might be made, I am sure that they won't mind me sharing the response here.

The reserves review is running a bit longer than anticipated, but should be available in early January. There are no specific plans for an announcement outside of a normal release on other corporate issues.

So I guess we'll be waiting until next year, and it sounds like they might not announce the results unless there's something else to announce,  or perhaps with the interims or the results

cheers K

 

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jseth123 4th Dec '12 982 of 1312

I'd say that's promising re discussions with another party actually...

Although, no specific plans for release doesn't suggest the material doubling of reserves or anything?

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peterg 4th Dec '12 983 of 1312

In reply to kenobi, post #981

sounds like they might not announce the results unless there's something else to announce, or perhaps with the interims or the results

Thanks for that K, though I do hope we don't have to wait for the Interims to hear :-) Prelims, or nearby, might well prove to be the case though.

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emptyend 4th Dec '12 984 of 1312
1

In reply to kenobi, post #981

The reserves review is running a bit longer than anticipated, but should be available in early January. There are no specific plans for an announcement outside of a normal release on other corporate issues.

Very elegantly put, IMO........  ;-)

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snodgrasse 5th Dec '12 985 of 1312
1

I thought there was a stock exchange rule to the effect that you can't sit on information that might have a material impact on the share price. It so, the statement, "There are no specific plans for an announcement outside of a normal release on other corporate issues" could imply that nothing's happening in the take over front and it's unlikely there's anything to be excited about in the upgrade.

Or, we could be optimistic and read the runes another way....

I hate parlour games.

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emptyend 5th Dec '12 986 of 1312
2

In reply to snodgrasse, post #985

the statement, "There are no specific plans for an announcement outside of a normal release on other corporate issues" could imply that nothing's happening in the take over front and it's unlikely there's anything to be excited about in the upgrade.

I prefer my interpretation - which is to say that all the loose ends in VN will be tied up at the same time (as I've generally been expecting ever since the reserves review was first mooted). If only I knew when..........

I hate parlour games.

This one is a cross between pass the parcel and musical chairs. Nobody knows when the music will stop - so it is perhaps best to hang onto the parcel or lurk close to a chair for as much of the time as possible. Unless one prefers to go off and read a book.

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snodgrasse 5th Dec '12 987 of 1312
2

In reply to emptyend, post #986

...Unless one prefers to go off and read a book.

Great Expectations?

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emptyend 5th Dec '12 988 of 1312

In reply to snodgrasse, post #987

 Very good  :-)

Or, even further back, "All's Well that Ends Well" (W. Shakespeare)?

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ExTownie 5th Dec '12 989 of 1312

Ignoring the possibility of a sale for now. On a similar point to snodgrasse, would a material change in reserves (say a movement beyond 10%) not require that information to be released to the market in a timely manner? That would make sense to me, but I am not aware of the rules.

ET

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adam 5th Dec '12 990 of 1312
1

Not the Comedy of Errors?

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sander4709 5th Dec '12 991 of 1312
2

Let's hope it's not Much Ado About Nothing...

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tournesol 5th Dec '12 992 of 1312
8

I think the idea that companies are not allowed to sit on significant information without announcing it is a popular misconception.

AIUI companies are under an obligation to avoid circumstances in which different parties which are active in the market are in possession of different information. In other words nobody should be able to gain an advantage by getting price sensitive information before anyone else. That means that when price sensitive information is released it should be done in a manner which does not disadvantage anyone - ie via RNS to which we all have equal access.

However a company is not obliged to publish price sensitive information if that information has not been made available to any market participant. It can sit on that info as long as it wants to - possibly for ever. The right to withhold info is limited in that if the info leaks or appears to have leaked then the co must act to ensure a level informational playing field.

This explains why some information such as drilling results always gets announced - becasue it is automatically shared with JV partners so nobody can control its dissemination. Whereas other company specific info - such as a take-over approach is sometimes kept under wraps for months or even years - (provided obviously that it is unsuccessful).

In the case of oil reserves, AIUI, companies tend to conduct a formal re-assessment and restatement on an annual basis. In the interval between re-statements changes to reserves will accumulate because of discoveries, depletion, revised reservoir modelling, revised production profiles, changes in oil price which change the marginal economics, etc etc etc. It is not practical for the co to make an announcement every time any of these change. Common practice seems to be that reserves restatements are tied to the annual accounting period and reported in conjunction with financial results.

So, I exxpect that SOCO will undoubtedly restate its reserves but that will be done in an orderly manner in conjunction with its year-end reporting schedule.

T

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