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.

 

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)
416.6p
Change
0.6  0.1%
P/E (fwd)
10.7
Yield (fwd)
4.2
Mkt Cap (£m)
1,380



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


1284 Posts on this Thread show/hide all

fullbreakfast 6th Dec '12 1005 of 1284
1

In reply to peterg, post #1002

Could there be tax implications?

Not for UK tax, though I suppose it is possible that there could be a US tax benefit. I'd be inclined to doubt it, however.

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emptyend 6th Dec '12 1006 of 1284

IMO peterg is by far the closest in this guessing game. Some of the other thoughts are a million miles off the mark, IMO.

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jseth123 7th Dec '12 1007 of 1284
1

Can these awards be granted in a close period?

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tournesol 7th Dec '12 1008 of 1284
6

I tend to think that there is a rather large contralto* standing patiently in the wings, all ready to come on stage. ISTM that CG's appointment is designed to provide her with a front row seat when the fat lady comes on to perform.


(* I originally wrote soprano, but then thought that word might be misinterpreted as being connected to Tony of that ilk)

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peterg 7th Dec '12 1009 of 1284
1

In reply to jseth123, post #1007

Can these awards be granted in a close period?.

I would assume so, the structures under which these are awarded were set up years ago, and the awards don't involve any current decision - other than an assessment performance against benchmarks, so I can't see why a close period would prevent them being made.

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adam 7th Dec '12 1010 of 1284
1

a million quid for two days work.

there'd better be some jam for shareholders

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emptyend 7th Dec '12 1011 of 1284
1

In reply to peterg, post #1009

Can these awards be granted in a close period?.

I would assume so

No they can't. There is no close period at present - or there wasn't yesterday anyway.........

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jseth123 7th Dec '12 1012 of 1284
1

Can you be outside a close period if you are discussing a sale of company with another party(/parties)?

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SW10Chap 7th Dec '12 1013 of 1284
8

Thanks for all the thoughts on this - it would be good to hear more from the company because, as things stand, it leaves me feeling a little uncomfortable.

I have no problem with a company deciding to elevate their VP of Finance to the Board, normally I would expect a statement  to go with it explaining why the shareholders' company is going to benefit from the move - something like:

Rui de Souza, Chairman of Soco, said: "I am very pleased that Cynthia has agreed to join the Board.  She is highly distinguished in/as [...] and will bring invaluable expertise in [...] to the Board. In particular, her knowledge and understanding of [...] which is an essential element of the company's future strategy.

Something must have triggered this move now and I think Soco should be a little more transparent. Without transparency, the subsequent announcement of LTIP shares being awarded looks a little cosy.

If there really is a contralto standing in the wings then it could look even worse: if a Director of a company bought £562k of shares just before a significant announcement, and could reasonably be expected to have knowledge of that announcement, how would that look?

If there's a rational business logic to my benefit behind all this, then great - let the sunlight in.

SW10

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jseth123 7th Dec '12 1014 of 1284
2

It's all a bit uncomfortable, I'll agree with that. Clearly there is a lack of independence on the board at Soco which isn't a problem on the whole and is an inevitable side effect of the long and successful history the board have of working together and having control of so much of the shareholders register.

I am quite bullish on these moves as they seem quite quick and to be positioning the board members to get their snouts in the trough at just the right time. It might look a little obvious in retrospect if something happens but I'm sure they have advice to say its all above board. To be fair, I'd be willing to look like a bit of a mug in my final business act if it netted me an extra seven figures. Don't forget, RC and ES have "never taken a penny off the table"...

In summary - I don't like it, but I think the signals are good for shareholders.

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tiswas 7th Dec '12 1015 of 1284

In reply to jseth123, post #1012

There are more qualified people on this board than me to answer this but a quick Google reveals a distinction between a close period and a prohibited period.

http://fsahandbook.info/FSA/html/handbook/LR/9/Annex1#D593

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WeeEck 7th Dec '12 1016 of 1284
1

I believe it is quite common in company takeovers for certain directors to be co-opted on to the new company board during the assimilation period!?
Just a thought.

 

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flyinghorse 7th Dec '12 1017 of 1284
4

Are we not getting excited here for nothing. The LTIP shares announcement is consistent with the same last year?
http://www.socointernational.co.uk/index.php?cID=268&cType=news

FH

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WeeEck 7th Dec '12 1018 of 1284
1

I am not bothered about the share issue. I am just curious about why appoint her to the board now. It is not as if she is new on the scene. Ducks in rows comes to mind.

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peterg 7th Dec '12 1019 of 1284
4

In reply to adam, post #1010

a million quid for two days work.

No, the LTIP share to CC have nothing to do with her being on the board or not. She would have got them regardless of her recent move to the board.

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jseth123 7th Dec '12 1020 of 1284
2

In reply to flyinghorse, post #1017

Are we not getting excited here for nothing. The LTIP shares announcement is consistent with the same last year?
http://www.socointernational.co.uk/index.php?cID=268&cType=news


How anticlimactic!

I can't help but think there is something in the fact that CC has moved on to the board out of the blue, and my suspicion is that it's something that will see the Cagles be well rewarded in short order. We'll only know in retrospect obviously.

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emptyend 7th Dec '12 1021 of 1284
7

Just a few comments:

  1. CC has been an integral and important part of the company since it was formed
  2. She would have got the options anyway (as in all previous years)
  3. Eric is right to suggest ducks are being got in rows, IMO
  4. I'm not bothered about the lack of explanation, especially given the balance between execs and non-execs on the board and the fact that she would have been there anyway (as CoSec). JSeth iscompletely  wrong to suggest there is a lack of independence on the board - they have SEVEN non-execs for cripes sake. There won't be many other companies that have less than 30% of the board made up of Execs.

 

IMO it is a trivial formality, designed to give more operational flexibility/security, especially in the sort of scenarios that we can expect to see.

 

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peterdm 7th Dec '12 1022 of 1284
5

CC will now have a new/revised employment contract, and director terminations are handled differently to other employees - Companies Act rather than Employment Protection etc. Will require a motion to be passed at an AGM/EGM. May also be a different notice period. Seems like the sort of loose ends you might want to tie up if a material change is in the offing.

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davjo 8th Dec '12 1023 of 1284
3

Seems like the sort of loose ends you might want to tie up if a material change is in the offing.

Yes indeed! .....such as the long mooted "structural" board change, which may result post SV sale, for example ES stepping down with RC becoming CEO and CC CFO???? Not sure if that would be frowned upon though!

 

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tournesol 8th Dec '12 1024 of 1284
10

I think it fair to hazard a guess that the elephant in the room is the one wearing his polo kit and with his trunk packed ready to depart for a well deserved retirement.

Understand that and the rest of it becomes crystal clear.

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