Vietnam Assets

Monday, Jul 20 2009 by
16

This thread has been created to discuss the Vietnam assets. These currently consist of:

a) CNV - an operating field in block 9-2 with 155mn boe of gross 2P reserves

b) TGT - a field which is about to enter development. Gross 2p recoverable reserves of 300+mn boe (management think it will ultimately be closer to 500mn) should be confirmed soon, as the final government approval for the development plan is now very close.

c) TGD and the rest of the HPHT appraisal area - huge exploration potential of over 1bn boe P50 recoverable

d) VT appraisal area - a small discovery area likely to be relinquished

I'll fill in more details in due course.

ee


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SOCO International plc is a United Kingdom-based 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 Nanga II A; the Democratic Republic of Congo (Kinshasa), consisting of Block V and the Virunga National Park, and Angola, consisting of Cabinda Onshore North Block. The Company's operations are located in South East Asia and Africa. It holds its interests in Marine XI and the Nanga II A Blocks in 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. It also holds a 60% working interest in the Mer Profonde Sud Block, offshore Congo (Brazzaville) through its wholly owned subsidiary, SOCO Congo BEX Limited. more »

Share Price (Full)
159.25p
Change
5.5%
Mkt Cap (£m)
501.3
P/E (fwd)
13.4
Yield (fwd)
3.4



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476 Posts on this Thread show/hide all

flyinghorse 5th Nov '13 457 of 476
4

In reply to kenobi, post #456

I do wonder if a sale of the whole company (Rather than just Vietnam) is now required/desired by management to trigger a "change of control" that would then see all the LTIP & option schemes crystallize?

FH

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emptyend 6th Nov '13 458 of 476
1

In reply to flyinghorse, post #457

FH,

Yes that is a good point. Though there is no reason why these things couldn't happen in closely-linked stages. And it is also true that the value of outstanding options/LTIPs relative to actual shares held is at an all-time low for the major players (probably only about 10% ish).

I think the odds have moved in favour of a whole company deal over the last year or two, but mainly because of management/board demographics rather than option positions.

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tiswas 6th Nov '13 459 of 476
1

So does the recent farm in make a whole company sale more, or less attractive to potential suitors?

Seems like more work for the buyer if his priority is production as he will presumably want to cover himself on what value he can achieve on any likely disposals of the exploration side before coming up with a sum of the parts bid price?

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tournesol 6th Nov '13 460 of 476
2

ISTM that the farm-in sends out a signal that anyone interested in buying the whole co in order to get hold of the Viet Nam assets could achieve a cleaner deal by moving in the near future rather than waiting. If Soco does more farm-ins or buys more early stage explo assets then a) they make the portfolio more difficult to integrate/rationalise and b) they spend cash. A predator would probably prefer to avoid bot those things.

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flyinghorse 6th Nov '13 461 of 476
3

In reply to tournesol, post #460

I think SOCO (often wondered what that stands for? Something Corporate?) will be hard to take out in a predatory manner unless its a stunning offer due to the distruibution/makeup of of share holders. (ie Unlike Venture & Dana who were hostile T/O).

The advantages of a mutual takeover would mean the ability to undertake full due diligence.
I think any offer will be proven reserves based so at the moment that's Vietnam and the rest is noise,albeit with some financial commitments.
I think you are right that the waters will get muddier as time goes by and no deal is done. The company has no choice but to keep moving forward rather than sit doing nothing with a for sale sign up. At least theres now a mechanism for outing value in place.

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emptyend 8th Nov '13 462 of 476
3

It is interesting to compare the flow test results on the TGT-10X well on the H5 fault block with the test results announced by Talisman in the Nam Con Son basin.....a total of 7,000bopd from three zones - all of which were much heavier than SOCO International (LON:SIA) 's recent test of 27,600bopd.

I'd say that Talisman's Vietnam business is in need of a big shot in the arm!

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emptyend 23rd Feb '14 463 of 476
2

Slide 16 ("page 14") from recent Talisman presentation, showing production at HST/HSD was only 8,000bopd for 2013 and is forecast stuck at 12,000 bopd for most of 2014 - suggesting that the capacity boost for FPSO testing is likely to have to come from TGT as HST/HSD doesn't seem likely to deliver as planned.

 

 

 

 

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extrader 23rd Feb '14 464 of 476
1

Hi ee,

On a glass half full basis, that means there's more capacity for our own production.....

On a glass half empty basis, is there any read-across for us in the reasons for Talisman's shortfall ?

ATB

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emptyend 23rd Feb '14 465 of 476
1

In reply to extrader, post #464

On a glass half empty basis, is there any read-across for us in the reasons for Talisman's shortfall ?

No. Not so far as I am aware anyway. Their fields are a quickly-depleting pimple piggy-backing on an elephant - though if you take their presentation slide at face value you will also see they think there is some upside based on their early production experience.

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flyinghorse 7th Apr '14 466 of 476
4

Small snippet on drilling challenges(Cementing/high pressure) & opportunities with new rig:
http://www.hlhvjoc.com.vn/hoanglong/en/news/content/410/2014-2015-hlhvjocs-rsquo-drilling-campaign-opportunities-and-challenges.html

FH

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ExTownie 7th Apr '14 467 of 476
2

FH - interesting thanks.

In 2013, HLHVJOCs’ successfully drilled and performed well testing operations on the TGT-10X. This was the key for the HLHVJOCs’ Management to turn the green light on for the construction of the Production Platform for TGT-H5 structure.

I assume that they need to have decided between using an FPSO and a tie-in before constructing this production platform?

ET

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emptyend 28th Oct '14 468 of 476
5

Article from 7th Sept that I've just noticed:

Construction of the H5-WHP (wellhead platform) jacket and drilling deck is complete. Offshore installation of the platform should be completed soon, with the jackup Naga 2 due to start drilling the five initial planned wells from mid-September onward.

Production will be tied-in to the FPSO serving TGT via a pipeline from the H5 WHP to the H1 WHP.

The FPSO’s oil throughput remains contractually limited to up to 40,000 b/d of its 55,000 b/d capacity. De-bottlenecking of the facility and increasing TGT production are therefore priorities for the partners.

However, a delay to this year’s drilling program has forced operational planning changes, the main one being to accelerate testing of the FPSO’s total liquids (oil and water) handling capacity.

The test program in July successfully confirmed an increase to around 140,000 b/d of liquids. It also confirmed minor additional modifications are needed to increase the capacity to more than 160,000 b/d.

IIRC the previous total fluids capacity was 125,000....so if they can both raise the total fluids capacity and convert some capacity to oil then perhaps production can be raised sooner than expected?


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peterg 28th Oct '14 469 of 476

In reply to emptyend, post #468

Thanks, ee - good find. I'm a little bemused why a delay to this year's drilling program (and presumably lower potential production, which I'd understood was a reason for hold ups in capacity testing) is now given as being a factor that "forced" accelerated testing of fluid capacity?

Good news though, and it must certainly be a marker, as you say, for useful increases in oil production once they get the wells sorted.

Peter

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emptyend 28th Oct '14 470 of 476
1

In reply to peterg, post #469

Hi Peter,

My guess is that if they'd drilled up more then they may have gone for a pipeline connection earlier and by-passed the FPSO. Or the journo may have it wrong. Or something else.

Or perhaps additional testing has been forced by the commercial reality that unless the FPSO operator "gets with the programme" on capacity, then he will struggle to get the contract rolled over? 

Perhaps the IMS will tell us.

rgds

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emptyend 15th Jul 471 of 476
4

The early start-up of H5 that was flagged at the 2015 AGM in June seems now to have been confirmed:

.....everything is now ready for the offshore installation to secure the target of first production from the TGT H5-WHP in August 2015, two months earlier than the deadline approved by the Government, which increases the production output from the TGT field by more than 11,000 barrels per day. This achievement not only safeguards the production plan of PVN, PVEP and the Petroleum Contract’s Partners of Block 16.1 (SOCO, OPECO and PTTEP), but also makes a contribution to the national energy security, territorial integrity and offshore economic activity security.

Given that the H5 topsides sailed away 5 days ago for the installation, I'm guessing that this morning's announcement of the results date followed confirmation that all had gone well in Vietnam with the installation of the topsides - and that we may be looking at 5th August as the date of first oil from H5. That early increase in production will be very welcome indeed as should help considerably in progressing the RAR and revised FDP for the TGT field as a whole - which is a key catalyst for value, IMO.

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tournesol 15th Jul 472 of 476
3

Ahaaaah!

so perhaps the game is once again afoot?

I had been looking at the share price this week and wondering whether the time was right for a bit of toe dipping.

I'm out of oil altogether these days and am not contemplating a major re-entry - but perhaps a couple of toes would be worthwhile.

Will sleep on it.

T

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emptyend 15th Jul 473 of 476
1

In reply to tournesol, post #472

Hi T,

Don't listen to me - I know nothing! 

However, that article does support the optimism at the AGM regarding H5 start-up.....and an early start-up can't hurt the chances of making progress with getting partners aligned and raising production. The big issue, of course, is the oil price (soft again tonight).....but I'd like to think that a plan to raise production materially can be put in place before the oil price moves much, because the cost of services needed to expand production will then be relatively low. As ever, it is a matter of timing......

....but can sentiment get much worse for either the stock or the sector?

I have to say that if I didn't own more than enough already I'd be up for some modest toe-dipping. I've done that in recent weeks in a couple of other sector stocks, mainly on the view that the "baby has been thrown out with the bathwater" in the sector. Balance sheet strength, cash and/or cashflow are all key though - as are modest or fully-funded work programmes.

As for the "M&A Game" here, it remains a guess - as ever......but an agreed FDP would be a serious catalyst. It may be worth noting in that context the AGM comment from Ed Story that all that is needed is a shared understanding of the development economics - you don't need to have an approved FDP or RAR to get stuff done if everyone agrees.

regards

ee

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kenobi 17th Jul 474 of 476
1

In reply to emptyend, post #473

>>> As for the "M&A Game" here, it remains a guess - as ever......

yes indeed, I couldn't help but smile at post 452 ...

"I don't think that we're going to be around to see the actual start-up of production in H5 - but may well be around long enough to see what the plans are"

But as you say, it's a guess. Personally I'm more interested in the longer term price of oil than the take over potential.

K

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emptyend 19th Jul 475 of 476

In reply to kenobi, post #474

Re 452 production hasn't yet started at H5......

.....just sayin'

Wait for the fat lady to finish singing first ;-)


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kenobi Mon 10:44am 476 of 476

In reply to emptyend, post #475

lol !!! good point !

however without attributing to anyone in particular as I can't be bothered to go back and check who said what exactly, I do recall discussions about how SOCO wouldn't ever produce oil on tgt, and we've had phase one and two now running for years, and about to have H5 go into production hopefully in the next few weeks. but yes you're right H5 hasn't yet started up !!

Hope you are well ee,

K

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