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 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)
302.8p
Change
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P/E (fwd)
7.9
Yield (fwd)
5.4
Mkt Cap (£m)
1,018



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470 Posts on this Thread show/hide all

emptyend 22nd May '12 211 of 470
6

Jimbly on ADVFN found an interesting link re the topsides load out:

HLJOC, PVC-MS and the subcontractors are effectively executing the offshore work including transport, installation, hook-up, and commissioning to target the first oil from WHP-H4 in July 2012, one month earlier  than the plan by the Block 16-1 Petroleum Contract Management Committee and 11.5 months earlier than the Early Development Plan, approved by the Ministry of Industry and Trade.

I found another interesting link recently, concerning Bach Ho:

After reaching peak output of 263,000 bbl/d in 2003, the field’s production dropped to an average 92,000 bbl/d in early 2011. It is expected that Bach Ho’s production decline rate will range from 20,000 bbl/d to 25,000 bbl/d through 2014.

...should be plenty of spare capacity in their facilities, then.

ee


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kenobi 22nd May '12 212 of 470

Yes I look forward to hearing what the management have planned for P2 production, and whether anything has been done to the fpso re water capacity, or if there are plans to tie in to Bach Ho infrastructure. I'm not sure how far the tie in point would be but I would have thought that longer term it would probably make more sense to tie in to Bach Ho, is Phase 1 much futher way or is there some other reason not to link that into the same network ?

K

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emptyend 22nd May '12 213 of 470
2

In reply to kenobi, post #212

longer term it would probably make more sense to tie in to Bach Ho, is Phase 1 much futher way or is there some other reason not to link that into the same network

It is more expensive to link to Bach Ho than the other solutions. And the need to do so is really only for the peak (say the next 10 years). Hopefully that will be someone else's decision shortly.

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kenobi 22nd May '12 214 of 470
1

It is more expensive to link to Bach Ho than the other solutions.

Do you have more info on this ee ? is the expense in linking in the pipeline, or is it to do with paying the owners of the infrastructure for it's use ? Once linked you would expect the real costs of using a pipeline to be much lower than the fpso solution, of course it may not be so in terms of the cost to soco, and I guess it depends where the oil is being shipped to, if it's being taken to vietnam then the pipeline makes more sense, if it's going elsewhere then it will still need to be loaded to a tanker anyway. (any idea what magnitude of cost difference there is ?)

I assume that PV have ownership or a share in the Bach Ho infrastructure, so they may well have a preference for using this solution, and paying a higher price, (since some of that price goes to them), I wonder if this is one of the issues causing the slow ramp up and perhaps the compromise we will have to live with, in order to get tgt production above 55k. I presume we are talking about fractions of a dollar per barrel or there abouts ?

Will be interested to hear what is said about the plans to handle capacity beyond the much discussed 55k,

K

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emptyend 22nd May '12 215 of 470
1

In reply to kenobi, post #214

Do you have more info on this ee ? is the expense in linking in the pipeline, or is it to do with paying the owners of the infrastructure for it's use ? Once linked you would expect the real costs of using a pipeline to be much lower than the fpso solution, of course it may not be so in terms of the cost to soco,

Yes - but nothing reliable enough to quote. Suffice to say that the capital costs would certainly be more expensive (tens of mns) - and I guess one should assume that there would be a bigger bite out of operating margins too due to tariffs.

Not at all clear which way will ultimately be picked or what the net costs/benefits would be. Will all have to wait to see the plans I guess.

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kenobi 18th Jun '12 216 of 470
8

Interesting video, showing something of what is involved in the fpso, tgt1,

http://www.youtube.com/watch?v=KJWjKicUL6g&feature=player_embedded

K

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emptyend 25th Jun '12 217 of 470
9

On the matter of production rates at TGT, there are some interesting stats in this article arguing that Vietnam will have to explore in the deep water:

Forecasts indicate that Vietnam’s oil production will decline to only 313,000 barrels per day (bpd) by 2020.1 Oil consumption in Vietnam, however, is set to increase by 69 percent between 2011 and 2020, with annual growth of 5 percent to 7 percent.2  By 2020, Vietnam will consume about 554,000 bpd.........

Vietnam now ranks third in terms of proven oil reserves in the Asia-Pacific region, with 4.4 billion barrels.

Based on those figures, TGT could be producing 25-30% of all VN oil and perhaps account for 12% or so of reserves.........not the sort of asset that will be left under-developed in the context of the supply gap that is forecast......

ee

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emptyend 25th Sep '12 218 of 470
4

There is an interesting BusinessWeek story out today quoting Ed Story:

“There are particular basins in deeper water offshore Vietnam that we think have very significant potential and could change the production decline rate,” Story said. “Some of them are in the claim areas,” he said, referring to parts of the South China Sea claimed by both Vietnam and China.....

Soco is in a better position than many other companies to target prospects in disputed Southeast Asian areas because it has “no interest” in going to China, said Story.

“Of the open areas, you’re talking deeper water and you’re talking claim issues vis-à-vis China,” said Story. “We’re willing to take measures of risk.”

I'm replying to Adam's comment here because the thread title he posted on isn't relevant.

That statement does not seem consistent with a near term takeover, or medium term either as would amount to a poison pill. I don't understand the logic behind this

It is impossible to say whether it is consistent or not, without knowing who might acquire SOCO VN.

The logic is simple - competitors for blocks in Vietnam are being deterred by their interests in China, so there is less competition for the blocks available. It is now clear that there are going to be no serious buyers being considered from China (unless this news is intended to provoke such a move) - but buyers from Europe (such as Perenco) or Japan, for example, are unlikely to be deterred.

More significantly, I think that SOCO are taking the view that a negotiated deal between Vietnam and China is now a realistic possibility (because the Chinese are plainly keen to resolve it and get on) - and there is an opportunity to get sensible assets locked up before there is a final resolution to China's claims. It is my understanding that they think that the recent Chinese moves indicate that the Chinese themselves won't be pushing their "9 dash" claims in all areas, so I'd guess that the blocks that they are mainly interested in won't come to be seen as especially contentious.....you'll note that Story left the exact location of the blocks ambiguous.

It'll be interesting to see - but I don't think we'll have long to wait......I suspect a deal is now quite close, because the potential disposal in Cabinda is IMO a move to reduce overall political risk in the portfolio to balance out the increased risks that may come with new offshore VN blocks.

ee

 

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adam 25th Sep '12 219 of 470
6

OK. That would seem like a good bridge type finesse, except that a later comment in the interview got me thinking that they are getting a bit big for their boots....

 

“If they want to keep what is a very, very significant and current and historical contributor to the balance of payments and the economy, they’re going to have to step out, with people who can take the heat,” Story said. “It’s that simple.”

Following the tenor of your analysis, I would presume you would read that as refering to someone else, not Soco?

 

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emptyend 25th Sep '12 220 of 470
4

In reply to adam, post #219

Following the tenor of your analysis, I would presume you would read that as refering to someone else, not Soco?

Well I think what we have here is a developing situation in which very few of the cards being played are going to show up in public. SOCO are of course pretty well placed to ally with VN on these issues at this stage - and indeed discussions of this sort have been going on in a desultory fashion for a year or two, I believe. I'd guess the recent Chinese moves have pushed it up the agenda more quickly.

However, I certainly don't see SOCO taking deepwater assets very far into their lifecycle (even if no VN deal is done soon)......I see it much more as a sensible portfolio move to add upside potential to the VN portfolio.

It isn't beyond the bounds of possibility that a pretty clear resolution will have been obtained in relation to the blocks concerned before any significant explo spend is required.......so a buyer of SOCO  VN would likely view it as a useful option to have available (perhaps even if they had interests in China - though that may depend on the level of contentiousness of the location).

Anyway....not much to be said for now - lets see what turns up next..... ;-)

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emptyend 5th Nov '12 221 of 470
7

It seems that a deal has been done to sell a chunk of the H1 2013 production from TGT.

Three buyers this time at 10,000bopd each (reportedly) - and at a premium of $4.90 to Brent. IIRC only Shell has bought on a term basis for both periods.

The premium is lower than the H2 2012 contract and the amount is (on the face of it) also lower, meaning that a greater proportion of production will probably be sold spot.

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noidea 7th Nov '12 222 of 470
1

As a follower and an admirer of emptyends knowledge/wisdom I would appreciate advice as to sell now as I am now back in the black after too long in the red. IS THIS SHARE EVER WORTH HANGING ONTO?????

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noidea 7th Nov '12 223 of 470
1

As a follower and an admirer of emptyends knowledge/wisdom I would appreciate advice as to sell now as I am now back in the black after too long in the red. IS THIS SHARE WORTH HANGING ONTO?????

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MadDutch 7th Nov '12 224 of 470
4

In reply to noidea, post #223

I have been in Soco for nearly 13 years, know quite a lot about it and I am definitely not selling.

I am adding to my spreadbet position but do not recommend anyone to do the same, it is very high risk.

MadDutch

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kenobi 8th Nov '12 225 of 470

Lets just hope that the market is starting to see the value and the takeover potential. The market seems to have been spooked by the delays in ramping up production, by socos own forcasts we should be producing 90k per day now, hopefully the market is seeing that there are no production problems other than expanding capacity, which might take some arm twisting, but is much better than geological problems. If the market has started to think that there could be a major reserves upgrade in the pipeline, or a deal , or both, then it's logical that the price should start to creep up, I wonder if we'll see any rns's showing who's buying ?

cheers K

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tiswas 8th Nov '12 226 of 470

K

I would be very surprised if we see any RNS's, IMO the volume has just not been there.

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kenobi 8th Nov '12 227 of 470

tiswas,

I bow to your superior knowledge I haven't checked the volumes, although I suppose if its rising on small volumes thats a good indication that it's in a good position to rocket on positive news

cheers K

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tiswas 8th Nov '12 228 of 470
3

K

This is a good reference for historic trade volumes.

http://www.investorease.com/company.php?disp=volume&order=0&epic=SIA

There is the question as to what volume is carried out on other exchanges, this information is just for the LSE.

So volumes could be a lot higher than we think, but I would be surprised if sufficient stock is available for the Insti's to pick up in any size at this late stage.

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emptyend 21st Jan '13 229 of 470
5

Previously I would have put reports like this one in the "incidental" thread, but frankly I think the news that ENI and Petrovietnam have signed a formal agreement is rather more relevant to the end game in Vietnam than it might seem on the face of it:

Rome, 21 January 2013 – The President and CEO of the Vietnamese national oil company PetroVietnam, Do Van Hau, and Eni CEO Paolo Scaroni signed a Memorandum of Understanding for the development of business opportunities in Vietnam and abroad, in Rome today. The agreement was signed after a meeting between Italian Prime Minister, Mario Monti, and the General Secretary of the Communist Party of Vietnam, Nguyen Phu Trong........

....Paolo Scaroni also discussed the development of Eni’s current operations in Vietnam and confirmed its favorable prospects due to the progressive strengthening of Eni's presence in the country, as well as its collaboration with the Vietnamese state company.

ps...well done to extrader for simultaneously covering the bases over on the incidental thread  ;-)

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extrader 21st Jan '13 230 of 470
1

In reply to emptyend, post #229

Hi ee,

Belated New Year greetings !

I can't help thinking that ENI's just set up a structure that would allow it to offer a quid-pro-quo or two that might prove useful in getting the VietNamese 'on side' in any local negotiations.....

ATB

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