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)
285.5p
Change
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P/E (fwd)
11.3
Yield (fwd)
5.3
Mkt Cap (£m)
947.7



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470 Posts on this Thread show/hide all

perro08 21st Jan '13 231 of 470
86

In reply to extrader, post #230

I am sorry if this is the wrong place for this message but I feel sure that you will excuse in the circumstances.

With great sadness I have to report that Davjo, your respected fellow contributor on these boards has passed away after a short illness.

The support and acknowledgement of his thoughtful and detailed appreciations echo'd here is a matter of some pride for his family.

If anyone feels moved to make personal reflections, please feel free to e-mail myself and I will make sure that the family are aware.

Prosper.

Peter Jones, Davids elder brother. peter@twitchen.co.uk

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jseth123 24th Jan '13 232 of 470
20

Hi Peter,

Very sorry for your loss. I'd never met him but Davjo had an amazing eye for investment and was only ever constructive to any discussion.

At a time when we all hope this investment that links many of us is about to come to fruition, it's a great shame he won't be here to see how it all pans out. But with the closing of the chapter there will be windfalls for many of us and I wonder if Davjo had a charity close to his heart that people could donate to in order to honour his contributions which may have shaped people's decision making and good fortune.

Just a thought.
My sympathies again,
JS123

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perro08 28th Jan '13 233 of 470
16

In reply to jseth123, post #232

On behalf of Davjo's family may I say a heartfelt thank you for the quite staggering tribute in the form of 'rec's' and in particular to those who sent personal messages.

Most of the family will not have been aware of the esteem in which he was so clearly held by his fellow contributors and your reactions to his passing will be expressed in his ' folder of remembrance'. Perhaps that section will be listed as a PSA (Prophesy Sharing Agreement), he did enjoy a little levity after all.

Best wishes to all, Peter

P.S. For those who very kindly expressed a wish to make a donation to Davids nominated charity, "Cancer Research", the funeral directors will be pleased to receive them at :-

Co-operative Funeralcare 233 London Rd, Hastings, St Leonards-on-sea, East Sussex TN37 6LU

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kenobi 13th Feb '13 234 of 470
2

operations update just out,

can't be great judging by the share price reaction, down nearly 5% as I write,

http://www.investegate.co.uk/soco-international-(sia)/rns/operations-update/201302130700107400X/

K

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anteos 13th Feb '13 235 of 470
3

looks like we'll still be here next year, waiting for the reserves update

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kenobi 13th Feb '13 236 of 470
6

Well I'm trying to understand these figures,

if we go with the most conservative figures, say 466 mb and recovery factor of 28% that would give, 130MB,
of which soco is entitled to 30% ish, so call it 40MB ? then we'd have to add on the cnv reserves, and adjust for whatever could be produced in the remaining licence time, and there is still uncertainty about the fill in drilling there.
(we need to consider other options, including the company's view that recovery factors might be upto 50%, however I'm just taking the lowest figures because I imagine that would be the starting point of anyone buying SOCO vietnam).
I don't suppose that the news about Angola is so terrible, but a little worrying that they are having to give extensions to the option to buy.

TGT production figures are sound, but we're only really getting to just under the 55k per day now, so doesn't appear that much progress has been made in increasing capacity of the fspo beyond it's boiler plate rating of 55k.

Maybe I've got it wrong, but this isn't the sort of result I was expecting based on what the management said at the last agm, I was expecting a somewhat better result (back in september for that matter). However it does say they will continue the monitoring work (unless I'm mistaken), so presumably they're thinking that with more data, and fill in/H5 drilling, the figures will increase.

K

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flyinghorse 13th Feb '13 237 of 470
2

The key point for me was the statement "adjustments if any at end of 2013". The word adjustments allows for upward & downward movement and end of 2013 for another year of the fields track record to be documented.

I did some quick maths and my estimation of the 2P recoverable WI number is ok but I dont know whats carried for CNV (ie total Vietman WI reserves was stated as 121.1mm as of 31st Dec 2011).

FH

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extrader 13th Feb '13 238 of 470
5

Hi kenobi,

We're not much the wiser, are we ?

I'm somewhat underwhelmed by the amount/quality of disclosure relative to (I feel legitimate) post AGM expectations - and the complete silence re mooted dividend or other proposal for outing/realising value.

In the final analysis, what PI's and even II's think doesn't matter in the case of Soco, as emptyend might say it's down to management / BoD .......and ONE interested/convinced buyer.......

ATB

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flyinghorse 13th Feb '13 239 of 470
3

Kenobi, We seem to be trying to understand the figures-here is my maths & I used a 2P estimate as thats what's in the annual report:
TGT STOIIP range at present 466mm-958mm and recovery factor range 28-35%
Assuming (dangerous I know but no 2P info given) these are the P90/P10 end points then a rough estimation of 2P recoverable is 766*.315=241mmbbls
which is approximately a WI of 74mmbbls--short of the 121.1mmbbls 2P number held as of Dec 2011 for whole of Vietnam.Closer if one uses the higher recovery factors also quoted by SOCO.
They also say any reserves adjustments at end of 2013 if any. They sensibly did not use the word upgrades.

The key issue for me is the inability to get the auditors to commit to a better outcome(ie a 2P upgrade over existing figures) with such limited field production history,and likley per well recovery factors.
My hope is that 2013 will be spent demonstrating that the 121.1mm for whole of Vietnam is sound (so no "adjustments" at YE) however I fear that any reserves increases will come from moving 1C/2C into 1P/2P,rather than a large revision of the existing 2P number, so depending on what the contingencies are we will be into a normal cycle of yearly reserves adjustments going forward.

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kenobi 13th Feb '13 240 of 470

Just realised no mention of a divi either,

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redhill 13th Feb '13 241 of 470
4

Just realised no mention of a divi either,

I don't think that's surprising - this is an operational update and a dividend would come under financial reporting.

Overall, it looks as though we'll have to sit and wait another year. When I wrote several months ago that I didn't expect a reserves update as soon as was being suggested on this board I was thinking "not until Q1/13", I wasn't quite expecting at end of 2013"!

No chance of a takeover being agreed (even if an approach is made) this year imo. Maybe ee will see it differently.

redhill

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peterg 13th Feb '13 242 of 470

In reply to kenobi, post #236

Maybe I've got it wrong, but this isn't the sort of result I was expecting based on what the management said at the last agm, I was expecting a somewhat better result (back in september for that matter)

Clearly the company could not get RPS to agree with their assessment of recovery factors - at least at this stage.

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kenobi 13th Feb '13 243 of 470
2

>>The key issue for me is the inability to get the auditors to commit to a better outcome(ie a 2P upgrade over existing figures) with such limited field production history,and likley per well recovery factors.

yes, and this is after extending the report from september/the fall to Feb the following year, to get more info/data, and unfortunately still a disappointing figure. Not sure how realistic it ever was that an audit would say a recovery factor would be 50%, but 28-35% is a fair way short of that.

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kenobi 13th Feb '13 244 of 470

In reply to peterg, post #242

Clearly the company could not get RPS to agree with their assessment of recovery factors - at least at this stage.

Yes agreed,  a little disappointed though given how bullish the management seemed about it at the agm.   It was never a good sign that it was taking so long to get the report,  but I was hoping that extra data gathered would be enough to convince the auditors of SOCO;s pov,  clearly it hasn't been. 

K

 


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kenobi 13th Feb '13 245 of 470

No mention of connectivity, so I guess the evidence isn't strong enough to convince auditors, perhaps not strong enough to convince the management given the extra data that has been collected, ?

K

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highgate55 13th Feb '13 246 of 470
2

flyinghorse

Thanks for your analysis - I was trying to do the same. Taking the average RPS estimate of STOIIP of 712 mm bbls + additional average undiscovered STOIIP of 102 mm bbls from block H5 gives a total of 814 mm bbls.

Using the average RPS recovery factor of 31.5% and SIA share of 28.5 % gives 73 mm bbls to SIA from TGT.

Applying the average SIA recovery factor of 47.5% to the 814 mm bbls STOIIP we get 110 mm bbls from TGT.

Assuming a value of US$ 15 / bbl and an exchange rate of £1 = US$ 1.55 and 350 million shares , the extra 37 mm bbls is worth about 100p per share.

However I find it frustrating and am dissppointed that after all this time the company is:

a) not able to re affirm and / or update us on the previous total 121 mm bbls of Vietnam reserves.
b) hsilent on the return of cash to shareholders



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loglorry 13th Feb '13 247 of 470
6

I'm out of these at 372p after having held them for 3 years. I've done ok but nothing spectacular. The update today in my opinion was poor and in particular not what the market was expecting. Production is OK but its capped at 55K (gross) because of problems with the FPSO and there doesn't look like there is a natural/easy solution to that. Furthermore the reserves update given today was appalling. They give a massive range of OIP numbers and a huge range of recovery factors and one has to ask the question why bother? At the lower end reserves come in much lower than the 121m 2P they already have booked but the market is looking for much more. Still no news on the gas sales price being agreed for CNV. I'm very glad that Jam is a preserve for Soco holders because it is more and more Jam tomorrow here. Log

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nigelpm 13th Feb '13 248 of 470
2

In reply to loglorry, post #247

Fair shout. There's plenty of smoke and mirrors in that RNS this morning and I took the view immediately that the uncertainties would also unsettle the market and got my trading holding away around £3.85. Will look to get back in around £3.50.

The bigger picture however is that it's still generating vast swathes of cash and I'm happy to be involved but just with a smaller % of the folio.

I suspect they are now much more vulnerable to a lower bid as well.

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loglorry 13th Feb '13 249 of 470
5

nigel - yes I keep hearing about all this cash being thrown off. I think someone said back in 2011 they were forecast to throw off pretty much the market cap in cashflow in the next 18months. That was when production was forecast to ramp up to 110K/boed or thereabouts.

But today we see:-
"Net cash and liquid investments as at 31 December 2012 was $211.4 million (30 June 2012: $178.0 million and 31 December 2011: $113.5 million)."

So cash up to $211.4 from $113.5m in a year or from $178m to $211.4 in the last 6 months.

Certainly not bad but its a £1.2bn market cap company and the rest of the convertible to pay off from that cash pile too soon.

However what really put me off was the reserve update which was just a non-statement. STOIP of 466m to 958m - lets take the low end (because the market will) and take 28.5% WI and 28% recovery comes out at 37m bbls net to Soco. Or the top numbers 958 x 28.5% x 0.5 = 136m net to soco against 121m booked 2P. OK there is some upside but this isn't going to blow the market away. The netbacks are very good and premium to Brent etc. but there is considerable risk too.

Sorry guys I know this won't be popular. Coastal or SMDR are a much better bet in this region IMHO.

Log
Long coastal only now (in the region)

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KingMcKong 13th Feb '13 250 of 470
1

Looks like a horrible day, and too late to sell I think (now 363p)

KMcK

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