Analysts reports

Thursday, Aug 06 2009 by

This thread is intended solely as a place to discuss analysts' notes on SOCO.


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SOCO International plc (SOCO) is an oil and gas exploration and production company. The Company's segments include South East Asia and Africa. It has field development and production interests in Vietnam, and exploration and appraisal interests in the Republic of Congo (Brazzaville) and Angola. In Vietnam, SOCO's Block 16-1 and Block 9-2 include the Te Giac Trang and Ca Ngu Vang Fields, which are located in shallow water in the Cuu Long Basin, near the Bach Ho Field. SOCO holds working interest in Block 16-1 and Block 9-2 through its subsidiaries, SOCO Vietnam Ltd and OPECO Vietnam Limited. SOCO holds its interests in the Marine XI Block, located offshore Congo (Brazzaville) in the shallow water Lower Congo Basin, through its subsidiary, SOCO EPC. SOCO holds working interest in the Mer Profonde Sud Block, offshore Congo (Brazzaville) through its subsidiary, SOCO Congo BEX Limited. SOCO's subsidiary, SOCO Cabinda Limited, holds participation interests in the Cabinda North Block. more »

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736 Posts on this Thread show/hide all

emptyend 17th Feb '12 477 of 736

In reply to djpreston, post #476

BoAML note starts:

Time to revalue Vietnamese barrels - BUY
The market seems to under-appreciate the value of Soco's Vietnam portfolio. The
acquisition of Conoco's Vietnam portfolio (stakes in Blocks 15-1, 15-2. – just North
of Soco's TGT field - and Nan Con Son pipeline) for US$1.29bn by Perenco
announced yesterday fully supports our view. Based on Wood Mackenzie data,
and assuming US$0.2-0.5bn for the pipe stake/working capital, the deal values 2P
reserves at US$14-19/boe. This is 40-90% above the US$10/boe of 2P reserves
that Soco is trading on and should help the market reassess the value of Soco’s
portfolio. BUY, PO/NAV 498p/sh.

.......and even Citi reach the same "Buy" conclusion (calculating an $18-19 per barrel number on the Conoco/Perenco reserves), with a 371p core NAV (471p total NAV).

Neither have anything in the valuation for TGD and both are obviously working from the reported 123mn bbls 2P (which compares to the 58mn 2P in the Perenco purchase).

Assuming this view is shared, I would certainly hope/expect to see a pretty swift rerating.....given the limited supply of stock.....followed by a further re-assessment after the results (and, I hope, a significant reserves uplift).


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loglorry 17th Feb '12 478 of 736

Nice to see the analysts coming round to seeing the same sorts of $/bbl prices we have been talking about here for TGT. I've not seen the notes but assuming they are both using $18-19/bbl read-across from Conoco/Perenoco deal and neither are assuming value for TGD why do they come to such a different target e.g. 377 vs 498?

I suppose this just re-enforces ee's point that the analysts estimates are all over the place and this should improve when we get more data in a month or so.


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peterg 17th Feb '12 479 of 736

In reply to loglorry, post #478

Hi Log

assuming they are both using $18-19/bbl read-across from Conoco/Perenoco deal and neither are assuming value for TGD why do they come to such a different target e.g. 377 vs 498? 

They both use similar values for core VN plus cash. The main difference is that Citi adds nothing for anything else - risked reserves upside, explo etc


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emptyend 17th Feb '12 480 of 736

In reply to peterg, post #479

In fact total NAVs are as close as they have ever been, at just under £5

Citi's note says:

We calculate a base case NAV of £4.71, which assumes US$110/bbl in 2012,
US$120/bbl in 2013 and then long-term US$90/bbl (real, 2012 money) and GBP/USD exchange rate of £1:$1.58. We have assumed a discount rate of 10% for our field models.This comprises a core value of £3.71 (£3.76 for core reserves minus £0.05/share for financial items), £0.94 of development/appraisal upside and £0.5/share of risked exploration. We set our target price at 20% discount to our base case NAV at £3.77, in line with the long-run average sector discount.

As Peter indicates, Citi's note includes nothing for it will be interesting to see what all their numbers look like  when we get updated details on production and reserves - and find out more about the outlook for TGD! And the discount rate and the long-term real oil price assumption both look extremely conservative, IMO.

£6-8 remains my deal target range, depending on the assets included.


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highgate55 18th Feb '12 481 of 736

Today's FT ( market report) discusses the Perenco purchase, the disparity in Soco's valuation and the likelihood of much increased production in 2H 2012.

I don't recall ever seeing the FT give Soco such a strong push

Let's see what Monday brings.

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emptyend 18th Feb '12 482 of 736

In reply to highgate55, post #481

They were just reporting ML's comments - but you are right.....several inches in the market report isn't the usual (mainly because Bryce doesn't understand E&P very well). No doubt the Bowleven bid situation reminded him.... ;-)

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MadDutch 19th Feb '12 483 of 736

In reply to emptyend, post #482

Good morning ee. I cannot find the FT article, any chance of the URL, please?

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rhomboid1 19th Feb '12 484 of 736

In reply to MadDutch, post #483


It is in the stockmarket report section towards the end

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MadDutch 19th Feb '12 485 of 736

In reply to rhomboid1, post #484

Which stockmarket report?

I searched stockopedia but nothing there. Can I have the URL please?


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rhomboid1 19th Feb '12 486 of 736

In reply to MadDutch, post #485

Sorry MD

I have a paper version and am not a subscriber to, it is on p19 in the article headed "CRH spearheads advance as footsie heads higher"

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emptyend 19th Feb '12 488 of 736

In reply to salty64, post #487

The print edition also highlights the SOCO International (LON:SIA) price chart for the last year as the only graphic in the column. First time I've seen them do that. Anyone would think that Bryce is, for some reason, thinking that they might be the next bid target  ;-)


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emptyend 20th Feb '12 489 of 736

In reply to emptyend, post #448

Further on the earnings front, there is this article on iii looking forward to earnings from, inter alia, SOCO International (LON:SIA) and Tullow Oil (LON:TLW):

Easily the most spectacular set of results in March will come from Tullow Oil (TLW). Analysts forecast that pre-tax profits will surge from £97 million to £752 million......

Dramatic profits growth is also in prospect over the next couple of years for SOCO International (SIA), the oil explorer, where profits for 2011 are expected to surge from £19.7 million to £113.7 million.

Soco's discoveries in Vietnam have set it on a growth path, and hopes are high that these will be followed by finds in the Democratic Republic of Congo.

Even more gushing results are in the pipeline for 2012 and 2013, according to City forecasters. They say profits should reach £308 million this year and £400 million next. The shares reached a peak of 400p last year and are now down below 300p, where they sell on just five times expected earnings for 2013.

338mn shares out now (say 339mn average for 2011) implies expected 2011 earnings of 53.5 cents per share (at say a 1.59 average FX, weighted by month of receipt) and the 2012 forecast is around $ kind of in the range of the numbers I reported 11 days ago.

I'm not sure that TLW's results will be "easily the most spectacular" though - lets wait and see before putting them on the winner's pedestal.



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emptyend 21st Feb '12 490 of 736

In reply to emptyend, post #448

ps....just three of the data points in that range. The latest notes I have (Nov) show :

MS......EPS:  2011 22.5 cents, 2012 49.1 cents ..... Revenue: 2011 $199.1mn, 2012 $420.1mn

ML.......EPS:  2011 27 cents,    2012  57 cents........ Revenue: 2011 $249mn ,   2012 $535mn

RBC.....EPS: 2011  38 cents,    2012 147 cents.......Revenue: 2011 $200.3mn, 2012 $768.1mn

I can add another to the above list:

Cannaccord........EPS: 2011 15 cents,   2012 45 cents.......Revenue: 2011 $159mn,   2012 $395mn

As I noted in my earlier post:

"...some reputations are going to be made and lost on this one......   ;-)"


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Fangorn 21st Feb '12 491 of 736

Do Cannaccord even have a reputation to lose?
I certainly wouldn't place them in the same bracket as MS, ML or even RBC.

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loglorry 21st Feb '12 492 of 736

I'm sure I'll be slated for saying this but I've found Cannaccord almost useless. I'm not just saying this because they are bearish on Soco but I agree with Fangorn they are not teir 1 brokers by any stretch of the mark.


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djpreston 21st Feb '12 493 of 736

In reply to loglorry, post #492


And of course Canaccord are taking over Collins Stewart....

sorry for the OT

Fund Management: European Wealth
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nigelpm 21st Feb '12 494 of 736

I expect RBC to reduce their estimates if production only continues at 30k for the foreseeable.

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emptyend 22nd Feb '12 495 of 736

In reply to nigelpm, post #494

Yes of course - but that isn't going to be the case!

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nigelpm 22nd Feb '12 496 of 736

Let's hope not.

Looks like some money out of Cove this morning.

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