This thread is intended solely as a place to discuss analysts' notes on SOCO.
The 400p target is based on $80 oil btw, with sensitivities showing:
412, 427, 435 453p respectively at $85, $90, $95 and $100/bbl.
More proof of the GIGO principle.....garbage in, garbage out
Not just SOCO but as I don't hold any of the others seems as sensible place as any to put this...
Citigroup initiates 10 UK exploration and production plays. Says the sector has been a good performer vs the UK market benefiting from rising crude prices and exploration success. Citi slaps buy ratings on Afren (AFR.LN), BowLeven (BLVN.LN), Gulfsands Petroleum (GPX.LN), Soco International (SIA.LN) and Premier Oil (PMO.LN). It sticks hold ratings on Salamander Energy (SMDR.LN), EnQuest (ENQ.LN), Tullow Oil (TLW.LN), Valiant Petroleum (VPP.LN) and Heritage Oil (HOIL.LN). "We think fundamentals are strong and sector valuations are attractive, discounting $80/per barrel long-term on our base case net-asset-values, vs the forward curve at $106/per barrel in 2015," says Citigroup. In terms of targets, has 205p on Afren, 500p on BowLeven, 500p on Gulfsands, 441p on Soco and 2570p on Premier; 380p on Salamander, 168p on EnQuest, 1650p on Tullow, 775p on Valiant and 296p on Heritage.
(sorry no details)
PS. Is it my imagination or is there more trading volume in SOCO at the moment - price is steadily rising.
that requires the sort of consideration of details that you don't get from Evo.
Returning to the topic of Evolution, I noticed whilst away that The Guardian reported an updated comment from Evo:
SOCO International rose 6.6p to 340p after positive drilling news from the Te Giac Trang (TGT) field offshore Vietnam. Analysts believe the company could be a takeover target for a national oil company such as Sinochem Petroleum. David Farrell at Evolution Securities said:
Our buy recommendation for Soco is premised on the fact that we believe the company will be acquired by year end by an Asian national oil company due to its strategic oil assets of which the TGT field is central. A take-out price [could be] much in excess of our current target price of 400p.
I don't think that the phrase "much in excess of our current target" is one that analysts bandy around willy-nilly - which suggests to me that the emergence of SOCO's results may be the last chance for analysts to have a fresh stab at a valuation and be able to credibly claim that some "new" information had led them to upgrade.
As you all know, I'm expecting a deal "much in excess" of 400p....having arrived at that view 4-5 months ago. Eventually analysts and the market will all arrive at a similar place, I suspect.
ee
Found this interesting table - wonder how today's resultsd will affect it...
| SOCO INTERNATIONAL ORD GBP0.05 | Neutral | UBS | Upgrade | 355.00 | - | 362.50 | +0.42% | 16/03/2011 |
| SOCO INTERNATIONAL ORD GBP0.05 | Buy | Citigroup | New Coverage | 441.00 | - | 362.50 | +0.42% | 10/03/2011 |
| SOCO INTERNATIONAL ORD GBP0.05 | Buy | Evolution Securities | Reiteration | - | 362.50 | +0.42% | 03/03/2011 | |
| SOCO INTERNATIONAL ORD GBP0.05 | Buy | Evolution Securities | Upgrade | 400.00 | - | 362.50 | +0.42% | 19/01/2011 |
| SOCO INTERNATIONAL ORD GBP0.05 | Buy | Royal Bank of Scotland | Upgrade | - | 362.50 | +0.42% | 18/01/2011 | |
| SOCO INTERNATIONAL ORD GBP0.05 | Hold | Jefferies | New Coverage | 335.00 | - | 362.50 | +0.42% | 12/01/2011 |
| SOCO INTERNATIONAL ORD GBP0.05 | Sell | Evolution Securities | Reiteration | 340.00 | - | 362.50 | +0.42% | 11/01/2011 |
| SOCO INTERNATIONAL ORD GBP0.05 | Hold | Brewin Dolphin | Downgrade | - | 362.50 | +0.42% | 20/12/2010 |
Some analyst comments, all obviously pre the 9.30 analyst presentation
JPM don’t expect to make any major changes to core NAV of 348p or RENAV of 394p. More importantly, TGT remains on track for first production in Q3 2011, which will transform the company’s cash generation profile
ML re-iterate Buy rating and 489p PO.
Evo Given the ramp up in oil production SOCO is an attractive proposition for bulls of the oil price. Retain Buy recommendation and 400p target
Numis - retain hold, price target 345, see better opportunities elsewhere
db
Well after today's budget the "better opportunities elsewhere" just got fewer. Soco must have just jumped in front of a few other companies as a take out target given the hike in tax just suffered by North Sea producers.
Log
Well after today's budget the "better opportunities elsewhere" just got fewer. Soco must have just jumped in front of a few other companies as a take out target given the hike in tax just suffered by North Sea producers.
When I was first investing in SOCO some 12 years ago, people though it was a mad idea to invest in some far-off country with a communist government and a history of instability. As it has turned out, Vietnam has been a model of stability, both politically and in terms of the fscal regime.
In contrast, yesterday's is (IIRC) the third (or perhaps 4th) tax raid by a UK Government over that 12 year period on companies operating in the North Sea .......
Just a snippit:
MF Global Initiates Seven UK E&P Stocks
0911 GMT [Dow Jones] MF Global initiates coverage on UK exploration & production, rating seven large-cap stocks: Afren (AFR.LN) and Premier Oil (PMO.LN) at conviction buy, SOCO International (SIA.LN) and Tullow Oil (TLW.LN) at buy, Cairn Energy (CNE.LN), EnQuest (ENQ.LN) and Heritage Oil (HOIL.LN) at sell. Has a positive sector stance balanced by several factors including supportive oil prices, significant event-driven news flow due 2H '11, an improvement in balance sheet strength and M&A potential. Sees the sector polarized into two groups in terms of risk; diversified, which are companies with larger portfolios and a broader spread of risk; and concentrated, companies with fewer assets and a higher concentration of risk. Prefers diversifieds overall.
RBC comment in their latest sector note:
Our International E&P universe is currently discounting around US$71/bbl, with most of our stocks exposed to seaborne crudes this is a particularly significant discount relative to Brent (trading at $112/bbl). Those companies that are active in geo-political hotspots in North Africa and/or the Middle East may endure discounts for some time; but that said, DNO International looks good value, especially as Kurdistan is on the target list of at least one cash-rich acquirer. Less speculatively we would note that Vietnam-focused SOCO International looks under appreciated and its key TGT oilfield development is due onstream in Q3/11.
Opportunities Below Core Value
Although we accept that the market is risk averse and increasingly unwilling to pay for exploration, we would note a number of companies with "tangible assets" are trading below our core NAVs, including Soco International (33% discount); Gulfsands Petroleum (32% discount); Ithaca Energy (30% discount), JKX Oil & Gas (24% discount) and Bankers Petroleum (17% discount).
.......but of course we all knew that.
ee
Al Stanton of RBC, reacting to yesterday's AGM presentation in The Scotsman:
SOCO International's business is set to be transformed in the third quarter by the development of its TGT oilfield, offshore Vietnam; yet the stock continues to trade at a 40 per cent discount to our 595p-a-share net asset value, which makes it one of the least expensive stocks in our international universe.......We forecast that the TGT development will help lift Soco's production, from 2,500b/d in early 2011, to more than 20,000b/d in 2012. And, under the terms of its production sharing contract (PSC), the company could be allocated 45 per cent of the field's revenue. As a result we calculate Soco's post-tax cash flow should leap 20-fold.
Soco International
354.3p -10.7p
Scotsman says BUY
's obvious really....
ee
Al Stanton and The Scotsman this morning...
SOCO'S business is set to be transformed early next month by the development of its TGT oilfield, offshore Vietnam; yet the stock continues to trade at a substantial discount to our estimated 597p-a-share net asset value.
http://www.scotsman.com/economicindicators/One-to-watch-Soco-International.6821165.jp
yes - just beat me to it, Art.....only just opened my emails ;-)
Must be a bit dispiriting for Al Stanton to have to keep on giving that message but, like myself, he obviously thinks he'll be proven more or less right in due time.
Incidentally, I've just made a post in relation to another topic which I think is enormously important for those who have an interest in SOCO International (LON:SIA). I have repeatedly said that I don't think there will be any prior warning when a deal gets done, so it is important to keep an eye firmly on the real value of the assets, even though it is tempting to get mesmerised by the stock market.
ee
I bought some more yesterday at £2.84 and this morning apart from Autonomy they were the only stock going up for the first 10 minutes. Now they're down 10p and I WILL NOT be buying any more. Crazy market and it's tempting to pick up other stock but SOCO looks the best bounce back in the market short term to me.
Wouldn't be surprised to see the authorities banning short selling in banking stocks similar to the Europe wide ban this morning in the UK or at least on Monday, but that's another thread...
ArtN (48,900 SIA shares and that's enough to be sure to be sure)
I wonder if there will be news about tgt start before the results on 24th august ?
if it's close enough presumably it'll get announced there ?
will be a shame if for the sake of a few days they are unable to announce start with the results,
K
Also added a small top-up on Thursday to my fairly chunky holding in SIA. Like everyone else waiting for TGT production first oil news to kick SP back above 400p levels and once 450p is broken then a major top-slice will take place.Will roll the remainder for the Vietnam/full company sale.
JPGH
Hi all,
As posted earlier on advfn, faintly surprised that there's no comment at Al's apparent suggestion that the transformation of Soco (per Scotsman) starts early next month.....
Has there been some un RNS'd type SW 10 slippage ? I'd understood guidance to be wef 12th to 15th August, meself.
ATB, GLA etc
.....had just replied to you on ADVFN:
I noticed that timeframe and checked it this morning. He is wrong - it will be earlier (but I didn't press for a precise date). Sometime next week therefore seems most likely, given that there are few other feasible dates ;-)
The original target date had been the 12th but I was aware of fairly late slippage to 17th/18th.
ee
Well I guess its not too surprising to see that theres been no analyst comment on the news today - guess theyre all still on Hols and waiting for the results...
Hi DJP
Do you think the analyst revisions to their notes will make much difference when they do come? SIA is big enough and today`s news has been flagged enough that i would have thought any professional investor who invests in this sector would have a fair idea of the figures already. Or am i giving the industry too much credit?
The valuation of SIA doesnt make much sense to me compared to many other E&P companies out there. I can explain why most other companies i hold are cheap currently but i cant explain SIA`s current market cap. Dont you think we will just drift around down here until we all get up one day to an RNS and !00% profit?
Leek
i would have thought any professional investor who invests in this sector would have a fair idea of the figures already. Or am i giving the industry too much credit?
Yes you would have thought so. But most analysts haven't written a note on SOCO since the AGM presentation which gave some indications of cashflow. And many will also have been unaware that the oil was likely to sell (as it since has) at a $5+ premium to Brent ($113 or so at today's prices - compared to the $90 assumed in most of their models).
Dont you think we will just drift around down here until we all get up one day to an RNS and !00% profit?
Certainly that is a possibility - and one I'm entirely relaxed about. I'm certainly not going to waste much time restating the obvious for those who are a bit slow on the uptake.
ee
