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Gosh, he really is called that! http://www.upstreamonline.com/incoming/article134720.ece
How extraordinary...
About the Author
Groundhog
14 comments
ArtNouveau
That is hilarious I must say.
I would think SOCO will be taken over either in part or whole by either Sinochem, Chevron or even now the Japanese.
ArtN
marben100
Whilst I do appreciate that Soco investors have had a long wait, impatience is the enemy of the investor.
ISTM that Soco is at a critical point now and my holding is at the largest level it has ever been. We have two critical projects to prove up: TGD and Nganzi. It will take some time to determine the true scale of these.
The last thing I want is a premature bid, before we, as shareholders, know just what we've got. There are three wells to drill at Nganzi. For TGD, if the current well is successful, we will have to wait for commercial approval before undertaking further drilling to validate the fan theory - which is where the main upside of that discovery lies. [thanks to ee for making the point about the need for commercial approval clear].
ISTM that we need until around the middle of next year at least before we have a really clear picture of what we have. I am glad that the directors have a sufficiently large share to block a premature bid.
Moreover, even in the unlikely (IMO) event of failures at both TGD and Nganzi, I am satisfied that my downside is protected by 90-150mmbbls of net reserves at TGT + ~30mmbbls at CNV. Of course, failures will lead to a sell-off in the short term... but AFAIAC that would probably pose another buying opportunity.
With several hundred mmbbls (or more) of unrisked net upside, all amply funded, this strikes me as an excellent risk/reward situation... and we just need to be patient to determine the outcome.
KNOC are just one of many possible bidders. I have little doubt that Soco's directors will be able to generate sufficient interest when the time is right.
Mark
emptyend
The last thing I want is a premature bid, before we, as shareholders, know just what we've got.
Mark - people can bid for SOCO all they like - but they won't get control!
Unlike Dana (and most other companies) the group of management and key investors can control their own destiny - because they have effective control of the share register.
As a result of this situation, though, I really don't think that one can simply assume that "we need until around the middle of next year at least before we have a really clear picture of what we have" !.......as you say yourself: "I have little doubt that Soco's directors will be able to generate sufficient interest when the time is right"......and THAT is something that can be used at ANY time.
As I have repeatedly said, it only requires one party to show interest in buying at the right price and a deal could happen at any time. Obviously (because of the control that the SOCO players have) buyers will wait for the results of the current drilling programmes [unlike KNOC and Dana, where they are trying to bounce shareholders out BEFORE the results of the major wells].....but once that is concluded then, depending on the precise results of TGD (which, incidentally, are VERY unlikely to come into the public domain for a range of sound commercial reasons in this case), a deal might happen at ANY point.
As you say though, failures would make a faster sell-off more likely.
Interesting times all round....
ee
marben100
Hi ee,
Of course you are right that a bidder COULD come along at any time with an offer that satisfies Soco's directors - and that's (partly) why Soco is now a "core" holding of mine. I will not attempt to be too clever and fine-tune my entry and exit, though I may add or reduce a bit if I feel the price has swung too far for whatever reason.
However, Soco's directors have a very clear idea of what they might be sitting on and appear to be highly optimistic (both at TGD and Nganzi). That makes me think it unlikely that anyone will offer enough to satisfy them at this stage, because from my observations of other sector takeovers, buyers want clearly proven assets and don't seem to give full-value to prospects.
Putting some figures on it..... I would guess that they're optimistic of having 500mmbbls+, net in total. @ $12/bbl (conservative, considering it's mainly oil and good VN fiscal terms)... so they'll be looking for offers of $6bn (=~£10/share). I doubt any bidder will come close to that this year.
Worth waiting for? You betcha. :0)
Best,
Mark
Isaac
Obviously (because of the control that the SOCO players have) buyers will wait for the results of the current drilling programmes [unlike KNOC and Dana, where they are trying to bounce shareholders out BEFORE the results of the major wells].....but once that is concluded then, depending on the precise results of TGD (which, incidentally, are VERY unlikely to come into the public domain for a range of sound commercial reasons in this case), a deal might happen at ANY point.
emptyend - How do you know this? Did we miss an annoucement?
I would think results that are significant and are likely to move the company share price significantly must be made aware to the shareholders when known. I can't see how Soco can withold such news, I would think Vietnam Gov will be all over it in the press and the PTTEP will want to back in on positive news.
Isaac
I think the key word in ee's comment is "precise"
Does that mean we are not going to have any idea of the flow rate or any indication of the size of the discovery?
If that is the case, it does'nt make much sense as it was only 2 years ago that Soco was very upbeat about TGD and you had the likes of Ed Story going on CNBC talking up Vietnam etc
Why go all quiet now?
emptyend
Sigh. It is completely obvious in the context of both the licence issue and the Thais. And it is also a point that I have spelled out several times previously.
I've no idea exactly what we'll get by way of info, but I'm not expecting very much.
Isaac
Why was'nt the licence issues a concern 2 years ago when Soco were very upbeat about TGD then?
Thai - Regardless of the outcome of TGD, Soco is a winner IMO.
I think the management should be very open and clear about the results on TGD.
emptyend
Yes - quite right. Had a mental block in mid post and couldn't be bothered to check correct term.
