Should the Soco management resign from the Board?

25th Jan '12 by Isaac

145 comments 46764 reads

Fwiw I think the Soco management should resign from the board as I simply don't think they have done a good job for shareholders at all over the last 4-5 years.

As a long term shareholder I feel they have had numerous opportunities to deliver operationally but have consistently failed.

Most notable failures are

-Lack of Commercial success on TGD & millions spent on various wells.

-Several wells drilled in Africa, again millions spent but no commercial success

-TGT 55,000 bopd year end target missed when it was only late Aug 2011 they talked about such target

-Selling out Baulaung only to see months later reserves upgrade & further drilling success by Salamander

I feel the management's judgement is questionable. It is difficult for the markets to have confidence in a management team that seems to be getting it wrong consistently.

I just think a management team with 30+ years of experience should be able to provide an accurate estimate as to when production targets on a big project like TGT is likely to hit 55,000 boepd. And have the ability to achieve those targets?

Why would you set a public target if you could'nt achieve it?

I mean if you can't work out when targets are likely to be hit then why should Investors have any confidence in their judgement as to which wells should be drilled?

Soco is down 13% over the past month, there are 46 E+P stocks that are up more then 10%. Soco has significantly underperformed in a what has been a bullish market the past 4 weeks. It is clear the market has 0 confidence in Soco.

http://www.digitallook.com/cgi-bin/dlmedia/heatmap??&&country_id=1&tool_url=/cgi-bin/dlmedia/heatmap&index_security_classification_id=-1&sector_security_classification_id=100148&dataplotcatergorycategory=share_performance&dataplotcatergory=price_mvt_3m&orderby_field=value1&action=tool_submit&tool_id=10&hide_extremities=undefined&remove_nas=undefined&username=Invisage&ac=208992&tc=

I don't trust the manageement team to make the right decisions for shareholders.

I would feel more comfortable if the two execs on the board resigned & the chairman indicated to the markets the company was for sale.

I think shareholders have given the management team enough chances over the past 4-5 years & feel enough is enough.

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kenobi

1st Mar '12

I am going to do just that, wait for the results in 3 weeks time.

oh good, I must me mistaking you for someone else, for the chap coming here just a couple of weeks before the results, and 4 weeks before we should have the plan to increase production to 55k per day. At a time when the management won't be able to say anything, I thought you were the chap urging people to call the management and tell them what for.

Easy mistake to make I guess.

By all means if you're not happy with the information that comes out in a couple of weeks time, then please do complain to the management to your hearts content. Others here (myself included), might even agree with you. But what is the point of bringing this up again so soon before the results ?

just to summarise though, the management won't sell the company for £5 so that you can make a turn on your investment, Unfortunately you are going to have to wait until the management get a price they're happy with. So we look forward to your thoughts after the results.

ExTownie

Fresh results, fresh reserves reports and with Phase 2 all set to go into production.....the timing will very soon be perfect. - ee

You are much closer to the company than most/all of us, but I thought that given the optimistic way they represented TGD in the most recent presentation, it would be very hard to agree a value while that was still outstanding? Do you expect some kind of deal that allows SoS to retain an interest in TGD?

Personally, I would prefer that SOCO International (LON:SIA) become a dividend paying producer, but given the age of management and their stated aims, that looks unlikely.

peterg

Draft advertisement for the Oil & Gas Journal, Petroleum Times etc

I though we were going to put it on eBay?

emptyend

it would be very hard to agree a value while that was still outstanding? Do you expect some kind of deal that allows SoS to retain an interest in TGD?

I've said on a number of occasions that I'd expect such a deal in the event that they don't sell the whole company instead. Whilst title to the TGD asset will certainly pass in its entirety to an acquiror, I'd expect that they will negotiate a back-in by SoS as part of any deal. Obviously it is possible that someone will give "fair value" to include TGD - but IMO that is only likely to happen if the whole company is sold.

I think one has to accept that any form of continuing operation will require some major changes in executive management in the foreseeably-near future. For that reason, I'd think a clean sale of the whole company is more likely at this point....though a deal which sells SOCO VN and then promptly merges the remainder of the assets with ANOther company certainly cannot be ruled out.

thebuffoon

I though we were going to put it on eBay?

Good idea Peter. We'll include a BUY IT NOW option and, of course, collection only..

Buffy

Isaac

2nd May '12

$100m spent on TGD and not even the courtesy to formally announce to shareholders of the resulting outcome of the TGD licence expiring on the 30th April.

Is anyone else hacked of that the management did not announce to shareholders the steps taken to come to a conclusion on TGD?

I plan to vote agtsint the reappointment of all the directors and their remuneration. They all have a responsiblity to shareholders and it is about time we showed them that there are other stakeholders in the business which they work for.

The AGM resolutions can be found here : http://www.socointernational.com/tmp_downloads/n145f99g114v70r16c40k120z94a68x6r46n50c27r27t82/2012-soco-circular-and-nom.pdf

I plan to vote against :

Resolution 2: Approval of the Directors’ Remuneration Report
This resolution is to approve the Directors’ Remuneration Report for the financial year ended 31 December 2011. You can find the report on pages 59 to 67 of the
Report and Accounts.

(c) Resolutions 3, 4, 5, 6, 7, 8, 9, 10 and 11: Reappointment of Directors
These are resolutions for the reappointment as Directors of Rui C de Sousa, Edward T Story, Roger D Cagle, Olivier M G Barbaroux, Robert M Cathery, Ettore P M
Contini, John C Norton, António V Monteiro and Michael J Watts who retire at this AGM as explained on page 48 of the Report and Accounts, and are being proposed
by the Board for reappointment. The reappointment of each Director is recommended by the Board in consideration of the results of their individual evaluation and
demonstrated satisfactory performance, commitment and effectiveness. Biographical details of the Directors are set out on pages 44 and 45 of the Report
and Accounts

The AGM takes place on the following date : Notice is hereby given that the Annual General Meeting of SOCO International plc will be held at The Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED on
13 June 2012 at 10.00 a.m.

Send an email to your broker advising them of the above information & which way you wish to vote for your vote to be counted or you can vote at the AGM.

I have advised my broker of my decision, it is important to do so via a Broker weeks before the AGM for the votes to be valid.

For those that are looking for a template to send to their brokers they may use the following :

Please can I exercise my right to vote at the AGM using my xxxxxxx shares to vote against the following resolutions for Soco's AGM :

Notice is hereby given that the Annual General Meeting of SOCO International plc will be held at The Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED on

13 June 2012 at 10.00 a.m.

I would like to vote against the following resolutions :

Resolution 2: Approval of the Directors’ Remuneration Report

This resolution is to approve the Directors’ Remuneration Report for the financial year ended 31 December 2011. You can find the report on pages 59 to 67 of the

Report and Accounts.

(c) Resolutions 3, 4, 5, 6, 7, 8, 9, 10 and 11: Reappointment of Directors

These are resolutions for the reappointment as Directors of Rui C de Sousa, Edward T Story, Roger D Cagle, Olivier M G Barbaroux, Robert M Cathery, Ettore P M

Contini, John C Norton, António V Monteiro and Michael J Watts who retire at this AGM as explained on page 48 of the Report and Accounts, and are being proposed

by the Board for reappointment. The reappointment of each Director is recommended by the Board in consideration of the results of their individual evaluation and

demonstrated satisfactory performance, commitment and effectiveness. Biographical details of the Directors are set out on pages 44 and 45 of the Report and Accounts

davjo

"I plan to vote agtsint the reappointment of all the directors and their remuneration"

Ah yes, I see it now...Isaac vs Pontoil, Chemsa, Quantic, ex-Toro holders, Story, Cagle, other directors, operational management et al. Result? Peeing into a gale and getting very wet ;-)

Davjo,

Ofcourse I get your point, but it is a matter of principle for me - I cannot see in anyway how a 100% bonus is justified and I have yet to see a post from anyone anywhere that has said they agree with a 100% bonus.

Besides, whose to say Chemsa and PontOil are fully supportive of how the company has been run the past year and past 5 years? And the Remuneration packages ?

It is also worth pointing out that almost 10% of shareholders voted against the reappointment of the following non-execs at last years AGM :

- Olivier M G Barbaroux

-Robert M Cathery,

-John C Norton

http://www.socointernational.com/tmp_downloads/i2d29k107l118a75v116z4l96f59l67g73f90t63h73d98/2011-agmvoting.pdf

If we can get 10% of shareholders to vote against the Remuneration package then I think that is significant. It sends out a clear message to the execs that they can't piss away shareholder cash and expect to line their own pockets with 100% bonuses.

It will also make the Remuneration Committee think twice about awarding these excessive packages in the future as quite frankyly not recieving full shareholder support is quite embarrassing for the Rem. Committee and questions their judgement.

Do you think Bob Diamond will be taking home £25m package next year? I doubt it regardless of Barclays performance, I expect it to be significantly less. He clearly had enough votes to get the remuneration but as he did not get full support from most shareholders I think he and the remuneration committee will back off.

Soco have spent $100mn of shareholder funds on TGD, but the directors don't even have the decency to release an RNS to communicate the outcome of the TGD licence expiry.

Are you too embarassed to talk about your mistakes Mr & Mr Soco - Well Shame on the directors for taking 100% bonuses & not expressing humility.

I am thoroughly embarrased for the management.

MadDutch

3rd May '12

The 42 red thumbs down are noted.
Not so much a winge, more an attempt at seeking attention.

Isaac rants:

$100m spent on TGD and not even the courtesy to formally announce to shareholders of the resulting outcome of the TGD licence expiring on the 30th April.

Is anyone else hacked of that the management did not announce to shareholders the steps taken to come to a conclusion on TGD?

I plan to vote agtsint the reappointment of all the directors and their remuneration. They all have a responsiblity to shareholders and it is about time we showed them that there are other stakeholders in the business which they work for...........

Soco have spent $100mn of shareholder funds on TGD, but the directors don't even have the decency to release an RNS to communicate the outcome of the TGD licence expiry.

Are you too embarassed to talk about your mistakes Mr & Mr Soco - Well Shame on the directors for taking 100% bonuses

I have been clear that I personally wouldn't have voted for 100% (full stretch) bonus payments, for the simple reason that management guidance on TGT production wasn't delivered. I was "happy" with everything else from an operational standpoint - and of course it is true that the actual delivery of production increases is a matter that is technically beyond SOCO's control, as Spurticus noted this morning - but it was an error of management to raise expectations of 55k bopd by year-end and not deliver it. Similarly it was an error of management in earlier years to raise expectations about TGD to levels that didn't reflect the limited experience from drilling (90% CoS estimates etc!).

I have also made it clear that I was surprised that there was no RNS about TGD this week.

However, that is where my criticisms stop.

It was pointed out to me when I enquired that if they HAD decided to extend the licence and drill a well (with or without a partner) then that would have been an RNS-able event. However, the situation with TGD was completely consistent with their guidance in recent months (see, for example, the flagging on p33 of the prelims presentation about the new 2012 concerns over higher reservoir risks and the warning that they may not sole risk). I would think it entirely possible that their advisors would have said that the circumstances did not warrant an RNS announcement, because the market expected the licence to be given up and there was therefore no news from a market perspective. Personally I would still have pressed to RNS it, just for the sake of clarity, but it wouldn't have been my decision - and there is always a wider context to consider, which shareholders may well not see.......

....which brings me on to my more general point!

Isaac goes on to rail that "They all have a responsiblity to shareholders" - and indeed that is completely true. HOWEVER, Isaac is completely wrong to imply that this equates with merely informing shareholders promptly of every nuance of events. Indeed it may very well be the case that it is crucial for Directors discharging their "responsibility to shareholders" that they do NOT tell shareholders everything at any point in time. I cannot emphasise that point enough: it may not always be in the best interests of shareholders for their company to be completely open and public about what is going on. Even if they had the option of RNSing the TGD decision (which they may not have done, depending on the advice they received), it may have been wiser and better for shareholders to deal with that decision in another way.

I cannot do more than guess why that might be the case - but I am merely alerting people to that possibility. It is my firm view that very much of what is going on at the company at present is interlinked - so I see it as quite possible that the TGD outcome is merely a (small) part of a much bigger picture, and that bigger picture hasn't yet been finished and isn't ready to present. There is an IMS due in the next couple of weeks - I'd fully expect the TGD non-extension to be reported in that.....but I will be even more interested to see what else the IMS contains when it emerges.

Finally, re AGM voting, I think it is completely pointless and counterproductive (especially at this crucial stage) to vote against any of the Directors. If I were able to attend the AGM (which unfortunately I am not) I would certainly question Mr Johns as Chairman of the RemCom why they felt that the full stretch target had been hit, in the light of my comments above about TGT production and guidance. But I would certainly expect that he had a good explanation. And it is even possible that, by the time of the AGM, there will be clues to that explanation. If there wasn't a good explanation, then I would vote against the RemCom report.

However, Isaac and others should remember that Pontoil have an important position here. They hold nearly 24% of the shares and have a representative on the Board. If they really didn't like the way things were being done, they would have considerable influence - and, ultimately, could vote against resolutions themselves. Pontoil's financial returns from SOCO have been virtually identical to any other buy-and-hold investor in SOCO over the last 5 years - and it is my opinion that they would be quite assiduous in arguing these issues at Board level if they thought it was appropriate. The fact that they appear not to have done so leads me to think there are counterbalancing reasons for the way things have been handled - and I remain content to give management overall the benefit of any doubt (though, to repeat, I would be asking about the bonuses at the AGM).

tiswas

Isaac is simply communicating the frustrations that I am sure we have all felt over the last 5 years and quite frankly if he wants to have a rant then let him get it out of his system.

I have every sympathy with him, not one of us has been holding these shares in the expectation that we would still be sub £3.00 in mid 2012 with TGD out of the picture.

Whether it changes anything in the longer term is of course a totally different matter.

loglorry

Maybe Pontoil are as frustrated as the rest of us an are slowly selling up into the buy back (although it will take them a long time). Perhaps this explains the weakness in the share price.

Maybe TGT is really a lemon and there are serious problems bringing it online to the levels previously projected. We really don't know apart from what the company have said and it is naive to think that they would not paint a rosy picture.

Personally I think TGT is fine but what I do have an issue with is people constantly looking on the bright side instead of discussing the potential problems and assessing their risk. You can be pretty sure the market is doing exactly that so unless you are prepared to just wait for that elusive bid it does matter.

rhomboid1

Hi log
A couple of points , if pontoil were selling then an RNS would have appeared, if they wanted to sell a lump to the company then I'm sure mgt would be happy to assist as they did with all the available convertible.

Re TGT the company has been very clear , on a well by well basis it is ahead of expectations , the only issue is the ramp up speeds vs data gathering discussion within the JOC as well as the issues surrounding facility capacity and the interplay of the CAPEX reqd. and ultimately the sizing of the kit. All of this will be in the context of Soco being on an exit strategy whilst other partners may be potential acquirers ...

The oil is there , cashflow is strong as the premium over Brent and the high oil price more than offset the delay .

I know that I'd be more than misguided to consider selling at current levels!

Cheers

Do larger holders have to RNS whenever they change their positions though? I thought it was only when they crossed certain thresholds.

Don't get me wrong I too think that TGT will deliver but it could take a lot longer that first thought. Most likely though they'll increase production in the coming months and we'll see a sale and realise value around the 450p mark for the company IMV.

Log

WeeEck

The other reason that Petrovietnam may not want production ramped up too soon is that they are in the process of finishing building a new refinery which in the future will probably take all of the production from TGT.
Eric

Hi Log

They have to notify if they cross a percentile up or down iirc, as Pontoil hold 23.02 % that doesn't leave them much room to manoeuvre...!

Thursday 18 September, 2008
Soco International
Holding(s) in Company
RNS Number : 7380D
Soco International PLC
18 September 2008

?
SOCO International plc
('SOCO' or 'the Company')

HOLDING IN THE COMPANY

The Company was notified yesterday that on 16 September 2008, Pontoil Intertrade Ltd acquired 584,000 SOCO International plc ordinary shares of £0.20 each ('Shares').

Following this acquisition, which represents 0.78% of the total voting rights of the Company, Pontoil Intertrade Ltd holds 17,254,213 Shares, representing 23.02% of the current total voting rights of the Company.

Following this acquisition, which represents 0.78% of the total voting rights of the Company, Pontoil Intertrade Ltd holds 17,254,213 Shares, representing 23.02% of the current total voting rights of the Company.

Actually they have been adding since then, rather than the reverse.......they now have 80,862,132 shares - which is 23.93% as at the date of the AR.......

Big rebellion on Aviva Remuneration.....

http://www.investegate.co.uk/Article.aspx?id=201205031657087099C

823m Shareholders against V 689.8m For

Aviva suffered a humiliating shareholder revolt at its annual meeting on Thursday with nearly two-thirds voting against its controversial proposals for executive pay.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9243456/Aviva-suffers-humiliating-revolt-over-executive-pay.html

Should the Soco management resign from the Board?

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Isaac

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