Well, it's not your typical mid-cap London listed oil stock. For starters, SOCO International (LON:SIA) actually pays dividends. And when I say pays dividends I mean that from 2006-2017 it distributed some US$476 million to shareholders. It has a policy of distributing excess cash to the owners of the company. It's not simply about drilling more holes in the ground and paying increasing amounts of cash and shares to its Directors. In essence, it's not simply a jam tomorrow stock.

Its main assets lie offshore Vietnam. These comprise two oil producing fields: TGT and CNV. In total, its production is around 7748 BOPD (H1 2018). These assets obviously require an investment that has not been forthcoming. In both blocks, it's partnered with the Vietnamese state oil company, PetroVietnam. The latter has clearly been strapped for cash, therefore, new wells have not been drilled at a pace that SOCO would like. That could be changing – A Vietnamese delegation was recently in London discussing investment proposals with SOCO's management. Nevertheless, some development is going ahead and the results should be revealed before the end of the year. It has also put in place measures to reduce its already low operating costs (Currently US$14 per barrel) with the extension of two major operating contracts on more favourable terms. And it should be remembered that its oil sells at a US$3 plus premium to Brent. However, the lack of investment in its offshore assets has obviously impacted its bottom line. In 2012, its revenue was around US$621 million and its operating profit was US$448 million. But by 2017, its revenue fell to US$156 million while its operating profit was a little under US$23 million.

On the back burner sits its other Vietnamese offshore assets – blocks 125 and 126. The company plans to buy existing seismic data in 2019 with drilling planned for 2021. Not used to superlatives and having researched the area since 2010, SOCO describes it as having the “Very real possibility” of becoming a new oil province.

Historically, the company has had a very strong balance sheet with a large amount of cash. In recent years, the question has been what it would do with that cash. Earlier this year, it seemed that there would be a merger with Kuwait Energy. But that fell through.…

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