Valuation, sentiment, and SP direction

Wednesday, Jun 17 2009 by

Detailed discussion of Soco's assets should take place on other threads, but this thread is to discuss the latest valuations both by ourselves and analysts, sentiment (ie will the shares go nowhere because there's not much upcoming news) and likely moves in the share price in the next six months.  How should the shares be valued?  How reasonable is it that any drilling without a firm commitment further than several months away is ignored by the market?

I haven't seen many recent analysts' reports on Soco, but I have one from Cazenove with a core NAV of 1370p and no doubt considerable explo NAV on top of that.  I imagine that's approximately concensus, but maybe with crude rising again these concensus NAV figures will start to rise.  Has anyone any other recent broker estimates?

My view, as stated elsewhere, remains that in the absence of much to get the market excited the shares will wander aimlessly for the rest of 2009.  I've previously guessed that if crude were $65 at Christmas 09, then Soco's SP would be somewhere near £13 then, and I'm still very happy with that guess.  What does anyone else think?

Of course unexpected bids and other events may overtake this, but these sort of events may happen to any company, and perhaps Soco (where management seem unlikely to accept bids since they believe there is considerable value not recognised by the market) is one of the less likely companies to be affected by the unexpected.  The key new news for Soco might be (a) a bid (IMO unlikely), (b) some sort of presentation by management of the drilling data they claim to have that demonstrates a significant strike has been made at E, currently ignored by the mkt, or (c) possibly hitting oil off the Congo.


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SOCO International plc (SOCO) is a united Kingdom-based oil and gas exploration and production company. Its segments include South East Asia and Africa. It has field development, production and exploration interests in Vietnam, and exploration and appraisal interests in the Republic of Congo and Angola. In Vietnam, It’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. It 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. It 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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1317 Posts on this Thread show/hide all

emptyend 5th Dec '12 998 of 1317

In reply to post #69680

It does seem odd that at the last AGM they stated there would be a review completed in the fall/September, with no mention that nothing would be announced. The whole thing slips, well at least 3-4 months, it's not over until the review is in

It is my understanding that the slippage from early December into January is due to wanting to incorporate more data from the recent TGT wells. You can draw your own conclusions as to why that might be.

Slippage from "the fall" happened much earlier - probably when the review was scoped out against the backdrop of likely production plans at TGT/CNV.


now they're saying they won't release the info outside normal announcements.

Not quite. They are saying:

There are no specific plans for an announcement outside of a normal release on other corporate issues

I must commend them on their extremely precise use of language. The only conclusion that can be drawn is that they haven't yet decided when or how to publish. 


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fleecednflogged 6th Dec '12 999 of 1317

There seems to be a general presumption that there will be a material increase in reserves reported.

If Soco managment can see that there won't be a material increase, then there is no conflict with the disclosure rules if they say,

There are no specific plans for an announcement outside of a normal release on other corporate issues.

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SW10Chap 6th Dec '12 1000 of 1317

Does anyone know what Cindy Cagle is expected to bring to SOCO International (LON:SIA) as an executive director? (Announcement here.)

Apart from her personal relationship, I know nothing of her previous experience or specializations outside Soco and I'd be interested to know why the Board believe her to be a valuable addition.





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Asagi 6th Dec '12 1001 of 1317

Ms Cagle joined the Company at its founding in 1997 and holds the position of Group Company Secretary and Vice-President-Finance.

She knows the company inside-out and is basically FD?

Asagi (long SIA)

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peterg 6th Dec '12 1002 of 1317

In reply to post #69697

Does anyone know what Cindy Cagle is expected to bring to SOCO International (LON:SIA) as an executive director?

No. I'm inclined to assume it has something to do with an expectation of imminent major changes at the company, though exactly what changes are expected, and how her elevation to the board helps in that respect escapes me. Could there be tax implications? 

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jseth123 6th Dec '12 1003 of 1317

SOCO announces that awards under the SOCO International plc Long Term Incentive Plan ("Awards") were made yesterday to the Executive Directors of the Company, Ed Story, Roger Cagle and Cynthia Cagle of 305,600, 229,200 and 156,300 ordinary shares of £0.05 each ("Shares"), respectively. On the date of the Awards, the market price of the Shares at the last closing was £3.597.

Tough couple of days at the office for Mrs Cagle...

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haiderali 6th Dec '12 1004 of 1317

In reply to post #69697

Apart from her personal relationship,

Could that actually be the angle here? Perhaps it is to ensure Cagle family representation at the top table, at SIA plc if R.C. had to leave for some reason?

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fullbreakfast 6th Dec '12 1005 of 1317

In reply to post #69699

Could there be tax implications?

Not for UK tax, though I suppose it is possible that there could be a US tax benefit. I'd be inclined to doubt it, however.

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emptyend 6th Dec '12 1006 of 1317

IMO peterg is by far the closest in this guessing game. Some of the other thoughts are a million miles off the mark, IMO.

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jseth123 7th Dec '12 1007 of 1317

Can these awards be granted in a close period?

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tournesol 7th Dec '12 1008 of 1317

I tend to think that there is a rather large contralto* standing patiently in the wings, all ready to come on stage. ISTM that CG's appointment is designed to provide her with a front row seat when the fat lady comes on to perform.

(* I originally wrote soprano, but then thought that word might be misinterpreted as being connected to Tony of that ilk)

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peterg 7th Dec '12 1009 of 1317

In reply to post #69710

Can these awards be granted in a close period?.

I would assume so, the structures under which these are awarded were set up years ago, and the awards don't involve any current decision - other than an assessment performance against benchmarks, so I can't see why a close period would prevent them being made.

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adam 7th Dec '12 1010 of 1317

a million quid for two days work.

there'd better be some jam for shareholders

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emptyend 7th Dec '12 1011 of 1317

In reply to post #69714

Can these awards be granted in a close period?.

I would assume so

No they can't. There is no close period at present - or there wasn't yesterday anyway.........

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jseth123 7th Dec '12 1012 of 1317

Can you be outside a close period if you are discussing a sale of company with another party(/parties)?

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SW10Chap 7th Dec '12 1013 of 1317

Thanks for all the thoughts on this - it would be good to hear more from the company because, as things stand, it leaves me feeling a little uncomfortable.

I have no problem with a company deciding to elevate their VP of Finance to the Board, normally I would expect a statement  to go with it explaining why the shareholders' company is going to benefit from the move - something like:

Rui de Souza, Chairman of Soco, said: "I am very pleased that Cynthia has agreed to join the Board.  She is highly distinguished in/as [...] and will bring invaluable expertise in [...] to the Board. In particular, her knowledge and understanding of [...] which is an essential element of the company's future strategy.

Something must have triggered this move now and I think Soco should be a little more transparent. Without transparency, the subsequent announcement of LTIP shares being awarded looks a little cosy.

If there really is a contralto standing in the wings then it could look even worse: if a Director of a company bought £562k of shares just before a significant announcement, and could reasonably be expected to have knowledge of that announcement, how would that look?

If there's a rational business logic to my benefit behind all this, then great - let the sunlight in.


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jseth123 7th Dec '12 1014 of 1317

It's all a bit uncomfortable, I'll agree with that. Clearly there is a lack of independence on the board at Soco which isn't a problem on the whole and is an inevitable side effect of the long and successful history the board have of working together and having control of so much of the shareholders register.

I am quite bullish on these moves as they seem quite quick and to be positioning the board members to get their snouts in the trough at just the right time. It might look a little obvious in retrospect if something happens but I'm sure they have advice to say its all above board. To be fair, I'd be willing to look like a bit of a mug in my final business act if it netted me an extra seven figures. Don't forget, RC and ES have "never taken a penny off the table"...

In summary - I don't like it, but I think the signals are good for shareholders.

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tiswas 7th Dec '12 1015 of 1317

In reply to post #69718

There are more qualified people on this board than me to answer this but a quick Google reveals a distinction between a close period and a prohibited period.

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WeeEck 7th Dec '12 1016 of 1317

I believe it is quite common in company takeovers for certain directors to be co-opted on to the new company board during the assimilation period!?
Just a thought.


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flyinghorse 7th Dec '12 1017 of 1317

Are we not getting excited here for nothing. The LTIP shares announcement is consistent with the same last year?


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