Vietnam Assets

Monday, Jul 20 2009 by
16

This thread has been created to discuss the Vietnam assets. These currently consist of:

a) CNV - an operating field in block 9-2 with 155mn boe of gross 2P reserves

b) TGT - a field which is about to enter development. Gross 2p recoverable reserves of 300+mn boe (management think it will ultimately be closer to 500mn) should be confirmed soon, as the final government approval for the development plan is now very close.

c) TGD and the rest of the HPHT appraisal area - huge exploration potential of over 1bn boe P50 recoverable

d) VT appraisal area - a small discovery area likely to be relinquished

I'll fill in more details in due course.

ee


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SOCO International plc (SOCO) is an oil and gas exploration and production company. The Company's segments include South East Asia and Africa. It has field development and production interests in Vietnam, and exploration and appraisal interests in the Republic of Congo (Brazzaville) and Angola. In Vietnam, SOCO'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. SOCO 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. SOCO 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 »

LSE Price
111p
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371.8
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n/a
Yield (fwd)
2.1



  Is SOCO International fundamentally strong or weak? Find out More »


476 Posts on this Thread show/hide all

kenobi 13th Feb '13 277 of 476
2

One other thing,

The expiration of the option to sell its 80 percent Cabinda stake in Angola has been extended to mid-February, Soco said today in a statement.

Mid Feb, that'd be tomorrow then by the usual calculations associated with the term mid (ie 28 days divided by 2, = 14 ),

Seems an odd thing to write and issue on the 13th of the month

K

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KingMcKong 13th Feb '13 278 of 476
2

In reply to sirlurkalot, post #260

Hi sirlurkalot

"...is that a kick in the teeth for the whole meeting-management-to-be-ahead-of-the-published-news investment approach?"

It's good to see your comment in the context of today's rather obfuscating RNS by Soco. I'm strongly in the camp of NOT expecting anything from AGMs or other meetings, although I do sometimes attend them.

My position is simple - I just don't trust myself not to be swayed by good presentations. On the occasions when I do attend I need to remind myself that I'm susceptible, and adopt a cautious attitude.

And it can operate in subtle ways. I well remember a presentation by Brian Hall of Aminex in which he very charmingly presented the case that all exploration was risky, that his experts were no better than the best from other companies, and that without a bit of luck the share price could gently drift off.

Of course everyone thought "He's hiding a great upcoming result" and they all rushed out to buy!

Aminex has been one of my worst investments as I've constantly topped up with rights issues, in the hope that the lucky drill would one day come along.

The greatest proponent of meetings is carmensfella, and he clearly has a special BS filter in his brain, which allows such meetings to add to his useful knowledge and understanding. But I know few others.

I have two friends here in Edinburgh who are cautious, mainly large cap., investors, and who haven't previously touched the explo sector. However they attended the last Petroceltic meeting and were persuaded that the company was a marvellous prospect destined to perform.

In its previous incarnation as Melrose Resources it has managed to be my second worst performer in the sector, and it's not got any better since the AGM.

Beware the smooth tongue of the clever presenting director! Your point is well made

KMcK

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peterg 13th Feb '13 279 of 476
4

In reply to loglorry, post #272

As highgate55 points out taking the average numbers you get a reserves downgrade!

Not entirely sure that is true. I can't find a previous breakdown of where the declared reserves are (if anyone has one please send me a link). However, CNV is said to be around half of TGT in size (in terms of declared reserves, rather than upside) , so rhomboid's assumption that they accounted for about 80 and 40mmbbls respectively (with a little from Africa making up the balance) sounds about right.

In that case highate's calculation, based on their RPS's mean estimates comes out just below what's booked. OK, that's a downgrade, just. But given that we would expect RPS to be cautious, and there looks like a lot of potential upside in the RF, it's not a negative report.

OK, it's not  the sort of "we've just increased our contingents by 400%" sort of release that WZR (keeps) putting out, but their SP just goes down when they do that anyway!

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emptyend 13th Feb '13 280 of 476
4

In reply to KingMcKong, post #278

Beware the smooth tongue of the clever presenting director! Your point is well made

Actually I thought it was a very cheap point made extremely predictably.

Put companies and director into two camps: those who seek to exaggerate and talk up their assets to the market and those who try their best to play a straight bat. I would agree that the former should always be treated with caution. And, ex-post, one can point to loads of examples where directors appeared to be giving a straight story - but events have turned out disappointingly for investors.

There is an easy explanation for this - which is NOT that they set out to mislead........ It is that, even if directors make their very best guess with 100% honesty about what will happen, circumstances, events, acts of god, random happenings, contractors not doing what they are paid for, contractors screwing up (eg TGT-2X), geology,  data errors, pure luck and a whole bunch of other things can conspire to make it appear that they were being misleading.

I don't think that directors are any better at  foretelling the future (for that is what it is, unless you have 100% control over events - which is something that non-majors never EVER have!) than anyone else - but I DO think that most of them try to give a pretty straight story on the way things will develop. There may very well be a bias towards "hoping for the best" - but there are also plenty of directors who have seen SW10's Law in action for long enough to know when they should row back on their hopes in public pronouncements. All they can do is make a best guess at what will happen, using all their knowledge and experience.

The problem for them is that they are damned if they do and they are damned if they don't -  and I can tell you that these things seem to be a helluvalot more straightforward when viewed from an armchair than when viewed from the sharp end of trying to run and manage businesses which have multiple groups of stakeholders. I'm not surprised that Directors frequently get it wrong - but I think it is disgraceful cheek for shareholders to jump to the view that they set out to mislead.

As to SirL's core contention (ie it is all noise, so ignore it), that is often true. But then it is sometimes not true. The problem for investors (and indeed directors) is that you can't usually work out which comments are more likely to be true ex-ante....whereas any fool can make such "analysis" ex-post.

ee

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flyinghorse 13th Feb '13 281 of 476

Reserves figures are on pg 98 of the 2011 AR

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kenobi 13th Feb '13 282 of 476
5

There is an easy explanation for this - which is NOT that they set out to mislead........ It is that, even if directors make their very best guess with 100% honesty

I've been thinking along these lines all day to be honest,  that they may well believe that the reserves are understated (and they may well be right),  and hence gave that kind of feedback to the agm.  However as tom cruise said in a few good men, "It doesn't matter what I believe,  it only matters what I can prove".  Sadly they have miscalculated re what the experts will certify.   

It doesn't matter what they believe only what they can prove,  if they cannot prove it to the satisfaction of these experts,  can they convince a buyer of it ???  well of course that need not be a binary yes/no answer. 

I would be interested in hearing a little more detail to be honest,  has the connectivity theory been disproven for example ?  If it has,  thats fine,  again it was their theory,  not a certainty,  or is it still considered likely but not proven to the level required to reassess the reserves based on it ?

We've been waiting so long for this report,  and to be honest for me this was the sort of time I was thinking there would be enough data (6 months after start of phase 2),  that a deal could be done,   that it is a big disappointment.   But never mind,  at the end of the day,  the price is where it was a month or so ago,  we're 5% or so off the peak,  It just feels we're looking at later this year or 2014 to get to where we thought we might be in sept 2012.   That might turn out for the best as if  we get a good result in H5, and this builds into the bigger picture,  the end result might still be good. 

Of course it doesn't mean a deal won't be done sooner,  but to my mind it sure makes it look less likely.  

I wouldn't be surprised if the price drifts off back towards 350 in the coming days allthough,  maybe we need to hear what they say in march re divis and other plans. 

One thing that I'm very disappointed with is that they haven't got production beyond 55k, after all this time. Is it really an fpso problem ?  and how come they managed to produce at over 60k at start up,  but haven't managed to streamline things to average at that kind of level so much later ?

evening all, 

K

 

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peterg 13th Feb '13 283 of 476

Reserves figures are on pg 98 of the 2011 AR

Thanks highgate. But they don't show how much is attributed to TGT

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emptyend 13th Feb '13 284 of 476
7

In reply to kenobi, post #282

I've been thinking along these lines all day to be honest,  that they may well believe that the reserves are understated (and they may well be right),  and hence gave that kind of feedback to the agm.  However as tom cruise said in a few good men, "It doesn't matter what I believe,  it only matters what I can prove".  Sadly they have miscalculated re what the experts will certify. 

.....mmmm...maybe - but I wouldn't be too certain of that. I have certainly miscalculated on that score - but, once again, that may only be a matter of time. The reports I hear imply that they think the market has misread the RNS.......

....in which context I am interested to see that Merrill said today

Independent assessment validates our NAV; upside remains
Soco hired the independent consultant RPS to assess oil-in-place volumes and
recovery factors on the TGT field, the core asset in Vietnam. Discovered oil
resources are estimated at 466- 958mmboe, with a recovery factor of 28 to 35%,
validating our 300mmboe base case for recoverable oil from TGT. Further upside
of 53-152mmboe of undiscovered resources in place has also been identified.
Importantly, management believe recovery rates of 45-50% are ultimately
achievable. This is based on experience of their own and other producing fields in
the basin, thus potentially adding a further 110mmboe to reserves. A full
Competent Persons’ Report (CPR) is likely to follow in due course.

As for

I would be interested in hearing a little more detail to be honest,  has the connectivity theory been disproven for example ?

I think the answer to that is no. It is in the process of being proved up but, since most of the 50+ producing zones still haven't been perfed and production-tested in parallel (needed for communication checking on each zone), this is clearly going to take time (and always was!).

And re:

One thing that I'm very disappointed with is that they haven't got production beyond 55k, after all this time. Is it really an fpso problem ?

Who has suggested there is any problem with the FPSO? I've seen no such suggestion - certainly nothing from the company or JV. You need to think about what it means to switch production between wells -  they've got lots of wells that can be produced, all at differing rates. With switching on and off causing some downtime (especially with new wells, I'd guess) I don't find it surprising that they aren't running continuously at 100%!

What IS needed fairly soon though is a proper capacity test of the FPSO - hopefuly we won;t have long to wait.

ee

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KingMcKong 13th Feb '13 285 of 476
7

In reply to emptyend, post #280

Hi, ee

and Happy New Year!

I feel you're jumping to the defence of company directors a bit too fast. The remarks by sirlurkalot and myself were not directed specifically at the Soco board, and my example of Aminex was not intended to imply that Brian Hall or any other director of that company has intended to mislead.

My essential point is that I don't trust myself to see through the sure, unsure or plain wishful thinking that many company statements may contain. And there are more than enough companies (see ShareSoc) that have directors paying themselves very handsomely whilst giving rubbish returns to their shareholders.

The question asked was whether meetings enhanced or confused ones perception of a company. All I'm claiming is that my personal experience has been rather negative. I've felt encouraged when I shouldn't have been and missed opportunities where I've misread what has been presented

KMcK

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kenobi 13th Feb '13 286 of 476
4

In reply to emptyend, post #284

>>.....mmmm...maybe - but I wouldn't be too certain of that.
I don't understand what you wouldn't be too certain about, that the management's views on reserves are much higher than the experts are willing to certify ? I can't see how you come to this conclusion. Perhaps eventually they will, but since the statements at the agm were in light of a fall/september cpr, clearly it is the case.

>>I think the answer to that is no. It is in the process of being proved up but, since most of the 50+ producing zones still haven't been perfed and production-tested in parallel (needed for communication checking on each zone), this is clearly going to take time (and always was!).

maybe it's just me, but given the significance of this, and that it was muted at the agm, I'm not sure that this point deserves lower billing than say the other main difference the recovery factor (which they did highlight). Perhaps they are less confident of the connectivity than the recovery factor ?

>>Who has suggested there is any problem with the FPSO?
sorry I wasn't clear, not suggesting there's a problem with the fpso, other than getting beyond boiler plate spec. I meant is the fpso really the bottle neck ?? or are we having problems producing beyond this level either geological or political with the partners.

>>What IS needed fairly soon though is a proper capacity test of the FPSO - hopefuly we won;t have long to wait.
yes agreed, and as I recall and quoted somewhere earlier today, at start up they quoted peak throughput at over 60k, so disappointed that they haven't progressed further on this. If it is due to changes to produce specific data for the cpr, then fair enough. It wouldn't have hurt to mention this. They said the average for jan was 5450 or something they could easily have said but at times we've run upto 62,000 or 65,000 and as start to work to optimise production we would expect to reach closer to this level average production.

K

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emptyend 13th Feb '13 287 of 476
3

In reply to KingMcKong, post #285

Happy New Year to you too :-)

Trust you've recovered from an overdose of  t'Laddie at Hogmanay ;-)

I feel you're jumping to the defence of company directors a bit too fast.

I appreciate that there was no particular assertion - but the subtext of the argument that has been repeated ad nauseam over the years on bulletin boards is that "you can't trust the blighters".  All I'm doing is pointing our that even the best-intentioned, most honest, best-researched prognostications can STILL be wrong (and usually are!) due to factors well beyond anyone's control - and often well beyond any reasonable expectation. That is particularly the case in the oil business, I think, where we aren't selling millions of widgets.....we are making tiny, very expensive holes in the ground, having chosen the location based on imperfect information in the hope that there is something valuable at the bottom that can be moved to the surface. Much can go wrong - and frequently does.

My essential point is that I don't trust myself to see through the sure, unsure or plain wishful thinking that many company statements may contain.

I'm not sure anything can be done about that. Nobody has a crystal ball or perfect antennae.

And there are more than enough companies (see ShareSoc) that have directors paying themselves very handsomely whilst giving rubbish returns to their shareholders.

Well, whilst I appreciate that there are some egregious examples (especially on AIM) that shareholders are right to be concerned about, I would suggest that it is perfectly possible for directors/managements to be doing a great job but, due to matters beyond their control, fail to deliver for shareholders. Boards then have a dilemma - shareholders obviously haven't made money so resent paying management....but the reality is, in many cases, that unless management pay meets the expectations of the employee/director, then they could leave - and if that happens then the outcome for shareholders may be even worse!

The trick is trying to align compensation with controllable metrics - and, in an industry like oil and gas where so much depends on partners, contractors and other third parties, this is genuinely extremely difficult to accomplish on a continuous basis.

The question asked was whether meetings enhanced or confused ones perception of a company. All I'm claiming is that my personal experience has been rather negative. I've felt encouraged when I shouldn't have been and missed opportunities where I've misread what has been presented

I think there is a bit of a small sample bias problem here......maybe its only the ones who have their meetings in Edinburgh who are useless?...... ;-)

All the best

ee (ducking and leaving rapidly ;-))

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emptyend 13th Feb '13 288 of 476
3

In reply to kenobi, post #286

I don't understand what you wouldn't be too certain about, that the management's views on reserves are much higher than the experts are willing to certify ? I can't see how you come to this conclusion

Easy. You were starting from the assumption that management was as optimistic as we were - and they were probably more realistic (aka better-informed). It is not inconsistent to expect recovery rates of 45-50% to be proven in time at the same time as believing that 28-35% is reasonable based on currently-available data.

maybe it's just me, but given the significance of this, and that it was muted at the agm, I'm not sure that this point deserves lower billing than say the other main difference the recovery factor (which they did highlight). Perhaps they are less confident of the connectivity than the recovery factor ?

Mooted? The recovery factor is a general broad assumption underpinning the data. The connectivity issue may affect STOIIP - but only if the right combinations of wells have actually been tested to provide the data....and I'd guess not enough have!

I meant is the fpso really the bottle neck ?? or are we having problems producing beyond this level either geological or political with the partners.

This is a good question. My understanding is that there have been partner delays to actually executing tests that have been agreed to - and I believe there is no problem at all in actually producing - just finding somewhere to put it safely. The reason for foot-dragging isn't clear - but there's not much new there.....partners rarely move at the same speed wherever they operate.

>>What IS needed fairly soon though is a proper capacity test of the FPSO - hopefuly we won;t have long to wait.
yes agreed, and as I recall and quoted somewhere earlier today, at start up they quoted peak throughput at over 60k, so disappointed that they haven't progressed further on this. If it is due to changes to produce specific data for the cpr, then fair enough. It wouldn't have hurt to mention this.

IIRC they have previously made the point that taking wells on and off and fiddling around trying to optimise this or that are all things that reduce production. They shouldn't have to keep stating the bleedin' obvious (I paraphrase ;-)). I imagine that the commentary with the prelims may illuminate these areas a bit.

 

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kenobi 13th Feb '13 289 of 476
6

>>Easy. You were starting from the assumption that management was as optimistic as we were - and they were probably more realistic (aka better-informed). It is not inconsistent to expect recovery rates of 45-50% to be proven in time at the same time as believing that 28-35% is reasonable based on currently-available data.

well all my optimism was based on what I heard about at the agm, that being that they would have a cpr, that the reserves hadn't been looked at in a long time, they were likely to be revised up in September, that they had found pressure changes matching at different zones suggesting they might have connectivity and much larger reserves and that recovery factors of 45-50% were considered likely at tgt. Maybe with hindsight it's all proved much harder to prove, but that just re enforces the point I was making that we haven't got any reserves upgrade even 5 months after the management suggested we would have one, and that it would be significant. So I would suggest it is primarily them that were too optimistic, and understandably, we people here, were fired up about the prospects, based on their guidance. Now whether or not ultimately they are proved right, which we all hope they will be, it remains that in terms of what they can prove, at this moment (after 5 months additional work), is not as high as we were lead to believe it might have been.
This follows on from kmck's points, that the management presentations, whether they believe it 100% or just paint the best possible outcome, need to be taken with a pinch of salt.

I recall discussions here specifically with Davjo, where he said well of course a reserves review can move the figures lower as well as higher, and I couldn't help but think of him today and what he might have written if he were still with us, (and also the debate as to whether p2' s could be increased without the infrastructure in place to exploit them, is this perhaps why we were not quoted breakdown of reserves in p2 etc ?)

will be interested to hear what further detail is published next month,

cheers K

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KingMcKong 13th Feb '13 290 of 476
3

In reply to emptyend, post #287

Hi again, ee

..maybe it's only the ones who have their meetings in Edinburgh who are useless?...... ;-)

!!!!!!!! LOL !!!!!!!! - made my evening :-)

I've already had a personal e-mail complaint from someone in Edinburgh who thinks I'm referring to her! It just proves that you can't trust modern communications at all!

I agree that there are lots of hard working and well-meaning company directors around and that events alter things all the time. But I don't think we should dismiss the core theme of the best ways to gather good data about companies. If we add together AGMs, published accounts, RNSs, presentations and any stray meetings, we can still get an RBS, LLOY or worst case a Marconi. The institutions and public were still buying right up to the fat lady singing.

I tend to side with Pyad - to quote (non verbatim) - "nobody knows that much about what's going on. Look at the numbers, take a butcher's at the Director Speak, test the EPS growth, grab some yield whilst you wait, and stick in the main to large caps" On balance you may come out on top.

I admire carmensfella and his LoQs and all the rest, and I've had a load of successes with explo, even in bongobongoland. But I've never had that much joy from director presentations.

The nearest thing was Tom Cross who was such a growly and dismissive sort of character you just had to trust him. And that worked pretty damn well :-)

KMcK

(just about recovered from Xmas, New Year, skiing with marben...now it's Lent and I'm off the booze. I'll report back if there's any positive effect on the portfolio :-)

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loftyd 14th Feb '13 291 of 476
5

Reserves figures are on pg 98 of the 2011 AR

Thanks highgate. But they don't show how much is attributed to TGT

I have a note that the end-2009 figures were 39mmboe CNV and 85.2mmbo TGT, for 124.2 mmboe in total (P1+2). I'm assuming this comes from a company RNS or presentation, but I don't know which one. The corresponding P1 figures are 24.0 and 46.7mmboe.

Allowing for production I'd therefore assume the current figures for CNV would be around 35-36mmboe.

If you ignore the prospective resources and take the mid-point of OOIP and recovery factors given by the consultants you end up with TGT figures a little under the 85m i've given above (and a fair amount of that has now been produced as well, of course). On this basis (low 30%s recovery), SOCO looks a little undervalued to me. If management are right and recoveries are 50% then there is sizeable upside, if SOCO can get whatever agreements are required with its partners to increase production considerably above 55k bopd - bearing in mind the point that davjo used to keep making, that reserves are only useful if you can produce them within the remaining licence period.

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emptyend 14th Feb '13 292 of 476
1

In reply to kenobi, post #289

Maybe with hindsight it's all proved much harder to prove, but that just re enforces the point I was making that we haven't got any reserves upgrade even 5 months after the management suggested we would have one, and that it would be significant. So I would suggest it is primarily them that were too optimistic, and understandably, we people here, were fired up about the prospects, based on their guidance. Now whether or not ultimately they are proved right, which we all hope they will be, it remains that in terms of what they can prove, at this moment (after 5 months additional work), is not as high as we were lead to believe it might have been.

Maybe that is true. It is impossible to say. All I'm saying is that perspectives on things change with time and events - and we certainly don't have the whole picture from management's perspective. For example (and I'm just flying a kite here, not seeking an argument or pointles debate) perhaps it suits them to keep the reserves picture under wraps for longer than expected because they need a bit longer than originally thought to 1) revise the production plan for the FPSO 2) drill H5 3) develop (and get reserves credit for) the connectivity understanding and 4) do a deal? We will probably never know.

I also thought of dj yesterday. I'm sure he'd be having a wry chuckle :-)

ee

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emptyend 14th Feb '13 293 of 476
1

In reply to loftyd, post #291

I have a note that the end-2009 figures were 39mmboe CNV and 85.2mmbo TGT, for 124.2 mmboe in total (P1+2). I'm assuming this comes from a company RNS or presentation, but I don't know which one. The corresponding P1 figures are 24.0 and 46.7mmboe.

Well dug out. That sounds about right in relation to my own understanding (though I haven't dug any numbers out myself). Proven will be a higher % now of TGT.

The other "pending item" in relation to CNV that may have a reserves impact (but certainly has a value impact) is the gas sales deal.

I would think there is some risk that CNV reserves could be reduced (pending a success with the planned well) but you are also right about the TGT upside - and that will continue to become clearer with more production data (and developments on the FPSO capacity etc).

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emptyend 14th Feb '13 294 of 476
1

In reply to KingMcKong, post #290

The nearest thing was Tom Cross who was such a growly and dismissive sort of character you just had to trust him. And that worked pretty damn well :-)

Of course he also paid himself pretty well relative to the peer group - as you may recall me pointing out to him at the last AGM ;-) .  Perhaps most of the time investors actually get what they pay for with managements (bar a minority of cases of mislabelling, where you only realise you've bought a donkey after an extended period of testing? The horsemeat scandal also has investment parallels.). The end result with TC was certainly a good one - though the timing of the hostile bid was pure serendipity in the light of events.

I don't think we should dismiss the core theme of the best ways to gather good data about companies. If we add together AGMs, published accounts, RNSs, presentations and any stray meetings, we can still get an RBS, LLOY or worst case a Marconi. The institutions and public were still buying right up to the fat lady singing.

I'm very much of the view is that as many sources as possible should be used. The problem with most of them is that they only deal with history - and the investment task is to consider the future. Some have argued that you should simply ignore management - but I frankly think that is nuts, because management are the only ones who have the up to the minute picture....and, one hopes, they also have a much better idea of the future!!!!  The tricky bit is deciding what weight to place on the various sources.....and I just think that placing zero weight on management is wrong in at least 90% of cases.

Glad you enjoyed the joke :-)

Lets leave it there as we are OT here?

cheers

ee

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kenobi 14th Feb '13 295 of 476
5

For example (and I'm just flying a kite here, not seeking an argument or pointles debate) perhaps it suits them to keep the reserves picture under wraps for longer than expected because they need a bit longer than originally thought to 1) revise the production plan for the FPSO 2) drill H5 3) develop (and get reserves credit for) the connectivity understanding and 4) do a deal? We will probably never know.

pointless debate indeed,  maybe having comissioned a report at the time of their choosing,  and delivered part of a report 5 months later,  they find that they need more time ?  to drill h5 ?  wasn't this in the plan all along ?

to do a deal ?  surely the report is most likely a pre requisite ?  

revise the fpso plan ?  yes maybe,

you have to judge management on what they achieve,  you can make excuses for them if you like.  Theres no doubt that delivering tgt ahead of time and on budget and the fpso,  was a outstanding achievement.  since then getting production up to the levels they committed to,  hasn't.   I recall seeing a graph at the agm before last showing start up phase 2 production at 110k, and cashflow projections based on this.  Well here we are,  a lot of months after start up phase 2 and the reality,  for whatever reason is half of that.

I can see exactly how Merril have come up with the quote you posted earilier,  either the chap didn't attend the agm,  so had a different expectation,  or he's wise enough not to take any notice of talk from directors about things they're not willing to go on the record in the results.  Also it sort of fitted their previous view and no doubt straight forward to go along with,  we told you so.  Whether they're right or not we'll see.  I'm not convinced by arguements that this is what the directors wanted,  more likely they've fought tooth and nail to convince the cp's of their point of view,  extending the data collection for months,  and against their own expectations have been unable to convince them.  But lets all make our own decisions about that.  I will be attending this years agm,  but will make sure I'm listening through my rose tinted glasses filter. 

I suspect that there's some politics in the back ground here.  The objectives of soco are unlikely to be the same as the other partners.  So if SOCO want to modify production to get a cpr,  and the other partners just want to produce oil in the most convenient way,  with least interuptions,  this is bound to cause some friction. As ES said at the last AGM,  some of the partners if they have a producing asset are happy to just produce,  and less concerned about optimising production or what the quoted reserve figures are.  Yes,  because they're not planning to sell. 

Anyway,  after the excitement of the last few weeks/months it's back to normal,  a deal might be done at any time,  but being conservative,  the next excitement is the results next month,  and the q2 drilling campaign,  after which we'll be in a better position to plan for higher production since we'll have a clearer idea of what the higher production levels might be,  (depending on the infill/ H5 result),   Then we might start to think that we need 6 months data from H5,  and a cpr completed at the end of the year ??   which might run through to easter if this one was anything to go by.  and assuming the partners co operate,  the world economy grows,  and the oil price is solid,  then perhaps a deal sometime next year ?  

cheers K

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uncommon13 14th Feb '13 296 of 476
1

In reply to emptyend, post #284

Regarding Merrill's comment below:
Importantly, management believe recovery rates of 45-50% are ultimately
achievable. This is based on experience of their own and other producing fields in
the basin
, thus potentially adding a further 110mmboe to reserves.


Although the RNS says:
The field is early in field life and without a directly comparable field analogue.
http://www.investegate.co.uk/soco-international-%28sia%29/rns/operations-update/201302130700107400X/

So, how do these two comments fit together since the TGT field has no direct comparable field analogue!

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