NO TA ON THIS THREAD PLEASE - (edit) and no pointless speculations either!
I've created this thread just to park stuff in that is only tangentially-related to SOCO's interests and doesn't relate to any of the specific assets.
I guess 'incidental' is the right place for this news item. Planned share split - 4 for 1! See http://www.socointernational.co.uk/?id=84&entityType=Document
db
I wonder whether the shares will get back to £16 by year-end ;-)
Makes (behavioural good) sense to split now (though not for the liquidity reasons claimed at this point!!). Frequently there is a 1p spread at present - and I doubt it would be much less than that at £4-5.
ee
Makes (behavioural good) sense to split now (though not for the liquidity reasons claimed at this point!!). Frequently there is a 1p spread at present - and I doubt it would be much less than that at £4-5
I clearly need another cup of coffee, because I can't see what the advantage (beahvioural or otherwise) is of this...
db
I clearly need another cup of coffee, because I can't see what the advantage (beahvioural or otherwise) is of this...
Simple - but not wholly logical! IF there should happen to be good success with drilling this year then the rebasing of the share price will mean that there is a reduced likelihood of people rushing to take profits. There are very very few shares indeed in the UK that trade at prices of over £50-60! If SOCO happened to be successful enough to (given the present number of shares) become one of them, retail interest would probably dry up.
It isn't logical (in financial theory) but there is very clearly in the UK a preference for shares to be priced in the £2 to £20 range....and this simply ensures that the shares will stay in that range.
No doubt Cairn's recent split will have influenced somewhat.
the rebasing of the share price will mean that there is a reduced likelihood of people rushing to take profits.
I'm with db here: why would I be any less likely to take the profit on 4 shares sold for £5 than 1 share sold for £20?
Though I can kind of see a counter-point that someone may prefer to buy 3 shares for £15 rather than splashing a whole £20 for 1 share...
Where's timarr with his behavioural take on this?!
SW10
I'm with db here: why would I be any less likely to take the profit on 4 shares sold for £5 than 1 share sold for £20?
Though I can kind of see a counter-point that someone may prefer to buy 3 shares for £15 rather than splashing a whole £20 for 1 share...
Tell you what - just ask the folks on ADVFN* which they prefer.... ;-)
It ain't logical and there certainly isn't any advantage in theory - but it isn't theory that matters....it is what happens in practice. It is simply that share prices above £40 or so appear to be "too high" - and pre-empting such a possibilty seems to me to be very sound (if surprising to intelligent, right-thinking theorists)
ee
ps....I also recall being taught that there was a "signalling" aspect to share splits - which again I'd suggest is quite relevant for the near future.
pps * See http://www.advfn.com/cmn/fbb/thread.php3?id=14382883&from=4620 ;-)
ok, so your point about the spread not getting narrower in absolute terms was not relevant to your suggestion that the split had behavioural advantages. I accept the received wisdom is that people don't like stocks with v large prices (and also that it isn't logical) - I just couldn't follow your argument that this had something to do with the spread.
db
db,
I clearly read it as a separate point, rather than a reason for the split.
I'll tell you why there is to be a split. It's because we have seen the problems Berkshire Hathaway had, and we don't want to start with the nonsense of having class A and B stock. :^}
Buffy
Bad bracketing on my part, I think, looking back:
(though not for the liquidity reasons claimed at this point!!). Frequently there is a 1p spread at present - and I doubt it would be much less than that at £4-5
I was just trying to make the point there that liquidity (as measured by the bid/offer spread) wouldn't actually be any better! Apologies for being confusing!
Where's timarr with his behavioural take on this?!
He’s been slowly trawling across Europe by bus, boat and bicycle and pondering a world without powered flight. At least there's good news back at the ranch. Sigh ...
Share splits are indeed an interesting and fertile testbed of behavioral finance. The original research goes back to French and Fama in the early 70's and shows that there’s a link between splits and subsequent dividend increases, the idea being that the split indirectly signals to investors that the divvie will be increased. So we can probably rule that one out in Soco's case, then …
Perhaps more relevant is that companies that split their stock prove to be much less likely to report earnings shocks. So a share split seems to be taken as a sign that the company is in a healthy state and the managers feel confident. Not that we should take much notice of how confident managers feel, of course. There’s some reasonable research to back this idea up (Ikenberry, or something like that).
I’d also guess that, as previously suggested, another answer is that the stock gets bid up because people think it’ll be more popular at a lower price. This suggests that "sophisticacted" investors reckon that "naive" investors prefer shares at a lower price regardless of earnings, an assumption that if true we can safely regard as “irrational”, no matter how we define the term. I've never seen any evidence to support this, but that doesn't mean it doesn't exist. Certainly I'm sure I've seen some evidence that shares exhibit greater volatility after a stock split, which I think is linked to greater retail investor activity.
Berkshire's a special case, I reckon, because the huge per share price is a barrier to entry. From memory BRK stock has very low turnover in line with WB and CM's wishes.
Anyway the good news is that markets tend to under-react to the news of splits (and, indeed, all news events) leading to improved subsequent returns. Hopefully we won’t need this extra boost to the SIA share price, but every little helps.
Now, if I can only find a paddle I reckon I might get out of this creek by Friday.
timarr
I bought some more today. I plan to buy more over the next few weeks ... despite already holding too many of these.
We are clearly in a correction phase in the markets which I expect to last a few weeks followed by a broad Rally on the back of a Conservative win.
I am struggling to find anything else which offers as much upside in the next 6 months.
Soco is well placed to withstand another jitter in the markets as the focus will be on drill results rather then what is happening in the economy/stock market. No other stock I have come across offers such protection.
Perhaps more relevant is that companies that split their stock prove to be much less likely to report earnings shocks. So a share split seems to be taken as a sign that the company is in a healthy state and the managers feel confident
well the above may well be the case in general, but I recall all these arguements being made about the RBS share split, not long before the , well, disaster.
Latest Phase of Bualuang Development Drilling Completed
Salamander Energy plc, the Asia-focussed independent oil and gas exploration and production company, announces the successful completion of Phase IV of development drilling on the Bualuang oil field, Block B8/38, offshore Gulf of Thailand.
The Vantage Emerald Driller jack-up rig arrived on location on 26th March 2010 for a drilling programme that comprised the side-track of three existing slant production wells and their conversion to horizontal production wells. Following the completion of operations, the rig departed from site on 10th May 2010.
All three sidetracked horizontal wells, BA02 ST2, BA03 ST2 and BA04 ST2 have been completed in the main producing area of the field with downhole electric submersible pumps and expandable sand screens. The wells each consist of 600 to 800 metre horizontal sections, and were successfully landed in the target zone between 3 - 5 metres below the top reservoir. All three wells have now been brought on stream, having cleaned up and tested at stepped-up rates to determine well productivities. In each case these are at upper end of pre-drill estimates. The wells will be choked back to produce at rates for optimal field management and reserves recovery.
http://www.investegate.co.uk/Article.aspx?id=201005110700056676L
Next IMS is due out on Monday or (more likely) Tuesday.......watch out for details on the put exercise and the plans for Nganzi.
Does anyone kno wwhat % of stock is out on loan and what % of the stock is currently held as shorts?
Big double-page spread on SOCO in Shares Magazine today - an interview with Ed Story.
Key excerpts:
The real juice is in West Africa and it overshadows everything else.
The company [in DRC] has invested in local infrastructure projects ... [which]... cost the company very little but offer a significant benefit in terms of securing a good working environment.
What next for the company.... a lot of mystery surrounding the two core assets in Vietnam & DRC will have dissipated by this time next year making the sale of either a more realistic prospect.
Why the emphasis on high impact drilling?
It's all about achieving exponential growth - you can go down the road of building up production through development but you need oil price increases for that kind of model to work
In response to a question about the Red Shirts unrest in Thailand...
I was in the region in '68 to '70
Anywhere they wouldn't consider operating?
Deep water drilling doesn't fit our profile. The cost of drilling is just so high ... Falklands... how much oil do you have to find to make it commercial?
Good to see SOCO getting more mainstream profile. http://www.sharesmagazine.co.uk/emag?vcabpage=26
What next for the company.... a lot of mystery surrounding the two core assets in Vietnam & DRC will have dissipated by this time next year making the sale of either a more realistic prospect.
That’s an interesting comment coming from the ever optimistic side of the Ed/Roger duo! What it says I think is that demystifying of the two assets is going to take some while beyond drilling before anyone has a clear enough picture to commit to a sale/purchase. In other words, there’ll be lots of interpretation work to be done post drilling…..hopefully ;-)
That’s an interesting comment coming from the ever optimistic side of the Ed/Roger duo! What it says I think is that demystifying of the two assets is going to take some while beyond drilling before anyone has a clear enough picture to commit to a sale/purchase.
Perhaps he's got an eye on how long TGD-1X took them? ;-)
I have a feeling that it may well be flagging the prospect of a whole company sale immediately after TGD-3X....which I'd guess will be a big step-out down the fan. The big unknown is whether that will be needed and, if so, how long it would take to plan.
However, there's a risk of getting ahead of ourselves - we should be a long way down the road by the autumn and able to see the destination pretty clearly even if there may still be work to do to finally get there. We should therefore be quite a bit "closer".
ee
