Soco Share Discussion Threads

[emptyend] 06/3/2017 21:57

https://www.theguardian.com/business/2017/mar/06/oil-price-investment-fields-iea-india-chinaOil price will soar without investment in capacity, says IEA

[emptyend] 06/3/2017 15:57

....done.....No idea why the shares are down here, but I can't see how they can stay there in the absence of an oil price fall or fundamental problem in Vietnam. Obviously the close period tends to help short-sellers but one shouldn't look a gift horse in the mouth.

[phatprofit] 06/3/2017 15:11

Sub 130 as expected...........Buy while you can !!!P

[kev0856153] 06/3/2017 12:18

Ed 123
I know you have sold out but do you have a price at which you would consider buying back in again? I share your concerns on the lack of transparency here.

[alamaison] 03/3/2017 16:22

In for £3k. Looking at recovery to 140p...

[emptyend] 03/3/2017 10:20

I'll stick with my description, thanks. Thanks for the reference 6,000 posts back, to the Nov 2014 discussion debating what had been said at the AGM in that summer. I'll leave people to consider the 20 or so posts around the referenced post, rather than pulling thoughts out of context.I was particularly interested to see post 13400 and to be reminded that SOCO was then (Nov 2014) trading comfortably below the metrics on which Coastal's Asian assets were sold in 2013. As I suggested above, these are small margins.The 2014 AGM was the one in which I pointed out very strongly to one of the NEDs that they should be more pro-active in pushing for a sale, before the oil price turned. Even at that point, this was effectively an idea whose time had passed.

[kenobi] 03/3/2017 09:53

ok,

we disagree then. I would say rather than you're wording,
I think PV have a make the most of the field over it's lifetime view.
which isn't even a bit surprising. Added to this not just bureaucratic, but very
cautious and conservative. How else do you explain the very slow start up of tgt ?
nothing to do with oil prices, or bureaucracy. You choose to characterise this as them stringing it out to avoid paying soco, I think there's probably a component of that, but the main thing is making the best of the resource. Something soco would also be interested in if it had a life of the field licence instead of the fixed time one.

Re the pipeline, you don't recall suggesting a possible timescale ?
"Exactly how long it might take for a pipeline solution to become operational will depend on the details of it - and I would expect there to be at least two stages to it (with the second only coming into operation when the FPSO release approaches). But if the first phase/stage is relatively straightforward (such as a Bach Ho hook up via the new H5 platform might be) then I'd think 2015 quite possible."
and
"I think there could be an interim capacity expansion in the plan that gets agreed in Q1 and (depending on the details per the point 3 alternatives) that could be operational at some point during 2015. You are right that the final solution is likely to need some shortish production experience from the H5 wells (so become operation sometime in H2 2016 perhaps), but that may not preclude a much more prompt "first phase" of some sort."

written nov 2014 post 13413, sounds like a possible timeframe to me. Sounds a bit optimistic with hindsight doesn't it oil price falls not withstanding ?

you're quoting $60M, before SOCO quoted 75 to 100M for a simple tie in from h5 to bach ho, with a $300M price to tie in all tgt, in what they called a full or better solution. These prices might have fallen with the price of oil.
there may be hybrid solutions to tie in all tgt for lower cost, I've not seen any, but they may well be working on something along those lines.

We do agree on one thing though, the pipeline is pretty low probablity, I agree not impossible, the H5 tie in being much more likely than the full solution. Although if it means we need the fpso as well, it's perhaps easier to imagine other expenditure. Whether fpso replacement would be more economic is another question.

What I would say, and SOCO have said, and ee seemed to agree with re h5, that the nature of the joc, is that we'd need to show that we have excess capacity that required a pipeline before approval could be got. This is a bit chicken and egg, since on the other side, they're drilling wells to fit our current infrastructure. So at the point where we get an excess, will the partners be persuaded we need more wells and a pipeline ? or will they just say we can drill less wells this year then ?

Obviously circumstances change and things might be different this time, but in the past, the joc has been conservative in its goals / ambitions.

K

[emptyend] 03/3/2017 09:42

Whilst trying (unsuccessfully so far) to find a cost estimate for pipeline connection, I came across an interesting piece from Numis dating from mid-2014. I'll post an extract later when I'm on a different device.In looking at the note, I observe that they were expecting to put the outline development plan for TGT to bed in H2 2014 but were finding it difficult to finalise costings as the services market weakened. I'm minded to think this is at least the second time when SOCO management's expectations have been frustrated by external events beyond their control. The first was the emergence of the global financial crisis ten years ago, within weeks of SOCO notifying a bid approach.....which, if terms had been agreed, would have left us contemplating a very different outcome for shareholders.In business, as in sport, the margins between the most successful and the rest are often very small indeed.

[emptyend] 02/3/2017 22:34

We'll have to strongly disagree then.There is an extant JOC, which has now recommenced development of TGT after two years of oil price induced haitus. Yes PV, PTTEP etc are enormously bureaucratic etc - and are naturally less aggressive than SOCO. But it is a massive and wholly unjustified leap to suggest that the field isn't being developed because they want to keep oil in the ground for when the licence runs off. That is simply fantasy, dreamed up on the evidence of nothing at all - it is just a search for an alternative explanation (to the obvious explanation of the oil price fall) for the lack of progress in the last 2-3 years. They don't do that elsewhere, they don't do it on other fields, there is no evidence of that motivation - and I'm not aware of any other countries trying to follow such a shirt-sighted approach, let alone one that is actively trying to encourage inward investment.If we were on the last couple of years of a licence, it might be different but we aren't.I've never suggested that a pipeline was more than a possibility, let alone put a timeframe on it. But the price would be, in today's market, perhaps $20mn per partner....which isn't outwith the scale of budgets for these projects. I consider it a relatively low probability alternative (20-30%) to FPSO extension. Obviously a longer-than-anticipated extension of the licence would improve the relative pipeline economics.

[kenobi] 02/3/2017 21:17

Ed123, I'm pretty sure that output will go up from here, if that wasn't the intention there's not much chance that the joc would have approved the water separating kit on the platform is there?

However, that's a world away from them stumping up 100's M for a pipeline, I completely agree if PV and the vietnamese government wanted to move things along faster in the last couple of years, of course they would of. They might need oil and foreign exchange, but it's certainly understandable that they're in no rush to pump more of a finite resource while the price is low. Not only because they are short of cash to invest. I'm staggered that you think it's odd that they should be looking at the whole lifetime of the fields and how to maximise the production over the long term, and of course that's independent of any licences. How else would you explain for example the really slow start up of tgt ? a year or more of producing 25-35k oil, at a time of $100 plus oil price ?

Yes, they're conservative, they're doing what they think is best for them, they don't have a licence period or any obligation to do anything in a licence period. As per the last agm, they seem quiet happy to refuse to do shutoffs even if this leaves the fpso bottle necked because of excess water.

But really, if you think this unreliable boyfriend is suddenly going to fall head over heels in love, and build a pipeline because it suits us, then please believe that. Don't mind me. I really hope you're right, and perhaps production will get up to the 100k plus as shown at the agm the year before tgt start up. A quality problem to have etc etc.

The problem we have is convincing PV (for they call the shots), to move faster. to invest to increase production. All the old guff about them needing the oil or the money, heard it all before, heard it when oil was over $100 and tgt was running at half capacity.

Sorry if you think my views are drivel, I'd personally be a whole lot richer if I'd listened to the voices telling me all this a few years ago rather that the "drivel" from some here, convinced they'd be a pipeline "within 12 months" and that oil prices wouldn't fall because analysts had misunderstood the very high depletion rates from shale wells etc etc.

As in all future predictions, there's a best case, worst case, and a most likely. This is somewhere between the best and worst case. That's what I'm interested in, if you find my views too conservative, that's fine, I would prefer surprises to be on the upside.

I don't understand, given recent history, why you're so optimistic, but of course I hope you're right. I very much doubt it though, and would prefer to plan/project on realistic figures and outcomes.

K

[ed 123] 02/3/2017 20:37

Hi Emptyend.

I've got no idea what the other drivel is about ...

Is it any wonder some folk have a go at you?

Anyway, back to the discussion ...

Nobody has said, "Machiavellian". PV and the Government will be adhering to the agreements. It's just that the outcome does not exactly suit Soco and its shareholders ..... but that can happen to minority partners.

Regarding PTTEP, they may have been short of funds but if PV and the Government had wanted to press on with further capital expenditure on TGT, do you suppose they would have taken a step back because the smallest partner was a bit short of funds? No, they would have gone ahead and applied the default terms of the partnership agreement if PTTEP hadn't stumped up. The stifled development on TGT was primarily due to PV/Government not wanting to spend.

The bottom line remains that Soco's biggest source of income is effectively controlled by another party, not Soco. Output at TGT may go up from here or it may not. We don't know and it's possible that Soco's management are none too sure atm, either.

If management do know, then they should update shareholders, imo.

[emptyend] 02/3/2017 19:01

Spot on Peter. I've got no idea what the other drivel is about, but it seems to bear little relationship to real-world business. The key in the oil business is to have partner groups that are well-aligned with each others' interests. That doesn't work perfectly smoothly over decades (as the last two years in particular have shown), but it is a mistake to assume that machiavellian self-interest can supplant partnerships. The issue with the JOCs seems to me to be mainly that PTTEP (in particular) over-extended itself and had to starve a number of projects of investment. That seems less of an issue now with oil prices recovering a bit.

[greyingsurfer] 02/3/2017 18:02

I'm at a loss, where did pv sign up to operate the fields in the interests of soco ?
they are operating the fields in their own interests, and if they were british fields and a Chinese company (say), I would expect us to do the same.....Why waste 100's M to get it out a bit quicker ? Because EE want's to ? soco management wants to ?

Come on K, that's not what anyone is saying. There is a commercial arrangement in existence. No it doesn't, I'm sure say that PV have to maximise rate of production. But it is a JV which has bought in a lot of expertise and capital. VN is keen for more inward investment, more JVs and lots of other investments. You don't get those, or at least good terms on those, if the outside perception is that you've tried to fiddle the outcome to minimise returns to the JV partners.

Plus of course, there's the much more direct issue that every bbl they produce brings in much needed revenue to VN.

We're dealing with a slow moving, risk averse, national oil company who are cautious and reacted to the rapid fall in PoO 2 years ago. Who are now beginning to unwind a bit as the PoO has gone up, with a plan that gets drilling going again, and steps towards improving fluid handling. Some of us may have got caught a bit by surprise by that, but with hind sight it's not a surprise. But there's nothing more complicated to it than that. They want the oil out and the revenue, but yes, they are slower moving than a small oilco might choose to be. But that doesn't mean they don't move, as the FFDP shows.

Peter

[kenobi] 02/3/2017 17:25

It is difficult to get fresh rounds of inward investment if, at the same time, you aren't prepared to play fair with those who have been investing in the country for 20 years.


I'm at a loss, where did pv sign up to operate the fields in the interests of soco ?
they are operating the fields in their own interests, and if they were british fields and a Chinese company (say), I would expect us to do the same.

We had a deal, for 20 years or 25, whatever it was, there's no commitment to maximise output over that period, no one ever thought their was, and if they did, the last few years will have corrected that mistake. To them TGT production is an amount, why would they waste 100's of millions to get it out quicker ? they don't just have one field they have many. Whether one comes in a bit sooner or takes another 5 or 10 years doesn't matter. Why waste 100's M to get it out a bit quicker ? Because EE want's to ? soco management wants to ?

I wouldn't be surprised if the current view of soco, is that oh they funded it initially, they've had their money back and more, much more, what exactly is soco contributing on a day to day basis ?

Obviously we understand they did the leg work, and put in money to this and other areas like tgd, that came to nothing, and this is our share of the spoils. But I'm not at all sure that this is appreciated in Vietnam.

Doesn't appear to me that even with this attitude, there's much hesitation from soco to investing in new fields, so what's the downside for pv and the government ?

the upside of dealing with tiddlers like soco is that unlike say exxon, no leans on you to do what they want.

[richalert] 02/3/2017 17:17

Ed

I just hope that there have been some meaningful discussions which will be announced in the near future. Not a way to go investing in the stock market though.

[ed 123] 02/3/2017 16:56

Yes, Richalert. Agree. :-)

I also wonder if Soco even knew precisely what would be approved in the FFDP for TGT? Before the submission there had been talk of 'options' for water handling. What I'm getting at is that the 'rubber stamping' signature, may have not been so simple. There may have been discussions between PV and the Government of Vietnam after the submission of the FFDP by the JOC, and the government finally came down to the choice it saw as being in the best interests of its citizens. I suspect that Soco is not fully 'in the loop'. That is why we don't get solid statements from Soco's management. Not an easy position for management - but obviously they do their best with it.

[richalert] 02/3/2017 16:28

Ed

Discussions of pipelines etc. are all very well but the reality of Soco's situation is that it is a minor partner of the Joint Operating Committee.

Which is exactly why there is no solid statement from management at the moment.

[ed 123] 02/3/2017 16:18

Hi Emptyend and Kenobi.

It is difficult to get fresh rounds of inward investment if, at the same time, you aren't prepared to play fair with those who have been investing in the country for 20 years.

How much has the Government of Vietnam paid Soco for all Soco's gas production? Correct me if I'm wrong, but I think the answer is, Nil. Is that playing fair? If not, why should things be any different going forward?

Discussions of pipelines etc. are all very well but the reality of Soco's situation is that it is a minor partner of the Joint Operating Committee. Soco will not decide anything about TGT; that power lies elsewhere - with the Government of the Socialist Republic of Vietnam. The Government of Vietnam takes gas from Soco without paying for it and, in my expectation, will continue to do whatever it judges to be in the best interests its own citizens. Why would it do otherwise?

[emptyend] 02/3/2017 15:55

What I would say, having just returned from Vietnam, is that the government and its agencies are trying very hard indeed to stimulate inward investment to the country. That much is 100% clear from both the PR messages they put out via Vietnam Airlines but also from activity levels on the ground, especially in areas like industry and tourism (massive development activity around Nha Trang and Cam Ranh for instance).This requires available energy - and I note Exxon's big gas field project seems to be moving ahead.It is difficult to get fresh rounds of inward investment if, at the same time, you aren't prepared to play fair with those who have been investing in the country for 20 years.

[kenobi] 02/3/2017 14:31

there were two pipeline options as I recall, one much cheaper than the other ,
just linking h5 to bach ho,

the exact figure is not that important, it's was substantial,

We'll see. it would seem to me that a replacement or enhanced fpso is a much more likely solution. But who knows what the drivers for PV thinking are, it might suit them to have more oil using the bach ho infrastructure, perhaps a deal can be done.

K

[emptyend] 02/3/2017 12:04

No it wasn't. Pipeline substantially less.FPSO immovability relates to the option date.

[kenobi] 01/3/2017 17:42

well, we'll see,

I would be surprised if even the 5 year extension comes for free, these things usually turn into some kind of deal. I recall when the tgd expenses become non recoverable, for example.

It's certainly a good idea to start removing water at the well heads rather than fpso, in large part because the partners don't want to shut down wells producing very high percentages of water, for their own reasons, which is causing a bottleneck where there need not be a bottleneck. Even in todays oil price environment, and lets be honest we're mid 50's, down to an opec deal cutting production. I don't see PV likely to invest (was it $300M) in a pipeline. Perhaps some cut down solution can be agreed, but in the past it's seemed that PV wanted to charge too much for the Bach Ho infrastructure. That may have changed, we'll see.

Not sure in what sense you think the fpso is immovable, when there's a contractual break at the end of 2018, and it's basically a boat, in water. The only chance for a pipeline, in my view, is if it's seen as a replacement for the fpso. Whether there's time to get it done by the break clause, well I would imagine there is currently, but if it's not in this years budget, and it has to wait another year, then I don't know, perhaps still. Having said that I wonder what the notice to activate the clause is ? will there be agreement and budget before then ?

I have very much a feeling that the organisation is very conservative, and reluctant to spend money while the asset is producing. So my guess would be that the fpso will continue, the new equipment will debottleneck, water wise, and perhaps a condition of the renewal (or non cancelling) of the fpso, is a agreement re increasing oil and liquid capacity, perhaps oil to 70k, which they have in the past suggested was easily possible. Will the new wells produce enough oil to need that much capacity ? what capacity is Talisman currently using ? well I don't know.

K

[emptyend] 01/3/2017 17:18

kenobi,The provision for a 5 year extension is contractual - so they will definitely get that. There is also precedent for additional extensions - and that would be a matter of negotiation and won't be free. However, remember that PV and PTTEP are partners.....so it isn't such a big "give".On the pipeline vs fpso question, the investment for a pipeline is relatively small, because it would just link to spare capacity in Bach Ho. The case for that was clearly undermined by the oil price plummet in 2014 and consequent investment standstill. I still wouldn't rule it out, now that the FFDP is agreed and partners are back on track.In my view, all these things are linked. The immovable element is the FPSO option - and that may be one reason to start knocking water out on the platform instead of on the FPSO.

[kenobi] 01/3/2017 12:59

I don't know if there will be an extension, there's a provision for a 5 year extension, I would be willing to bet we won't get it on a plate for nothing,
there will be something given in return.

To think that they don't have a different views on timescale and extraction of maximum amount of oil regardless of periods of licences is to ignore what has happened in the past. To be honest, they'd be foolish to do anything else, they've had soco fund the expo, and development, and in return given them a slice of the pie for a period. There's no commitment to run the enterprise to the benefit of soco over that of PV and the people of vietnam who own the resource. You could call it cynical, or you could call it realistic based on everything we've seen in the last few years. I Remember when you were pretty sure they'd be a pipeline to get round the fpso issue. On a lifetime of the field view, it's pretty hard to justify such a big investment when the alternative is to extract the oil more slowly over a longer period.

It wasn't long ago you were speculating there might be an extension as part of the FDP, I would have thought we would have heard by now if that had been the case.

I am fairly optimistic from here for soco, hopefully before long we'll get some more of the payment from the chinese co, and we will be in a situation to start exploring the new blocks.

Perhaps they'll be an extension at some point, we've just waited 2 years or more for the fdp,so don't hold your breath. Before that there was all that talk of connectivity, and that the reservoir might be much bigger than previously thought. I would put both on the nice if it comes off pile.

[ed 123] 01/3/2017 12:38

Hi Emptyend.

Oh dear! You're doing it again ...

There will certainly be a licence extension - the only question is how long for.....

You cannot possibly know that. You should not be misleading readers of this board.

If you were Tran Dai Quang (President of Vietnam) you might be able to say that there will certainly be a licence extension. However, you are not that person. You are 'Emptyend' on an ADVFN bulletin board and you do not speak on behalf of the Socialist Republic of Vietnam.