Sovereign Oilfield Share Discussion Threads

[comedy] 23/6/2009 13:01

saw your post on cbm pbracken..looks like a good recovery play...mansged to get 15k and 5k before they whiped price to 15p...

[pbracken] 23/6/2009 08:39

It would seem today's announcement is telling the market, 'Wakey, wakey.....we're delivering on debt reduction, we're making money, and costs continue to fall. How about a less punative rating.'

Well, at least that's what I hope it's saying. Seems like it could get interesting.

[pbracken] 18/6/2009 15:18

Keep an eye on FTO; I'm a buyer around 6.1-6.2p. Fab China gas exposure.

[pokerbrat] 18/6/2009 13:46

pbracken - i will be looking to buy here over the next few weeks and stash a handful away in my SIPP. This seems the perfect long-term punt for that - huge upside and little downside. So either I retire wealthy or I lose a few grand.

I got your tip from the CBM board where I am also holding in my SIPP. Would welcome any more recovery plays you may have stumbled across in your travels.

Obviously I DMOR.

[pbracken] 16/6/2009 16:18

Well, I'm a buyer of the stock. I can't say I'm totally convinced of the investment case, but I'm sufficiently convinced to have picked up a six figure holding. Bargain with the mms - I bought my stock for around 11.5p.

[pbracken] 01/6/2009 14:20

I'm told it's over the worst, but I remain to be convinced. The sale of DDS and the renegotiation of the debt are both very big positives. I gather trading in the fabrication division remains reasonable, and a pick up in the oil services sector is clearly under way. That will only help, too. At these levels SOGP could be a stonking punt. But I'm going to wait for evidence that the corner has been turned before going in.

[petrotec] 01/6/2009 11:19

anyone got any idea where this will head?

[mdchand] 18/5/2009 19:26

hmm - sifted through the interims. don't think tomorrow is going to be a good day (although I do hope I am wrong).

Good news is that the ongoing cost of the debt has been reduced by circa £1m per annum. The bad news is that the debt as a proportion of assets has increased. They've also sold the 'jewels' in the fabrication business - the one division which appeared to be winning new contracts.

To turn this around, they really do need to some big contract wins, coupled with some ruthless reductions on the administration side.

Still, I suppose I should be grateful that it is actually relisting and that the accountants havent qualified the accounts - albeit they are heavily caveated and dependent on certain business assumptions moving forward.

I also hope the directors pull this through as they have used their entire shareholding in the business as security to the banks. Still, if that doesnt focus their minds, I'm not sure what will.

[meandy] 18/5/2009 18:20

lets blow the dust off this thread and ask what will happen tomorrow when the shares begin trading again.......??

[bones698] 30/9/2008 19:43

suspended no money, at the mercy of the banks which are not in a good mood. looks like some serious ramping digging. might have a look if they survive and buy at 3p

[digging] 01/9/2008 10:01

regenisis/rgn big news last friday.not de-listing capital injection.pi,s have missed it in the equity rns.

[mdchand] 29/8/2008 16:18

Kuwaiti sheikh joins Aberdeen oil minnow - Scotsman

Published Date: 21 August 2008

By Hamish Rutherford

City Correspondent

ONE of Scotland's smallest listed companies is hoping to win contracts in the Middle East after appointing a 25-year-old member of the Kuwaiti royal family to its board.

Sovereign Oilfield Group said Sheikh Sabah Ali Fahad al-Salem al-Sabah, part of Kuwait's ruling dynasty, was joining its board as a non-executive director with immediate effect.

The Aberdeen-based oil services company, which has a market capitalisation of less than £3 million, yesterday declined to take questions on the appointment.

But a statement from chief executive Graham Burgess made it clear part of the attraction was Sabah's connections.

"We are delighted to welcome Sheikh Sabah to the Sovereign team," Burgess said. "His knowledge, experience and connections will strengthen our capabilities in key Middle East and international markets and will expand opportunities to develop internationally."

The Al Sabah clan has ruled Kuwait for more than 250 years. After discovering oil in the 1930s, Kuwait is the Middle East's fourth-largest oil producer, and one of the wealthiest nations on earth.

Burgess, who owns more than 29 per cent of Sovereign, which he co-founded in 2003, was not returning phone calls.

The company declined to provide either a CV or a picture of Sheikh Sabah, saying that the latest addition to the board wished to keep a "low profile".

Asked what experience he would bring to Sovereign, which has a sales office in Kuwait, a spokeswoman for the firm said: "The idea is to progress and take advantage of his connections in the Middle East to help facilitate Sovereign's expansion there. Hopefully new contracts will come through."

It is unclear what the attraction of becoming a non-executive director of an Aim-listed minnow is be for Sabah, who, like other members of his family, is likely to receive a significant monthly stipend from the office of Kuwait's Emir.

According to Sovereign's 2007 annual report, non-executive directors Geoffrey Pearson and Dr Graham Dixon were paid £18,000 for attending 11 meetings.

It is the second board position for Sabah, who also has a position on Canadian company Infintive Corporation, although that company's status is listed as "dormant".

Sovereign appears to need the contacts its latest recruit could bring. Despite a boom in investment in oil services due to record crude oil prices, its shares have fallen by more than 80 per cent in the last year on concerns about debt levels.

Although it recorded 100 per cent increase in turnover in the six months to 30 September over the same period in 2007, its last results available, Sovereign's pre-tax profit fell from £1m to nil.

Its shares were unchanged on 15.75p yesterday.

[mdchand] 29/8/2008 16:10

well, by luck, coincidence or guesswork, it does look like a large overhang has finally been cleared, which has released the share price upwards. Guess time will tell whether our mr digging is anything more than a pure ramper, but the oil services sector does seem to be rising today across the board, so who knows....

[digging] 29/8/2008 14:50

what about this one from 15p 8trader.created new thread and aberdeen press about the prince.I-MATE/IMTE. MULTI-BAGGER RESULTS VERY SOON AND BUSINESS UPDATE FROM CHINA AND CANADA AND N.AMERICA.BIG BUCKS.

[mdchand] 27/8/2008 09:05

This article is dated April 2008 - taken from

Neither Graham Burgess nor I could believe that nearly a year has passed since we last reviewed the progress of the AIM-listed company that he and Peter Felter established in 2003 and took public in 2005. It has been a year of solid consolidation amid global economic conditions that have sometimes been favourable, sometimes challenging but never dull.

The group was conceived in a highly entrepreneurial way to take advantage of the demand from oil and gas companies for integrated fabrication and drilling services as a kind of two-pronged approach to meeting these customers' prime operational requirements. From the start, the strategy was to build the company by acquisition: the pre-and post-flotation acquisitions are detailed in my June 2007 Exec article*.

Bedding in

Early 2007 saw a flurry of acquisitions, facilitated by a £50 million line of credit extended by the group's bankers Merrill Lynch. Dunfermline-based Forfab, purchased in January, was followed in March by RDT Precision Engineering of East Kilbride and, in April, by Labtech Services and Vertec Engineering, both of Aberdeen.

Together these companies represented a large chunk of fabrication capacity, and while Sovereign has a policy of allowing its subsidiaries a fair amount of autonomy, they took a while to bed in, as Graham puts it: "We went through a quiet period during which we held back deliberately from making any further acquisitions. As a policy, when we add a company to the group we put in management teams and keep open the lines of communication but we don't try to integrate two management teams into one. We'd look upon amalgamating the businesses as a waste of resources."

For example, Labtech and Vertec both manufacture and fabricate accommodation modules, engineering cabins, engineering cabins for wellheads, for the ROV industry and for mudlogging in the oilfields for companies like Baker Hughes, Schlumberger and Halliburton. If they were to be amalgamated, they would probably lose 25 percent of the combined market share they command – far better to allow them to continue to operate independently and even compete, each contributing valuable resources and skills to Sovereign's global fabrication capacity, Graham believes.

Rough winds

These darling buds of May 2007 withstood the rough economic winds of 2007, and business has grown strongly. However, the said winds did shake the group's further acquisition plans. It had been Sovereign's intention to add two more drilling services businesses, but the credit squeeze put the wind up the banking backers and these deals had to be abandoned.

The consolidation period is complete now, and the group has been reorganised into two divisions, a Fabrication Division with seven operating subsidiaries, and a Drilling Division with five subsidiaries. The Fabrication companies have done particularly well over the last year, and recently announced a number of significant contracts totalling £7.35 million.

OIL Engineering Limited, specialists in structural and pipework fabrication services, has been awarded two contracts. One for the manufacture of manifolds for the North Sea Victoria Project at a value of £1 million, and the other for the manufacture of lifting and handling frames for Acergy Norway AS – value £0.5 million.

Vertec Engineering, designers and manufacturers of specialised fire protected cabins and local equipment rooms for the oil and gas, renewables and transport industries, has been awarded contracts totalling £2.85 million. These include a contract with FMC Technologies Inc for £1.2 million for the manufacture of a VSD Module, and a contract with Saipem America Inc for the manufacture of A60 workshop/control vans at a value of £0.65 million.

Forfab has been awarded contracts estimated to be in excess of £1 million for the design and manufacture of storage and pressure vessels for export to the Middle East.

Labtech Services, which designs, manufactures and hires containerised and skid mounted equipment, has been awarded a contract to design, fabricate and install an accommodation module onboard a North Sea drilling rig. This contract is valued at £1 million.

Meanwhile, Oil Engineering Middle East LLC, based in the Group's new facilities in Abu Dhabi, has been awarded a contract for the fabrication of two accommodation modules for FPSOs currently under manufacture in the Middle East. The contract value is estimated to be in excess of £1 million.

Unique in the North Sea

Graham is understandably delighted at these successes: "The Fabrication Division is now a major force in international manufacturing services," he says. He is also pleased with the drilling companies though it's here, if anywhere, that there have been setbacks. Three of the companies have been trading strongly. One experienced a delay in the delivery of some contracts, so has not achieved the revenue hoped for in the period. Another company, Diamant Drilling Services (DDS), however has resisted efforts to move it into profit. In line with a strategic decision taken last year, DDS is now on the market, having not achieved profitability by September.

There's no lack of interest in DDS, which has sound and innovative technology, says Graham. However a more fundamental change in the structure of the group will take place when the remainder of the Drilling Division is sold out of the Group, so that the quoted company Sovereign Oilfield Group will become a large and profitable focused fabrication business.

"Because the fabrication businesses are trading strongly we'd expect that division to be profitable going forward, and so we would be able to return some value to the shareholders," he explains. The split has been approved, and will take place later this year following a further reorganisation of banking facilities.

The background to the business, against which it was conceived, has of course grown stronger with increasing global demand for oil and gas and rising prices. In the eyes of the public, and even in the investor community, there seems to be a tendency to conflate the price of the commodity with the profitability of the companies that service the industry.

The industry is struggling to meet demand, and the only way to do that is by more drilling and more intervention, which is Sovereign's core business. And when the oil prices went up, the market expected to see an immediate rise in profits of related companies - which didn't and doesn't happen, because there's no direct link.

Comprehending complexity

The Stock Exchange for its part struggles to understand the oil services industry, says Graham, especially when it is as complex as the Sovereign Oilfield Group, so he has learned lessons from the larger Abbot Group and its CEO Alasdair Locke. "It was only when they focused on a single business stream, which in their case was drilling rigs, that they started seeing value moving into their shares. I think we are moving in the same direction now by focusing on fabrication."

Sovereign Fabrication Services is now unique in the North Sea area in that it can deliver a full range of fabrication services from general fabrication to subsea structures, to pressure vessels to pipework, right through to cabin work and accommodation modules, Graham says. "We are now chasing larger contracts where delivery can be shared between group companies but the whole structure is delivered by the SFS with each of the subsidiary companies contributing the part that is its specialisation."

Chasing larger integrated contracts is the company's main priority. Close on its heels is the goal of replicating its North Sea success, focused in Aberdeen, at Abu Dhabi, a single facility that focuses the skills of all the companies in one location. Abu Dhabi has also performed strongly over the last year and is currently working on a large accommodation module.

Geographical expansion

That operation is a huge success already, and the model for future expansion in other geographical areas. Next on the list will be West Africa where discussions are currently taking place – Graham is confident of having a site and a local partner by the end of this year.

After West Africa, Sovereign wants to establish integrated fabrication facilities in Norway and Brazil. In the case of Norway, the route of choice would be via acquisition, so the timing for that option could yet be dependent on the availability of capital. Brazil and West Africa can be established with a local partner and therefore don't need the same level of new investment. With an order book worth some £30 million and a burgeoning market, Sovereign is in a good place even without the expansion that the entrepreneurial and impatient Graham Burgess needs to make happen.

I should end by making it plain that, despite the impending DDS divestment, the Drilling Services Division is no basket case. On the contrary, it holds some brilliant technology and should have a great future after it has been acquired by Claymore Investments Limited, a company controlled by Graham Burgess, Peter Felter and Julie Cowie, all directors of Sovereign – but that is another story.

Worth a read, if only to get up to speed.

[logica2me] 26/8/2008 19:16

Very interesting rise today. I can see 50p again soon. I managed to pick up 30,000 today and will look to accumulate more in the coming days.

Log

[legallf] 26/8/2008 15:11

digging = ramper!! still 95% down compared to pick....

[ju1cester] 26/8/2008 13:29

and a 25-year old who has joined the board, but his only claim to fame is that he's a Kuwaiti royal.

[digging] 26/8/2008 12:43

l2 3v1 30p/32.5/32.5/32.5.max buy 1k

[willz] 26/8/2008 12:39

I'm puzzled on this one too, nothing substantially has changed except the appointment of the Sheikh on to the board but the shares have nearly doubled. The company is still the same one which has dived from ~270p to 15p ok minus the drilling side now however.

[ju1cester] 26/8/2008 11:57

Where is this "rumoured Iraq contract" coming from.

I've only seen news on ties with Kuwait.

[digging] 26/8/2008 11:27

virtually impossible to buy.kuwaiti prince now on the board.how high.200p+

[digging] 26/8/2008 10:48

looking like a very big deal in kuwait.

[digging] 22/8/2008 11:22

ZOO DIGITAL/ZOO results imminent starting to motor.