Soco Share Discussion Threads

[flyinghorse1] 09/1/2018 11:14

It does seem that any likely obstructions have been cleared on the KE side post float failure. For me it also suggests that a sole focus on MENA strategy for KE might not have been widely agreed - i dont see why they could not just list in London rather than reversing if thats what they all wanted?
Perhaps relative stability of Vietnam is attractive given block 9 production is from a field that straddles the Iran border and relies on quarterly payments from Iraq,and is where the bulk of KE value lies. Remove that ( blk9) and Soco look the stronger)- hence suggesting a risk weighting previously.
As for SOCO we have allways said we are ringfenced to green light the right decision having a high percentage of holders connected to/ working for the company.

Given the cash redistributions of late they must have a price in mind that they can support by voting for it. Infact a coming together of equals often never works because the other allways thinks they are bigger/ better value.
An imbalance and a desire to get out will help.
Earlier in Dec I felt we were worth in the region of £2-£2.50 with news we have been expecting ( reserves,oil price pick up,recent infill and water handling, disposal/ tidy up of Africa) ( i noted total/ eni are in Iraq in south).

Whats not clear is the new share ratio and combined entity value ( as stated by a few here ) that would be acceptable to the SOCO board. I assume all the options will vest, or some will be good leavers so can cash out,so obstacles for a deal are relative values. I dont know if there are any reglatory hurdles or Vietnam hurdles.
FH

[nigelpm] 09/1/2018 11:04

Thanks for clarification. Will definitely be interesting.

[nigelpm] 09/1/2018 10:23

Trading update is due tomorrow

Did you ask the company?

[invisage] 09/1/2018 08:21

Trading update is due tomorrow

[emptyend] 09/1/2018 08:20

fh1, Thanks for those comments. Re the changes of management at KE, I think this just reflects the fact that KE seem to have changed strategy when the float was pulled and it looks to me (on a pretty cursory look) as if control was pulled from the CEO etc and handed to more of a "deal team" - hence the "interim". The Board background gives a decent indication.As to timing, I suspect we'll get more details in around 10 days time, which I believe was the date pencilled in for the update - and might now have other news tied in with it.

[johnyee 7] 09/1/2018 07:28

There was an egm at Kuwait energy in Dec and many staff were forced out. I've been in Kuwait energy ever since it got the assets of Concorde oil and gas and ended up with shares in Kuwait,that's 10 years I've been waiting to sell my shares at a huge loss by the way so hope good things come to all of us.

[lauders] 09/1/2018 00:48

Good to see some long awaited excitment at Soco Towers! Should be plenty to talk about for a while now and if there is a trading update on Wednesday then there will be even more to talk about no doubt. Thank you flyinghorse1 for your insight above too. Turbulent would seem to be the correct word if key players have departed prior to this news. I hope there are still some key staff left who you have faith in?

[flyinghorse1] 09/1/2018 00:16

This is worth a read for a quick summary of Kuwait energy.

hxxp://www.kuwaitenergy.co/Frontend/KEC/FlipBook/170920170734556527/index.html

If this does not work --go to KE home page
hxxp://www.kuwaitenergy.co/
and look at red area at bottom -latest reports , corporate profile to get it. (September 2017 corporate profile)

Soco is one of the peers in slide 6--at opposite end's of the graph. The KE 2P almost dwarfs the sum of all the smalls peers! It is GCA(Gaffneys) doing the reserves audit work.

Interestingly the block 9 Faihaa field is also part of the Yadavaran field in IRAN ,and KE state on page 14 there will be no opec cuts/restrictions on production.
Its a shed load of oil.
There is some detail on the agreements for block 9 (slides 10 thru 13).

As EE states the ratio of SOCO to KE will be key. I can see risk factors being applied to some of the KE numbers.

I am very disappointed that some of the key Kuwait energy people have left into the run up to this (its obviously been turbulent behind the scenes--driven by key investors who need to monetise?) -particularly Sara Akbar the ex CEO who I knew and worked with when Kuwait was being rebuilt post invasion ,as for me she added the credibility to KE and the contacts in Iraq.(She was a reservoir engineer at KOC)

FH

[invisage] 08/1/2018 23:38

I can see upside pressure building in Soco shares in the coming weeks....



What is a 'Reverse Takeover - RTO'
A reverse takeover (RTO) is a type of merger that private companies use become publicly traded without resorting to an initial public offering (IPO). Initially, the private company buys enough shares to control a publicly traded company. The private company's shareholder then uses its shares in the private company to exchange for shares in the public company. At this point, the private company has effectively become a publicly traded company. An RTO is also known as a reverse merger or a reverse IPO.



Read more: Reverse Takeover (RTO) hxxps://www.investopedia.com/terms/r/reversetakeover.asp#ixzz53dhC8Zmq

[emptyend] 08/1/2018 22:06

Wouldn't like to put a firm number on it but that sounds the sort of territory.The key to the valuation will be:a) what the City makes of the total enterprise value andb) the proportion of the whole that SOCO shareholders would getOf course the question of SOCO's 2P/2C reserves is a crucial input here to both those points...and indeed the production plans are too.I think it is now clear why we didn't get to hear pre-Christmas. They are plainly putting all the numbers in from both sides and agreeing terms before they tell the market. As I've noted, I'd be surprised if there wasn't a decent production potential increase - and I'm certainly expecting some sort of reserves upgrade. As things stand, there seem to be significant uncertainties (eg what values for Congo assets?) but basically it is a question of the extent of the present undervaluation, I think. 25-30% from here ...or more... seems quite possible in the short term, given that we now seem likely to get full value out on the table in one hit.And we can then expect the deal (if finally agreed) to be strongly "sold" to institutions.

[eggbaconandbubble] 08/1/2018 21:13

Capital punishment for corporate crimes! That would improve one's trust in the City!

Whatever deal is done here my guesstimate is that it means share price 175p+ BWTF...etc.

[nigelpm] 08/1/2018 17:04

Robs,

Kenobi mentioned that earlier - very much an irrelevant side show.

[emptyend] 08/1/2018 17:02

Old news, robs12 (and kenobi). Thats been in the works for years (and may not have helped the post-oil-price-fall paralysis in PV). Mostly affects other divisions than PVEP, I think.

[robs12] 08/1/2018 16:54

And just to throw a little more excitement into the mix:



Vietnamese oil officials in the dock for embezzlement...

[emptyend] 08/1/2018 16:48

Having now had a quick look at the KE assets, the vast bulk of their reported reserves (96%) relate to service contract assets in southern Iraq. It will be these assets that may lead to the classification of the deal as a reverse takeover because they dwarf SOCO's....but, because of the service contract instead of a PSA, they will be relatively less valuable per bbl. I wouldn't be surprised if SOCO had looked at these fields before as they certainly looked at similar service contract assets in southern Iraq at one point way back.They had 31mn boe in Egypt in 2015....so similar ballpark to SIA. Seems to be in sensible places. Their assets in Yemen are tiny (c 0.5% of 2P) and Oman is also small.

[nigelpm] 08/1/2018 16:38

Auction UT trade right on the high of the day at 129p - always helpful.

[invisage] 08/1/2018 16:21

I understand a trading update is due on Wednesday.

[nigelpm] 08/1/2018 14:57

Very true - needs to be compelling value for Soco shareholders otherwise it won't get support. KE are the "sellers" in this scenario.

[minesapint] 08/1/2018 14:52

KEs country risk (Egypt, Iraq) make Vietnam look like a walk in the park. Substantive issues around collectability and transferability of Egyptian pounds - see KEs Bond issue for risks and strait jacket of negative pledges. USDollar 250m due for repayment in 2019. Little wonder KE are looking for an outer.

[top tips] 08/1/2018 14:47

Interesting turn up.

[emptyend] 08/1/2018 14:42

...checking back, BAML were lead advisor to Kuwait Energy on their float..........so I would unsurprised if SOCO had been a Plan B for Kuwait Energy ever since the float plan was terminated in the summer.

[master rsi] 08/1/2018 14:41

Not strange that this is happening as for some time now, Oil companies were expected to be taken over or get together on a merger deal as the Oil price is rising

[emptyend] 08/1/2018 14:37

....the reason I mentioned Kuwait Energy's advisers is that, until a year or so ago, they were the corporate broker and advisor to SOCO (and listed as such in the annual reports) a role they had held for nearly 20 years IIRC.They therefore know SOCO better than most! In fact better than anyone, as they also remain bankers to the company.Perhaps BAML are a longstanding advisor to KE....but perhaps they've been specifically hired to do a deal that gets KE a listing?