Soco Share Discussion Threads

[emptyend] 29/1/2018 16:37

So ..... very low volumes and a strongish close. Possibly things happening?

[tyler19] 28/1/2018 12:15

The company needs to increase production to benefit from economy of scale, with new licences and drilling this should happen. Needs to state that all production problems are resolved to win investors confidence. This will take time but I suspect we are close to a turning point. With low investor confidence the share price may drop if the merger doesn’t materialise, capitulation! This would make it a good time to buy. However, if the merger occurs those waiting for a drop will miss out. Best to spread your purchases, if possible.
I do feel for anyone who has lost money on the stock. We’ve all been there, it’s not nice.
I hate quoting other people, but there is a lot of truth in the saying that you want to be greedy when others are fearful and vice versa.

[richalert] 28/1/2018 11:45

Yes. That was the gist of it nigelpm. Have to try to stay positive here.

[nigelpm] 28/1/2018 11:37

He didn't quite say that to be fair. He mentioned a deal might get him out of a hole (so to speak)!

[richalert] 28/1/2018 11:36

greyingsurfer. Too late for me I'm afraid. It's just hang on till I drop.

[greyingsurfer] 28/1/2018 11:33

One thing is for certain, I have lost a lot hanging onto these shares. And I can't see how they are going to recover in the near future, other than a sell out or deal, which ever way, will result in a loss hereIf you really see no recovery why hold? Sell out and move on.

[richalert] 28/1/2018 11:18

If this price 80p to 115p is a true reflection of the current fair value for Soco with oil prices at 70 dollars then we have seen a considerable under performance of management through last 4 years, irrespective of what happened to the oil price. Even just standing still I would have expected us back to the 170p region by now.

Africa mothballed, Vietnam difficulties, could the news get any worse, before it gets better?

One thing is for certain, I have lost a lot hanging onto these shares. And I can't see how they are going to recover in the near future, other than a sell out or deal, which ever way, will result in a loss here.

Hope some news arrives soon.

[nigelpm] 28/1/2018 10:40

Blimey if it gets anywhere near 80p I'd probably add even more. Right now I'm already pretty happy with the existing holding and be patient.

[tyler19] 28/1/2018 08:30

Averaging down when the potential growth story has turned negative is not wise. Averaging down when the growth story is in tact is good investing. I often average down when I think a stock is at a turning point. Some investors choose to wait till a recovery has been in place for a while, which also works but often they miss out on the big returns but take a lower risk. It’s about understanding your downside risk when averaging down.
I would recommend taking a longer view on this stock, 2+ years for the big increase in production.
I suspect a healthy dividend will be maintained. A slight reduction is possible post merger to pay for exploitation of new reserves, which will be seen as a positive.

[lauders] 28/1/2018 02:37

Good summary of the risks/rewards tyler19. As you say the upside from here, given the recent "activity", is greater than a significant downside so I am contemplating averaging down and hoping the dividends continue. There should be no danger of the latter I suppose given the managements stated intentions of continuing dividends but whatever deal comes along may I suppose change even this part of any "plans". Hence I am still cautious and besides it is not always wise to average down so I have heard from more experienced investors than myself.

[tyler19] 27/1/2018 23:54

Lauders, E&P companies are risky by nature. I wouldn’t recommend putting all your eggs in this basket. However, whenever the oil cycle recovers the rewards tend to be high. Not to mention the high volatility at major turning points. Irrespective of the merger I suspect the bottom for this stock is probably around 80p. The upside is a lot less limited. There’s a recovery story here , may be not now, maybe in a few months time. For me it’s worth a 30% risk to make sure I don’t miss out. I’m basing my investment on the fact that from here onwards drilling will increase, 5 wells this year, the company is cash rich and wants to make deals, extra production capability is close at hand with facility being modified, high oil price, change of management team, new licences. Waiting for everything to be perfect will be too late. Maybe now isn’t the perfect time to buy but I suspect it’s an even less perfect time to sell.

[yasrub] 26/1/2018 19:21

Apologies Nigelpm I just saw a reference on the OPHR board which you will be aware of.

[nigelpm] 26/1/2018 18:20

Where's the chat about the Ophir/sia tie up please? I've thought for a while it would make sense. Something odd went on with the two stocks towards The close but that's just me pondering really.

[emptyend] 26/1/2018 17:58

10th Jan:Construction and installation of new processing equipment on the H1-WHP has been completed. The start-up of the water handling system on H1-WHP experienced setbacks and delays due to issues resulting from damaged valves and production stabilisation issues. However, the system is now functioning in line with expectations and production guidance has been achieved.Following installation, the operator identified a sub-optimal performance issue affecting two gas compressors on the FPSO. Evaluation of the technical solutions for and requirement for further investment in the gas compression issues is ongoing and these costs will be included in the 2018 budget and work programme.So....yes there were delays but (from Ed's comments) it was still under budget. And it was evidently working as expected for some time before year-end, because they identified other issues "following" the installation. That might be trimming off 1,000 bopd ish......

[yasrub] 26/1/2018 17:08

The current weakness is a surprise to me and even the late drop sums the current sentiment. I note OPHR are having a torrid time and there is a bit of chat about a OPHR/SIA tie up but I am not too sure. I am going to let this play out and believe there should be a transformative deal and take a view then.

[dbford] 26/1/2018 16:21

No I am correct. If you read their update their water handling was not up and running by Septrmber and they required addition work on it so that it was near the end of the year before working correctly (which they RNSd in January - 'The start-up of the water handling system on H1-WHP experienced setbacks and delays due to issues resulting from damaged valves and production stabilisation issues.' They have not specified the exact nature of the compression problem, but it does seem to be related to the altered set up put in place at the time of installing the additional water handling -'Following installation, the operator identified a sub-optimal performance issue affecting two gas compressors on the FPSO.'

When they sort out the compressors and demonstrate they can increase production the share price will go up.

[dbford] 26/1/2018 14:55

The magagment suggested that the waterhandling facilities would be up and running by September or before. It is now well into January and they still do not have their set up working correctly. When they put out an RNS to say this is all working then the share price will improve.

[emptyend] 26/1/2018 14:31

....by the way....note that management continue to draw a chunk of their salaries in shares (under the pre-agreed irrevocable plan, probably entered into nearly a year ago).... so they can personally be quite relaxed about the drift over the last 6 months. But they will soon put something out to prompt a sharp rerating.....

[emptyend] 26/1/2018 14:28

If that is the case then shareholders must be stupid....or otherwise unable to read RNSs through 2017.

[dbford] 26/1/2018 13:47

I would suggest the dwindling price is purely the dwindling production figures and until they actually demonstrate with output numbers that the slide has ended and is actually increasing then the share price will continue to drift.

[emptyend] 26/1/2018 12:51

All fair comment - and I agree the conclusion. The other aspect is that the share price drift could allow considerable scope for presenting the eventual deal in a highly positive light (because there will then be a read-across opportunity for analysts).As an aside, it shouldn't be under-estimated how far the market can drift from "fair value" when a company is constrained in making public announcements and marketing to investors for months on end. Investors (particularly private investors) rush to assume that management isn't delivering and is simply being idle - whereas often the truth is actually the polar opposite!!

[stepone68] 26/1/2018 12:04

Yes, I'm just trying to answer Rich's question about why the price performance has been so poor. I'm certainly hopeful on production increases (although disappointed by the last update) - I'm just wondering whether analysts have a model built with production rates and license end dates, and all they do is update the production rate using company guidance - which at this point is still dropping each year. So I am still a holder because I hope that production increases, license extensions and potential reserves being written back on will all lead to upside.

Fingers crossed!

[emptyend] 26/1/2018 10:26

But they have released news on the core assets. We know that the decline in production of recent years has been arrested by the water-handling installation and that the ability to raise production has been delayed by the previously-unidentified issues with compressor performance. That will be rectified this year, along with further well drilling. Personally I'd guess that TGT/CNV could be at c.11,000bopd net by year-end.On the licences, that is a fair point. IIRC a 5 year extension is baked into the licence terms but there is precedence in the basin for further extensions beyond that. So, at some point, I would expect a licence extension to be announced - though that could literally be at any point from now to the licence end.

[stepone68] 26/1/2018 09:47

Isn't the problem that there is a constant headwind from the Vietnam license end dates getting closer, and that the production continues to decline?

[richalert] 26/1/2018 09:45

Thanks EE.

Surely irrespective of being in a closed period, it doesn't stop them from managing the business as usual and releasing ongoing news regarding their core assets. After all news has been released regarding blocks 125/126. So I am still puzzling over the lack of performance of core assets.