Soco Share Discussion Threads

[emptyend] 26/4/2018 17:12

What on earth are you wittering on about, ohisay? There is nothing ad hominem.

[ed 123] 26/4/2018 16:47

Closed at 99.5p. Another 16.5k shares were offered at 99.5p but not matched in the closing auction. Suggests an institutional holder has more to sell at this level.

[ohisay] 26/4/2018 16:41

EE you've made some good posts recently - so please don't do ad hominem attacks on a perfectly good dissenting view .

[nigelpm] 26/4/2018 15:46

CWA - not quite : " The Shares were purchased on the open market pursuant to a trading plan entered into on 9 February 2017."

[emptyend] 26/4/2018 15:02

it seems some people haven't been paying attention....

[flyinghorse1] 26/4/2018 14:48

I’ll take the P50 outcome of either scenario

[ed 123] 26/4/2018 14:26

Emptyend

Not implausible by the end of 2020.

Dictionary definition of "implausible" is "provoking disbelief".

hxxps://www.merriam-webster.com/dictionary/implausible

Your list of desirables is very much implausible ... fantasy, in fact.

Soco is stymied with an underperforming main asset, partners who can block progress, a licence that expires in about 8 years time, management who failed to execute even a single 'rescue the overborrowed oil company' deal when the commodity price had dipped and caused existential distress for some.

If they had it in them to do this sort of thing, they would have done it when pricing was very much to their advantage. The best potential deals came and went.


Your 'future of Soco' list .....

a couple of deals? Really!

Extended TGT licence? May not happen and if it does, at what cost?

Oil price of $90? It's not what the forward market is saying.

Finding commercial oil with a wildcat well? 1 in 10 chance?

Like I say, it's very much implausible for all this to happen.


Meanwhile back in the real world, Soco's share price is where it should be c. 100p.

(No offence intended to holders but there are times when I feel I have to say it like it is.)

[cwa1] 26/4/2018 14:18

Messrs Brown and Watts topping up their ISAs :-)

[emptyend] 26/4/2018 13:53

...I'm not bothered how long it is. I'd settle for getting back to somewhere over £3.50 or so, so that total returns were in the £4.50 area that we once enjoyed. A couple of deals, a change of sentiment, a firmer oil price (say $90 or so), an extended TGT licence and some oil on the first 125/6 well should do that, I think. Not implausible by the end of 2020.

[richalert] 26/4/2018 12:26

EE. Thanks for correcting my errors. Here's hoping we have a long and successful future.

[emptyend] 26/4/2018 12:24

Fair point!Absent the financial crisis scuppering the deal tabled back in 2008 it might all have been ancient history......

[stepone68] 26/4/2018 11:53

Apologies in advance EE, but I'll look forward to the day they put '...The Endgame' on the front of the Annual Report :-)

[emptyend] 26/4/2018 11:36

Good point re Serica....and the same applies to PMO which at one point touched 20p before tripling post-deal.SIA hasn't gone to such a big discount relative to "value" but I could easily see a decent deal taking the share price up to the 180-200p range. Note also that there should be some upward reserves revision to come following the 2018 drilling programme (as noted in the annual report), so I don't think this is a massive ask, given that the shares were trading at 250p with Brent at $70 before the 2015 reserves reclassifications took the price down to 150p. It could largely be accomplished by changing sentiment from glass half-empty to glass half-full.Also note that any company that put "POISED FOR GROWTH" on the front cover of its annual report would look pretty silly if it didn't deliver on that promise!

[flyinghorse1] 26/4/2018 11:18

Also Serica deal is an indicator of a company going down hill to uphill very rapidly.

[nigelpm] 26/4/2018 10:33

The move up on the Kuwait news is testimony to that.

[emptyend] 26/4/2018 10:30

I simply stick to my point that a deal RNS could change sentiment on a sixpence. Once the direction becomes clear, if it is truly a value-additive deal, then the share price should move far higher almost immediately, because the "uncertainty discount" should disappear at a stroke.

[nigelpm] 26/4/2018 10:02

Agree on the balance sheet points from ee - I made this one myself a couple of months back.

I do understand the market being totally disinterested here but still suspect an RNS with cashflows from oil > $70 will focus some minds.

[jotoha2] 26/4/2018 09:23

Nice to see you invested in quality Nigel , you really do pick the winners!!!!!

[emptyend] 26/4/2018 09:11

Richalert, I think you are comparing apples and oranges. Your general point is true but there a number of specific tests in the accounting for oil and gas companies which should ensure that the book value doesn't overestimate realisable values. There is also the ongoing depletion of asset values as the assets are effectively consumed. These checks and balances are particularly the case for producing assets such as TGT and CNV (less so for for assets still being evaluated, such as 125/6).For example, SOCO has taken impairments in recent years for:- Marine XI assets, because no further work is planned or budgeted and no sale has been agreed. That does NOT mean that there won't be a big chunk of that amount getting written back in due course - it is an impairment demanded by the accounting standard.- CNV, because due to the deferral of a planned well it became clear that all the oil and gas in the reserves could not be extracted during the remaining licence term - so the reserves were reduced and the asset impaired accordingly.Regarding the licences, it is my understanding that there is an option for a five year extension within the terms of the licences. These options haven't yet been exercised (as expiry isn't yet very close). Additionally there is precedent in Vietnam (Perenco, I think, from memory) for additional extensions to be granted. I would suggest this is wholly plausible for TGT/CNV because they are JOCs involving PV and PTTEP and SOCO, which has been a good corporate citizen in VN for 20 years and will continue to be so with blocks 125/6.Furthermore, re the book value, the policy move to successful efforts should make the book value even cleaner going forward. The book value will continue to reduce as it is depleted by production (hence the depletion charge) but, at the point the licences expire, the book value of those licences would approximate zero - so the scenario you suggest simply won't occur in an oil and gas company. In a manufacturing company, for example, the assets are not written down as a matter of course - and their value if the company ceases to trade will often be very substantially less because the assets have no or limited alternative use (hence my apples/oranges comment).rgds

[richalert] 26/4/2018 08:46

EE. Having had experience of running a company and liquidating it, I would suggest that the asset value is not the true worth of the company. In the case the companies income source comes to an end, and liquidation is the only way forward, then the asset value is worth only fractions of what is stated on the books, cash excepted of course.

I am now more concerned about Socos expiring contracts. Is it 2026? for current blocks. Hoping the licenses can be extended.

[cwa1] 26/4/2018 08:42

Morning All

FWIW, I've thrown my hat in the ring this morning with a modest purchase. I had hoped for lower-and probably should have waited as no doubt an opportunity will present itself at some point-but decided to push the button at just under 98 and get a few, leaving a little powder dry to enable a further purchase if it drifts off more.

The dividend of 5p represents a yield of over 5% on this upcoming payment alone(and, yes, I DO know that the price is likely to adjust by that amount anyway) Also another 5%+ looks likely in a year's time whilst we await "developments".

I think at some point something will have to give if this sort of yield and current OP can be maintained.

As ever fingers tightly crossed.

[emptyend] 26/4/2018 08:25

It is perfectly reasonable to compare Enterprise Values......because that is the amount of cash that represents the asset base of the companies. You are completely right about the lack of steer on earnings and the uncertainty over direction - but it is completely clear that:- they want to grow the asset base- that the dividend will continue to be paid- that the focus in growing the company will be taking on development opportunities rather than greenfield explo (though of course 125/6 provide such upside potential)What the company will look like in terms of its asset base and geographic location is another matter.....and that is certainly worth some discount.......but it seems to me that the market is wrong to ignore SOCO whilst bidding-up PMO and TLW. That may persist for a while - and has already - but at some point it will unwind when clarity emerges due to a deal finally getting done.I had hoped the transforming deal would have been done much sooner - but I think the current share price is an excellent entry point relative to the asset base (which was the point of the TLW comparison).

[yasrub] 26/4/2018 08:13

I think something will have to give soon, currently/last 12 mths a distinct apathy has been shown towards the company. Whilst there will always be speculation of deals that came so close - nothing tangible is evident. Hopefully the AGM will offer the opportunity to understand a clearly defined future direction. The danger is we will just drift without the catalyst the market demands, based on managements' current packages I suggested when the Kuwait deal was mooted the pressure is on to deliver - currently that has not happened.

[richalert] 26/4/2018 07:16

I don't think comparing Enterprise value against debt is a particularly good indicator. The financials of companies are much more complex, in particular guidance for future earnings, guidance on future direction. What are the company's plans for the next year? I think Soco seems to have become confused over what it is doing. If it is an exploration company, where is the news on new exploration? That's excepting blocks 125V. As a producer it is hamstrung by its partners.

As I see it, we need to see more sense of direction from the directors and crucially more guidance.