Soco Share Discussion Threads

[bonkers3] 06/6/2018 14:03

EE,

Your last sentence is a bit ambiguous, at least to me.

Maybe I missed something but I thought the dividends were 27.25p

2013 nil
2014 10p
2015 2p & 5p
2016 5p
2017 5.25p (to come)

Today's price of 106.77 gives 79.52 with dividends subtracted
or 134.02 with dividends added.


Cheers.

[emptyend] 05/6/2018 16:56

YASRUB, it isn't just "in your mind". The shares have definitely underperformed over the last year or so - to an extent I would never have believed possible with oil around $75. New management and new strategic direction......but no clarity as yet on the quality of either. It is ALL about delivery. You are indeed not being unfair to be expecting some action pretty pronto. Ex-post I have been too optimistic in expecting management to deliver before now......but it always takes two to tango...and it is difficult to time perfectly any material trading in and out when deals are done behind firmly-closed doors (notwithstanding the Middle East leak from a third party re Kuwait).....ps.....re comparisons with others, the current share price is ex roughly 88p of dividends (IIRC) since 2013. PMO, TLW, CNE have paid nowt.....

[greyingsurfer] 05/6/2018 16:41

Brucie, I've been in 17 years! And I'm way ahead. Sold slightly more than half at well over current prices, and current share price is a 4-5 bagger for me (plus more than my buying price in dividends in recent years). Yes, if I'd had a crystal ball I could have sold earlier at much better prices, but I don't, and I'm still in as I can see the remaining value here.

Peter

[yasrub] 05/6/2018 16:27

I do not think I am being unfair in now expecting that a value enhancing 'asset package' should be close. As highlighted above the strategy was highlighted over a year ago and whilst I would be the first to moan if there was not obvious value to SIA - I suspect those tasked will be feeling a little uneasy not coming up with anything tangible at this point in time. Over the last couple of weeks I have raised the reserves query in the hope that again this in time will turn into a positive for the company and note the views 'for' and 'unlikely' - so sit and wait to see how management will look to progress.

I say 'sit' as an armchair critic it does seem so much more straightforward :-)

Patience is a virtue but my holding over the last 12-18 months has definitely underperformed to my mind, but I shall obviously hope that a clear direction/execution of strategy is forthcoming.

[emptyend] 05/6/2018 16:12

Hindsight is wonderful.....but SIA also outperformed all the others you list on the way up. The notable underperformance applies to the last 12-18 months.

[brucie5] 05/6/2018 16:03

And without taking away any of your glory, EE, they were great years for ANYONE seeing and then buying the TREND in oil! DNX, SIA, TLW, take your pick. But then the trend stopped. And the trend should be your friend!

(It's somewhat ambivalent atm, but with good dividend and robust PoO, I'm giving it the benefit of the doubt).

[emptyend] 05/6/2018 16:00

...he'd only have the last 12-18 months (3 years max) to complain about if he had. The first 15 years were a different story......

[brucie5] 05/6/2018 15:54

greyingsurfer
5 Jun '18 - 14:07 - 21177 of 21178
0 1 0
The market is always "accurate" Brucie, in that it represents what you can buy or sell for at the moment. It doesn't have any "accuracy" beyond that.

Peter
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I've had this discussion so many times, it's not really worth repeating. Certainly, each to his own but: I do hope you haven't been stuck in here for the last five years with EE, foresaking all others...

[kenobi] 05/6/2018 15:01

Peter are you planning to go to the AGM ?

[greyingsurfer] 05/6/2018 14:07

The market is always "accurate" Brucie, in that it represents what you can buy or sell for at the moment. It doesn't have any "accuracy" beyond that.

Peter

[emptyend] 05/6/2018 13:31

Up to you what you think about reserves. p22 in the AR could hardly make it any clearer, especially when read in conjunction with the 2015 reclassification details but by all means wait for it to happen.Of course the main short-term attention has to be on deals. The shares are down by some 30% since that strategy change was revealed a year ago and, as you rightly say, nothing has been delivered. It is often said that the past is no guide to the future with investment and, whilst I understand the lack of confidence, it remains the case that with something as "lumpy" as a material deal (and they are only looking at material deals) they aren't easy to do. Indeed I take some comfort from them passing on at least two deals because the terms weren't right. If they had passed on 10-20 then I'd be more worried.There remain enough asset packages available to get something sensible done that will give a decent boost to income on a 2-5 year view....but you are right that the proof of the pudding is in the eating.Re Brucie's comment, I see he believes in perfect market efficiency.....and should therefore be investing in index baskets not individual shares.

[brucie5] 05/6/2018 12:01

Well, fwiw, we have a small rising channel that recently knocked up against a falling overhead ceiling. Cash generation makes this attractive at this level, but catalyst for significant rise is surely the PoO. Granted, I know next to nothing about the underlying, but too much knowledge, as evidenced on this bb. can be a highly dangerous thing, when mobilised against the greater accuracy of the market. The latter, it may already be noted, has not been convinced by EE's sophisticated battery of arguments, and in depth knowledge.

Therefore I try to keep it simple.

[ed 123] 05/6/2018 11:43

Ta, Emptyend, however that 25-30% production increase needs to happen to justify the current level of reserves (assuming 7.5 years left). So, more risk to the downside than the upside perhaps?

Conclusion? If there is to be an upgrading of the share price it's unlikely to come from their existing producing fields. 125/6 Exploration well might be a couple of years away. Therefore, attention turns to deal making. So far and despite the distress of some potential asset sellers in 2016, Soco hasn't completed any recent deal. That doesn't inspire me with confidence going forward. It's not impossible but it feels like a roll of the dice situation for any share price upside.

[cerrito] 05/6/2018 11:20

I see JPMCAZ has come out with s neutral rating and a tp of 127

[emptyend] 05/6/2018 11:09

......"at the moment" everyone more or less agrees with you. But the 2018 work programme with new wells and compressor fixes should raise production, with more wells firmly in the FFDP. I'm thinking by year-end production forecasts for 2019 could be 25-30% up on 2017....and even a five-year contractual extension at that point would c. double the reserves recovery.p.22 of the AR gives a very clear steer.

[ed 123] 05/6/2018 10:19

Well, we'll see on the extensions. My guess would be, nothing happening for at least another two years.

Reserves? Y/e 2017 commercial 2P was 28.1 mmboe. Say 7.5 years of licence left, gives projected average daily production of 10.7 kboe. Output in 2017 was about 8.3 kboe/d. Field is in decline but this is to be offset by new water handling and new wells. It remains to be seen how this plays out but at the moment I don't see any reason for commercial 2P to be increased.

[emptyend] 05/6/2018 09:57

There is a contractual extension option of five years embedded in both PSCs, which means that the earliest expiry is December 2029 unless the partners choose not to extend.Additionally there is precedent in VN for a further extension, as you know. The timing of efforts to negotiate that is a matter of judgement; I'd be pressing for it asap but there may be other factors at work in the political big picture. Bear in mind that PV and PTTEP are also partners.On the reserves, it is clear that the bulk of the reclassification of reserves in 2015 was due to the then absence of an agreed work programme. Now that there is a fully-agreed and approved FFDP there is no reason whatsoever that this should not be factored in.

[ed 123] 05/6/2018 09:37

I am less confident than yourself, Emptyend, about the extensions. Yes, Vietnamese production is declining but production is only a proxy for what the government of Vietnam really wants: Income. When the seven years is up, PV can go from being a minority partner to being the full owner. Before then the parties will do their calculations. For Vietnam it would be .... licence extension payment + future tax receipts from foreign partners + income from PV's minority share - versus - income from 100% ownership. For me, as an investor, it would be safest to assume that meaningful value of Soco's two Vietnamese production blocks ends with the conclusion of the basic licence period. I just can't see anyone (Vietnam) giving away more than they need to in a commercial deal.

The case for an upgrade of reserves? The rise in the oil price only helps if the JOC is purely economically driven. In the past there has been slower agreement to invest than Soco would have liked. So, would this rise in the oil price necessarily result in more investment and going for more but higher cost barrels? I don't know. Without that aspect, Soco needs to demonstrate higher production from the current plan - the kit needs to run perfectly and those increased(?) output figures can then inform a reserves re-calculation.

I'll go on Thursday, look and listen. I am prepared to be persuaded but at the moment I don't see a strong case for me to hold shares here.

[kirkie001] 05/6/2018 09:25

I'm still happy holding this share, and clipping the dividends as they come off, but it is becoming an ever smaller part of my portfolio, having once been my largest holding.

I don;t see much downside risk from here, but I'm struggling to see much upside either.

Outside of a POO rise which will bring the whole sector up, what are the possible catalysts - other than blue sky things like M&A - in the remainder of 2018 for any upside?

[kenobi] 04/6/2018 20:46

who's going to the AGM then ?

K

[emptyend] 04/6/2018 19:01

Yes there is precedent, Ed. I was told the same last year. And I'd agree it is probably too soon.....but I'd still be advocating it and would also be expecting it, perhaps in Q1 next year? It needs to come from the JOC level, as the licence holder.....and that points to an end of year event, given the annual planning cycle.I also note that recent VN production numbers have been on the slide - so there is a strong case to be made re stimulating investment in raising production (which will be limited, in the absence of an extension).

[ed 123] 04/6/2018 18:21

I don't think you'll get that licence extension for a while yet, Emptyend. I spoke to Soco today to ask them about the Vietnam licences. They say it is too soon to start negotiating extensions to Blocks 9-2 and 16-1. They say there is precedence of others getting extensions from the government of Vietnam. They couldn't give an idea on the cost of any extension.

Application for the licence extensions may be a while off?

[emptyend] 04/6/2018 18:02

Nigel, I think the answer to that is very clearly given in the AR. p22 clearly states that the "conservative approach (to reserves, re not taking account the fully approved programme in the updated FFDP) following the interpretation and incorporation of the results of the 2018 infill drilling programme into the static and dynamic models".Basically they have only looked at the first 18 months of the planned (and funded) work programme.....which seems much too conservative. I'd like to see a licence extension granted this year, so that the reserves reassessment can have maximum impact.

[nigelpm] 04/6/2018 17:17

I was thinking of similar but I'd be a bit more clear in the wording i.e. :

"What conditions need to be met to consider a re-evaluation of a reversal of the previous reserves downgrading"?

[joestalin] 04/6/2018 17:02

How about - "At what PoO would a rerating of the reserves be merited?"