Soco Share Discussion Threads

[buywell3] 26/6/2018 14:07

Anyone manage to exit at the last 120p level ?

[kenobi] 26/6/2018 12:45

yes I agree, it's a shame this asset couldn't have been used as part of a deal towards some other asset, but I'm sure they would have tried that and gone that way had it been possible

K

[yasrub] 26/6/2018 11:19

Having had 24 hrs to digest the deal, it is clear no PI is in a position to quantify how beneficial the royalty element could be. What it does lead me to believe is a cleaning up process is now in full swing and I remain hopeful a deal might be looming to add to the current portfolio - ideally a explo/producing situation.

I mentioned trusting the management yesterday and whilst for the last 6-9 months I have become a little frustrated at what I perceive minimal tangible progress - this management have not given me any sleepless nights - it has been steady as it goes but perhaps we might now get some positive activity.

[kenobi] 26/6/2018 10:15

yes I hope we'll be getting a lot more too, but the 10M isn't even upfront, some not due until perhaps the end of 2019, hopefully much more long term though

K

[greyingsurfer] 26/6/2018 09:58

Thanks, Kenobi - useful background

On the face of it a good deal for them, they're paying a max of 10M for something that even after the appraisal that has found some oil, cost us 4M. I wish them lots of success pumping lots of oil and giving us lots of royalties

$10m upfront. I hope they will be handing over a lot more than that out of their future earnings (and I'm sure they do too)!

Peter

[kenobi] 26/6/2018 09:15

Peter,
Re the partner, when I spoke to Ed, he said there were two companies interested, and that they had a prefered one, who they knew would do a good job, I have no way of knowing if that's the one that got the deal, because of course he didn't mention names. There's no love lost between soco and ENI so maybe having a third party in there who are committed to developing the assets might bring them to the table. You are in a weak position if you say up front that you want out. If this was their first choice and they are untested perhaps it's some of the key people that they had confidence in ? I have no way of knowing just speculating. On the face of it a good deal for them, they're paying a max of 10M for something that even after the appraisal that has found some oil, cost us 4M. I wish them lots of success pumping lots of oil and giving us lots of royalties

K

[ohisay] 25/6/2018 22:47

Ed123 - thanks for your fair and balanced input (as usual) .

I have simplified my reading of this board by ignoring two more serial imbeciles

The question is who are they ?

[emptyend] 25/6/2018 21:28

kenobi,The $4mn was given in one of the AR notes. Can't tell you which as don't currently gave access.Meanwhile I have simplified my reading of this board by ignoring two more serial imbeciles. Which is great......!

[greyingsurfer] 25/6/2018 18:03

Still wondering what the "bonus payment" is about.

I would imagine these are payments - to Congo(B) associated with activation of the licences. Clearly these will now be by Coastal.

I agree that info on Coastal seems hard to come by, which is a bit frustrating, other than this from the RNS
- Coastal Energy Congo is a subsidiary of Coastal Energy Holding Ltd. The group develops proven offshore oil reserves in West Africa. It is specialised in using early production systems (FPSO/MOPU/FSO) for staged field developments. The group is privately owned by Norwegian shareholders.

I think you have to assume management have done due diligence and decided this is the best on offer, and that they are likely to get production underway. If you don't trust management with that then it's probably best not to be invested!

Peter

[robs12] 25/6/2018 17:19

"... I don't mind what anybody posts on here ...providing that
...It isn't personal attacks - which some has been in the past and the subtext of some comments has been today."

It seems you're not even attempting to disguise them in the subtext then EE:

"Frankly some of the comments on here reveal embarrassing ignorance on behalf of the posters."

"Surely that means it is time for you to stop posting here"

"if you actually believe what you are telling everyone, there is absolutely no reason for you to bother reading or posting here - let alone turning up to the AGM and defiantly waving your one share against all the resolutions."

Not having a good day are we..?

Anyway, back to business. Still wondering what the "bonus payment" is about.

And despite some digging this afternoon, there seems to be a complete dearth of information about Coastal Energy. I don't think it is the same Coastal Energy group operating in Malaysia/Thailand?

So a new unknown entity with no track record? Not overly inspiring to me. Anyone managed to dig anything up?

[kenobi] 25/6/2018 16:05

I am pretty sure that Peter's right, the expenditure was for the production licences, pretty sure it was mentioned at the AGM.

there has been no work done there for some time though perhaps there was a little salary/ overhead attached to it? The vast majority would be the licences. Now paying 4M up front to get only 10M by the end of 2019 max, doesn't sound like great business, but the royalties will hopefully change the complexion considerably. The alternative would have been to let it expire and ENI would have got it for free or buttons.

Seems to me we had little alternative, and the management have played a poor hand as well as could be expected.

K

[emptyend] 25/6/2018 15:57

One point to note (for clarification) is that SOCO can expect to earn up to nearly $2.50 per WI entitlement barrel actually produced (as the royalty is on gross production).....so the absolutely key question for the deal value is what are the production plans (especially in relation to Lidongo, where all we've been given to go on is the pre-drill estimates (which, IIRC, were exceeded)).Not worth fussing over finding out, because the development plan ultimately agreed for the four areas is totally pivotal to value.......but it should be substantial versus the upfront cash.

[dunderheed] 25/6/2018 15:36

21345/7, So where do we have that stated please or is this an inference?
Because I don't want to find it is for aborted BD work - all (absolutely) fine if related to latest deal etc.

[emptyend] 25/6/2018 15:22

Hello Peter,Yes that is exactly what it was for as the context of kenobi's query made clear. It simply facilitated the deal structure we have today.rgds

[greyingsurfer] 25/6/2018 15:19

DH

Do we know what that was in aid of and $4MM chasing silly dreams is just straight down the toilet?

It was presumably the cash for the development licences - so hardly down the toilet!

Peter

[yasrub] 25/6/2018 15:09

I suspect this deal does as already mentioned come down to the new partner and this in turn means whether the PI trusts the judgement of SIA management. The asset had been written down to zero and the quantifiable payments are pretty much negligible in the scheme of things. The royalty payment is where it gets interesting and time will only tell - but dare I say it the reality is one is left making quite a few guesses.

I believe this will currently not change sentiment towards SIA but in time might look a clever deal but unfortunately it is not an obvious positive. I think it is back to waiting to see what management might be working on to add to the current asset portfolio.

[ed 123] 25/6/2018 13:39

Thanks, Nigelpm. :-)

Soco used to be my biggest holding, going back a few years. I still follow it as I have built up some knowledge and there may come a point when I think it's a buy. I read this board as part of keeping up to date. However, there are times when I see something written which I view as being unrealistically optimistic (to the point of being misleading). I have the choice then of leaving it unchallenged or stating the situation as I see it.

Yes, it does take time but it's sort of a defining thing for me. What type of person am I? Sure, it's easier to let everything go, to not attend agms, to never question, to never stand out, to never say the difficult things. That's not me, though. I may ruffle a few feathers but I like to think I do some good with this approach to life.

Hope things go well for you and good luck to all others too.

[nigelpm] 25/6/2018 13:02

Concur as well that it's worth having you around Ed. Although I do often question why you bother but I guess that's your call.

[ed 123] 25/6/2018 12:59

Thanks for those kind words, Kenmitch. Appreciated. :-)

[kenmitch] 25/6/2018 12:45

Ed 123

I just lurk here now and don’t post as anything I post upsets emptyend and it’s not worth the hassle. Reason for still taking an interest is because share did look bombed out compared with similar shares in the sector. So I bought back at £1 but have since sold out. At a lower price Soco might be worth buying again.

This post is just to say that I find your posts invaluable. There’s a bull and bear case for every share and it’s dangerous following any poster, however knowledgeable, who doesn’t recognise that basic fact. Even more so if said posters are opinionated and resent questioning posts.

So do please keep posting on Soco. Your views are always considered, balanced and well argued.

[nigelpm] 25/6/2018 12:39

Well the market is clearly counting that value into the share price - which is down again on the great news...

I'd say the share price moving about here is far more to do with the seller who given their behaviour in Friday's auction seem very keen to get out ASAP.

[kenobi] 25/6/2018 12:26

to be clear the 20M I guessed in the pub was my guess, which I came to in the split second that ee asked what I thought, I thought I had said 10 to 20, but 20 is not an unreasonable guess, given the guidance I had heard was not a lot up front but a something on production.

I'm not really thinking we're both right, I'm thinking one of us was a lot closer than the other, what the eventual figure turns out to be, well that's another matter, and who will be here to collect it remains to be seen,

good call tiswas in getting out when you did !

Ed, hum yes in the short term you're wining from the headline figure, perhaps though 20 and something from production is actually a closer guess than 10 ?
Water under the bridge, and now on as you say they can do deals that give the company life beyond the current assets.

K

[robs12] 25/6/2018 12:17

1) Headlines that the sale value is "$10mn" are wrong - Agree!

2) Whether the deal is worth $10mn, $20mn, $50mn or more, that is value in the company that we couldn't have counted on last week. Well the market is clearly counting that value into the share price - which is down again on the great news...

I'm afraid my view is that today's deal is insignificant. Perhaps I am overly disappointed that it was not just a 'tack on the end' paragraph to a much more significant deal announcement. Probably hoping for too much from our $13m team (maybe less a few $ now).

"I doubt we'd see $100mn back but it will certainly be a multiple of the $10mn headline value" - I'm afraid I don't see any certainty at all and think that statement is entirely misleading (other than the certainty somebody is desperately trying to talk it up to be more than the damp squib it is!).

But I guess I'm happy to stay embarrassingly ignorant! ;-)