Soco Share Discussion Threads

[nigelpm] 20/9/2018 14:35

Wow - SDX :



Recent press speculation

SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil and gas company, notes the recent press speculation relating to the Company.

The Board confirms that it is in discussions for the acquisition of a significant package of assets in Egypt from BP (the "Acquisition"). The Acquisition would constitute a reverse take-over under Rule 14 of the AIM Rules for Companies and would be subject to Shareholder approval.

Lots going on in the sector right now.

[stepone68] 20/9/2018 14:30

And I see on page 30 that Merlon production is declining off the back of "reduced drilling activity, water breakthrough and operational issues" - sounds like an almost perfect fit for Soco :-) !!

[stepone68] 20/9/2018 14:07

Does the bar chart on page 11 of the presentation say that they are expecting Vietnam production to decline 3% a year for the next 5 years? Is that just a base case - i.e. situation at current date, assuming none of the bottleneck issues are resolved, or is that an actual expectation of what Vietnam will deliver?

StepOne

[lauders] 20/9/2018 14:06

Well, at last some action at SIA! I was right with Egypt but wrong with the company who incidentally have just now stated they are going into temporary suspension as they are doing a RTO of some BP assets in Egypt.

The market doesn't seem particularly interested in SIA's news but hopefully the BOD can change this mindset as things progress. Probably going to be some wait, but good to see something else other than Vietnam in focus and I doubt it is going to be such a disappointment as the African ventures.

[richalert] 20/9/2018 13:54

So if production is take a mean 7000 bpd and oil price remains close to 80 USD - 4 USD = 76 USD / barrel less 34 USD costs per barrel = 42 USD / barrel.

7000 bpd * 360 days uptime * 42 USD = 105,000,000 USD.

Is the whole amount due to Merlon?
Are taxes due on this?

30 more wells at 2million USD = 60,000,000 USD

Then plus other exploration wells, it becomes quite clear that this will not be net cash producing.

So are we waiting 2-3 years to find out if the venture is net cash producing?

[emptyend] 20/9/2018 13:49

For those looking at the comparison with Ophir, my understanding is that there were 5-6 companies who had a look at the Santos package, including SOCO, who were outbid by Ophir - possibly to the tune of $40-50mn I think. The Santos assets were a very good package - so it was purely a matter of price.My impression is that the upside in the Merlon assets could prove to be significantly greater. The key to proving that will be a greatly accelerated rate of drilling over the next two years - my guess they will drill 40+ wells by the end of 2020, with more than half of these being in the north of the concession.

[emptyend] 20/9/2018 13:38

Just to be clear on well costs, they indicated that it was "less than" $1mn to drill, "less than" $1mn to test and bring into production and "less than" $2mn all-up. Repeated those points several times.So it might be less than $1.8mn per well but I think that is a fair stab for now.

[nigelpm] 20/9/2018 13:19

Yes you recall correctly from conf call - was Brent less 4 bucks.

[kenobi] 20/9/2018 12:53

And how generous the terms are to Merlon,

and what the tax rate payable on the profits are,

I assume that the oil/gas can be sold on the open market by the company and not tied into selling to any particular buyer ?

I seem to recall the prevailing price quoted was brent -$4

K

[kenobi] 20/9/2018 12:51

As Ed said, the train has left the station, hopefully this will be the first of a number of deals leading to a turn around in SOCOS fortune, at least we have some production beyond the life of tgt and cnv,

We have to remember that Ed and the others are massive share holders and they must think that this is a good deal, and they have much closer knowledge,

I assume the production figures quoted are net to merlon ? I wonder what the split of the jv is ?

K

[thegreatgeraldo] 20/9/2018 12:24

Nah..... question is how many bbls are on the licence & what's a bbl worth, net of all costs, taxes, etc?

I'll pop back around 2040 with the answer

[silverlandfinance] 20/9/2018 12:18

I am a long-standing shareholder in Soco.
Firstly, I am surprised that they purchased a company in Egypt.
More importantly, we need to find out in how many years will the p rofits generated(at present oil prices) buy back the investment. Anything more than 5 years is too expensive a purchase

[dunderheed] 20/9/2018 12:01

nigel I assume that is drill plus completion plus 'connection' to pipeline i.e. what I refer to as drill and tie in?

[joestalin] 20/9/2018 11:55

piece on yahoo finance about Tullow & SIA:-

[nigelpm] 20/9/2018 11:53

Drill costs on slide 12 of presentation - have averaged $1.6m per well in 2017.

[nigelpm] 20/9/2018 11:45

Interested to see the commitment to maintaining the dividend comment from ee above. I had idly wondered if that might waver given the costs forthcoming.


Mentioned on the conf call by Jann.

Also in :

hxxps://www.socointernational.com/private/downloads/fjphXjeT0vOdzQ2WfCZsbA/20180920_Presentation_DL_.pdf

[dunderheed] 20/9/2018 11:45

ken apologies I always loom at 'pure drill costs' (which I had at 0.6 - 0.8mm in minds eye actually lol) but either way am exactly aligned with what you say!
I personally am completely underwhelmed by this deal and whilst wasn't expecting much, was looking for something more innovative than this, from this highly acclaimed BD team (by EE anyway!).

EDIT to be quite frank the 'clutching at straws' OPHR deal is much better than this imho and, I would have thought sia must have looked at that surely?

[kenobi] 20/9/2018 11:35

21585, ken, 150 wells like they need (imho) much much less than 300MM - was this the figure quoted?

they quoted basically around a million to drill the well and a million for completion, ee has put it at 1.8 per well, but at the same time they did mention that rigg rates might creep up as they got 3 and 4 rigs,

it's in the right ballpark I would say,

Hence my comment, if this is self funding it's not going to be generating any cash at this point, you can't have it both ways. It's self funding but we're re investing it all means, it's no earnings increasing, in the short term at least, however, long term is another story,


K

[cwa1] 20/9/2018 11:23

Interested to see the commitment to maintaining the dividend comment from ee above. I had idly wondered if that might waver given the costs forthcoming.

[buywell3] 20/9/2018 11:03

Market not impressed

[dunderheed] 20/9/2018 10:59

"unless perhaps an even better (?!) opportunity comes along".
EE well that cant be that difficult can it (for well connected BD teams)(?) so am I correct inferring you think they will be farming down and who to, out of interest, as it doesn't look like that big a queue from where I'm standing?
Thanks for clarification on "well plus tie in" costs though.
I (opposite to you) and am slightly less enthusiastic now but again wtfdik and again, all imho.

[emptyend] 20/9/2018 10:53

so....to me the key point is that there has been underinvestment in the assets and the result has been that wells haven't been drilled to maintain production in the south - which can see production increases via waterflood (as with the nearby Apache analogue). They are targeting production of 15,000 bopd by 2023 and it will take about 60 wells to develop the 2P production profile (30 day wells, costing c. $1.8mn all-in to drill, complete and put onstream)But that isn't all. There are 20+ undrilled prospects in the areas which already have 3D and a $4mn 3D prog will be shot on the balance (in the north) around year-end. The northern area has a major untested resource play where the main local reservoir rock has a c.200' thick section.....hence the plan to ramp up to three rigs by this time next year and probably add a 4th in 2020.IMO there are some pretty serious investment intentions during 2019 and particularly 2020 that can bring significant upside and are also within SOCO's capacity. They have no intention to farm down at all, unless perhaps an even better opportunity comes along. This plugs the growth gap nicely, given that 125/6 won't get even the commitment well drilled until 2020.Commitment to maintaining the dividends, by the way.Positive comment on the CNV-5ST1 well which had a stuck equipment following a loss of circulation.

[redartbmud] 20/9/2018 10:52

I certainly hope that the new partners are more receptive and proactive than PVN, whose only word in English appears to have been 'no' to many constructive development suggestions in the last couple of years. In the meatime we have seen yoy declines in production.

[nigelpm] 20/9/2018 10:49

Can't really see the share price going anywhere from here. The bulls have been saying SIA is undervalued all the way down.

Very true but doesn't mean they are wrong of course.

[dunderheed] 20/9/2018 10:49

21585, ken, 150 wells like they need (imho) much much less than 300MM - was this the figure quoted?