Soco Share Discussion Threads

[emptyend] 24/12/2016 11:32

Key point from FH:
"Gettng the reserves auditors to any large proven number in an unconventional play will need proof via field production,not just a well test."
....another reason why there is nothing recent?

We know from SOCO's experience that unconventional reservoirs breed caution over estimates (which, in SOCO's case at CNV, proved well-justified given the actual production experience).

[flyinghorse1] 24/12/2016 09:19

ET,
Yes all the best to Soco holders.You make some good points but look whats happened to the likes of Panthenon recently on non delivery.
I dont have a downer on Hur(more like SOCO)but like you see HUR as exciting,but think that i would be taking some money from the table right now. A lot of PI's just see the big numbers and dont understand the uncertainty.
I also traded it sucessfuly in the past,so was looking to re enter(like you re balancing) but felt it was to risky for a large investment,with the excitement based on large numbers thrown about with out much underpinning/recent external review.
I would feel a lot more comfortable with a recent CPR ,and see remaining uncertainty,rather than management estimates. A small punt,may be ok,but not the farm for me at my stage in life.
The impact of a dry Halifax well will be one way,but then it could be sucessful.
The reservoir parameters in some of the areas bar Lancaster are not that well defined especially oil type,with RPS themselves stating that the oil types are not well defined.it dissapointing that given this the Lincoln well was not tested. I believe typhoon/ tempest is heavy oil, and another field volatile oil/ condensate- can these be developed WOS?
The large spread in resources is indicative of uncertainty. I counted 19 wells drilled from the CPR,and only Lancaster seems defined.Lancaster in CPR form does not work commercially at current prices.
I see HUR as preoilers who will sell out to a larger player. They have just over a billion shares issued to get to this point. Gettng the reserves auditors to any large proven number in an unconventional play will need proof via field production,not just a well test.RPS also mention that they added a CoD- chance of development to some of the contingent resources.They also mention considering the conventional play numbers with more certainty (GPoS).
I dont currently hold but may throw in at a punt level and see what happens.
Who would we see as the buyers of HUR or do you think they will have to go it alone to first production?
I prob ought to post on the HUR board, but no one will like my view and as i dont hold whats the point in getting in a point of view argument.

[flyinghorse1] 24/12/2016 01:44

I would be taking some profit out of HUR and putting it in a safer haven were i invested there as its way to hot.

[invisage] 23/12/2016 23:33

Why does emptyend have inside information?One should report him to the FCA.Being a non exec of a plc he should know better.

[emptyend] 23/12/2016 22:48

Happy Christmas to you too Kenobi. I understand that the FDP is now finally agreed and being prepared for Govt sign-off.So pretty imminent (Jan, I guess)

[kenobi] 23/12/2016 22:12

Well I hope so, getting a FDP agreed finally would help,

getting production up so that the fpso is a bottle neck again would be great too, then we can argue about a pipeline or other solutions again.

Have a great Christmas EE, and all the best for 2017,

and to everyone on this board, lets hope soco turns the corner for us,


K

[emptyend] 23/12/2016 21:43

Just goes to show that many parts of the market seem to lack context. A strong Q1 beckons for SOCO, I think, as they finally make some demonstrable and solid progress.

[flyinghorse1] 23/12/2016 18:37

HA--Its mad but Hurricane now have a bigger market cap than Soco.
No production,need massive development funding,FPSO signed up for,and a CPR that dates from Q42013 with a forward strip price of +$90/bbl
They have no Proven reserves,and a 1C (case dependant) of circa 181-188mmbbls.

FH

[emptyend] 23/12/2016 17:04

HA.....no. I think their conclusion would be that hitting the big fractures is more of a lottery than they'd thought initially.

[emptyend] 22/12/2016 07:18

Thanks for that clarification, Steve.

[steve73] 22/12/2016 03:23

Bookable reserves depend on the forecast oil price, which is heavily influenced by the current OP.

For fields in later life, the cessation of production (CoP) occurs when OPEX exceeds revenue, and Reserves can only be booked up to CoP. A low current OP leads to a low forecast of future prices, which brings forward the CoP date, and any oil left cannot be classes a reserves.

As the O/P increases, the forecast futures increase, and the CoP moves out allowing much more of the unbookable reserves to be reclassified.

For mature fields with long tail-end production a wildly changing O/P can make huge differences to the reserves that can be booked.

[emptyend] 21/12/2016 22:23

Just for reference, the commerciality declaration at TGT was September 2008 and CNV was two years earlier.Due to other diversions, I'd rather overlooked the after-effects of the takeover last year of Talisman by Repsol. They seem to have been reorganising and laying organic expansion plans in VN in recent months - but I wonder whether they (or ENI, still) would find SIA a handy bolt-on?

[emptyend] 21/12/2016 21:40

Cash comparisons will be like-for-like and always include liquid investments (which are usually 3-6 month time deposits).

[cerrito] 21/12/2016 21:17

Thanks emptyend
I note that they have now $91m of cash up from £70 at 30.6 and this as they say includes the $10m. If they have generated $18m in cash from operations(taking into account the $8m dividend) that would be great but I am not sure if they are including the $10m of liquid investments or not.
I see that in the interim statement they said-and it rather surprised me-quote An additional distribution to shareholders will be considered later in 2H2016-unquote nd the conclusion seems to be no-and not a surprise.

[emptyend] 21/12/2016 19:35

2030-something. 2035-2038, I think from memory. Sure it was discussed was back on TMF. Slightly different times, with CNV expiring first.

[cerrito] 21/12/2016 19:33

Excuse my ignorance but when is the TNT/CNV license running out? Been through the Annual Report and founds lots of other info but not this.
Do CNV and TNT expire at the same time?
TIA

[emptyend] 21/12/2016 18:58

The way reserves work, they would all be extractable in the licence life. That is why CNV reserves were written down when the cancellation/deferral of the well needed for pressure support meant that not all would then be extractable.I also would wonder about the possibility of a formal licence extension (beyond the possible extension already available) at some point. After all, the licence holder is an established JOC in which PV is already a major partner - and there is likely to be an ongoing relationship in any event.

[kenobi] 21/12/2016 18:16

Much of that is now water under the bridge,

the problem we have is that the licence is running out, and production is relatively low, we're still waiting for the fdp, so how do you value soco ?

what would it take to get the reserves uprated again ?

And if we did, given the Partner situation, how much of the oil can we extract in the time left on the licence ?

then there's the blue sky of the new areas but that may or may not come to anything so currently, not much value there.

K

[emptyend] 21/12/2016 11:51

FH, Again I agree with much of that, but I wouldn't criticise strategy etc as heavily. I'd say they underestimated the politcal risks of getting involved in Block V DRC....but probably because they looked at things rationally, rather than with the mindset of eco-warriors looking for a fund-raising opportunity. The area concerned was scrub - and the local population was and still is impoverished and in need of an economic stimulus.I also don't criticise the lack of hedging. Any of us could have sold or hedged - and we all knew the company doesn't hedge (neither do most other debt free E&Ps).Dry holes in MPS etc just go with the territory - and at least it was $5mn under budget and drilled at half the cost originally expected.The one area where I do fault management is the failure to manage expectations over the reserves reclassification.....and I let them no in no uncertain terms. Hopefully thats all behind us.....

[flyinghorse1] 21/12/2016 11:45

That was later

[pumph] 21/12/2016 11:34

North Korea? Wasn't that Aminex rather than SOCO?

[flyinghorse1] 21/12/2016 11:30

I guess I am just frustrated and only still in SOCO because of the drop from my average and being a longer player (no day trading etc).

More importantly would I stay in if I could get out with a relatively short haircut--no,as I don't see a good plan,and that's the dilemma for new investors and current underwater investors.
There is opportunity here for them to build a good plan that people can buy into.

You likely have such a buffer in SOCO to be immune to thinking about radical change,or took returns a cash (I can think of recent political scenarios where change was absolutely required, and the people had a vote).
In our case some of the shareholding ring fencing has us tied in knots both positively (hostile takover) and negatively (change).

I really liked the returns to shareholders idea,but not with out expansive plans that would sustain-ably deliver it for the foreseeable future.

Regarding the shareholder return,mine was eroded as I reinvested at a high price effectively disappearing it.

The management/board are supposed to identify and protect against "Turnbull risk" in our case a crash in oil price (hedge strategy)leading to break even ecos, shift from proven to contingent,investing in politically unstable ventures (N Korea and the Gorilla saga,African offshore foray despite good potential for oil there. There seems some insensible risk taking of late.

I can blame myself for my mistakes,would just like to see a similar attitude at a high level in SOCO through some action.
Lets hope you are right that its coming,but that shows our inability to influence it.