As expected, SOCO International reported a significant rise in full-year revenues and production after operations at its Te Giac Trang field (TGT) in Vietnam came onstream in August, but we still hold reservations as to whether the company will be able to deliver on its planned ramp-up in 2012.
Excluding discontinued operations, SOCO achieved a sixfold increase in net profits to $88.6m (£56.4m) on average net production of 5,437 barrels of oil equivalent per day (boepd). The company finished 2011 with entitlement to 14,700 boepd. Average entitlement from the TGT field has been 12,300 bopd since production started, but over 40 per cent has been held back by the state-owned co-owner Petrovietnam as it recoups set-up costs.
Despite its complex geology, TGT has averaged gross output of 30,424 bopd during 2012, with recent performance levels in excess of 40,000 bopd. While this is certainly encouraging, it needs to be set against the fact that TGT had initially been expected to reach a target of 55,000 bopd by the end of last year. This target has been moved back to the third quarter of 2012, although SOCO admits there are outstanding "alignment issues with Petrovietnam over the rapidity of raising production levels".
Prior to these figures, Nomura initiated coverage on SOCO with adjusted EPS of 42¢ for 2012 (20.6¢ in 2011)
| SOCO INTERNATIONAL (SIA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 329p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 327-329p | 12-MONTH HIGH: | 414p | LOW: 253p |
| DIVIDEND YIELD: | nil | PE RATIO: | 20 | |
| NET ASSET VALUE: | 325¢ | NET CASH: | $114m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | nil | -8.9 | -12.6 | nil |
| 208 | 55.3 | 37.4 | 42.8 | nil |
| 2009 | 69.3 | 54.7 | 11.8 | nil |
| 2010 | 48.4 | 30.9 | 3.80 | nil |
| 2011 | 234 | 159 | 26.4 | nil |
| % change | +384 | +414 | +595 | - |
£1 = $1.57 | ||||
