Shares in SOCO International have rallied over 15 per cent in the past fortnight ahead of confirmation that production has commenced from a second platform at the company's flagship Te Giac Trang field (TGT) in Vietnam. The news has alleviated some of our concerns over the expected pace of the ramp-up at TGT and we no longer recommend selling the shares.
Analysts at Singer Capital have unwound 5 per cent of their original 20 per cent risked adjustment to SOCO's net asset value. However, with a limited number of exploration targets in the pipeline, it's still difficult to pinpoint any near-term price catalysts.
SOCO reported that crude output from TGT will increase to 55,000 barrels per day (bpd) from the current 42,000 bpd at the floating production storage offloading unit Armada TGT 1. The company made much of the fact that the ramp-up is now running slightly ahead of schedule, which will be a relief for shareholders given previous delays to the original timetable.
