Record production and a burgeoning cash pile enabled Soco International (SOCO) to initiate its maiden payout to shareholders at the half-year stage. Soco plans a 40p-a-share payout to shareholders in October by means of a tax-efficient B&C share scheme, and will target a future shareholder return of 50 per cent of free cash flow.
The ramp-up at Soco's Te Giac Trang (TGT) site in Vietnam underpinned a 40 per cent rise in daily net production to 17,135 barrels of oil equivalent (boe). Soco is encouraged by recent testing at the TGT 10X appraisal well, which established a daily flow rate of 6,179 barrels of oil. Elsewhere, Soco is moving ahead with testing of a 50 metre commercial interval that has been identified at the Lideka Marine East 1 prospect in Congo Brazzaville.
Higher production volumes meant that operating costs were down by a quarter on the first half of 2012 to $7.90 a barrel, which fed through into a 13 per cent rise in operating profits to $229m (£148m), while net cash flow was up by the same margin to $181m. Soco is now debt-free, having redeemed $47.8m in convertible bonds during the period.
Jefferies gives a sum-of-the-parts valuation of 437p a share.
| SOCO INTERNATIONAL (SOCO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 403p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 402p-403p | 12-MONTH HIGH: | 408p | LOW: 315p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 10 | |
| NET ASSET VALUE: | 387¢* | NET CASH: | $361m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 263 | 202 | 29.2 | nil |
| 2013 | 324 | 229 | 32.1 | nil † |
| % change | +23 | +13 | +10 | - |
£1 = $1.55 *Includes intangible assets of $254m, or 76¢ a share † Excludes 40p special dividend | ||||
