SOCO slides on Canaccord downgrade

The signing of a gas sales contract meant that SOCO's daily net entitlement technically increased by 8 per cent last year, to 16,694 barrels of oil equivalent (boe). But that was something of an accounting gain that didn't flow through to the financial results. These instead suffered from the temporary curtailment of production at its key TGT field in Vietnam, as well as the fall in oil prices, which meant each barrel sold realised around $5 less than it did the previous year. As a result, cash profits slipped by 5 per cent to $473m (£283m), while operating cash flows came in at $314m - down from $335m in 2012.

Canaccord's valuation concerns need to be set against SOCO's habit of returning surplus cash to shareholders. It distributed $213m (40p a share) last October via a B/C share scheme, and intends to disburse a further $100m this year. However, the group is courting a possible public relations disaster as it moves ahead with plans for exploratory drilling at the Virunga National Park in the Democratic Republic of Congo - home to a population of endangered mountain gorillas.