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Soco gets paid, 12 years on

A big dividend hike, and the post year-end receipt of a long-overdue payment, were the highlights in Soco's 2016 accounts
March 27, 2017

As one of the lowest-cost producers listed in London, Soco International (SIA) might have seen 2016's multi-year low oil prices as an opportunity to invest in new sources of production. Instead, the focus was largely on balance sheet preservation. Capital expenditure - funded entirely from cash resources - more than halved to $40.1m (£32.1m), partly due to the unwillingness of Vietnamese joint venture partners to drill. Unfortunately, "very limited investment" in its prime TGT field, the offshore asset in which Soco has a 30.5 per cent stake, has resulted in production declines.

IC TIP: Hold at 134p

This year, upgrading the infrastructure and development drilling at TGT is one of three strategic priorities. Fortunately, there is a bit more cash available to do so, and from a source investors may well have forgotten. In December, Soco received the first $10m from the 2005 sale of its Mongolian assets, with the outstanding balance of $42.7m passed on this month.

That's just as well, because average production is now expected to sit between 8,000 and 9,000 barrels a day this year, down from an average of 9,883 in 2016 and 11,976 in 2015. Against that output, market consensus forecasts are for pre-tax profits of $46m and adjusted EPS of 2.8¢ this year, rising to $82m and 11.5¢ in 2018.

SOCO INTERNATIONAL (SIA)

ORD PRICE:134pMARKET VALUE:£443m
TOUCH:133.5-134.3p12-MONTH HIGH:168pLOW: 115p
DIVIDEND YIELD:5.2%PE RATIO:NA
NET ASSET VALUE:258¢NET CASH:$85m

Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (p)
201262244662.7nil
201360833331.7nil
20144481534.3nil†
20152158.2-10.32.0†
20161555.7-5.67.0
% change-28-30-+250

Ex-div: 25 May

Payment: 16 Jun

£1=$1.25 *Includes intangible assets of $218m, or 66¢ a share. †40p a share was returned to shareholders via a share scheme in October 2013 (22p in October 2014), and a 10p cash return was paid in June 2015