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.
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: | 134p | MARKET VALUE: | £443m | |
TOUCH: | 133.5-134.3p | 12-MONTH HIGH: | 168p | LOW: 115p |
DIVIDEND YIELD: | 5.2% | PE RATIO: | NA | |
NET ASSET VALUE: | 258¢ | NET CASH: | $85m |
Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
---|---|---|---|---|
2012 | 622 | 446 | 62.7 | nil |
2013 | 608 | 333 | 31.7 | nil |
2014 | 448 | 153 | 4.3 | nil† |
2015 | 215 | 8.2 | -10.3 | 2.0† |
2016 | 155 | 5.7 | -5.6 | 7.0 |
% 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 |