In 2018, SOCO International’s (SIA) operating costs fell, its cash pile, cash flow, net assets and top line all rose, and its average barrel of crude even sold at a $3 (£2.30) premium to Brent. But the 28 per cent drop in the shares over the last year suggests shareholders’ focus is all on falling production.
Full-year results contained no revisions to output guidance, but the trend is negative. Should SOCO hit the lower end of its 6,500-7,500 barrels of oil equivalent per day (boepd) target range, then production will have fallen 21 per cent in two years. Against this decline, a $37.8m reversal of an impairment charge to its smaller Vietnamese field came as a rare bright spot, and flattered reported figures.
It’s just as well that SOCO has a new strategy to tout, in the shape of a $215m cash-and-share bid for Merlon Petroleum, a low-cost Egyptian oiler producing 6,500-7,000boepd. That deal was rubber-stamped in December, and should complete by June.
On average, analysts expect adjusted earnings to narrow to 5¢ per share this year, against 6¢ in 2018.
| SOCO INTERNATIONAL (SIA) | ||||
| ORD PRICE: | 68p | MARKET VALUE: | £226m | |
| TOUCH: | 67.1-68.2p | 12-MONTH HIGH: | 125p | LOW: 65.5p |
| DIVIDEND YIELD: | 8.1% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 151¢ | NET CASH: | $145m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
| 2014 | 448 | 153 | 4.3 | nil* |
| 2015 | 215 | 8.2 | -10.3 | 2.0* |
| 2016 | 155 | 21.9 | -1.3 | 7.0 |
| 2017 | 156 | 22.7 | -1.5 | 5.25 |
| 2018 | 175 | 80.1 | 7.3 | 5.5 |
| % change | +12 | +253 | +387 | +2148 |
| Ex-div: | 9 May | |||
| Payment: | 31 May | |||
| £1=$1.31. *22p was returned to shareholders via a share scheme in Oct 2014, and a 10p cash return was paid in Jun 2015 | ||||
