TIDMSIA
RNS Number : 8726H
Soco International PLC
13 June 2017
SOCO International plc
("SOCO" or the "Company")
AGM TRADING AND OPERATIONS UPDATE
SOCO International, an international oil and gas exploration and
production company, issues the following trading and operations
update in advance of the Company's Annual General Meeting which is
being held at 10:00 today. At the meeting, Ed Story, President and
Chief Executive Officer, will make a presentation which will be
made available on the Company website
http://www.socointernational.com.
Ed Story, President and Chief Executive Officer, commented:
"The Board remains committed to its strategy of shareholder
value creation through the growth of the business and cash returns
to shareholders.
"Including the proposed final dividend of 5p per share (approx.
$20.6m) for 2016, SOCO will have returned $476m to shareholders in
capital returns, share buybacks and cash dividends.
"SOCO's robust operational and financial health continues to
uniquely position the Company for material growth. Our focus is to
improve, grow and diversify our portfolio with onstream assets at
appropriate valuations that present the opportunity for value
creation for shareholders."
FINANCIAL UPDATE
SOCO continues to achieve enduring financial strength and
flexibility, with no debt, low operating costs and attractive
Vietnam production economics. Cash balances as of 31 May 2017 were
approx. $150.8m, including $42.7m collected in March 2017 in
association with the Company's final and full collection of the
receivable associated with the 2008 disposal of its Mongolia
assets.
Revenues for January-May 2017 were $65.8m. The average realised
oil price per barrel achieved for the same period was approx.
$54.8, representing a premium of approx. $2/bbl to Brent; a similar
premium is expected for the remainder of 2017.
A recommended dividend of 5 pence per share for 2016 is expected
to be approved at the AGM and to be paid on 16 June 2017.
The capital expenditure budget for 2017 remains at approx.
$50.0m. In Vietnam, $35.0m is included to cover the development
drilling and infrastructure upgrade on our existing assets and the
purchase of existing seismic data for the Blocks 125 & 126 new
venture. $15.0m is included for Africa to cover Marine XI PEX
bonuses.
Operations update
Vietnam - Production
Stable rates of production from Te Giac Trang ("TGT") and Ca Ngu
Vang ("CNV") fields. Production net to the Group's working interest
averaged 8,545 barrels of oil equivalent per day ("BOEPD") through
May 2017.
TGT Field production for January-May averaged 23,288 BOEPD gross
and 7,022 BOEPD net to SOCO. CNV field production for January-May
averaged 6,091 BOEPD gross and 1,523 BOEPD net to SOCO. Production
guidance for 2017 is maintained at 8,000 to 9,000 BOEPD for the
full year 2017 reflecting planned shut-ins later in the year.
Vietnam - Development
Block 16-1 - TGT Field
(30.5% interest; operated by Hoang Long Joint Operating Company
("HLJOC"))
The 2016/2017 TGT Development Drilling Programme commenced in
November 2016 with "batch drilling" on the TGT-27PST1 and TGT-28P
infill wells on the H4-Well Head Platform ("WHP") in the central
area of the TGT Field.
Following HLJOC partner agreement to add two additional infill
wells in the current programme, infill drilling commenced drilling
in March 2017. The TGT-30P infill well on the H1-WHP is now
producing around 2,500 BOEPD with an as expected 40% water cut. The
TGT-29P infill well on the southern H5-WHP was recently completed
and is currently undergoing production clean up procedures ahead of
being tied into the production system. Both wells were executed on
time and on budget.
Drilling has commenced into the reservoir section of the high
angle and long reach TGT-14X step-out appraisal well on the H5
South fault block, which initially commenced during the 2015
drilling campaign.
Construction of new processing equipment for installation on
H1-WHP has commenced following approval of the TGT Full Field
Development Plan ("FFDP") by the Vietnamese authorities in February
2017. The processing equipment will handle an additional 90,000
barrels of liquid per day ("BLPD") with specific water handling
capacity of up to 65,000 barrels of water per day. This increases
the handling capacity of the total system to approximately 180,000
BLPD, allowing for higher levels of oil production at the same or a
higher water cut rate than previously possible.
Block 9-2 - CNV Field
(25% interest; operated by Hoan Vu Joint Operating Company)
The CNV Field has continued to perform steadily throughout the
year; production for January-May averaged 6,091 BOEPD gross and
1,523 BOEPD net to SOCO. Discussions with the Bach Ho owners are
ongoing to establish the most effective means of enhancing
performance through modifications at the reception terminal.
New Ventures
Negotiations for a 70% interest in a Production Sharing Contract
("PSC") over two blocks, Blocks 125 & 126, in the Phu Khanh
Basin offshore central Vietnam, have concluded. Following the
successful negotiation of the PSC amongst SOCO, SOVICO Holdings
Company and PetroVietnam, it is expected to be signed in the near
future pending approval from the Vietnamese authorities.
Blocks 125 & 126 are in moderate to deep waters in the Phu
Khanh Basin, north of the Cuu Long Basin, and have multiple
structural and stratigraphic plays observed on the available 2D
seismic data. Interpretation of the available data indicates there
is good potential for source, expulsion and migration of oil with
numerous reservoir and seal intervals likely.
Africa Portfolio
Marine XI Block, offshore Congo (Brazzaville)
(40.39% working interest, SOCO-operated)
Following the successful application for an exploitation permit
("PEX") over the Lidongo prospect, the Lidongo PEX commenced in Q4
2016 and discussions to improve its commercial terms were
positively concluded in Q1 2017. The revised terms are awaiting
approval of the Ministry of Hydrocarbons.
Three further PEX applications were submitted in March 2017 for
retention of the Lideka East, Viodo and Loubana prospect areas
beyond the expiry of the Marine XI Exploration Licence.
Discussions with the authorities and the Marine XII partners on
commercialisation of the Lidongo area continue.
Cabinda North Block
(Non-operated, 17% working interest)
Discussions are ongoing among the partners and with the
authorities to agree the new partnership, operator and activities
during the licence extension period to April 2018. The legal
documents to complete the changes are now being circulated among
the parties for formal approval.
Strategic UPDATE
The newly formed Business Development group, headed by Dr Mike
Watts and Jann Brown, has heightened the Company's pursuit of
material growth and optimal rationalisation of the portfolio.
SOCO's Board continues to be committed to its strategy of
shareholder value creation through sustainable cash returns to
shareholders and growth of the business.
ENQUIRIES:
SOCO International plc
Roger Cagle, Deputy Chief Executive and CFO
Antony Maris, Chief Operating Officer
Tel: 020 7747 2000
Bell Pottinger
Nick Lambert
Elizabeth Snow
Tel: 020 3772 2500
NOTES TO EDITORS:
SOCO is an international oil and gas exploration and production
company, headquartered in London and traded on the London Stock
Exchange. The Company has field development and production
interests in Vietnam, and exploration and appraisal interests in
the Republic of Congo (Brazzaville) and Angola.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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