Interim Management Statement

RNS Number : 8294E

Soco International PLC

16 May 2013

 



16 May 2013

SOCO International plc

("SOCO" or the "Company")

INTERIM MANAGEMENT STATEMENT

SOCO, an international oil and gas exploration and production company, today announces its Interim Management Statement relating to the period from 1 January 2013 to 16 May 2013.

OVERVIEW

·      Production for the first four months of 2013 averaged 18,538 barrels of oil equivalent per day ("BOEPD") net to the Company's working interest, approximately 60% higher than the same period in 2012.

·      The first phase of production handling capacity testing of the Te Giac Trang ("TGT") Floating Production, Storage and Offloading vessel ("FPSO") was completed with sustained production of over 60,000 barrels of oil per day ("BOPD").

·      A rig has been secured to continue the offshore Vietnam TGT field appraisal, which is expected to commence with a well on the previously undrilled H5 Fault Block before the end of June 2013.

·      A rig has been secured to accelerate drilling of the Lideka East well offshore the Republic of Congo, now expected to spud before the end of June 2013.

·      The Company is now debt-free and holds net cash and liquid investments of approximately $328.5 million as at 15 May 2013 (31 December 2012: $215.3 million), after redemption for cash of the remaining convertible bonds with a par value of $47.8 million in May.

OPERATIONS 

VIETNAM

Block 16-1

Te Giac Trang ("TGT")

Following the agreement of the owner and operator of the FPSO, and approval from the relevant Vietnamese authorities, the Hoang Long Joint Operating Company ("HLJOC") completed the first phase of a multi-stage test of the TGT FPSO oil production handling capacity beyond the 55,000 BOPD contractual minimum quantity.

The first phase of the capacity test, in which the FPSO successfully processed sustained production of over 60,000 BOPD, confirmed our expectations based on the detailed pre-test simulations, that only minor modifications to the low pressure separator system would be required. These will now be made ahead of the next phase of the programme when production handling capacity limitations above 60,000 BOPD will be tested. This second phase of the FPSO capacity test is expected to commence in June/July 2013 following the tie-in of the Thang Long JOC's production stream.

The Naga-2 jack-up drilling rig has been secured to continue the appraisal and development of the TGT field, commencing first with an exploration/appraisal well in late June on the southern-most H5 fault block, which is the most significant undrilled fault block on TGT.  The outcome of this well and significantly more production data from the field will enable further progress in the assessment of the potential of the field.

Production from the TGT field has averaged 16,137 BOPD net to the Group's working interest (30.5%) during the first four months of 2013 (9,312 BOPD for the first four months of 2012 and 12,618 BOPD for the full year average 2012) with net entitlement production being equivalent to working interest production in 2013 as costs carried on behalf of PetroVietnam were fully recovered in the first half of 2012.

Block 9-2

Ca Ngu Vang ("CNV")

Production on Block 9-2 from the CNV field averaged 2,401 BOEPD net to the Group's working interest (25%) during the first four months of 2013 (2,378 BOEPD first four months of 2012 and 2,139 BOEPD full year average for 2012).

The Hoan Vu Joint Operating Company has received the required approvals from the Vietnamese Government authorities for the updated Full Field Development Plan for CNV which includes the CNV-7P development well.

Although a rig has not yet been contracted, we expect to drill this additional production well on CNV at the end of 2013, which will allow us to access the thus far undrilled south-western corner of the field. The outcome of this well, with additional production history, should enable us to update the reserves position in the field.

AFRICA

REPUBLIC OF CONGO (BRAZZAVILLE)

Marine XI

The Marine XI partners have agreed to accelerate the drilling of the Lideka Marine East 1 well (SOCO 40.39%, Operator). The Transocean Falcon 100 drilling rig has been secured and this well is expected to spud before the end of the second quarter. The well will be a test of stacked plays and will test both the structural closure updip from an oil leg encountered in the Lideka Marine 1 well that was drilled two kilometres to the west and also the large untested structural closure in an overlying formation.

Nanga II A

The Group has been awarded a one-year exploration licence over the Nanga II A Block located adjacent to the coast, onshore Congo (Brazzaville), near the M'Boundi producing field. The initial plan is to evaluate aeromagnetic data and reprocess several 2D seismic lines previously acquired over the block before determining whether or not to proceed with a limited 3D seismic survey on the area. This work is ongoing and following completion the Group will determine whether to enter into a production sharing contract.

DEMOCRATIC REPUBLIC OF CONGO (KINSHASA)

Block V

The Government of the DRC commissioned an aerial survey and baseline studies over Block V in September 2011 as part of its wider objective of performing a Strategic Environmental Evaluation. Accordingly, SOCO's work programme has been agreed in close collaboration with the Congo Environmental Studies Group (also known as "Groupe d'Etudes Environnementales du Congo" or "GEEC") and the Congolese Wildlife Authority (also known as "Institut Congolais pour la Conservation de la Nature" or "ICCN").  Whilst the viability of the aeromag survey is in question due to the existing security situation, the work programme includes various environmental baseline studies (for example, fish and mollusc studies on Lake Edward). Preparation is underway for the environmental studies to commence shortly.

SOCO's social projects are also expected to commence shortly. The priorities for these projects are being determined in close collaboration with the relevant national and local authorities and medical care support agencies.

Nganzi

In the Nganzi Block, depth migrated reprocessing of the data from the 2D seismic acquisition programme is ongoing.  Following interpretation, decisions will be made by the partners on potential drilling locations prior to year end.

ANGOLA

Cabinda North

Interpretation of the data acquired from the 2D seismic acquisition programme was completed during the year. Preparation has now commenced for the drilling of the 20-6 and 20-7 exploration wells in the Dinge area. Drilling is expected to start mid-2013.

CORPORATE

Redemption of convertible bonds

The Company's remaining convertible bonds, with a par value of $47.8 million, were redeemed for cash on 15 May.  The Group is now entirely debt free.

SOCO Finance (Jersey) Limited, the company that issued these convertible bonds, has requested that these  be cancelled from the Official List of the London Stock Exchange plc with effect from 8.00 a.m. on 17 June 2013.

Option to sell majority interest in SOCO Cabinda Limited to minority interest holder

In September 2012, SOCO announced that it had entered into a conditional agreement (the Disposal) with Quill Trading Corporation ("Quill") wherein the Group was to sell its 80% majority interest in SOCO Cabinda Limited ("SOCO Cabinda") to Quill, the holder of the remaining 20% interest. SOCO Cabinda has a 17% participating interest in the Cabinda North Block, onshore the Angolan enclave of Cabinda. Quill paid a non-refundable deposit to the Company for the option to acquire SOCO's entire shareholding in SOCO Cabinda. Although the Option expiry was extended, Quill has not met the conditions for completing the transaction.

OUTLOOK

The Company's Vietnam project means the Company is highly cash generative, and would remain so even at oil prices substantially lower than the current levels.  Although exploration will continue to be an important component of the Company's business plan, and exploration drilling has been accelerated for this year in the Republic of Congo, a capital return to shareholders is a priority and will come to fruition in the second half of this year.  The Directors intention is for this to be a sustainable capital return programme that will distribute excess cash to shareholders on an annual basis.

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ENQUIRIES:

SOCO International plc

Roger Cagle, Deputy Chief Executive and Chief Financial Officer

Tel: [phone]

Pelham Bell Pottinger

James Henderson

Rollo Crichton-Stuart

Elizabeth Snow

Tel: [phone]

NOTES TO EDITORS:

SOCO is an international oil and gas exploration and production company, headquartered in London, traded on the London Stock Exchange and a constituent of the FTSE 250 Index. The Company has interests in Vietnam, the Republic of Congo (Brazzaville), the Democratic Republic of Congo (Kinshasa) and Angola, with production operations in Vietnam.

SOCO holds its interests in Vietnam, all in the Cuu Long Basin offshore, through its wholly-owned subsidiaries, SOCO Vietnam Ltd and OPECO Vietnam Limited. SOCO Vietnam Ltd holds a 25% working interest in Block 9-2, which is operated by the Hoan Vu Joint Operating Company and holds a 28.5% working interest in Block 16-1, which is operated by the Hoang Long Joint Operating Company. OPECO Vietnam Limited holds a 2% interest in Block 16-1.

SOCO holds its interests in the Republic of Congo (Brazzaville) through its 85% owned subsidiary, SOCO Exploration and Production Congo SA ("SOCO EPC").  SOCO EPC holds a 40.39% interest in the Marine XI Block located offshore in the shallow water Lower Congo Basin and is designated operator of the Block. SOCO EPC also holds a 100% interest in a one-year exploration licence over the Nanga II A Block, located onshore, adjacent to the coast. 

SOCO holds its interests in the Democratic Republic of Congo (Kinshasa), all onshore, though its 85% owned subsidiary, SOCO Exploration and Production DRC Sprl ("SOCO E&P DRC").  SOCO E&P DRC holds a 65% working interest in the Nganzi Block, situated 50 kilometres from the west coast, and an 85% working interest in Block V, situated in the southern Albertine Graben in eastern DRC.  SOCO E&P DRC is designated operator of both Blocks.

SOCO holds its interests in the Angolan enclave of Cabinda through its 80% owned subsidiary, SOCO Cabinda Limited, which holds a 17% participating interest in the Production Sharing Agreement for the Cabinda Onshore North Block.

 

END

 

 

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