E&P Soco International (SIA) slumps 17% to 147.7p as the market ignores relatively positive production guidance and focuses instead on a lower than expected output from the H5 platform in Vietnam and slightly cautious language over future cash returns to shareholders.
Soco fine tunes its guided output for 2015 from 11,000 to 12,000 barrels of oil equivalent per day (boepd) to 11,800 to 12,000 boepd as the H5 platform on the Te Giac Trang (TGT) field comes on stream ahead of schedule and under budget. The bad news is that current production at around 9,000 boepd is slightly below expectations.
There is also a slight delay to the submission of a revised field development plan on TGT which would allow it to tap more of field's potential. Having been pencilled in for this quarter, it is now expected in the first quarter of 2016. As Investec has previously flagged ‘Whether Soco gets approval for this plan will effectively dictate Soco’s narrative for the coming years. It therefore represents its most important catalyst.’
Finally the destiny of the company’s dividend remains in question. It warns that while it remains committed to cash returns to shareholders it also believes that in light of potential capital commitments and oil price uncertainty ‘maintaining its balance sheet and strategic flexibility is important to deliver long-term value and growth to shareholders’.
