Last checked at 17 May 2010 07:00
SOCO International plc
("SOCO" or the "Company")
Interim Management Statement
SOCO presents its Interim Management Statement for the period from 1 January 2010 to 17 May 2010.
OVERVIEW
Ÿ All rigs contracted (or contracts to be finalised within days) for the entirety of the 2010 exploration/appraisal drilling programme geared towards de-risking circa 600 million barrels of potential net recoverable reserves.
Ÿ Strong balance sheet with circa $260 million of cash and equivalents post exercise of the put option by approximately two thirds of the bondholders.
Ÿ Spudding of high impact TGD well offshore Vietnam expected in weeks.
Ÿ TGT development, the largest project in the Company's history, is on track for mid 2011 startup.
OPERATIONS
The most active drilling programme in the Company's history continues into 2010. The programme advances with a drilling campaign in the Cuu Long Basin offshore Vietnam to appraise and prove up significant additional reserves and two to four high impact exploration wells on the Nganzi Block onshore the Democratic Republic of Congo (Kinshasa).
The potential impact on reserves and production from the current development, appraisal and exploration programme is larger than anything undertaken by the Company to date.
SOUTH EAST ASIA
VIETNAM
The Company's Block 9-2 and Block 16-1 interests in Vietnam are in the Cuu Long Basin, which is a shallow water, near shore, oil rich basin defined by several high profile producing oil fields, the largest being the Bach Ho field, which lies adjacent to both blocks. Bach Ho has produced more than one billion barrels of oil to date.
Block 16-1
Te Giac Trang
First oil is targeted for mid-2011 with production from this first phase of development expected to be approximately 50,000 barrels of oil per day ("BOPD"). Tenders for a number of long lead items have been issued. Conversion of the floating production, storage and offloading vessel is underway in Singapore. Fabrication is ongoing on the initial unmanned platform to be installed in the third quarter of this year on the northernmost H1 fault block. Drilling of the initial development/appraisal wells will be conducted from this platform and begin shortly after installation of the platform.
Te Giac Den ("TGD")
The TGD Appraisal Area encompasses an area of 150 square kilometres including the high pressure, high temperature discovery well, TGD-1X-ST1, on Prospect E and the analogous E South Prospect. This area borders the southern boundary of the TGT field.
Negotiations are being finalised for the drilling rig that was contractually bound in February 2010. The TGD-2X well is expected to spud in early June. This well is targeting reserves (P50) of circa 100 million barrels in the supravolcanics interval that was briefly tested in the discovery well. The Company will be drilling this well on a sole risk basis.
Block 9-2
Ca Ngu Vang ("CNV")
Phase II development drilling began in April 2010 with the spudding of the CNV-6P-ST1. This well will be converted to a water injector, since the efficient exploitation of this Basement field requires early water flooding to reach a plateau production and avoid gas breakthrough. In the interim, production has been scaled back pending the initiation of water injection in order to maintain adequate reservoir pressure.
Production was suspended from early December 2009 until early February 2010 when a pipeline inspection gauge became stuck in the production line connecting the CNV platform to the Bach Ho production platform. CNV production net to the Company's working interest averaged 1,996 barrels of oil equivalent per day through the first four months of the year.
THAILAND
Bualuang field
SOCO Exploration (Thailand) Co. Ltd. holds a 40% interest in the Bualuang oilfield located offshore in the Gulf of Thailand.
A 384 square kilometre 3D seismic programme was acquired in the first quarter of 2010. The programme is intended to evaluate additional exploration potential within the Block as well as to enhance understanding of the field.
Phase IV development drilling began in March on the field located on Block B8/38, offshore in the Gulf of Thailand. The drilling programme comprised the side-track of three existing slant production wells and their conversion to horizontal production wells. The programme completed in early May and all three wells have now been brought on stream.
Production from Bualuang net to the Company's working interest averaged 2,376 BOPD through the first four months of the year.
AFRICA
REPUBLIC OF CONGO (BRAZZAVILLE)
SOCO Exploration and Production Congo SA (SOCO EPC) holds an interest in and is the designated operator of the Marine XI and Marine XIV Blocks, located in the Congo Basin, offshore the Republic of Congo (Brazzaville).
SOCO EPC received official notice from the Oil Minister of the one year extension of Phase 1 of the production sharing agreements for both Blocks. As a result, this gives the Company ample time to analyse the results of the 2009 initial appraisal drilling on the Viodo field on Marine XI and to prioritise exploration drilling on both Blocks for later this year or 2011.
DEMOCRATIC REPUBLIC OF CONGO (KINSHASA)
Nganzi Block
SOCO Exploration and Production DRC Sprl, is the designated operator with an 85% working interest in the 800 square kilometre Nganzi Block, onshore the Democratic Republic of Congo (Kinshasa).
In April 2010, the Company secured the services of the onshore drilling rig, Caroil #1, owned by CAROIL SAS. The contract is for two firm and two contingent wells. Drilling of the first well, the Nganga well on previously designated Prospect "B" in the Block situated some 50 kilometres from the west coast, is targeting circa 200 million barrels of recoverable reserves and is expected to spud in mid-July. Each well is anticipated to take approximately 40 to 50 days to drill with another two to three weeks added if testing is required.
The Company continues to discuss farm-out options with a few select participants, but has made no commitment to farm down its interest.
Block 5
SOCO E&P DRC holds a 38.25% participating interest in a Production Sharing Agreement for Block 5 located in the southern Albertine Graben in eastern DRC adjacent to the border with Uganda where there have been recent discoveries in the same basin. The Block, award of which is pending a Presidential Decree, covers an area of 7,105 square kilometres, encompassing part of Lake Edward.
ANGOLA
Cabinda North
SOCO Cabinda Limited, the Company's 80% owned subsidiary, holds a 17% participating interest in the Production Sharing Agreement for the Cabinda Onshore North Block in the Angolan enclave of Cabinda. The 1,400 square kilometre Cabinda North Block, operated by Sonangol, is bordered in the north by Congo (Brazzaville) and in the south and east by the DRC.
The seismic acquisition programme that began in late 2009 was suspended in January 2010 by the operator due to multiple security incidents in the region. No drilling is anticipated in Cabinda during 2010.
CORPORATE
Share Placing
In January 2010, the Company successfully placed 7,234,347 new ordinary shares of 20 pence each at a price of 1410 pence per Placing Share (the "Placing Price"). The gross proceeds of the Placing were £102.0 million.
Bonds
The Company redeemed at par $166.million of the $250 million convertible bonds that were issued in 2007 as just over 66% of the bond put options were exercised on 16 May 2010. The remaining bonds mature in May 2013.
Following the redemptions, the Company has a cash and equivalents balance of circa $260 million.
OUTLOOK
We are only weeks away from spudding the high impact TGD appraisal well offshore Vietnam targeting circa 100 million barrels. In July, this will be followed by the high potential drilling campaign onshore in the Democratic Republic of Congo. Whilst this is frontier exploration, we are confident that we have done everything to maximise our chance of success. Regardless of the outcome of these drilling programmes, we are on target to deliver the largest development project in the Company's history in mid 2011.
17 May 2010
ENQUIRIES:
SOCO International plc
Roger Cagle, Deputy Chief Executive and Chief Financial Officer
Tel: 020 7747 2000
Pelham Bel Pottinger
James Henderson
Evgeniy Chuikov
Tel: 020 7337 1500
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, Thailand, the Republic of Congo (Brazzaville), the Democratic Republic of Congo (Kinshasa) and Angola.