SOCO International - a lot to like at this share price level, buy says Gary Newman

First Derivatives - are its reported earnings real? After 20 years is KPMG sure? Reviewed HERE

Sometimes it is hard to fathom why a company with strong fundamentals continues to be unloved by the market, and for me that is very much the case with SOCO International (SIA) at the moment, and has been for some time now. Lately the share price has slipped and is now trading at around the 88p level, and whilst it has bounced around 10% from the recent low of 80p that we saw, it still seems incredibly cheap at a market cap of just over £300 million, especially when you consider the current strength in oil prices.

Versarien – another “collaboration agreement”… but are we ever going to get any results? Read HERE

Recently we have started to see all sorts of sky high predictions for where the oil price is heading, and whilst I don’t share that view as some of the figures being quoted are completely unsustainable in terms of maintaining strong demand – as we have seen previously at much over the $100 per barrel level – I can certainly see it remaining at this sort of level. Some will argue that supply and demand dynamics don’t support the current price longer term and the rally has been very much driven by sentiment, there have been periods in the past where that has been the case for a number of years – it certainly was true prior to the most recent crash in oil price. But as long as we don’t see a sustained period of very low oil prices, then I find it hard not to see value in SOCO at the current share price, especially if its future growth plans come to fruition in the way that the company is expecting. It already had strong production at its TGT and CNV fields in Vietnam, averaging 7,748boepd for the first half of 2018, and whilst it has encountered a few problems with additional drilling operations at these fields – delays to rigs arriving and then drilling issues at the CNV-5P sidetrack – which has caused a downwards revision in full year guidance to 7,000-7,400boepd, these are only temporary problems and shouldn’t negatively impact on future production levels. News should be fairly imminent on the outcome of operations at CNV, and this rig will then move onto the TGT field.

Bowleven – drilling news, Waseem Shakoor frustrated & me too writes Nigel Somerville HERE

Recently the company announced that it is diversifying its production via the acquisition of Merlon Petroleum El Fayum in Egypt, and that will significantly increase overall daily output, as well as adding to its existing reserves. Some will argue that this $215 million acquisition isn’t cheap – it consists of $136 million in cash and the remainder via the issue of 66 million SOCO shares – but the saying ‘you get what you pay for’ usually rings true when it comes to natural resources, and I believe that it is a good long term move for the company. As part of the deal it will also repay the outstanding $22 million of debts that Merlon has. This deal should be completed in early 2019 and is effective dating back to the start of 2018. The crux of the deal is that it will add 24 million barrels of 2P reserves, along with further 2C contingent resources of 37mmbbls, and in 2017 OPEX for this Western Desert asset was just $6/barrel. Last year the asset was producing at nearly 7,900boepd, but there is plenty of potential for that to increase, with over 15,000boepd being targeted by 2023 – so even if the Vietnam fields don’t see an increase in production in that timeframe, it would still mean that SOCO would likely be producing more than 22,000boepd by then. Admittedly that level of production from the El Fayum field won’t be sustainable longer term and will need to exploit the current 2C resources, but it still has a lifespan that should prove to be very profitable for SOCO over the next decade or more.

Falanx – is this a denial of placing rumours? Read HERE

Once the deal completes it will mean that SOCO has 2P and 2C reserves and resources of 111mmboe, and based upon that I see the current market cap as being cheap, even allowing for the associated risks and discounted future cash flows. Financially the company also appears to be in good shape with a robust balance sheet and plenty of headroom via its reserve based lending facility, even post acquisition, and even based solely on its net asset value of $476 million as at June 30 2018 and ignoring its future potential for growth, it looks cheap. It is also one of the few AIM resource companies that has actually returned a significant amount to investors over the years – more than $500 million to date – and in the last interim accounts it announced a dividend of 5.25p per share (equating to $23.3 million), representing a yield of around 6%, which is very decent for this type of company at this stage. You could argue that I am biased as I do hold some shares here myself, but I find it hard to see what isn’t to like at this share price level – aside from oil price risk, which applies to any company in this sector - and am planning to add to my position.

Shoe Zone – shares jump on ‘ahead of expectations’ update, but still an income buy say Tom Winnifrith & Steve Moore HERE

Filed under: SOCO International, First Derivatives, Versarien, Bowleven, Falanx, Shoe Zone

Petropavlovsk - POX Hub processing milestone, Buy

12/10/2018

Yourgene - Premaitha as was - interim numbers not impressive, but still a strong buy?

12/07/2018

Numis statement shows why the finnCap IPO is such a stinker says Tom Winnifrith

12/06/2018

Synectics - remains a recovery buy say Tom Winnifrith & Steve Moore

12/04/2018

Blue Prism Group - argues it is pleased in trading update, but shares still a sell?

11/29/2018

Greencore & Ibstock - a tale of two disposals from Chris Bailey

11/28/2018

Premier Oil could see a swift rise when oil bounces considers Gary Newman

11/27/2018

Optibiotix - Greek deal news via Adam Reynolds keyboard, but better to come. Buy.

11/26/2018

Updated thoughts on Tesla - stay short says Lucian Miers

11/23/2018

Three larger cap buy ideas from Chris Bailey

11/22/2018

AO World - interims argue remains confident, but can high growth rating really be justified?

11/21/2018

Dividend stocks & what to make of the Brexit omnishambles from Nigel Somerville

11/20/2018

Sirius Minerals - patience will pay longer term argues Gary Newman

11/19/2018

Falanx - shares to still more than double?

11/16/2018

Victoria - update on bond fiasco, remains a sell says Lucian Miers

11/14/2018

Glencore looks too cheap considers Gary Newman

11/13/2018

Bowleven - raising my stance back to buy says Nigel Somerville

11/12/2018

First Derivatives - it is smoke & mirrors, keep selling says Lucian Miers

11/09/2018

Buy ITV and Marks & Spencer?

11/08/2018

Imperial Brands - fade the moral outrage & buy says Chris Bailey

11/07/2018

Bushveld Minerals - banking some profit prudent, but still more to come?

11/06/2018

Keep buying any weakness in Centamin as the company is now back on track says Gary Newman

11/05/2018

Horizonte Minerals - I remain confident following feasibility study says Gary Newman

11/02/2018

Obtala - sharpens focus & a fundraising, still a buy says HotStockRockets

11/01/2018

Restaurant Group - what to make of Wagamama acquisition? Chris Bailey reviews

10/31/2018

Cairn Energy will see rapid production growth in the coming years - Buy says Gary Newman

10/30/2018

Barryroe could still come good for Lansdowne Oil - speculative buy says Gary Newman

10/29/2018

WPP advertises a shocker - where now?

10/26/2018

Barclays or Metro Bank - who to fancy in a financials cage fight?

10/25/2018

Whitbread - a core FTSE-100 holding? Chris Bailey reviews

10/24/2018

Anglo Asian Mining - a golden buy?

10/23/2018

Alba Mineral Resources - updates from Wales and Horse Hill, excitement soon to be sparked?

10/22/2018

Shoe Zone - shares jump on ‘ahead of expectations’ update, but still an income buy

10/19/2018

SOCO International - a lot to like at this share price level, buy says Gary Newman

10/18/2018

Ariana Resources - gold production & exploration positives. Nigel Somerville writes

10/17/2018

Shenanigans at First Derivatives Do Not Look Good. Sell says Lucian Miers

10/16/2018

Five large caps for capital growth from Chris Bailey

10/15/2018

Dunelm - am I at danger of buying some frilly curtains? (and more). Chris Bailey writes

10/12/2018

Synectics - a buy for recovery say Tom Winnifrith & Steve Moore

10/11/2018

Versarien remains a sell for the brave (& First Derivatives). Lucian Miers writes

10/10/2018

Rose Petroleum - a buy says HotStockRockets

10/09/2018

Union Jack Oil - adding to material potential catalysts. Buy says HotStockRockets

10/08/2018

Tlou Energy - a speculative buy considers Gary Newman

10/05/2018

Tesco - shares now too cheap? Chris Bailey reviews

10/04/2018

easyJet & Royal Mail - where now after share price shockers? Chris Bailey reviews

10/03/2018

Goldplat - post full-year results, a buy suggests HotStockRockets

10/02/2018

Columbus Energy Resources - after interims remains a buy says HotStockRockets

10/01/2018

Bluebird Merchant Ventures - updates on projects, remains a buy says HotStockRockets

09/28/2018

Next & Imperial Brands - following news, updated views from Chris Bailey

09/27/2018

Why I would short Time Out Group says Gary Newman

09/26/2018

Randgold merger - what to do? Chris Bailey reviews

09/25/2018

Rockrose Energy - a long term buy and hold suggests Gary Newman

09/24/2018

Premaitha - a buy at up to 15p, target 25p says HotStockRockets

09/21/2018

Kingfisher - have I bogged up or is it still a buy? Chris Bailey reviews

09/20/2018

Is Tate & Lyle or Purecircle a sugar rush stock? Chris Bailey reviews

09/19/2018

Tern - Interim car-crash: SELL says Nigel Somerville

09/18/2018

Atalaya offers good exposure to copper plus has plenty of growth potential says Gary Newman

09/17/2018

Will Morrisons or Biffa be the first to a three quid share price? Chris Bailey reviews

09/14/2018

Aston Martin - a fan of the brand but what of the IPO? Gary Newman reviews

09/13/2018

Koovs - viable or just a money pit? Gary Newman reviews

09/12/2018

No panic with FTSE 100 at a five-month low - some stock ideas from Chris Bailey

09/11/2018

Emerging markets bear market...so buy Ashmore?

09/10/2018

Centrica & Dixons Carphone - investor fear meaning opportunity?

09/07/2018

Breedon - a materials supplier Buy suggests Chris Bailey

09/06/2018

Hurricane Energy - a great deal. Buy says Gary Newman

09/05/2018

Biome Technologies: Strong interims - keep those winners running says Cynical Bear

09/04/2018

Whitbread - a caffeine high. Chris Bailey reviews

09/03/2018

Arcontech - I quite like the look of this one says Cynical Bear

08/31/2018

Fresnillo offers a great way to have some silver exposure says Gary Newman

08/30/2018

Property sector madness - a property company & housebuilders review by Chris Bailey

08/28/2018

EVR Holdings - a long way from justifying its current valuation? Gary Newman reviews

08/24/2018

Headlam - quiet day shocker as I talk about a small cap writes Chris Bailey

08/23/2018

Two larger cap resource names to buy (still) from Chris Bailey

08/22/2018

Ariana Resources - cash flowing from Kiziltepe, a Buy says HotStockRockets

08/21/2018

Mimedx & Purplebricks - sell call updates from Lucian Miers

08/20/2018

BBQs and bingo... Kingfisher or Rank Group a buy? Chris Bailey reviews

08/17/2018

Royal Mail - Ofcom fine...so time to buy? Chris Bailey writes

08/16/2018

Ariana Resources - does Turkish Lira crisis mean stance is downgraded? Er, NO! says Nigel Somerville

08/15/2018

Why I am still short Tesla writes Lucian Miers

08/14/2018

Whitbread & Patisserie Holdings - a Chris Bailey shopping centre visit special

08/13/2018

Why I think Hurricane Energy really is worth nearly 1 billion pounds & maintain a conviction buy

08/10/2018

Quilter - spin-off opportunity? Chris Bailey reviews

08/09/2018

Harvey Nash - should it be recommending the offer? Steve Moore reviews

08/08/2018

Concepta - suck up justifiable anger, still a buy from HotStockRockets

08/07/2018

Tesla Q2 results & doing UK Oil & Gas due diligence. Lucian Miers writes

08/06/2018

BigDish - IPO, is there a meal to be had? The Pizza Hardman Darren Atwater reviews

08/03/2018

Next - when would I snaffle the shares back? reviews Chris Bailey

08/02/2018

HotStockRockets: RedT Energy - some think it could treble!

08/01/2018

Ibstock - a time to be bricking it or not? reviews Chris Bailey

07/31/2018

Tesla - Musk Looks Like He is Losing the Plot says Lucian Miers

07/30/2018

You say Facebook... and I say Fadebook says Chris Bailey

07/27/2018

ITV - strategic direction sensible. Remains good value considers Chris Bailey

07/26/2018

Woodford Patient Capital Trust - how does Neil Woodford get out of the mess?

07/25/2018

Long, wrong and deliriously happy - Sosandar still cheap! Nigel Somerville writes

07/24/2018

Versarien - a case of Deja Vu. Outstanding Short Value argues Lucian Miers

07/23/2018

Versarien - Cynical Bear initiates coverage with a sell

07/20/2018

Barclays - a buy, if common sense prevails? Chris Bailey writes

07/19/2018

Block Energy - a speculative buy considers Gary Newman

07/18/2018

Telit - agrees automotive business sale, shares also still a sell says Lucian Miers

07/17/2018

Columbus Energy - following acquisition news an even stronger buy says HotStockRockets

07/16/2018

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