A Review of the Nigerian Energy Industry

Oil producer Soco profits halve, shares tumble

Soco International has a permit for oil exploration in the Congo.
Soco International has a permit for oil exploration in the Congo.

14 March 2015, London – Oil producer Soco International reported a 54 percent decline in annual profit after it was hit by the slump in oil prices, sending its shares spiralling more than 25 percent lower.

Disappointing drilling results at an offshore Vietnamese well forced Soco to shift some of its probable reserves estimates into the possible category, the change reducing the company’s forecast oil reserves.

The company plans to pay a dividend of 10 pence per share but investors took fright and the shares tumbled to trade down 27.7 percent at 0855 GMT.

Soco, which came under fire last year for wanting to drill for oil in a national park in Congo, made $152.7 million in pre-tax profit in 2014, compared with $333.3 million the previous year.

Revenue fell to $448.2 million, down 26 percent on 2013. The company, which had already announced that it was cutting 2015 investments by more than 60 percent, said on Thursday it was delaying the start of drilling work at its MPS Block offshore Congo Republic until next year.

“In response to the lower oil prices, we have deferred drilling the MPS exploration well to 2016 and undertaken several actions to reduce our general and administration costs,” the company said in its full-year results statement.

The company’s 2015 capital expenditure budget of $90 million will largely go to its operations in Vietnam to which it has allocated around $70 million, it said.

Soco had a cash balance of $166.4 million at the end of last year, a position it said it was ready to use for acquisitions if opportunities arise.
*Karolin Schaps; Pravin Char and Keith Weir – Reuters

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