LONDON -- The shares of SOCO International (LSE:SIA) slumped 5% to 371 pence in London trade today after the market took a dim view of the oil group's progress.
SOCO, an FTSE 250 company that operates mostly in Vietnam, said its share of production during 2012 improved 170% to 14,757 barrels of oil a day. The group also confirmed that production during January had averaged 18,825 barrels a day.
Today's announcement revealed that the company's main field could hold between 466 million and 958 million barrels of oil, with a third-party consultancy estimating a possible recovery rate of between 28% and 35%. However, SOCO claimed that "additional drilling" could improve the recovery rate to between 45% and 50%.
In addition, the mid cap said its cash reserves had improved by almost $100 million to $211 million during 2012.
Assuming January's production rate can be sustained throughout 2013, rough calculations suggest that current-year earnings could be about 57 pence per share. Although that forecast is based on the sales and costs recorded by SOCO during the first half of 2012, it does suggest that the shares may now be trading at less than seven times possible profits.
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