Soco Repositions into Egypt (Update)
London-listed small oil producer Soco said September 20 it plans to move into Egypt and has announced an agreement to acquire Merlon Petroleum El Fayum Company for around $215mn.
The purchase price will be made up of $136mn cash, and the issue of new Soco shares (representing 19.75% of its share capital). Merlon holds a 100%-operated stake in the El Fayum oil concession in Egypt.
Soco said it plans to use Merlon as a springboard to “build a material business” in Egypt and the Middle East/North Africa region, though did not specifically say if it might also diversify into gas production. El Fayum has reserves of 24 mmbbls net (2P) and will be immediately cash-generative, due to its 7,859 b/d net 2017 production at El Fayum which is expected to double to over 15,000 b/d by 2023.
Soco’s existing assets are only in Vietnam, following recent divestments in Congo-Brazzaville and Angola-Cabinda (the latter pending). The company also announced its net 1H2018 profit was $3.5mn (1H2017: a $1.1m loss) and that net production was 7,748 barrels of oil equivalent per day (chiefly oil), down 10% year on year.
Update as at October 5: Soco said its Angola-Cabinda asset sale has now completed and it has received the total cash consideration of US$5mn in cleared funds, together with a minor further payment to cover funding requirements after 30 June 2018. The asset sale related to Soco's 80% stake in Soco Cabinda which in turn held a 22% non-operating in the Cabinda North production sharing contract.