Soco sees delay on Mongolia assets payment; production in line with guidance

Soco International said in a trading and operations update on Wednesday that payment from the buyer of its Mongolian assets had been delayed by at least 30 days.

The oil and gas explorer has been advised by Daqing Oilfield Limited Company, the 2005 purchaser of its assets in Mongolia, that the $52.7m payment which was expected this month will now be delayed due to a request for additional technical information from its parent company, China National Petroleum Company.

It did not give a specific date when the payment might be received.

The company said year-to-date production has averaged 10,042 barrels of oil equivalent per day, which is in line with the revised guidance it provided last week for between 10,000 and 11,500 for the year.

Soco said the average realised oil price per barrel of around $43 per barrel for the first 10 months of the year represents a premium of around $1 per barrel to Brent crude and a similar premium is expected for the rest of 2016.

The group said its 2016 exploration and development programme remains fully funded from existing cash resources and capital expenditure for the year is expected to be around $45m.

President and chief executive officer Ed Story said: “Whilst the delayed payment of the Mongolian subsequent payment is not helpful, it is viewed as only an additional delay as they acknowledge the debt. We have a strong balance sheet, steady cash flows, no debt, low operating costs and attractive Vietnam production economics, all of which are significant differentiators for the company within our sector.

"Soco has returned more than $448m to shareholders, in share buybacks, and in capital returns and cash dividends (equivalent to 76 pence per share), since 2013. We have a business model that works and we expect to build on this model to continue to deliver value and growth through the cycle."

At 1007 GMT, the shares were down 0.4% to 134.75p.