FTSE250 oil company Soco international (LSE: SIA) announced plans to place up to 7,234,347 new ordinary shares. Soco plans to use the proceeds to help bring 50,000 barrels of oil per day (bopd) on-stream in Vietnam by mid-2011 and fund a new high-impact exploration project in the Democratic Republic of Congo (Kinshasa) and Republic of Congo (Brazzaville), targeting 700 million barrels of potential recoverable reserves.
Further details were not disclosed, The stock was last trading at £14.14.“We are now moving into the appraisal stage on Block 16-1 offshore Vietnam, which could generate production of a 100,000 bopd. Within Africa we are at the early stages of exploring a potentially prolific asset base”, Soco chief executive Ed Story said, “[the] placing gives us the financial flexibility to exploit fully our asset base whilst meeting all of our mid-term financial commitments.”
BofA Merrill Lynch and JP Morgan Cazenove Ltd are joint book-runners for the placing. The total number of placing shares and the placing price, is subject to agreement between SOCO and the book-runners and will be announced in due course. The placing shares will represent a maximum of approximately 9.6% of SOCO’s existing issued ordinary share capital.
The exploration programme includes a 12 month drilling campaign in the Cuu Long Basin offshore Vietnam, to appraise and prove up significant additional reserves. A total of five high impact exploration wells will be drilled in the Congo. Up to three exploration wells are planned for the Nganzi Block onshore the Democratic Republic of Congo and two exploration wells in the offshore Congo Basin. Total capital expenditure for 2010 is projected to be in the order of US$185 million.
Disclosure: The author holds no positions in the company