Soco International SIA Half Year Results

  Soco International (SIA) - Half Year Results

RNS Number : 5062K
Soco International PLC
22 August 2012




                            SOCO International plc

                          ("SOCO" or the "Company")

                                      

                              HALF YEAR RESULTS



SOCO International plc, an international oil and gas exploration and
production company with interests in Vietnam, Congo (Brazzaville), the
Democratic Republic of Congo (Kinshasa) and Angola, today announces its Half
Year Results for the period ended 30 June 2012.



Financial Highlights



· Net cash of $178.0 million (31 December 2011: $113.5 million)

· Record revenues of $263.2 million (31 December 2011: $234.2 million)

· Operating profit increased 29% over full year 2011 ($156.9 million) to
$203.3 million



Operational Highlights



· Net working interest production for 1H12 increased 521% compared with
1H11, averaging 12,197 barrels of oil equivalent per day net ("BOEPD");
entitlements production of 13,682 BOEPD

· The Te Giac Trang H4 Wellhead Platform commenced production a month
ahead of schedule in July 2012, increasing field production to average
approximately 50,000 barrels of oil per day ("BOPD") since start up; peak
production of over 60,500 BOPD to date as the FPSO capacity limits are
gradually tested

· During the period, the Company purchased 7.5 million ordinary shares
into treasury at a cost of $32.6 million (£2.76 average) and redeemed $0.9
million convertible bonds

· In July 2012, the Company announced and completed the acquisition of
the outstanding 20% non-controlling interest in SOCO Vietnam Ltd for cash
consideration of $95 million



ENQUIRIES:



SOCO International plc

Roger Cagle, Deputy Chief Executive and Chief Financial Officer

Tel: 020 7747 2000



Pelham Bell Pottinger

James Henderson

Victoria Geoghegan

Elizabeth Snow

Tel: 020 7861 3232



HALF YEAR REPORT



CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT



The focus for the first half of 2012 has been on optimising our portfolio,
taking advantage of windows of opportunity to increase our interests in
current projects that we believe are meaningful and have the highest potential
impact to the Company. Our highest priority was to consolidate our interests
in Vietnam in both the Te Giac Trang ("TGT") and Ca Ngu Vang ("CNV") offshore
producing fields. This was accomplished when we acquired the 20%
non-controlling interest in SOCO Vietnam Ltd, the entity through which we hold
our interests in Vietnam. This transaction was overwhelmingly approved by
shareholders on 20 July 2012 and closed on 31 July 2012. We have also
increased our interest in Block V in the Democratic Republic of Congo ("DRC"
or "Congo Kinshasa") by acquiring the majority contractor interest making us
the sole non-governmental participant with an 85% working interest.



In addition, we are re-evaluating the projects in the current portfolio and
increasing efforts to add new projects that offer material upside. Marine XIV
partners will determine whether to enter into the second exploration period
during the fourth quarter of this year.



Five wells drilled from the second and southern TGT unmanned producing
wellhead platform ("WHP"), designated H4-WHP, were brought into production in
July 2012, approximately a month ahead of an accelerated schedule and
approximately a year ahead of the original field development plan. These
producers were added to the eight producing wells already connected to the
northern wellhead platform, the H1-WHP, which have been producing into a
floating production storage and offloading vessel ("FPSO") since August 2011.
Total production from both platforms averaged approximately 50,000 barrels of
oil per day ("BOPD") since bringing H4-WHP on line as individual wells from
H4-WHP were being manipulated to accumulate reservoir data. Peak production
to date exceeded 60,500 BOPD the week prior to releasing results. The Hoang
Long Joint Operating Company ("HLJOC"), operator of the TGT Field, is close to
finalising the contract for the sale of approximately 20-25 million cubic feet
of gas per day to the local gas market.



The firm exploration well in this year's drilling programme is expected to
spud offshore Congo Brazzaville before year-end on the Marine XI Block.
Unlike our previous efforts that were focused on sub-salt targets, this well
targets reservoirs above the salt layer. Two other exploration wells will
potentially be drilled this year.



First half 2012 after tax profit was $97.2 million up from $6.8 million for
the same period last year as a result of bringing the TGT field into
production in the second half of 2011. Capital expenditures were $62.5
million for the first half of 2012 ($65.0 million in the first half of 2011).



As we are still in the early stages of production from the TGT field and with
exploration activity continuing in Africa, the Directors have decided not to
pay a dividend at this time.





OPERATIONS



VIETNAM

Block 16-1

Te Giac Trang

Production from TGT, sourced only from the H1-WHP, averaged 10,019 BOPD net to
the Group's working interest during the first half of 2012 with net
entitlement production averaging 11,504 BOPD including recovery of costs
carried on behalf of PetroVietnam.



Activity continued apace throughout the period in preparation for the start of
production from the second TGT platform, the H4-WHP. Drilling of five
development wells from H4-WHP was completed prior to releasing the rig on 26
April 2012. All the development wells were suspended and subsequently
perforated to become producing wells. Accelerated construction activities on
the H4 topsides allowed for an early load out from the fabrication yard and
production from H4-WHPcommencedon 6 July 2012, over one month earlier than
scheduled and nearly a year ahead of the original approved development plan.
Simultaneously, the PetroVietnam Drilling Services Corporation rig, the
PVD-II, arrived on location at the H1-WHP and commenced drilling a four-well,
infield development drilling programme.



In May, the HLJOC entered into a term contract for the second half of 2012 to
sell a total of 40,000 BOPD to three purchasers at a price equal to a $6.60
premium to Dated Brent. Production over and above the term contract will be
sold on the spot market.



Te Giac Den ("TGD")

Whilst the results of the interpretation of the new 3D seismic, acquired late
last year, enhanced the understanding of the area, the Company concluded that
it was not in shareholders' best interests to drill another well in the TGD
Appraisal Area on a sole risk basis. Although farm-out discussions were held
with interested parties, a definitive agreement could not be reached. As a
consequence, SOCO informed the relevant authorities that it would not commit
to drill and thus relinquished the TGD appraisal area upon the expiry of its
option to drill, which ended on 30 April 2012.



Block 9-2

Ca Ngu Vang

Production at the CNV field, which is operated by the Hoan Vu Joint Operating
Company ("HVJOC"), has been steady, with a temporary four weeks reduced limit
to test the efficiency of alternative production chemicals. Dedicated test
separation and metering facilities have been installed on the Bach Ho central
processing platform complex and commissioning is near completion.Once in
service, the new facilities will allow HVJOC to more accurately measure liquid
and gas production from the CNV production stream entering the Bach Ho central
processing platform complex. This will benefit the Company by allowing for
more accurate allocation of CNV oil, gas and gas liquids production within the
Bach Ho production system. A 20 day production test to validate the newly
installed system is being finalised with the Operator of the Bach Ho system
and is expected to be performed in the third quarter.



CNV production net to the Company's working interest has averaged 2,178
barrels of oil equivalent per day ("BOEPD") during the first half of 2012.





AFRICA



CONGO BRAZZAVILLE

Marine XI

The results of the Mindou Marine 1 well suggest that the Vandji Formation is
missing in certain areas of Marine XI. However, analysis of the data suggests
that there is some potential for a Basement play in the block and a rework of
the seismic is ongoing to incorporate this information.

From an analysis of the results of the Lideka Marine 1 well drilled by the
previous Block concession holder, the Marine XI partners have agreed to drill
the Lideka Marine East 1 well, which is expected to spud before the end of
2012. This well is a test of stacked plays and will test both the structural
closure updip from an oil leg encountered in the Sendji Formation in the
Lideka Marine 1 well that was drilled two kilometres to the west and also the
large structural closure in the overlying Tchala Formation.



Marine XIV

The Makouala Marine 1 exploration well, which was drilledin the final quarter
of 2011 in the Marine XIV Block, encountered hydrocarbons in both the primary
and secondary reservoir targets. However, analysis of the wireline logs
indicated that the reservoir sands at the location were not as well developed
as predicted and there was insufficient overall pay thickness for commercial
flow rates. The well was subsequently plugged and abandoned and the rig
released.



After reviewing the information gained from the drilling programme, Marine XIV
partners will determine whether to enter into the second exploration period by
November 2012.



CONGO KINSHASA

Block V

During the period, preparations were underway for an aerial survey over Lake
Edward and the adjacent lowland savannah, along with environmental baseline
studies that include an inventory of hippopotami, ichthyological studies and
malacology studies on Lake Edward, all of which are planned to commence within
the next half year period, pending the security status of the region.



SOCO has continued to engage with the local and indigenous communities
regarding SOCO's activities, including engagement with traditional chiefs and
a local awareness campaign. SOCO has also engaged with international
authorities concerning clarification of the permits granted by the
Environmental Acceptability Certificate. The aerial survey and baseline
studies were commissioned through an Environmental Acceptability Certificate
issued by the DRC Government in September 2011 as part of its wider strategic
environmental evaluation and, accordingly, SOCO's work programme was agreed in
close collaboration with the Congo Environmental Studies Group ("GEEC") and
the Congolese Wildlife Authority ("Institut Congolais pour la Conservation de
la Nature" or "ICCN").



In July 2012, SOCO increased its interest in the Block V licence to 85% by
acquiring the 46.75% interest held by Ophir Energy Plc. The remaining 15%
interest is held by Cohydro, the national oil company of DRC. See Note 8 to
the Condensed Financial Statements below for further details.



Nganzi

The 2D seismic acquisition programme, which commenced early in the first
quarter, has been successfully completed and processing commenced. Following
interpretation, decisions on potential drilling locations will be madeprior to
year end.



ANGOLA

Cabinda North

Interpretation is underway of the data acquired from the 2D seismic
acquisition programme which was concluded over the Cabinda North Block A in
2011. The results of the interpretation have been factored into drilling
decisions with the first wells likely to be on the Dinge discovery on the
block early in 2013.





FINANCIAL RESULTS



Following the start-up of production from the TGT field in the second half of
2011, SOCO continues to report record production volumes, revenue and profits
from continuing operations exceeding levels achieved in any period in the
Group's history. Group revenue for the first half of 2012 has increased
almost tenfold over the equivalent period last year, contributing to the
continuing capital programme on the TGT development. That development reached
a further milestone in July when production commenced from the second TGT
wellhead platform, the H4-WHP, bringing TGT field production targets up to
55,000 BOPD. The acquisition of the remaining 20% of SOCO Vietnam Ltd
announced in July further consolidates the Group's interests in Vietnam (see
below).



INCOME STATEMENT

Operating results

Revenue

Following a full six months of production from the Group's TGT field in
Vietnam, SOCO's oil and gas revenues in the first half of 2012 were $263.2
million up from $26.4 million in the equivalent period last year which was
only attributable to the CNV field. For the reporting period the Group
realised an average oil price slightly higher than that achieved in the first
half of 2011 at $120.68 per barrel of oil sold (period to 30 June 2011,
$118.09 per barrel). The Group's working interest share of production during
the period was 12,197 BOEPD up from 2,339 BOEPD in the first half of 2011
mainly due to the addition of TGT volumes. Cost recoupment associated with
the Group's cost carry of PetroVietnam on Block 16-1 was fulfilled in the
period by receiving higher entitlement volumes totalling 13,682 BOEPD from TGT
and CNV.



Cost of Sales

Cost of sales in the period was $55.0 million for the six month period to 30
June 2012, up from $11.6 million in the first half of 2011. This increase is
mainly associated with the TGT field where cost of sales were $50.3 million
including an inventory credit of $11.4 million. The TGT inventory volume,
which is recorded at market value, was higher at 30 June 2012 than at year end
2011. Production operating costs for TGT were $19.1 million for this six
month reporting period and in line with the costs for the period to 31
December 2011 ($14.0 million) following commencement of production in August
2011.



Cost of sales associated with the CNV field was $4.7 million, including an
inventory credit of $2.6 million (first half of 2011 - $11.6 million,
including an inventory charge of $3.0 million). Production operating costs
associated with CNV were $2.3 million in the first half of 2012, down from
$3.3 million for the first half of 2011 mainly due to less workover activity.



Royalties on oil sales from TGT and CNV in the current period totalled $18.5
million compared with $1.4 million arising from CNV oil sales in the first
half of 2011. Export duty arising on TGT oil sales amounted to $8.0 million
in the current period. CNV oil was sold into the domestic market for both the
current period and equivalent period last year and was not subject to export
duty. Depreciation, depletion and decommissioning costs (DD&A) were $19.0
million in the first half of 2012 compared with $3.0 million in the equivalent
period last year reflecting the production and cost basis of the TGT
development.



On a per barrel basis, excluding inventory movements, DD&A and royalties,
production operating costs were approximately $10.50 per barrel compared with
approximately $10.00 per barrel in the first half of 2011. CNV production
cost per barrel was higher in the first half of 2011 than the current period
due to higher non-volume related production costs, in particular well
intervention costs. This is offset by the higher per barrel operating costs
on the TGT field with dedicated production and processing facilities on the
FPSO compared with the CNV field where platform facilities are shared with the
Bach Ho field.



On a per barrel entitlement basis, DD&A increased from approximately $7.00 per
barrel in the first half of 2011 to approximately $7.60 per barrel in the six
months ended June 2012 reflecting the impact of the higher TGT DD&A charge due
to higher development costs per barrel compared with CNV, where the existing
facilities of Bach Ho are being utilised.



Administrative costs for the first six months increased from $3.6 million in
2011 to $4.9 million in 2012. The increase is primarily due to a higher
proportion of corporate resources being utilised on evaluating new projects
along with costs associated with the change of corporate office.



Operating Profit

Operating profit for the period was $203.3 million arising from the Group's
production operations in Vietnam compared with $11.3 million for the first
half of 2011.



Non-operating results

Other gains and losses decreased from a gain of $2.8 million in the first half
of 2011 to a gain of $0.7 million in the current reporting period mainly due
to a lower gain in the fair value associated with the subsequent payment
amount tied to future oil production from the Group's divested Mongolia
interest.



Although total interest charges have reduced following the convertible bonds
repurchase in the second half of 2011, the current period finance costs
increased from $0.4 million in the first half of 2011 to $2.4 million in the
six months ended 30 June 2012 as, prior to the start-up of production
operations in TGT, interest charges associated with the TGT development were
capitalised in accordance with IAS 23 Borrowing Costs. Subsequently all
finance costs have been expensed in the income statement.



Tax

The tax expense increased from $7.7 million in the six month period ending 30
June 2011 to $104.7 million in the current reporting period consistent with
the higher profit in the current period mainly arising from TGT field
production. As costs carried by the Group for PetroVietnam on Block 16-1 were
fully recouped during the period the proportion of non-taxable income
associated with cost recoupment has significantly reduced compared with 2011,
thereby increasing the effective tax rate in Vietnam to a rate approximating
the Vietnam statutory rate of 50%.



Profit for the period

The profit for the current period, after tax, was $97.2 million compared to
$6.8 million in the first half of 2011 reflecting the first full six month
period of production from TGT.



BALANCE SHEET

Intangible assets increased by $15.8 million since year end 2011 and by $46.4
million since 30 June 2011 reflecting exploration activity in the Group's
Africa region, including drilling activity offshore Congo Brazzaville.
Property, plant and equipment increased by $13.5 million since 2011 year end
and by $60.7 million over the last 12 months almost entirely due to the TGT
field development.



Oil inventory was $23.0 million at 30 June 2012, up from $13.4 million at 30
June 2011 mainly due to the addition of TGT volumes offset by a lower market
value due to declining world oil prices, and up from $10.2 million at year end
2011 mainly associated with the timing of oil sale liftings also offset by a
lower market value. Trade and other receivables at 30 June 2012 were $43.8
million, up from $15.4 million at 30 June 2011 mainly due to TGT oil sales
offset by timing of CNV liftings and a lower realised oil price, and down from
$79.9 million at year end 2011 mainly due to the timing of oil sale liftings
and a lower realised oil price.



SOCO's cash and cash equivalents at 30 June 2012 were $224.4 million (31
December 2011 - $160.1 million and 30 June 2011 - $213.1 million). This
increase is a result of cash inflows from production operations in Vietnam
offset by the Group's TGT development programme and exploration activity in
Africa, as described above. In addition, the Company utilised surplus cash
balances to buy back its own shares (see below).



Trade and other payables were $20.8 million at the current period end down
from the balance of $37.3 million at 30 June 2011 and $49.5 million at 31
December 2011 mainly due to the status of the ongoing work programmes, in
particular in Vietnam associated with the TGT development. Tax payable of
$9.9 million at the end of the reporting period compared with $1.6 million at
30 June 2011 and $13.5 million at the end of 2011 is consistent with the
timing of liftings in Vietnam where tax is paid on each cargo lifted.



As at 30 June 2012 the Group's only debt was the convertible bonds with a par
value of $47.8 million. The liability component of the debt was $46.4
million (30 June 2011 - $79.2 million and 31 December 2011 - $46.6 million)
following the repurchase of bonds in the second half of 2011 with a par value
of $35.4 million and in the current period with a par value of $0.9 million.
Further details of the bonds, which were originally issued in 2006 at a par
value of $250 million, are in Note 23 to the 2011 Annual Report and Accounts.
The bonds have been reclassified as a current liability as the remaining bonds
will be redeemed at par value on 16 May 2013 if not previously purchased and
cancelled, redeemed or converted.



Deferred tax liabilities have increased to $75.3 million at 30 June 2012 from
$26.0 million at 30 June 2011 and $37.5 million at 31 December 2011 mainly due
to accelerated tax depreciation and other tax timing differences associated
with Block 16-1, Vietnam. Long term provisions comprise the Group's
decommissioning obligations in South East Asia which have increased to $33.4
million from $22.6 million at 30 June 2011 and from $32.7 million at year end
2011. This reflects the installation of facilities and development well
drilling activity at the TGT field.



CASH FLOW

Net cash flows from operating activities for the first six months of 2012
comprise the Group's continuing Vietnam operations and amounted to $160.3
million compared with $13.2 million in the first half of 2011. This increase
is mainly due to the contribution of production from the TGT field including
the associated impact on working capital movements, as described above.
Capital expenditure for the period ending 30 June 2012 was $62.5 million
compared with $65.0 million in the equivalent period last year. This reflects
the continuing TGT field development programme and exploration activity in the
Group's Africa projects. Cash used in financing activities of $33.4 million
was mainly for the purchase of own shares into treasury (see below). There
were no cash flows arising from financing activities in the equivalent period
last year.



Production

During the first half of 2012 the Group's production, net to the Group's
working interest, of 12,197 BOEPD comprised oil production from the TGT field
of 10,019 BOPD and oil and gas production from the CNV field of 2,178 BOEPD
compared with the first half of 2011 when total production was 2,339 BOEPD
sourced entirely from the CNV field.



Related party transactions

Other than the acquisition of the non-controlling interest in SOCO Vietnam Ltd
(see below), there have been no material related party transactions in the
period and there have been no material changes to the related party
transactions described in Note 32 to the Consolidated Financial Statements
contained in the 2011 Annual Report and Accounts.



Risks and Uncertainties

There are a number of potential risks and uncertainties which could have a
material impact on the Group's performance over the remaining six months of
2012 and could cause actual results to differ materially from expected and
historical results. Risks and uncertainties that remain unchanged from those
published, along with their mitigation, in the 2011 Annual Report and Accounts
are summarised below:



· Operational risk - associated with conducting exploration, drilling and
construction operations in the upstream oil and gas industry.

· Empowerment risk - the conduct of international operations requires the
delegation of a degree of decision making to partners, contractors and locally
based personnel.

· Credit risk - in respect of the Group's financial asset at fair value
through profit or loss arising on the Group's disposal of its Mongolia
interest and short term financial assets.

· Foreign currency risk - associated with cash balances held in non-US
dollar denominations.

· Liquidity risk - associated with meeting the Group's cash requirements.

· Interest rate risk - applicable to the Group's cash balances, debt and
financial asset.

· Commodity price risk - associated with the Group's sales of oil and
gas.

· Regulatory risk - arising in countries where the Group has an interest,
including compliance with and interpretation of taxation and other
regulations.

· Contractual risk - in relation to contractual terms that may be subject
to further negotiation at a later date.

· Capital risk management - in relation to Group financing.

· Reserves risk - associated with inherent uncertainties in the
application of standard recognised evaluation techniques to estimate proven
and probable reserves.

· Reputational risk - associated with the conduct of oil and gas activity
in locations where social and environmental matters may be highly sensitive
both on the ground and as perceived globally.

· Business conduct and bribery risk - the industry sector and certain
countries where SOCO operates may be perceived as falling short of the
standards expected by the UK Bribery Act.

· Political and regional risk - due to the location of the Group's
projects, often in developing countries or countries with emerging free market
systems.

· Health, safety, environment and social risks - arising due to the
nature and location of the Group's activities.



Further information on the above principal risks and uncertainties of the
Group is included in the Risk Management section of the 2011 Annual Report and
Accounts and in Notes 3 and 4 to the Consolidated Financial Statements in that
report.



GOING CONCERN

The Group has a strong financial position and, after making enquiries, the
Directors have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future. Consequently
the Directors believe that the Group is able to manage its financial and
operating risksand, accordingly, they continue to adopt the going concern
basis in preparing the Half Year Report.



CORPORATE

Own shares

Following the share placement in 2010 of 28,937,388 Shares at a price of
£3.525 per Share, the Company repurchased 1,497,852 Shares in the second half
of 2011 at an average cost of £2.903 per Share and a total cost of $6.8
million. During the six months ended 30 June 2012 the Company repurchased a
further 7,464,416 Shares at an average cost of £2.760. As at 30 June 2012,
the Company held 9,072,268 (31 December 2011 - 1,607,852 and 30 June 2011 -
110,000) Treasury Shares.



Acquisition of the outstanding non-controlling interest in SOCO Vietnam Ltd

In July  2012,  SOCO  completed an  agreement  with  Lizeroux Oil  &  Gas  Ltd 
("Lizeroux") to acquire the 20%  outstanding non-controlling interest in  SOCO 
Vietnam Ltd, for a cash consideration of $95 million ("the Acquisition"). The
consideration is to  be satisfied out  of the existing  cash resources of  the 
Company upon  receiving  instructions from  Lizeroux.  The Group  has  carried 
Lizeroux`s share of all costs and expenses incurred by SOCO Vietnam Ltd,  and, 
prior to completion, was entitled to receive 100% of any and all distributions
made by SOCO  Vietnam Ltd until  such time  as the Group  has fully  recovered 
those costs and expenses, including a rate of return ("the Carry  Recovery"). 
Lizeroux was classified  as a  related party by  the UK  Listing Authority  by 
virtue of  its substantial  shareholding  in SOCO  Vietnam Ltd.  In  addition, 
Lizeroux's majority shareholder, Mr Hai Hoang Nguyen, was a related party  due 
to his being a  director of SOCO Vietnam  Ltd. The Acquisition was  therefore 
conditional upon the approval of SOCO shareholders, a resolution for which was
passed by shareholders at a  general meeting of the  Company. As a result  of 
the Acquisition, SOCO will acquire the right to receive all of the future cash
flows that the  non-controlling interest  is entitled to  receive, namely  the 
remaining 20% of distributions made by SOCO Vietnam Ltd post Carry Recovery.



Transfer of the interest in Block V of the Albertine Graben ("Block V"), DRC

In July 2012, Dominion Petroleum Congo Sprl transferred its 46.75% interest
in the Contractor`s right, title and interest in a production sharing contract
relating to Block V to SOCO Exploration & Production DRC Sprl ("SOCO E&P
DRC"). The transfer was completed on 20 July 2012 for the cash consideration
of $6.5 million plus agreed reimbursement of $2.2 million for the cash calls
paid in 2012. As a result of the transfer, SOCO E&P DRC has an 85% interest in
Block V.





OUTLOOK



We are  maintaining our  existing guidance  of TGT  gross production  for  the 
remainder of the  year being  approximately 55,000  BOPD but  would note  that 
field  production   rates   will  vary   from   day  to   day   depending   on 
ongoingoperations (both drilling and well intervention activities) as well as
facilities uptime.



Even with the acquisitions of various interests and the expectation of  adding 
one or  more new  projects later  this year,  all which  will be  funded  from 
current cash balances, the advent of full production from TGT has transformed,
and will continue to transform, the Company. The priority remains to increase
shareholder value. We will continue to examine all avenues of achieving  this 
goal including building  the portfolio, buying  back shares in  the market  or 
distributing excess cash to shareholders.







Rui de Sousa

Chairman



Ed Story

President and Chief Executive Officer

Responsibility statement

We confirm to the best of our knowledge:



· The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting;



· The interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and



· The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transaction and changes
therein).



By order of the Board

Roger Cagle

Chief Financial Officer

21 August 2012







DISCLAIMER

This Half Year Report has been prepared solely to provide additional
information to shareholders to assess the Group's strategies and the potential
for those strategies to succeed. The Half Year Report should not be relied on
by any other party or for any other purpose.



The Half Year Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.

INDEPENDENT REVIEW REPORT TO SOCO INTERNATIONAL PLC



We have been engaged by the Company to review the condensed set of financial
statements in the half year financial report for the six months ended 30 June
2012 which comprises the condensed consolidated income statement, the
condensed consolidated statement of comprehensive income, the condensed
consolidated balance sheet, the condensed consolidated statement of changes in
equity, the condensed consolidated cash flow statement and related notes 1 to
8. We have read the other information contained in the half year financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.



This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. Our work has been undertaken so that
we might state to the Company those matters we are required to state to it in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our review work, for this report, or for the conclusions
we have formed.



Directors' responsibilities

The half year financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half year
financial report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.



As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half year financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting," as adopted by the European Union.



Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half year financial report based on our
review.



Scope of review

We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.



Conclusion

Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half year
financial report for the six months ended 30 June 2012 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.



Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

21 August 2012

Condensed consolidated income statement

                                (unaudited)         (unaudited)
                           six months ended    six months ended      year ended
                                  30 Jun 12           30 Jun 11       31 Dec 11
                  Notes              $000's              $000's          $000's
                                                       
Revenue             3    263,239              26,439         234,156
Cost of sales                      (54,971)            (11,582)        (67,789)
                                                       
Gross profit             208,268              14,857         166,367
Administrative
expenses                            (4,932)             (3,553)         (9,422)
Operating                                              
profit                   203,336              11,304         156,945
Investment                
revenue                                 381                 742           1,080
Other gains                   
and losses                              668               2,835           3,298
Finance costs                       (2,443)               (351)         (2,684)
Profit before
tax                 3               201,942              14,530         158,639
Tax                 4             (104,706)             (7,717)        (70,046)
Profit for
the period                           97,236               6,813          88,593
Earnings per
share (cents)       5
Basic                                  29.2                 2.0            26.4
Diluted                                29.1                 1.9            26.3
The results are from
continuing activities
only.





Condensed consolidated statement of comprehensive income


 

                             (unaudited)        (unaudited)
                              six months
                                   ended   six months ended         year ended
                               30 Jun 12          30 Jun 11          31 Dec 11
                                  $000's             $000's             $000's
Profit for the                       
period                            97,236              6,813             88,593
Unrealised currency                             
translation differences             (73)              4,527              4,215
Total comprehensive                    
income for the period             97,163             11,340             92,808





Condensed consolidated balance sheet




                               (unaudited)            (unaudited)
                                 30 Jun 12              30 Jun 11              31 Dec 11
               Note                 $000's                 $000's                 $000's
Non-current
assets
Intangible
assets                  208,930     162,528     193,102
Property,
plant and
equipment               807,030     746,374     793,565
Financial
asset                  41,310    40,326    40,617
                          1,057,270     949,228       1,027,284
Current
assets
Inventories            22,997    13,387    10,230
Trade and
other
receivables            43,794    15,438    79,859
Tax                            
receivables                            533                    432                    467
Cash and
cash
equivalents             224,372     213,149     160,075
                        291,696     242,406     250,631
Total
assets                    1,348,966       1,191,634       1,277,915
Current
liabilities
Trade and
other
payables                          (20,775)               (37,275)               (49,481)
Tax
payables                           (9,892)                (1,563)               (13,527)
Convertible                                 
bonds           6                 (46,421)                    -                    -
                                  (77,088)               (38,838)               (63,008)
Non-current
liabilities
Convertible         
bonds                                  -               (79,154)               (46,572)
Deferred
tax
liabilities                       (75,303)               (26,013)               (37,540)
Long term
provisions                        (33,352)               (22,604)               (32,749)
                                 (108,655)              (127,771)              (116,861)
Total
liabilities                      (185,743)              (166,609)              (179,869)
Net assets                1,163,223       1,025,025       1,098,046
Equity
Share
capital                27,577    27,534    27,544
Share
premium
account                73,058    72,622    72,721
Other
reserves                107,750     149,022     140,747
Retained
earnings                954,838     775,847     857,034
Total
equity                    1,163,223       1,025,025       1,098,046





Condensed consolidated statement of changes in equity



                    Called up   Share
                        share premium    Other Retained
                      capital account reserves earnings                  Total
                       $000's  $000's   $000's   $000's                 $000's
As at 1 January
2011                   27,534  72,622  149,205  763,856              1,013,217
Share-based
payments                  -     -      491      -                    491
Transfer relating
to convertible                                          
bonds                     -     -    (651)      651                    -
Retained profit for
the period                -     -      -    6,813                  6,813
Unrealised currency
translation
differences               -     -     (23)    4,527                  4,504
As at 30 June 2011     27,534  72,622  149,022  775,847              1,025,025
New shares issued          10      99      -      -                    109
Purchase of own
shares into
treasury                  -     -  (6,829)      -                (6,829)
Share-based
payments                  -     -      484      -                    484
Transfer relating
to convertible
bonds                     -     -      281    (281)                    -
Equity component of
repurchased and
cancelled bonds           -     -  (2,211)      -                (2,211)
Retained profit for
the period                -     -      -   81,780                 81,780
Unrealised currency
translation
differences               -     -      -    (312)                  (312)
As at 1 January
2012                   27,544  72,721  140,747  857,034              1,098,046
New shares issued          33     337      -      -                    370
Purchase of own
shares into
treasury                  -     - (32,571)      -               (32,571)
Share-based
payments                  -     -      252      -                    252
Transfer relating
to share-based
payments                  -     -    (401)      401                    -
Transfer relating
to convertible
bonds                     -     -    (240)      240                    -
Equity component of
repurchased and
cancelled bonds           -     -     (38)      -                   (38)
Retained profit for
the period                -     -      -   97,236                 97,236
Unrealised currency
translation
differences               -     -        1     (73)                   (72)
As at 30 June 2012     27,577  73,058  107,750  954,838              1,163,223



Condensed consolidated cash flow statement



                                       (unaudited)      (unaudited)
                                  six months ended six months ended year ended
                                         30 Jun 12        30 Jun 11  31 Dec 11
                             Note           $000's           $000's     $000's
Net cash from operating
activities                    7            160,324           13,181     90,183
Investing activities
Purchase of intangible
assets                                    (22,228)         (26,092)   (51,242)
Purchase of property, plant
and equipment                             (40,267)         (38,915)  (100,954)
Net cash used in investing
activities                                (62,495)         (65,007)  (152,196)
Financing activities
Purchase of own shares into
treasury                                  (32,571)              -    (6,829)
Share-based payments                         (260)              -        -
Repurchase of convertible
bonds                                        (929)              -   (35,629)
Proceeds on issue of
ordinary share capital                         370              -        109
Net cash used in financing
activities                                (33,390)              -   (42,349)
Net increase (decrease) in
cash and cash equivalents                   64,439         (51,826)  (104,362)
Cash and cash equivalents at
beginning of period                        160,075          260,438    260,438
Effect of foreign exchange
rate changes                                 (142)            4,537      3,999
Cash and cash equivalents at
end of period                              224,372          213,149    160,075



Notes to the condensed consolidated financial statements



1  General information

The information for the year ended 31 December 2011 does not constitute
statutory accounts as defined in section 435 of the Companies Act 2006. A
copy of the statutory accounts for that year has been delivered to the
Registrar of Companies. The auditor's report on those accounts was not
qualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying the report and did not
contain statements under section 498(2) or (3) of the Companies Act 2006.



The half year financial report is presented in US dollars because that is the
currency of the primary economic environment in which the Group operates.



As we are still in the early stages of production from the TGT field and with
exploration activity continuing in Africa, the Directors have decided not to
pay a dividend at this time.



The half year financial report for the six months ended 30 June 2012 was
approved by the Directors on21 August 2012.





2 Significant accounting policies

The half year financial report, which is unaudited, has been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) as adopted by the European Union and the
disclosure requirements of the Listing Rules and using the same accounting
policies and methods of computation as applied by the Company in its 2011
Annual Report and Accounts for the year ended 31 December 2011. The condensed
set of financial statements included in this half year financial report has
been prepared on a going concern basis of accounting for the reasons set out
in the Financial Results section of this report and in accordance with
International Accounting Standard 34 Interim Financial Reporting, as adopted
by the European Union, and the requirements of the UK Disclosure and
Transparency Rules of the Financial Services Authority in the United Kingdom
as applicable to interim financial reporting.





3 Segment information

The Group has one principal business activity being oil and gas exploration
and production. The Group's operations are located in South East Asia and
Africa and form the basis on which the Group reports its segment
information. There are no inter-segment sales. Segment results are presented
below:



Six months ended 30 June 2012 (unaudited)

                                           SE Asia Africa Unallocated   Group
                                            $000's  $000's      $000's  $000's
 Oil sales                                 263,239     -         - 263,239
 Profit (loss) before tax                  207,811     -     (5,869) 201,942
 Six months ended 30 June 2011 (unaudited)
 Oil sales                                  26,439     -          -  26,439
 Profit before tax                          14,524     -           6  14,530
 Year ended 31 December 2011
 Oil sales                                 234,156     -          - 234,156
 Profit (loss) before tax                  165,563     -     (6,924) 158,639





4 Tax

                       (unaudited)      (unaudited)
                  six months ended six months ended year ended
                        30 Jun 12        30 Jun 11  31 Dec 11
                            $000's           $000's     $000's
 Current tax                66,943            5,777     56,579
 Deferred tax               37,763            1,940     13,467
                           104,706            7,717     70,046



The Group`s corporation tax is calculated at 50% of the estimated assessable
profit for each period. During each period both current and deferred taxation
have arisen in overseas jurisdictions only.

5 Earnings per share

 The calculation of the basic and diluted earnings per share is based on
the following data:



                     (unaudited)      (unaudited)
                six months ended six months ended year ended
                      30 Jun 12        30 Jun 11  31 Dec 11
                          $000's           $000's     $000's
 Earnings                 97,236            6,813     88,593





                                                  Number of shares ('000)
                                             (unaudited) (unaudited)
                                              six months  six months      year
                                                   ended       ended     ended
                                              30 Jun 12   30 Jun 11 31 Dec 11
 Weighted average number of ordinary shares
 for the purposes of basic earnings per
 share                                           332,665     336,153   336,072
 Effect of dilutive potential ordinary
 shares:
    Share awards, options and warrants             1,259       7,913     1,348
    Convertible bonds                                -       8,389       -
 Weighted average number of ordinary shares
 for the purposes of diluted earnings per
 share                                           333,924     352,455   337,420



At 30 June 2012 up to 4,797,495 (31 December 2011 - 4,859,552) potential
ordinary shares in the Company that are underlying the Company's convertible
bonds and that may dilute earnings per share in the future were not included
in the calculation of diluted earnings per share because they were
antidilutive for that period.





6  Convertible bonds

As at 30 June 2012 the Group's only debt was the convertible bonds with a par
value of $47.8 million, the liability component being $46.4 million (30 June
2011 - $79.2 million and 31 December 2011 - $46.8 million) following the
repurchase of bonds in the second half of 2011 with a par value of $35.4
million and in the current period with a par value of $0.9 million. Further
details of the bonds, which were originally issued in 2006 at a par value of
$250 million, are in Note 23 to the 2011 Annual Report and Accounts. The
bonds have been reclassified as a current liability as, if the bonds have not
been previously purchased and cancelled, redeemed or converted, the remaining
bonds will be redeemed at par value on 16 May 2013.





7  Reconciliation of operating profit to operating cash flows

                                         (unaudited)    (unaudited)
                                          six months     six months
                                               ended          ended year ended
                                          30 Jun 12      30 Jun 11  31 Dec 11
                                              $000's         $000's     $000's
 Operating profit                            203,336         11,304    156,945
 Share-based payments                            512            491        975
 Depreciation, depletion and
 amortisation                                 19,018          3,035     19,409
 Operating cash flows before
 movements in working capital                222,866         14,830    177,329
 (Increase) decrease in
 inventories                                (12,768)          3,018      6,175
 Decrease (increase) in
 receivables                                  27,837          2,767   (57,610)
 (Decrease) increase in payables             (7,174)          (180)     12,588
 Cash generated by operations                230,761         20,435    138,482
 Interest received                               376            754      1,095
 Interest paid                               (1,219)        (1,930)    (3,943)
 Income taxes paid                          (69,594)        (6,078)   (45,451)
 Net cash from operating
 activities                                  160,324         13,181     90,183



Cash and cash equivalents (which are presented as a single class of asset on
the balance sheet) comprise cash at bank and other short term highly liquid
investments that are readily convertible to a known amount of cash and which
are subject to an insignificant risk of change in value.



8  Subsequent events

Acquisition of the outstanding non-controlling interest in SOCO Vietnam Ltd

In July 2012, SOCO completed an agreement with Lizeroux Oil & Gas Ltd
("Lizeroux") to acquire the 20% outstanding non-controlling interest in SOCO
Vietnam Ltd, for a cash consideration of $95 million ("the Acquisition"). The
consideration is to be satisfied out of the existing cash resources of the
Company upon receiving instructions from Lizeroux. The Group has carried
Lizeroux`s share of all costs and expenses incurred by SOCO Vietnam Ltd, and,
prior to completion, was entitled to receive 100%, of any and all
distributions made by SOCO Vietnam Ltd, until such time as the Group fully
recovered those costs and expenses, including a rate of return ("the Carry
Recovery"). Lizeroux was classified as a related party by the UK Listing
Authority by virtue of its substantial shareholding in SOCO Vietnam Ltd. In
addition, Lizeroux's majority shareholder, Mr Hai Hoang Nguyen, was a related
party under UKLA rules due to his being a director of SOCO Vietnam Ltd. The
Acquisition was therefore conditional upon the approval of SOCO shareholders,
a resolution for which was passed by shareholders at a general meeting of the
Company. As a result of the Acquisition, SOCO will acquire the right to
receive all of the future cash flows that the non-controlling interest is
entitled to receive, namely the remaining 20% of distributions made by SOCO
Vietnam Ltd post Carry Recovery.



Transfer of the interest in Block V of the Albertine Graben

In July 2012, Dominion Petroleum Congo Sprl transferred its 46.75% interest in
the Contractor`s right, title and interest in a production sharing contract
relating to Block V of the Albertine Graben ("Block V") to SOCO Exploration &
Production DRC Sprl ("SOCO E&P DRC"). The transfer was completed on 20 July
2012 for the cash consideration of $6.5 million plus agreed reimbursement of
$2.2 million for the cash calls paid in 2012. As a result of the transfer,
SOCO E&P DRC has an 85% interest in Block V.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


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