SOCO International plc, an international oil and gas exploration and production company, announces its preliminary results for the year ended 31 December 2018.

Ed Story, President and Chief Executive Officer of SOCO, commented,
In 2018 SOCO set out its vision to become a full cycle and growth orientated E&P company of scale. We made some significant steps towards achieving this in 2018, including the announcement and shareholder approval of the Merlon Petroleum El Fayum Company acquisition, putting in place SOCO’s new debt facility and portfolio optimisation through the divestment of our West African position. A year of opportunities and achievements, but 2018 has also had its challenges, including operational issues and delays which impacted on production from Vietnam. Upon completion, the Merlon acquisition will mark a significant turning point for SOCO, as we double our production, open up a whole new region of potential future opportunities and welcome key members of the Merlon team with a track record and proven ability to create value in Egypt. We look to deliver on increased production in Egypt and on our exploration plans in both Egypt and Vietnam.  We remain committed to creating value for our shareholders through a combination of capital growth and capital returns. I am pleased that the Board has decided to recommend a 2018 final dividend of 5.5p per share, a 5% increase on 2017. In addition, we have repositioned SOCO to support further growth in the wider Middle East and North Africa region, both organically and through additional mergers and acquisitions.

2018 STRATEGIC HIGHLIGHTS
Shareholder approval of the Merlon transaction in Egypt with completion on track for 1H 2019 – the acquisition will;

• Add proven and probable (2P) reserves of 24 million barrels and contingent (2C) resources of 37 million barrels
• Complement and diversify SOCO’s existing Vietnam-focused portfolio and create a new hub for our business in Egypt
• Increase SOCO’s through-cycle financial resilience through Merlon’s low cost resource basw

• Reserve Base Lending Facility (“RBL”) of $125m in place
• Portfolio optimisation through divestment of non-core interests in Congo (Brazzaville) and Angola completed in line with the Company’s strategy

2018 FINANCIAL HIGHLIGHTS
Strong and efficient balance sheet, RBL in place, solid cash flow and low cash operating costs:

• Revenue of $175.1m (2017: $156.2m), an average realised crude oil price of $74/bbl (2017: $56/bbl), representing a premium to Brent of over $3/bbl
• Low cash operating expenditure of $13.63/boe (2017: $13.73/boe) 
• $55.9m of cash generated from continuing operations (2017: $45.0m)

• Profit before tax (“PBT”) of $80.1m (2017: $22.7m)
• Recommended 2018 final dividend of 5.5 pence per Ordinary share (approx. $28.9m), an increase of 5%
• Dividends paid to shareholders during 2018 of $23.3m (2017: $21.0m)
• 2018 cash capital expenditure of $22.4m from continuing activities (2017: $25.2m from continuing activities and $4.1m from discontinued activities), fully funded from existing cash resources
• Year-end cash and liquid investment balance of $240.1m (2017: $137.7m), including the $100m draw down from the RBL, giving net cash of $140.1m  

2018 OPERATIONAL HIGHLIGHTS

• Net production average of 7,274 boepd (2017: 8,276 boepd) in line with revised guidance - TGT production averaged 5,686 boepd (2017: 6,724 boepd) and CNV production averaged 1,588 boepd (2017: 1,552 boepd)
• On Blocks 125 & 126 in Vietnam, bid packages for a 2D seismic acquisition programme have been agreed and issued targeting commencement in mid-2019
• Successful extension of two key operational contracts, resulting in significant cost savings for the TGT Field: the FPSO Operations and Maintenance Agreement and the Bare Boat Charter for the FPSO Armada TGT 1

OUTLOOK FOR 2019

• Production guidance, maintained at 6,500 to 7,500 boepd net
• Completion of the acquisition of Merlon El Fayum is expected in H1 2019
• 2019 Vietnam capex guidance of approx. $34m fully funded from existing cash resources, to cover the development drilling and infrastructure upgrade on TGT and 2D seismic acquisition and processing for Blocks 125 & 126
• Optimise capital allocation providing shareholder return through dividends or acquisitions that can support value accretion and underpin a longer-term dividend stream.