Soco International, the Vietnam focused oil explorer, has jumped nearly 5% after a positive broker note suggesting the company as a possible takeover target.
Soco is up 15.2p to 339.1p as JP Morgan raised its rating from neutral to overweight and said it could be worth 400p to 500p to a predator. The bank said:
We believe Soco is one of the more attractive M&A candidates in the European exploration and production space, given its focused portfolio (essentially Vietnam), rising production profile, attractive valuation and materiality. We believe the most likely acquiror of Soco would be one of the resource hungry Asian national oil companies, such as the Koreans, Chinese, Indians or Japanese, with the Koreans and then the Chinese being the most likely in
our view. We believe 400p-500p is a fair takeover value range for Soco.
In addition to Soco's takeover appeal, at the current share price, we believe exploration upside is an attractive free option. Admittedly there is only one, high risk well left in its 2010 drilling campaign, but next year Soco plans to drill two wells offshore Congo, and potentially further wells in the DRC.
