1. Introduction

SOCO International plc ("SOCO" or the "Group") today announces that it has entered into a conditional sale and purchase agreement for the sale of its wholly owned subsidiary SOCO Thailand LLC ("SOCO Thailand") to Salamander Energy plc ("Salamander Energy") for an initial value of US$105 million (subject to certain financial adjustments), plus contingent cash consideration of US$1 million (the "Disposal"). SOCO Thailand is a 99.9993 per cent. shareholder of SOCO Exploration (Thailand) Co Limited ("SOCO Exploration Thailand"), the entity that holds the Group's interest in the Bualuang Field, offshore of Thailand.

Salamander Energy is an Asia-focused independent exploration and production company with 22 licences across Indonesia, Thailand, Vietnam, Lao PDR and the Philippines. Founded in 2005, Salamander Energy has developed strong operating credentials across all areas of the exploration and production life cycle and has consistently grown production year on year. Salamander Energy was admitted to trading on the London Stock Exchange in December 2006.

2. Background to and reasons for the Disposal

SOCO has a track record of realising value at the appropriate stage of an asset's life-cycle and re-investing the capital to build significant shareholder value. The Board believes that the Disposal now is in the best long-term interests of the Group and represents an excellent opportunity to realise value for the Group.

The significant proceeds from the Disposal will strengthen the Group's balance sheet and provide funding for existing exploration and development opportunities and for future opportunities that may arise.

3. Information regarding SOCO Thailand

SOCO Thailand owns 99.9993 per cent. of its Thailand subsidiary, SOCO Exploration Thailand, which holds a 40 per cent. interest in the Bualuang Field. The remaining 60 per cent. interest in the Bualuang Field is held by Salamander Energy Bualuang, as operator. The Bualuang Field is located in the west of the Gulf of Thailand in water depths of approximately 60 metres.

The Bualuang Field commenced production on 27 August 2008 and produces oil from five wells into a 500,000 bbl capacity FPSO. The Group currently sells oil from the Bualuang Field to the Thai national oil and gas company, PTT Public Company Ltd, through a 12-month term contract that commenced on 1 January 2010. Under existing conditions and with proper reservoir maintenance, the economic life of the Bualuang Field is estimated to extend to 2019. The Bualuang Field production licence is due to expire on 23 October 2025.

As of 31 December 2009, the estimated gross 2P reserves in the Bualuang Field amounted to approximately 22.8 mmbls (approximately 9.1 mmbls net). Bualuang Field production, net to the Group's working interest, averaged 2,991 bopd through the first half of 2010.

For the 12 months ended 31 December 2009, on an IFRS basis, SOCO Thailand generated revenues of approximately US$62 million and profit before taxation of approximately US$39 million. Gross assets of SOCO Thailand, as at 31 December 2009, were approximately US$40 million. Current trading of SOCO Thailand is in line with the statements made in SOCO's AGM statement dated 9 June 2010.

4. Approvals and consents

Due to the size of the transaction, completion of the Disposal is conditional upon the approval of SOCO shareholders at a general meeting of SOCO. Additionally, the Disposal is conditional upon the approval of Salamander Energy shareholders at a general meeting of Salamander Energy.

A circular containing further details of the Disposal and including the notice to convene the general meeting will be posted to SOCO shareholders as soon as practicable.

The Disposal is expected to complete by or before 30 September 2010.

5. Use of proceeds

The Disposal will strengthen SOCO's balance sheet and will provide cash, the majority of which will be used to fund the Group's exploration and development programmes. In particular, capital will be deployed in order to further develop SOCO's assets in Vietnam, a key area of operation for the Group. Additionally, the proceeds will provide the financial flexibility necessary to participate in future opportunities as and when they arise.

Ed Story, President and CEO of SOCO, said:

"The Disposal will enable SOCO to generate greater long-term value by re-investing the proceeds in the development of its core assets, particularly in Vietnam and West Africa. This transaction is another example of the Group’s strategy of realising value for shareholders at the appropriate stage of an asset’s life cycle."

ENQUIRIES

SOCO International plc
Roger Cagle, Deputy Chief Executive and Chief Financial Officer
Tel: +44 20 7747 2000

Bank of America Merrill Lynch
Sole financial adviser and corporate broker to SOCO
Tel: +44 20 7628 1000
Andrew Osborne
Paul Wheeler
Anya Weaving

Pelham Bell Pottinger
PR adviser to SOCO
James Henderson Tel: 020 7861 3160
Evgeniy Chuikov Tel: 020 7861 3148

Merrill Lynch International ("Bank of America Merrill Lynch"), a subsidiary of Bank of America Corporation, is acting exclusively for SOCO in connection with the Disposal and no one else and will not be responsible to anyone other than SOCO for providing the protections afforded to clients of Merrill Lynch International or for providing advice in relation to the Disposal or any other matters referred to herein.

Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations, and by their nature, are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. The information does not assume any responsibility or obligation to update publicly or revise any of the forward-looking statements contained herein.
 
 
 
 
 
 
 
 

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