SOCO International plc (LON: SIA) may be valued at less than 7 times profits.
The shares of SOCO International (LSE: SIA) slumped 25p, or 6%, to 371p during early London trade this morning after market took a dim view of the oil group's progress.
SOCO, a FTSE 250 company that operates mostly in Vietnam, said its share of production during 2012 improved 170% to 14,757 barrels of oil a day. The group also confirmed production during January had averaged 18,825 barrels a day.
Today's announcement revealed the company's main field could hold between 466 million and 958 million barrels of oil, with a third-party consultancy estimating a possible recovery rate of between 28% and 35%.
However, SOCO claimed that "additional drilling" could improve the recovery rate to between 45% and 50%.
In addition, the mid-cap said its cash reserves had improved by almost $100m to $211m during 2012.
Assuming January's production rate can be sustained throughout 2013, rough calculations suggest current-year earnings could be about 57p per share.
Although that forecast is based on the sales and costs recorded by SOCO during the first half of 2012, it does suggest the shares may now be trading at less than 7 times possible profits.
Of course, whether today's statement and SOCO's £1.2bn valuation combine to make the share a 'buy' or a 'sell' remains your decision.
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> Maynard owns shares in SOCO International.