City interview: Soco boss, Ed Story

By Daily Mail Reporter
Updated: 05:58 EST, 20 February 2008

 

Oilman Ed Story enjoys a game of elephant polo. The bizarre, three-a-side game, developed in Thailand, sounds straight out of Monty Python. But it will stage a World Cup in April - and Story hopes to play.

'You need a long mallet,' he tells me with a straight face.

'It developed at an elephant shelter in northern Thailand. They got into riding, then elephant polo. It's amazing how fast they can go, while you try to hang on!'

It sounds a Texan tall tale. But Story, the founder, president and chief executive of explorer Soco, assures me it is true.

He loves Thailand, but it is hopes of a jumbo sized find in nearby Vietnam that have turned Soco into a stock market star.

Oilmen call giant fields 'elephants'. Hopes that Soco will find one have lifted its shares to £21.54 (down 26p), valuing it at almost £1.56n and making it one of the largest UK-quoted oil explorers.

The shares were £4 two years ago and 260p when Story floated the group in 1997.

After some hits and misses in Vietnamese waters, it made two important finds and is now drilling into a huge structure in search of gas. Story believes success could 'transform the company'.

Talking at Soco's London offices, the affable Texan knows this would crown a career that has taken him to the far frontiers of exploration - from the Mongolian plains to the deserts of Yemen.

Soco has already delivered gains to UK investors only exceeded by Cairn Energy - as Story knows. He sold Cairn its original Indian and Bangladeshi prospects, sits on its board and is friendly with its boss Sir Bill Gammell.

Like Gammell, he knows George W Bush, who worked in the family oil business before moving on to the White House. Was Dubya a good oilman?

'It was a very competitive time and prices collapsed, so it's difficult to judge,' says Story cautiously. 'He made more money on his baseball team.'

Story had no family roots in oil, and his degree was in finance. But when Standard Oil (later Exxon), lured him first to New York and then to Thailand, his love affair with frontier oil began.

His life has been adventure-packed. At Exxon, he supplied fuel to anti-communist rebels in the 'secret war' in Laos. 'The Pathet Lao (communists) tried to run me over,' he says.

'Another time, I was trying to sell two DC3 planes to a Corsican who owed us money and we had stopped his fuel supply.

'He got very angry and showed me his weapons. In the end he stole the planes anyway.' He laughs at the memory.

'In Yemen, this guy on a seismic crew was kidnapped, but it was a refined form of kidnapping. The tribesmen would come every weekend with his clothes to be washed!'

Ultimately, they swapped him for a jeep.

Despite all this and 'numerous plane crashes, that sort of thing,' Story will go anywhere, including North Korea and Iraq. 'We didn't concentrate on the Axis of Evil,' he says. 'It just worked out that way for a while. We go to a lot of strange places. We like to be there first and define the terms rather than take someone else's.'

This reflects his view that the world is short of oil. There is certainly a huge demand for new opportunities, he says.

'These were viewed as Russia or remote parts of the world such as Greenland. But the Russians don't need funding, and can buy technology. So the available world has shrunk, and the host countries have become hugely demanding in tax terms.'

As a result, he thinks oil prices will probably stay above $50. 'Oil will remain scarce, and prices robust. We need to plan accordingly.

'Green is good, but there is only so much green can do to meet demand. Clearly there is scope for more nuclear energy. In the massive power consuming areas of the world, it's probably the only near-term solution.'

Story began his roaming early in life. His father, a retail merchant, moved regularly and he attended no less than 18 schools. When he moved to Thailand, he loved it. When Exxon shifted him back to the US and a job loomed in its corporate hierarchy, he struck out on his own.

In the 1980s he allied himself with Snyder Oil. Ten years ago he launched Soco (using the initials of Snyder Oil Co). 'We thought there was a gap between the very large oil companies and the "Mom & Pop" operations,' he says.

He took Soco into, and out of Russia, and spent several years - and £45m - in Mongolia, before selling out to PetroChina. On the way, he picked up a penthouse in the capital Ulan Bator.

This is one of a string of residences - a ranch in Texas, a place in Colorado, another in Mississippi, a flat in London, an apartment block in Bangkok. 'I leave clothes in lots of places,' he says. Fortunately his wife Joey is an interior designer.

Working in some of the world's most dangerous countries, he survives by choosing his commercial partners carefully. 'Our local partners get minority holdings. If we succeed, they make a lot of money, if not, they make nothing,' he says.

'We are trying to be in the same shoes as them, not the outsider telling them what to do. You want to blend in with the foliage. When we were in Iraq, we didn't have bodyguards. You just attract attention. It's the worst thing you can do.'

Soco's greatest success, Vietnam, was launched with an expatriate oil engineer who wanted to go back home. With his help, it beat off Exxon and others to win a licence.

What followed was a crucial test of its exploration skills. Generally oil migrates upward. But in some rare parts of the world, and Vietnam is one, it migrates downward. 'We tried some different geological approaches, and they worked,' he says.

News of its gas prospect is keenly awaited and Story says we should know a little more about it soon. 'It's a huge structure and there's another to the south, so it would be a major event. It could significantly enhance our valuation. A potential development could attract the very largest of companies.'

If so, he will be ready to talk with potential buyers. 'Soco's history is one of taking projects, adding value, and when we've extracted the bulk of the leverage, selling them on. If we look at our portfolio, in Yemen very little mystery remains,' Story says.

'It is a plumbing issue. Vietnam, we are approaching a time when it's mature.

'The immature part is West Africa, where we have three exciting areas and haven't drilled yet. There is nothing to preclude disposals along the way and returns to shareholders.'

With shares and options worth £80m-plus, he shows no interest in retiring. 'You only make money when you take it off the table,' he says, referring to his notional wealth. 'We're not done.'

Besides, he has an elephant to ride.