That shares in Soco International had risen nearly 12 per cent in the space of a week provided the clearest possible signal that a drilling update from the oil explorer’s closely followed operations offshore Vietnam was on its way.

The trouble was that the statement that Soco produced yesterday was not the one that the stock market wanted.

Shares in the £1.5 billion company fell 7 per cent as tests on the Te Giac Den (TGD) prospect, its most promising property, once again proved inconclusive. Drilling has been repeatedly plagued by technical difficulties: TGD is a high-pressure, high-temperature discovery, 5 km beneath the sea bed at its deepest.

Further, by its own admission, some of the techniques Soco has used to sink these unconventional wells has only exacerbated those difficulties. The upshot was that, although gas flowed to the surface, the damage to the lower part of the well sustained during drilling precluded a meaningful result.

Progress at Soco’s adjacent Te Giac Trang (TGT) field was more definitive. The second test on its latest appraisal well flowed at more than 7,000 barrels of oil a day, taking the total output from the wells drilled so far to 60,000 barrels a day. On that basis, Soco’s estimate that TGT could contain between 300 million and 500 million barrels of oil, against current booked estimates of 250 million barrels, looks feasible. Elsewhere, the company confirmed that Ca Ngu Vang, the first of Soco’s discoveries in Vietnam, should start to produce oil next month, the cashflows from which will usefully supplement the $420 million it already has sitting on its balance sheet.

The broader problem is that, although Soco is making steady progress with its portfolio of assets in West Africa, it is the companmy’s developments in Vietnam that remain key to investor sentiment.

That includes the longer-term issue of how Soco will commercialise the production from TGD should its potential be met. If the field is as big as hoped, huge liquefied natural gas plants would be needed onshore Vietnam to deal with its output.

At yesterday’s £18.60, the shares are arguably according little value to TGD for now – which is perhaps sensible given that a conclusive result, or a potential sale of Soco’s Vietnamese assets is now not likely before next year. All the same, hold.

BlueBay

Investing in distressed debt might sound like a high-risk game, but it is proving a safer bet than backing BlueBay Asset Management, the specialist credit fund manager.

Whereas the conspicuous laggard in BlueBay’s portfolio – the $2.7 billion (£1.4 billion) Value Recovery Fund (VRF) – is down 5 per cent, shares in BlueBay have halved on the year. They were down 14 per cent yesterday alone after it said that pre-tax profits for the 12 months to June 30 would be “broadly similar” to those of the previous year at about £52 million, or 14 per cent lower than consensus estimates. The culprit is BlueBay’s performance fees, levied as a 20 per cent cut on the appreciation of its funds, which have totalled only £4 million over the past five months, against the £18.2 million booked in the second half of the last financial year.

Not all was gloom. BlueBay’s European corporate debt fund was up 8 per cent. Further, the company is taking steps to underpin VRF. It is reducing management and performance fees to 1 per cent and 15 per cent respectively for a 30-month period in exchange for investors being locked in until next July. This avoids VRF being forced to sell illiquid assets on unfavourable terms by customer redemptions.

Yet the greatest comfort from yesterday’s update came with the disclosure that BlueBay continues to pull in cash. Net inflows to its funds over the past five months have been $3.5 billion, against a forecast $2.5 billion. That advance – which underpins the longer-term investment case – suggests that institutions continue to value BlueBay’s debt market expertise and that the shift towards corporate credit as an asset class remains intact. Even so, at 283p, or 18 times forward earnings, against its sector’s 13 times, the shares, which suffer from illiquidity, are too dear. Pass.

Majestic Wine

It would be a shame if Tim How’s last set of results after 19 years as chief executive of Majestic Wine were to be overshadowed by the retailer’s share price, which has halved from last year’s high.

As yesterday’s full-year numbers show, Majestic faces pressures over and above the squeeze on consumers being felt elsewhere in its sector. Higher wine duty of £1.72 a bottle in the wake of the Budget, vigorous promotions by supermarkets, poor harvests in France and Australia and a stronger euro together mean that prices are likely to increase a further 10 per cent to offset higher costs.

Adverse currency moves have also reduced the appeal of cross-Channel trips, with underlying sales from Majestic’s Calais superstore down nearly 9 per cent on the year. So all things considered, the 4.4 per cent rise in like-for-like sales over the past six weeks might be considered an achievement – albeit that the figures are flattered by higher prices. Yesterday’s near9 per cent rise in the shares made much the same point.

For its part, Majestic has tailored its tactics for tougher times. Cheaper wines have been brought in for customers put off by price rises on Sancerre and Chablis, and marketing spending has been increased around peak sales periods, such as the forthcoming barbecue season.

Majestic has a loyal customer base, a sound balance sheet and low operational gearing. However, 217p, or 12 times this year’s earnings, still feels steep. Tempus advised “avoid” at 270p in January, and that remains the case.

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