I think they would welcome a buyout of Deen Dayal -- it would be a huge windfall for the 5% passthough of JPR ... the rest can either be a dividend ... but more likely it would pay for a reverse merger or three and form a bulked up public firm with a solid mgmt team ...
Impressive figure published today in Indian press
ONGC is potentially providing $2-2.5b for 50%+ of the Deen Dayal block
As compared to the $3b that has been invested to date through GSPC led partnership
On the low end, that puts GGLR's 5% stake at $200m, with $150m carried debt
Net $50m valuation today ... or, $0.20/share (on 250m shares)
They will most likely have a spin-off with re-capitalization. And ideally a new strategic partner to buy-into the block. If GSPC takes a loss on the buy-in, at least up front, there will probably be their own carried-interest mechanism, where upside revenues are shared back to GSPC ... e.g. if they spent $3 billion, and sell 50%+ control for $1 billion, then they would attach rights to revenue above $1 billion for the 50% allocation (e.g. 20% overriding royalty on revenues above $1 billion, up to an additional $500 million) -- this would make GSPC and lenders whole over time ...
The deen dayal carried interest loan agreement is circular -- they are the lender and the deen dayal project account is the ultimate creditor ... so, it's not something they can default on
They can default on other loans, they've likely needed to make adjustments to terms, assuming they were Western-style loan agreements -- however, GSPC was quickly merged into a larger entity last year, they have tons of cash flow.
The recent GSPC restrucuting news is related to the overall exploration cost overhang, and it's causing potential lenders to demand higher interest rates. The local state-supported lenders that GSPC got most f its exploration funds from most likely don't want to renew and invest further, they expect to be repaid -- production revenues were planned to start two years ago
Jubilant was taken private in Nov 2015, the 15% public equity was brought back by the dutch parent company ... they haven't updated their website since 2013
This is the Sanand and Miroli block ... I assume GGLR still holds 10%, and would need to pay for 10% of the drilling costs, and would gain 10% of the resulting revenues
the old equity stakes: GSPC 55%, Jubilant 20%, Prize Petro 15%, GGLR 10%
20 exploratory wells were completed, 5(?) being discoveries -- this was back 2013 timeframe ...
I'd think the options for natural owners include ONGC or Reliance or BP - operators of neighboring blocks that can profit from leveraging the undersea pipeline, the platforms, and the onshore condensing facility that have been built ... I think all the built infrastructure can be sold at a modest profit, and/or all the ownership structure around "GSPC offshore" be sold off ... the equity in GGLR is likely still 31% ILDE, 9.9% Crede, 9.9% JPR ... some former exec/directors collectively might have 5-15% ... there's going to be a fair bit of the quity in the accounts of Canadian brokerages, which cannot trade since the firm is non-filing .. and there are a few million shares floating around in pink sheet land ... I think it'll take ~$2m for GGLR to clean up the accounting and filings ... if the Cambay Tarapur ring fence transaction ever happened, that would have brought in some cash .. and the back revenue sharing owed to GGLR that Key Capital says came in the door ... I don't have an indication of how much quarterly cash flow is currently being produced by Tarapur ... and if the other stakes around have been divested/relinquished, or extended until funding is available
Yes, 1 TCF is just DDW at highest probability of recovery ... there is as lot more to be had in DDW - 5+ TCF ... but current mgmt structure is not going to facilitate drilling for it ... there are a number of prospective wells across DD already drilled that can be re-entered and sidetracks attempted ...
Reads like they are done and gone -- and also reads like they never put hard cash into GGR (or it was returned)
At 50 mmcf/day , selling for $7mmbtu = $350k/day (?) or $100m / year
This is for one well ?
Another article over the weekend has ONGC denying active discussions ...
I'm not sure ... Also I believe each Deen Dayal teaming partner will need to approve the transaction - could give GGR leverage for better cooperation
I doubt GSPC executed the Deen Dayal spin-off, so they'll report, burying in the overall financials, it in the just completed year end, the annual report is due towards the end of May
What they want/need is to get the $3b in debt/sunk cost of the Deen Dayal buildout off the books of the gas distribution company ...
Turning on the wells will be a bit of a process ... maybe they can do it faster ... they also need to frack all the wells to really make them work - maybe they can get that started in a few weeks
Is the account Canada-based or US-based ? - If in Canada, you wouldn't be able to make any transactions anyhow, until GGLR gets its accounting straight and makes a filing
The firm is cash flow positive and still has valuable holdings in India. It looks like Key Corp is going away ... not clear if they really have any legal proceedings with their claims that they made a binding deal with the firm and hae a claim to the assets - at this point, it appears not.
So, it's back to JPR, and some staff in India - with some modest support from IDLE.
The most promising property continues to be Deen Dayal - GGLR still has 5% on a carried interest basis, with ~$2.3 billion overall invested - so,once production starts and the first $2.3 billion in revenues beyond operating costs flow, then anything further is free cash , GGLR will see 5% of free cash flow of the property
GSPC is being forced to spin off Deen Dayal to its own stand alone entity - GSPC Offshore, with new management - this appears to be occurring on April 1st -- the new $7/mmBTU pricing is also going into effect April 1st, and I assume they will be able to turn on the wells, which were completed over a year ago, in a 8-12 week timeframe ... we should be seeing news in the Indian press over the summer
The policy guidelines would be applicable to future discoveries as well as existing discoveries which are yet to commence commercial production as on 1.1.2016. However, in case of existing discoveries which are yet to commence commercial production as on 1.1.2016, if there is pending arbitration or litigation filed by the contractors directly pertaining to gas pricing covering such fields, this policy guideline shall be made applicable only on the conclusion/ withdrawal of such litigation/ arbitration and the attendant legal proceedings. All gas fields currently under production will continue to be governed by the pricing regime which is currently applicable to them.
This is very good news for Deen Dayal ... this is the highest price offered since govt negotiations began 4-5 years ago ... now they need to complete the spin-off to the new holding company, and likely need to frac some of the existing wells
I think the ILDE investment, and debt conversion to equity, and repricing to allow for Crede investment took us to 189m, and Crede investment took us to 250m shares ... so, firm has $2.5m market cap ... Key said that ILDE released $4m in back revs from Cambay property. JPR probably used $1m or more of it to pay himself and some other slaries and costs. So, firm is trading near cash value, and has a modest cashflow positive property -- there is the Cambay Gas well that is ready to double revenues, whenever it gets turned on (maybe this has happened?) and there is a large amount of proposed new development wells ... of which GGLR will have 14% or 20% participation based on inside or outside the ring fence ... GGLR should have also been paid for the 6% sold under the ring-fence agreement
I think we can believe Key's urgent message a year ago, that all back revenues from GSPC were paid into GGLR ... and also JPR cut himself a paycheck with it ... given he would have stopped taking a salary several years ago due to the cash crunch, it doesn't seem inappropriate, not any more-so than operating without audited financials
There has been a bunch of recent selling, probably 1-2m shares total over the last 4-6 weeks, I picked a bunch of them up over the last month ... and someone else made a buy that swept up the asks on Friday -- so, didn't seem like there was any more selling to do, but someone hit the bid again today ... there can't be may individual shareholders left ... Crede, ILDE, JPR all will avoid transactions with non-filing status ... Key, it appears, never had any shares
It's looking like these preferred shares weren't issued ... Key can ask for a settlement of a couple $100k for services delivered if they like ... I think they aren't following through with the deal they originally suggested, as JPR didn't agree with it