Great Eastern Share Chat (GEEC)

I’ve no idea why having held over the last months, maybe years, that an investor would get out now- dragging the price down against themselves. just as geec is about to embark on exploration drilling that could transform reserves and at a time when new markets for gas in India are opening up AND the current price discounts quite a bit of bad news already.
Then again, I’m probably missing something important!

"the Company has taken appropriate measures to minimise the impact by optimising costs and increasing efficiencies, remaining profitable and cash generative during the period to post an $8m cash profit, up 23% y/y"

So at current FX rates $8m = £6.7m

From a market cap of £24m that's a P/E of 3.6 for a company with significant growth potential!

Agree with you Bismarck. I guess that’s what makes a market so good opportunity for buyers. Company needs to just make a bit more progress on commercialising the resource and the shares should begin to move meaningfully upwards.

Think SP Angel will revise their price target upwards soon as well. Broker advise is usually total rubbish so maybe can’t base too much on this but the delta of the price target move will be the interesting element. Ie if 25% up or down then irrespective of the actual price target that should equate to a similar move in the underlying share price. Probably too simplistic to look at it that way though. Whatever, still feel that the shares are very significantly underpriced.

https://*********************/companies/uk/oil-gas-e-ps/great-eastern-energy-corporation-limited-sponsored-gdr-regs/research/sp-angel/sp-angel-energy-fy22-results-upgraded-shale-potential-geec-ln-/7_2022070802102293211/ba5000f2-45bb-43df-ab8f-046a687d6f90

Happy weekending!

Looks that way.

Strange, apart from the war, which you would expect to put upward pressure on the SP, I cannot see anything has happened that would cause the drop from 40p at end of Jan and the circa 20p we've now seeing....

Someone wants to get out of their investment here!

Suspect that there’s no meaningful change in financials with the results on Friday. Sales, profits and cash will probably show a modest uplift at best.

Hopefully and more meaningfully the company might give us some good detail on the drilling plan, discussions with GAIL for an off take arrangement for the gas, and an update on the pipeline construction from Durgupur.

Great Eastern Energy Corporation Limited (LSE: GEEC), the fully integrated, pioneering Indian Coal Bed Methane ("CBM") Company, will announce results for the year ended 31 March 2022 on Friday, 8 July 2022.

Looking at my Stockopedia report we have forecast NP for 2022 of $3.94m, giving us a P/E of 9

The forecast NP is shown increasing to $8.2m for FY23, which at current SP would be a P/E of around 4.5!

Despite the challenges of covid they've continued to pay down debt, currently now $50m

Things are looking good, even without factoring in shale.

I've never understood the share price cycling between 20p and 40p over the past year? Hopefully on our way back to 40p again, or hopefully even higher! Luckily for me I took some profits both times we hit 40p and bought back in at 20's.

Now seriously considering buying more and holding

Do we know if there has been any update on the Mannargudi block arbitration?

Bring on the shale gas discoveries Bismarck!
Good time to buy as seems there is a persistent seller in the background providing liquidity and holding the price down.

$2bn investment in shale would be pretty significant upscaling for this business of £29m market cap. Obviously would take some years but would be a complete gamechanger.

Good to hear the pipeline still progressing, albeit quite slowley

Topped up this morning !

Agreed Agricore that todays news is an under-appreciated positive. If they prove up 6.6trn cubic feet of gas in the shale then it won’t be under appreciated for long. It’s an ‘if’ for now so we’ll have to wait until we get the exploratory drill hole results.

Hi Troy,

You were right when you anticipated today's news about Shale drilling. I think it reflects the extreme despondency in the market that there's virtually no reaction or trades in the market to today's news. It's actually a positive sign (the only way is up, as Yazz sang).

Finalisation of the pipeline H2 2023 is later that either of us would like and I had hoped Q4 2022 would be achievable. Nevertheless it is welcome progress. I looked up the pipeline map and there's a much bigger picture than just connecting to Kolkota. The pipeline network stretches right across India and is a national pipeline network.

GLA

Just the update investors wanted to see. There are no guarantees obviously but proving up of the estimated gas in the shale at raniganj would propel the share much higher.

Also good to get an small update on the gas pipeline, albeit just that it is progressing.

Pieces falling into place here. Proof of Commercial shale gas volumes and completion of the pipeline news should arrive in the next few months. Would also expect an off take agreement to be put in place with GAIL when shale gas volumes confirmed.

Notice that the old story of geec looking to invest $2bn in shale gas over the coming years has surfaced again in the press and on the company website - dated June 5th.

The interim results from the company mentioned expectation of final approvals to be received for shale gas drilling later in 2021. We didn’t get these approvals in 2021 but I’m wondering if the rerun of the story now indicated that the company have reason to believe the approvals are imminent?

I think we're on the same page here Agricore. My point on the debt is in line with yours in that the balance sheet is in good order so rising interest rates is not a problem a the moment. They will though have to pay higher interest on debt that matures and is refinanced so merely highlighting that any existing or new investor should inform themselves of what this will mean for the company

regarding the 20 to 30 transition im in total agreement with you, again, my point being that geec is a structural growth play which reduces the importance of cyclical changes in demand and economic activity. The shift from coal to gas & renewables over the coming decades will provide stronger year over year growth than might be seen across a slowing economy for example.

23p is a great price to buy more shares at so congratulations on that purchase

Hi Troy

Regarding changing Indian 10 year yields GEEC's debts are not index linked so there's no effect. In fact below is my understanding of their debt situation:

"The debt level as at 31/12/21 is around $60m and the company is paying down around $8m p.a. plus interest of $5m.
The Company maintains a prudent approach to capital discipline and is continuing to pay down its debt position and not taking up the optional debt moratorium allowed by the Reserve Bank of India due to COVID-19. Gross debt fell by US$4.3m during the first six months of FY22 to US$56.3m, and estimates are that net debt fell to US$48.3m (FY21: US$52.4m) resulting in a material drop in GEEC’s net debt/equity ratio to 0.53 (FY21: 0.58). The Company continues to focus on optimising its debt coupon rate and had been able to reduce it from 10.32% in FY21 to 9.48% for FY22. This will result in an annual saving in FY22 of c.US$0.51m.

Regarding a 20-30 year transition to gas that's not what I'm seeing. I believe there's at least a CAGR of 9% for natural gas. ESG concerns do exist in India, and of course the $325/tonne coal price is encouraging a faster energy switch.

Refer to:
https://www.ibef.org/industry/indian-oil-and-gas-industry-analysis-presentation

I managed to top up today at 23p which I'm very pleased with.

Interesting day for geec share price. There’s a persistent seller around, selling blocks of 5000 or multiples of 5000 for a few months now. But combined with a surprise interest rate hike by the Indian central bank and geec has taken a hit.

Worth remembering that interest rate rises have been flagged in India for a while (like with much of the world) - no surprise that they are coming it’s just the timing that has spooked investors.

Also worth noting that 10 year govt bond yields in india are back to levels last even in 2019. Geec traded at 50p or so then with arguably a more stretched balance sheet then. I don’t think a few interest rate rises will stretch geek’s ability to pay interest on their debt immediately but interest cover is worth checking out and being sure on as the company have some debt refinancing to go through in the next year or two and they may have to lock in a higher rate.

Final point - geec is a structural play on the transition away from coal use to gas and renewables in india. This will play out over the next 20 to 30 years. Interest rate cycles will come and go during this time. Management just have to keep a relatively conservative balance sheet and these cycles won’t matter too much to the patient investor.

Own research vital as always but possibly some good days to come for patient investors with a longer time horizon to pick up good amount of shares.

Thanks for this post Troy, topped up today, difficult to see this being a looser in the med to long term

https://m.timesofindia.com/city/kolkata/city-pockets-may-get-piped-cooking-gas-by-may-end/amp_articleshow/90990195.cms

This is the most positive update I’ve seen yet on the market access prospects for the huge Kolkata market to open up for GEEC. Really shouldn’t be underestimated how important this article is.

GAIL pessimistic scenario reported as September 2023 for pipeline completion. With that geec will crank up gas output from their raniganj field and begin to drill more wells. We should also see them then proceed with shale gas test wells, which if they come in positive should see a very large re-rate for geec stock.

Domestic energy security never more important than now and with gas the people of Kolkata will get significantly better air quality in the city, saving lives and improving health outcomes.

The company will update in July and again in November this year. We should get some positive messages from them in both.

Interestingly it's not strictly speaking just about getting a pipeline connection to Kolkata (which is happening August 2022 according to SP Angel), searched and not found anything to contradict that view. The bigger picture is India is building a huge interconnection of gas pipelines and are planning on increasing gas usage from 6.7% 2021 to 15% 20230. This includes for cars (CNG) replacing diesel/petrol as well as domestic and industry. (replacing Urea, Wood and LPG). The pipeline network is 18,700km in 2022 and will grow to 25,700km by 2027 including to other large cities/areas like Mumbai. CMG (Coal Methane Gas) doesn't suffer the same increase of water content that conventional gas does according to the GEEC web site and the resource is large enough that depletions isn't a huge challenge.

So there's grounds for optimism on this share and how it provides an interesting and stable play on India, green(er) energy, commodities, poor sentiment/overlooked opportunity, controlled risk...tick tick tick tick tick

https://gailebank.gail.co.in/goga/NewApplication/images/New_Map3.jpg
https://economictimes.indiatimes.com/industry/energy/oil-gas/gail-puts-west-bengal-on-indias-gas-map-hurl-in-greener-cheaper-fuel-for-homes-automobiles/articleshow/80723294.cms

Off topic but this article is a fascinating glimpse into why we see a lack of condemnation from India towards Russia over Ukraine. The side of the news that we don't get to learn from our own news sources.... https://economictimes.indiatimes.com/news/how-to/why-india-has-been-soft-on-russia-here-are-the-strong-reasons/articleshow/90873069.cms

Good luck with it agricore. Nice to hear from another investor in geec. I’ll post anything I find of interest but could be quite quiet until the company update in July and then again in November.

Hi Troyto, thanks, your posts are much appreciated. I'm establishing a position here in what looks an interesting opportunity.

Not sure i understand why investors would sell GEEC at this point. Sadly, geopolitical tensions will be heightened for years to come leading to volatile energy and agriculture prices. Countries are already signalling moves to protect domestic production on both fronts. Global gas markets are tight as a drum as a result, which should encourage India's drive to develop domestic gas supplies more aggressively. But with Russia blocking exports of fertiliser to global markets and India being an important fertiliser producer, the outlook for increased demand for Indian production is strong. Fertiliser plants use gas as the primary feedstock and so with increased demand coming down the track then there will be increased demand for gas also. GEEC happens to be located close to several fertliser production plants in India. While the increased demand for gas may not feed through to GEEC directly, it certainly doesnt worsen the backdrop of market conditions for the company. I appreciate that commentators will state that investors are 'risk-off' at the moment but that doesnt stack up as a medium-term investment proposition. Now is the time to buy GEEC more than at any point in the last few years. Just my view of course. Do your own research (not that anyone is reading this).

https://timesofindia.indiatimes.com/city/kolkata/land-acquisition-roadblock-hits-cng-roll-out-in-state/articleshow/88820631.cms

The saga seems to rumble on. Talk of re-routing the pipeline in and around Kolkata is at least something but clearly a reasonable amount of work still to do to get the land access permissions fully in place for the pipeline. Travesty really given the human health impact of polluted air in the city and the ability of CNG for the transport system as well as cleaner household cooking gas to significantly clean up air quality. No investment should be based on hope but hoping that common sense prevails here and remaining permissions come in quickly through 2022. Share price should do very well if we get that news!

I try to make sure i share what i find in terms of research so that all those reading on the chatboard at least get information and hopefully some valuable opinions rather than ramping. Couple of articles worth a read here from the last few days that throw a bit of light on the remaining challenges of finishing off the natural gas pipeline to Kolkata.

https://www.telegraphindia.com/my-kolkata/news/cng-project-faces-stiff-resistance-in-bengal-mayor-vows-completion-in-18-months/cid/1839741

https://timesofindia.indiatimes.com/city/kolkata/cng-pipe-laying-hits-land-hurdle/articleshow/87787621.cms

this likely explains the massive discount to fair value of the share price currently. Market currently taking a very distrusting view on when or even if this issue gets resolved. For me, the government of India and state government are too invested in this to have it delayed much longer and a resolution will be found (hopefully) soon.