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One aspect that frustrates me about GEEC is that they have not made progress in securing an offtake agreement with GAIL. The upside of waiting is that they can now maybe lock in a much higher price for any offtake signed in the next few months given the guidance in the interim results of expectations for substantially higher realised gas prices for cbm in the market.
So with the benefit of any doubt given to the management for this master stroke of strategic thinking, we can now read the more energised wording in the interim results to get on with expanding production and the explicit reference of farm in as a source of finance as possibly hinting that the management have started some initial conversations.
So who might be in the frame? Essar Oil and Gas operate the raniganj east field adjacent to geec’s raniganj south and have a very significant balance sheet at their disposal.
Essar is already connected to the Urja Ganga pipeline, which is connected to the national grid since May 2021. The company has an agreement with Gail to supply the CBM through the gas pipeline.
Given the drilling synergies that must be significant between the two companies my money would be on a farm in with Essar and maybe also an overseas technical partner to bring shale gas specialism to this opportunity.
While such a move would dilute the massive upside potential for the share price of geec, it would also expedite the roll out of hundreds of new wells. Once largely complete and derailed I also wouldn’t be surprised if Essar then buy out geec and other shareholders (from farm in).
Essar are moving on this now and so if I’m right an announcement won’t be far off. Geec can’t finance their ambition from debt despite the strong balance sheet. It just isn’t big enough. They could issue a significant amount of new equity and combine with a London main market listing. I wonder though if that would get away at a high enough price for management to accept the dilution. So maybe the more attractive option is the farm in where synergies and a better understanding of the true value of the raniganj asset that Essar would bring is the option that lands?
As always time will tell but the tone and wording of the last update imply that we are not far away now in my opinion. Vital to DYOR though
Outlook is most important with GEEC with a potential highly transformative step up in reserves, production, sales and cash inflow. Negatives are that the numbers themselves were nothing to dwell on (but it isnt about the current numbers) and the fact that no update on the date for shale exploration drilling or the pipeline to Kolkata was given.
Positives are that pricing outlook for 2023 and 2024 are significantly higher than current prices and that company has re-iterated the additional CBM wells that can be drilled on top of the 144 remaining from the original drill plan for Raniganj South. There is also more firm talk of finance options (debt, equity and farm in) which indicates maybe that we are much closer to news on financing the huge growth opportunity. The higher pricing outlook has brought higher confidence to push ahead with drilling more wells (supported i guess by the progress of the kolkata pipeline).
I was hoping for a date for the shale exploration drilling but clearly this is still a little way off. The statement seems to imply that the focus for more immediate expansion is CBM. 2023 is indicated as the year that the CBM drilling campaign will resume so either way next year is an exciting year for production and reserves increases.
A bit longer to wait i suspect. i still have a high degree of confidence that GEEC will re-rate strongly during financial year 2023/24
Suspect that the 100k share trade was a sale that executed first thing this morning and was booked out around midday. That would have dropped the bid / ask resulting in the follow up 45k trade being executed at 16.1p as market makers tried to absorb the stock.
Suggests someone wanting to exit a position quickly and realise cash. Could be for a whole host of reasons especially in this economic environment. Suspect that a lot of people who have some investments are needing to cash some in to cover rising household costs etc.
2 weeks to go until interim results and I don’t see any reason why these shouldn’t be in line with expectations and hopefully have some positive news on pipeline construction and shale gas well drilling timetable.
Excellent in price Bismarck! Hopefully the interim results early Nov will give enough info for the re rate to begin. Exciting times ahead.
With a market cap of $24M US, if NP does reach $8M in 2023 that's a P/E of 3, and for 2024 a NP of $12M is a P/E of 2 !
So I've topped up, added 25% to my existing holding @ 19p and averaged down to 21p
Agree that the share price and £20m odd mkt cap is really not asking for very much from geec in terms of profits and cashflow, compared to what could be achieved in the next two years. Significant possible uplift in reserves from shale, and offtake agreement with GAIL and growing demand in india for gas as a transition fuel but also now a strategically important fuel after Putins antics.
Good time to buy when share prices discount a lot of bad news already obviously and I think that is then case here with geec. Just my opinion though.
There is a significant liquidity discount with geec which is justified as it’s hard to build and sell a large position. India is also a high risk jurisdiction - so investors will have to apply a large discount rate to value the cash flows here properly.
With news of progress on reserves, production, sales and pricing though, all of which we should get in the next 12 months, the forecasts will be uplifted significantly as you say and the discount rate should fall as the investment case is clearer = big re rate in my view.
Great Eastern Energy Corporation Limited (LSE: GEEC), will announce its
interim results for the six months ended 30 September 2022 on Monday, 7
November 2022.
Thanks Troy
I'd already read SPAngel's releases and I've now looked at Market Screener and Simply Wall St too, to no avail.
Not been able to check Arden, perhaps they are the source?
With the new tariff and stronger post Covid demand I would expect the numbers to be much improved for 23/24
Seems daft this still being at 18p. Just got to decide what to sell to release funds to buy a few more....
Think they reported something like $1.6m for 2022 on July 8th. SP Angel cover Geec and their research and forecasts are open to public. Can’t remember what they have published but easy to check. Arden also cover geec but I don’t think their forecasts are available directly. Market Screener worth checking also for forecasts as usually quite good at picking up revisions.
Substantial revisions to 2024 numbers of geec secure offtake with GAIL and open taps to sell all thur can from existing wells. Then add in longer term kicker of new wells and possible shale gas reserves commercialised for 2025 and beyond.
Hope that helps a bit bismarck!
Stockopedia are showing the following net profits -
2022 $1.39M
2023E $8.2M
2024E $12.3M
Anyone seen any company releases or broker notes to substantiate these 23/24 forecasts?
Had hoped for some news by now on the initial drilling campaign to test for shale gas commerciality.
The company is not known for its efforts to communicate with shareholders so we will only hear of these plans when they are about to start.
Imagine that they will wait until the interim
results update in November to tell us the timeframe and the drilling should be imminent by then. Their last announcement did state that drilling was planned for this calendar (I think) year.
Movement from resources to reserves of anything like the mid case for shale volumes will mark a significant upward move in the share price imo and this news could begin in only a few weeks from now.
Otherwise it’s all quiet on the gas pipeline as far as I can see.
Hopefully some good news to come here in an otherwise bleak looking autumn and winter for folk living in Europe!
Agree. It’s a great update from Indus. A stock that is more overlooked than GEEC. While price controls don’t apply to CBM - so GEEC has much more control on pricing - the rising regulated price cap is good to see. Should stimulate more gas production in india and help open up new demand. It also underpins GEECs current $10 btu pricing. There’s a good chance that the cap rises again later this year, underpinned both indi and geec further.
https://wap.business-standard.com/article-amp/companies/reliance-expects-gas-price-to-rise-in-oct-wants-removal-of-ceiling-prices-122072400273_1.html
This update from Indus should have a positive read across for GEEC.
https://www.lse.co.uk/rns/INDI/gas-sales-price-increase-3ub5fxwl9vlen56.html
I think it's because some people get bored. They see it like a trade not an investment.
Certainly agree
We're now at under half the SP we saw in Jan and I've no idea where the bad sentiment has come from. As far as I'm concerned the SP should have at least maintained that level. I'm also in DEC and SEPL and they've both done well this year (very well compared to the market), even with the Exxon fiasco affecting SEPL
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 !