The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Well that's nice to know! Yeah it really is a patience play, and not one for the faint-hearted. I figure enough money will eventually trickle through GDG that they will actually make good on their LFB orders, but that could still be several years. I don't see much else forthcoming from China. Maybe business will pick up in India to keep us going until the mothership is in better shape. Any other notes would be appreciated, and there's no rush :)
I don't suppose anyone made it to the AGM? I know Immy was thinking about it. Would be interested to know how it went from a PI perspective.
Seems unnecessarily harsh trion. I'm pretty sure that approach with Rampdeep will get you nowhere. Immy/Chow, any cliff notes you can provide from the meeting would be much appreciated. I only have a small holding these days, more out of sentiment than anything else, but still keen for this to come good.
Respect for RG's conduct and a gloomy outlook aren't incompatible stances. Besides, it was only one aspect of his performance I was defending (treatment and respect for PIs) - in many other ways he's been woeful. I think he's probably a talented engineer and a brave entrepreneur, but he's demonstrated that he's not brilliantly suited to leading a listed company. His misguided optimism is what led most of us deep into this hole. I don't think it was malicious but it has been financially harmful. This is no more than a long term punt for me at this point, having strongly reduced my position around 8-10p.
I think you've hit the nail on the head with your long term prognosis printguy. There's currently a credit pinch that is going to prevent GDG spending anything like that capex they would like to spend to develop their assets. It's going to take at least a few years before the cashflow improves enough before it becomes self funding. That's problematic because GDG has always been the safety net here, and now it looks an awfully long way down. More so when you consider that GDL is currently loss making and pretty cash poor. A few years wait while running losses is not a tenable situation, hence a sub 4p price. I think you're a little unfair on RG and some of his (former) acolytes - myself included. RG has taken the time to speak to a number of small holders at length, and has been exceptionally accommodating at AGMs. He's the only CEO of any of my small cap investments that has been anywhere near as reachable. Admittedly, he's availability is sporadic, but credit where it's due - he's no figment of anyone's imagination. His actions proves he isn't ignorant of the PI, even if he hasn't delivered value to us.
At a current PE of 5, buying back and cancelling the shares is probably a shrewd bit of business. I'd also have been happy with a special dividend (more immediately rewarding and simpler to understand), but while the SP is languishing in value territory it's a good time to reduce the number in circulation. Should help to sustain the dividend in the longer term, and if they can show that is sustainable we'll eventually see some capital growth.
There was nothing last year between early Oct and late Jan, so it could be silence in the immediate future. I'd very much like to think they'll let us know if the 30 well program is going to plan. It would be reckless not to.
There's a "new" GDG presentation dating from Nov 17 on their website. It's pretty much a re-hash of their previous Powerpoints, so not really worth much time. All the usual points hit: - Increasing (and subsidised) domestic demand - Not affected by oil prices - Loads of reserves - Binding partnerships with the big Chinese nationals - LFB is great - Looking to raise $250M in debt for capex Unfortunately, conspicuous by its absence was any mention of the current 30 well program with GDL, which is usually rolled out as an example of their steady growth and ambition. That makes me a little nervous that it's on hold while they boost their cash reserves (which were sat around $50M at mid-year). I'm not greatly worried, as my holding is now pretty minimal and my investment timeline extends beyond the foreseeable future. Personally I'm braced for a disappointing ops update.
Ops update in the next 6 weeks telling us that the GDL contract has gone perfectly to plan. Outside chance of another 3rd party contract. Confidence level about 2/10.
Can anyone explain the Tender Offer to me in layman's terms? It seems like a really convoluted way to return value to shareholders when a special dividend would do the job just fine. My best guess (having read the RNS three times over) is that it's a kind of share buy back by proxy. So the 'value' that we shareholders are getting, comes in the form a guaranteeing a price of £1.80 for up the 7% of our holding. If I'm anywhere right on that, is anyone able to explain why they've chose to take that route over the multitude of simpler methods?
Hi guys, thanks for providing that information. I'm unconvinced by the answer personally. If that's a true and legitimate reason then I think it was negligent not to state as much openly in the RNS. I've no doubt that India wasn't a cheap thing to get started, but they already wrote off $4M (from memory) last year in set up costs. I don't recall then offering any guidance that it would be a similar amount again this year. Based on the most recent loss, cash is now getting tight. It is absolutely imperative that the next ops update out of China is positive. GDG have the cash and have had months to plan for execution - the job should be very simple.
Mostly in line with what we were expecting, except perhaps the stonking loss. It seems to be down to the huge increase on the cost of sales, which actually exceeded revenue. Any ideas what happened there?
But what's there to say. We cling on and hope that for the first time in 3 years Rampdeep's forward guidance is accurate. I'd take $15M at mid year and a mildly positive outlook.
Okay, let's split the difference and say a handful of salt :) Fair point on China CBM. If there was a way to hedge bets and invest in the whole industry then I'd likely move my money in there. For now the Greka group are the best we can do!
I'd offer a disclaimer to that JH. GDL may well turn out to be just another small drilling company, but a lot of the downside is underpinned by GDG. Not many small drillers have the comfort of a former parent that is sitting on at least $20B of proven gas reserves, with a long term capex plan of $20B to develop that value and bring it to production. If nothing ever comes of the other opportunities in the CBM world, then GDL could still go on to do amazing things working exclusively for them. Personally I think they're at least 2-3 years away from getting through their current cash pinch, but once the gas is flowing freely then the growth in their activity could be exponential. Dare I say it, even transformative. Obviously those GDG numbers have to come with the same pinch of salt as anything coming from RG's direction. Despite the disappointments GDL is still a compelling investment story.
I take a couple of positives from the GEL contract. Firstly that Rampdeep is still talking to the big dogs of Chinese CBM (really not obvious based on our last 18 months of work), and secondly that something can actually come out of a test activity. On that message of hope - have a good weekend all!
Thanks for the AGM reports guys, much appreciated. By the sounds of things it went largely to expectations, so I haven't really had anything to offer. Figured I may as well chip in though. Metres drilled seems to be a pretty good indication of revenues, and 26K suggests maybe $10M for H1. Better than last year, but not especially good given how optimistic we were about the prospect of Q1 drilling in India. Thankfully due to the investigative efforts of board members we already knew that was going to be the case. I take the talk of doubling last year's revenue with a pinch of salt, because I've heard Rampdeep's EOY estimates before. Theoretically there's no reason why we shouldn't crack $50M based on the outstanding Lee Fabrics and the other morsels from elsewhere, but I find myself sceptical. The second tranche of work for GDG has disappeared from the plans and there's no sign of the reserve-based lending they were so confident about arriving in Q2. We can only cross our fingers that the existing work survives the year. They can afford it, and no doubt have done a lot of planning on the sites, but somehow they seem to find a way to surprise us with their capacity for inactivity. The really sad part is that they're our only real customer. That's all very negative, and yet I continue to hold. Well I think it's because long term the numbers stack up and once the capex pinch has resolved itself (GDG aren't going to be flush with spending money for a couple of years) we could be onto a huge winner. And I'll be damned if I'm selling at 6p. So GDL is now firmly in my back burner bottom draw rather than the get-rich-quick obsession that it was a year ago. I won't be holding my breath for any news coming out of the UK, Australia or Indonesia.
Sorry fellas, not going to be able to make the AGM festivities this year. I'm sure that even if RG has nothing good to lift our spirits at least Jimmy and Skooby will find a reason for a few pints. Hopefully you'll find the time to report back on the latest transformational insights :)
It's a risk, but I don't think it likely. Mainly because of his vision for GDG and its status on the FTSE250. Any negative treatment of shareholders for GDL or GEL will do him absolutely no favours in the city. If GDG is going to raise the money it needs to develop assets then it needs the money men on side. The promotion to the main board was recent enough for me to believe Rampdeep intends to do this properly. Besides that, I've seldom known a CEO be so willing to reach out to PIs the way RG has. Most of the top dogs are unreachable and somewhat uncaring about the small investor. I find it hard to believe he'd make that effort, and have that attitude, if his intention were to screw us over. So for me it's not a big risk. RG has his faults but my take is that he's going to treat investors fairly.
I've never thought to look. Fact is it doesn't touch the sides of how much he's lost on paper due to the decrease in share price of his babies. On GDL alone he must have taken a £10M hit to his net worth.