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Interesting update here: https://www.downtoearth.org.in/news/governance/little-chance-of-kolkata-getting-cng-soon-land-acquisition-hiccups-halt-supply-72618 .

Article indicates that land acquisition around Kolkata has not been completed to allow the planned gas pipeline to proceed. Article is dated Aug 3rd 2020 so nothing will have changed.

This is frustrating as GEEC will wait with further investment to develop the raniganj field and open the taps on existing wells fully again until they have a good market to sell in to in Kolkata. It seems that powerful landowners around the city want to extract maximum value for land access rights with the project tantalisingly close to completion and maybe also supported by oil companies supplying diesel into the city.

Huge market there for gas in kolkata and this could easily take every last mmbtu from both Essar and GEEC in Raniganj but seems we have to wait some more months until these issues get resolved. Who knows, being India it may even be years. You would have thought a compulsory land acquisition order could be slapped on landowners around Kolkata to stop this kind of profiteering happening.

Still, whilst we wait a main market listing in the UK and successful shale gas test should provide a bit of a boost to the share price. Real potential here wont be recognised though until the Kolkata issue resolved or the company can prove up significant demand outside of kolkata.

A £1bn resource trading at £15m tells us that the market thinks there is virtually no chance of ever selling gas in any quantity in this part of India. I still think this is a huge inefficiency in pricing this asset but that's the game....find assets that are fundmentally mispriced and buy them. Either your research is good and you make money or the market was right, your research is wrong and you lose the lot.

Even if the vaccines do work..... "The government says if the Janssen and Novavax vaccine trials go well, the first deliveries could take place in mid-2021." We will need testing until then i suspect!
UK not the focus though, albeit that maybe GDR should be focusing on the UK.

Link here from June has a few positives. Essar operating right next door to GEEC and development of CBM field is kind of parallel tracking with GEEC. Good to see comment that sales volumes expected to be back to normal in july, demand expected to pick up from here and possibly most significantly that the pipeline to Kolkata to be operational in September. I think im right in saying that Essar already have an agreement with GAIL to supply into the network. GEEC dont have this yet though.

https://www.business-standard.com/article/companies/essar-oil-gas-eyes-new-consumers-for-its-cng-business-in-unlock-1-0-120060700377_1.html

for what its worth, suspect that GDR will wait a few days from now to provide an update. RNS are a bit of distraction to put out so makes sense to wait a few days and provide a trading update and date announcement for prelims for FY to june 2020, and then also update the market regarding Covid tests. By waiting there is also the potential for the added bonus of FDA and/or WHO approval. makes perfect sense to wait until next week to announce to my mind!

Stock markets make an attempt to discount future financial performance of a company. Whilst report and accounts are an important part of assessing the current financial health of a company they are far from the only consideration when assessing the potential value. Every stock price reflects what the 'market' anticipates a company will report in the future. Exceed those expectations and the share price will rise, miss them and it will fall - general rule of thumb!

to be precise, enterprise value is market cap + all loans and debt - cash

for those interested in developments for testing market in India, ICMR have issued new recommendation today on POC testing which has implications for the number of PCR tests the will be needed. We'll obviously hear more from GDR in the coming weeks on orders and sales, which is key, so this is for back ground info. Interesting to see how a country like India is responding to this spiraling crisis. The frontline to save lives has gone POC already with support from lab testing.

https://www.thehindubusinessline.com/news/national/icmr-recommends-new-point-of-care-throat-nose-test-for-covid-19/article31831717.ece#

Hi both. agree very much with Hasiba there Steve, brokers price targets are worthless really. What i would say though is that on traditional valuation metrics either GEEC looks very cheap or the market is pricing in a significant deterioration in revenues and earnings. The Indian government is clearly committed to increasing the share of gas in the national energy mix to 15% by 2030 (from c6% now) so the macro picture is supportive. GEEC have significantly derisked their gas resource, as in there is gas and it flows well enough to be commercially extracted. Finally the new pipeline to Kolkata and new markets to sell the gas to is still on track to be commissioned in 6 months. GEEC will also be testing the shale prospects on their acreage in the coming months. Success here is not needed for upside to the share price so if commercially viable shale gas can be proved up then this could be a very exciting share to be invested in. BUT shale is highly uncertain at the moment.

Got to keep in mind whilst this looks to be setting up nicely at the moment for GEEC, it is India (anything can happen) and the management team in my view are not that strong and terrible communicators. The Modi family who own around 2/3rds of the shares have been buying in though as recently as Nov last year.

One thing to be aware of is the production rates of gas from the existing wells. I need to do more work on this but is has been reducing. They've definitely choked back production deliberately lately to keep the gas available for sale rather than flaring it so its difficult to assess whether there is some underlying reason for reduced flows or whether its just the deliberate actions of the management to slow production rates down. They currently cant sell all they produce as local markets never really opened up for them, despite years of promises that there were many customers desperate to get their gas!

so please DYOR, lots of it. The eventual value of the reserves is in the hundreds of millions if gas pricing stays where it is and they can keep costs under control and the market opens up. And you can get that opportunity for <£20m market cap and around £40m debt. Dont expect transformation over night but could be an excellent entry point for a longer-term play.

GL

Good to have some company on this board Hasiba. Not sure many investors know about GEEC.

I agree that it looks very undervalued.....but then i've been saying that for years

as it happens. Sales and profit down but cash stable. This is not a problem as its all about the sales growth opportunity from supplying gas into GAIL's pipeline to Kolkata and West Bengal. Pricing also looks to be holding up (somehow).
Company confirm that this pipeline with be operational by Dec 2020 so we should see sales increasing significantly in year to march 2022. Also shale environmental permit has been granted so we will have news on this in the coming months as well. Proof of commercial resource here will transform the value of the company especially with a ready market at the end of an operating pipeline.

strongly agree that India should buy GDRs superior test but whether they will or not is a different issue. Saying that i also dont know what standard of test Indian manufacturers can produce. For a country the size of India they also surely have to scale their lab capacity!

Hopefully some orders and sales news soon though.

Thanks for the link. Article states Indian government have asked 'domestic manufacturers' to step up and supply the tests. GDR definitely have strong distributor links into India but I dont think they have manufacturing capacity in the country. Or can manufacturing capacity be re-tooled to produce the beads with raw ingredients and IP shipped in? I dont know enough about how this might work but seems to me that GDR are not in the mix if the article is correct and the focus is on domestic Indian manufacturers to supply the tests unfortunately!

unusual to see such a large trade in GEEC. Definitely a purchase order. With full year results due in June or July seems someone is confident. Saying that, whilst results for the year to March 2020 should be fine and not much affected by the covid 19 lock down in India, the outlook for 2021 has to be bad given the gas glut and weakness in prices as well as the hiatus in industrial activity. On the upside, government is keener than ever to expedite the transition to gas (from coal and fuel oil) for the economy and work is restarting on building out the interstate and intracity pipeline networks. GEEC may also soon get the clearance needed to test for shale gas on its acreage which could significantly increase volumes if its profitable to extract, (the application for permit has been pending for over a year now).

There is a huge disparity with GEEC between the value of the underlying resource and the current enterprise value. The resource is largely derisked as well with potential significant upside from shale gas resources beneath the coal bed methane. The management and family own nearly 70% of the available stock so there really are not many shares and the Indian government are committed to raising the share of gas to 15% (from 6% now) of energy mix by 2030 with emphasis on both domestic supply and LNG imports.

Only problems are 1) Its India and they seem unable to move anything forward quickly even if they know they want to do it.
2) Company seriously needs to find a new CEO and not keep sticking with the incumbent who is a Modi family member. With hundreds of millions of potential value at pay with the Modi family 70% stake you would think that they would sacrifice their own in order to realise this value

or c£85m if you include the convertible loans. (albeit that at current share price the £1.50 conversion price loan will not be exercised)

report and accounts will give you the details in the notes section. One aspect to consider....whilst technically correct to fully dilute and include the addition shares from conversion of the convertible so the 65m odd shares if we receive a large special dividend from the cash generated near term from Sars Cov 2 tests then convertible loan holders wont be eligible for this as they wont have converted by time share price goes ex special dividend. So distributed across only 45m shares. I have no idea if holders can convert early though once they hear there is a special divi on the way!

Its another milestone achieved for sure and well done to GDR for getting here in this timeframe, but the line 'The Company will now begin distribution to potential customers for initial clinical evaluations, and aims to record first commercial sales in June. ' is the one that could limit the upside for now. Clarity on scale of sales is obviously key to realising full value and if clinical evaluations are just beginning now then we have another few weeks to wait until orders turn into reported sales. Definitely a few 10s of % today though so cant be disappointed with that.

Mr Budd, I emailed a question to your investor relations people a few days ago, so now i have your attention on this board any chance of an answer? Also could you give hargreaves lansdown a nudge to sort out broker placing option allocations? HL are restricting my funds and still telling me its a pending order!

Got to love lockdown and people getting creative to amuse themselves

Not quite true Maka. We have had the announcement of WHO prequalification since Covid19 drove the share price up, but granted the shares will drop a lot if it transpires that there is no buyer for GDRs test. The longer-term value of GDR easily exceeds current market cap to my mind without any contribution from Sars Cov 2 test but suspect many on this board now are not here for the longer-term.

Maybe also just a point in response to comments about other tests being developed and no guarantees that GDR's will find a buyer. I don't think anyone disputes this. No buyer of the GDR test then the share price collapses but if you want certainty then put your money in a bank account at 0.025%. Markets try to discount an uncertain future. that's what investing is all about. Once we have a certainty of either lots of demand or no demand for the GDR test the share price will be nothing like it is now, instantly as soon as that certainty is apparent. Price the future that you think is going to occur and compare it to the current share price. Invest or short accordingly.

I managed to find a bit of extra cash this morning. called my broker and they confirmed that they are taking new orders and amendments to exiting orders until 16.00hrs this afternoon and that the book closes at 17.00hrs. No indication given as to when i/we will here on allocations and I suspect that there will therefore be an RNS tomorrow morning.

Ceejay. Boris has stated 200,000 tests per day target. Thats 1.4m a week. so to the end of the year that would be around 34 weeks. so somewhere in the region of 50m tests. Assume £8 per test (low end of guidance given by GDR) then thats £400m. If GDR take a 25% royalty then that would be £100m to the company by end of 2020.

Keep in mind that there are around 1bn people across the worlds most developed economies so the total demand for tests at the same level as the UK is many multiples of this. much more than GDR can supply. In fact it would take around 10 GDRs at 250,000 tests per day to supply just the most developed countries for the next year.