GeoGlobal selling stakes in three Cambay blocks

Vol 16, PW 9 (15 Nov 12) People & Policy
     

The share price of New York-listed Canadian operator GeoGlobal Resources has plummeted by almost 80% over the past year to just $0.07.

This news is unlikely to reverse the downward trend: GeoGlobal wants to exit three onland blocks in Gujarat where it partners GSPC and is talking to fellow Calgary-based consultancy Fire Creek Resources. Set up in 1994, with operations in 20 countries, Fire Creek is in talks to buy GeoGlobal’s 10% stake at the 143-sq km NELP-IV Sanand/Miroli block (CB-ONN-2002/3) and the 448-sq km NELP-V Ankleshwar block (CB-ONN-2003/2), plus its 20% stake at the 784-sq km pre-NELP Tarapur licence (CB-ON/2).

Expect due diligence and the ‘farm-in’ to be completed by February next year through a Special Purpose Vehicle (SPV) incorporated in Calgary called Sarus, the Hindi word for crane. GSPC managing director Tapan Ray approved GeoGlobal’s request to exit last week but formal board approval is still awaited.

GeoGlobal also wants to sell its 10% stake at the 94-sq km NELP-IV Mehsana block (CB-ONN-2002/2), but Fire Creek isn’t interested. “Fire Creek’s initial study found Mehsana as good as dead,” we hear.

Since 2005, GeoGlobal has sunk over $40m at these four blocks; in total it has spent $58m on its 10 assets in India. Last February, around the time new president Paul Miller took charge, GeoGlobal told GSPC it wanted to exit.

“(Former GeoGlobal head) Jean Paul Roy got along well with GSPC,” we hear. “But Miller blames GSPC for the slow pace of work; that’s why GeoGlobal wants to move out.