Surrounded by controversy, Canadian exploration company GeoGlobal Resources Inc could find it difficult to carry out the earlier plan to sell its stake in four Gujarat hydrocarbon blocks.
The blocks are at Mehsana, Tarapur, Sanand-Maroli and Ankleshwar; GeoGlobal had partnered with Gujarat State Petroleum Corporation (GSPC). "Talks were held between officials of GSPC and GeoGlobal for selling the latter's stake in the four blocks. The discussions remain inconclusive," said a source. "It is quite possible that GSPC might not allow GeoGlobal to exit until it (GGR) resolves the dispute over the K-G block."
The reference is to the Deendayal gas block in the Krishna-Godavari basin, where the two companies have a dispute going back several years. GSPC has spent about Rs 8,000 crore on exploration and production in this offshore block and both companies blame each other for a big cost overrun and how the amount spent is to be recovered, with each making claims on the other. According to industry experts, Canada’s FireCreek Resources had expressed readiness to purchase GeoGlobal's stake in three of the blocks, barring Mehsana. The three are valued at about $50 million (Rs 270 crore).
- Canadian explorer GeoGlobal Resources (GGR) has four hydrocarbon blocks in Gujarat — Mehsana, Tarapur, Sanand-Maroli and Ankleshwar
- GGR is in a partnership with the Gujarat State Petroleum Corporation (GSPC) in the blocks
- Earlier this year, GGR had expressed its willingness to sell its stake in the four blocks
- However, talks between GGR and GSPC on the stake sale have remained inconclusive
"The management has not taken any decision on the matter (allowing GeoGlobal to exit from the four blocks)," said a GSPC official, requesting anonymity.
For the Mehsana block, Jubilant Offshore Drilling is the operator, while GGR has a 10 per cent participating interest. Similarly, in the Sanand/Mirolo and Ankleshwar blocks, GGR has 10 per cent with GSPC the operator. In the Tarapur block, GGR purchased 20 per cent participating interest from GSPC.
An email query to GeoGlobal did not elicit a response, while the managing director of GSPC was not available for comment, despite several attempts.
In its recent quarterly report, GGR commented about its dispute, stating, "In September 2007, we commenced discussions with GSPC in an effort to reach an amicable resolution. A number of draft settlement proposals have been put forward by us to GSPC, seeking to settle this dispute amicably. However, no settlement agreement has been reached as of November 16, 2012, and there can be no assurance that this matter will be settled amicably."
GGR also faces heat from the New York Stock Exchange on its dwindling share prices and poor performance. On Tuesday, the NYSE issued a notic,e asking the company to file a plan of compliance by December 31, addressing how it intended to regain compliance with the listing standards by March.
According to the notice, GGR shares traded at the one-month average price of $0.11 a share. Also, the company failed to comply with exchange regulations, as it had "sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether such company will be able to continue operations and/or meet its obligations as they mature." GGR shares had lost 77 per cent over the year.