Canadian explorer might find it difficult to exit Gujarat blocks

Last Updated: Fri, Dec 07, 2012 07:41 hrs

pSurrounded 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 blocksppThe 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 latters 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"ppThe 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 8000 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&rsquos FireCreek Resources had expressed readiness to purchase GeoGlobals stake in three of the blocks barring Mehsana The three are valued at about 50 million Rs 270 crorepptable width400 cellpadding2 tbody tr height20 styleheight 15pt td width814 height18 bgcolor95acb3font size2 faceTahoma colorffffffstrongEXIT WOUNDSstrongfonttd tr tr height20 styleheight 15pt td width814 height1 bgcolorccd7dd ul lifont size2 faceTahomaCanadian explorer GeoGlobal Resources GGR has four hydrocarbon blocks in Gujarat &mdash Mehsana Tarapur Sanand-Maroli and Ankleshwarfontli lifont size2 faceTahomaGGR is in a partnership with the Gujarat State Petroleum Corporation GSPC in the blocksfontli lifont size2 faceTahomaEarlier this year GGR had expressed its willingness to sell its stake in the four blocksfontli lifont size2 faceTahomaHowever talks between GGR and GSPC on the stake sale have remained inconclusivefontli ul td tr tbodytablepp"The management has not taken any decision on the matter allowing GeoGlobal to exit from the four blocks" said a GSPC official requesting anonymityppFor the Mehsana block Jubilant Offshore Drilling is the operator while GGR has a 10 per cent participating interest Similarly in the SanandMirolo and Ankleshwar blocks GGR has 10 per cent with GSPC the operator In the Tarapur block GGR purchased 20 per cent participating interest from GSPCppAn email query to GeoGlobal did not elicit a response while the managing director of GSPC was not available for comment despite several attemptsppIn 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"ppGGR also faces heat from the New York Stock Exchange on its dwindling share prices and poor performance On Tuesday the NYSE issued a notice asking the company to file a plan of compliance by December 31 addressing how it intended to regain compliance with the listing standards by MarchppAccording to the notice GGR shares traded at the one-month average price of 011 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 andor meet its obligations as they mature" GGR shares had lost 77 per cent over the yearp

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