GBP seems to have slipped under the radar for a little while –...

GBP seems to have slipped under the radar for a little while – little mention on the boards to speak of. Be aware that I have a holding & hence a vested interest, so please DYOR etc.

Until recently, GBP had no booked reserves, no revenue, and have a less than spectacular history, having been involved with Falklands Oil & Gas (FOGL), & with a joint venture with Woodside in Kenya which came to nothing (unless there is a successful law suit – the Woodside farm in tied them into drilling two holes, they drilled one & then backed out – GBP & other JV partner Dana Petroleum have started legal proceedings against Woodside…will be an interesting case!).

GBP now have a 15% interest in Leighton (Texon operator - recent well flowing, more to be drilled), so a little revenue coming in.

They sold out of FOGL a little while ago (keeping a small 1.85% stake, worth approx $2.5m), and as a result have cash in the bank – considerably more than the current market cap. As at 30 June 2008, cash was $34.5m, shares in issue = 174.4m…34.5/174.4 = 19.8c per share… current SP = 14c. Cash has probably come down a little, & they are about to spend a little (read on…), but currently it appears that market cap is still significantly less than cash.

The directors have some pedigree: Peters Taylor & Blakey are ex founders of Dana Petroleum, along with Mark Savage … so they would appear to know about the business & pulling deals together. Blakey & Taylor have been buying shares recently & hold significant stakes.

On Friday, Tower Resources (UK based exploration tiddler with some common directors to GBP, and one of only two non producing oil stocks I hold – three now, including GBP) confirmed that the Ugandan government will permit GBP to become a JV partner with them – 50% stake for costs of drilling two wells (capped at US$6.5 for the first well).
After the first drill, GBP state they will still have net cash of US16.25m, equivalent to A$25m or 14.3c per share…which is about today’s share price.

They are due to drill just to the North of HOIL/Tullow’s successful finds in the Albertine basin in Uganda. They are due to spud in March, maybe stretched into April. They are shallow wells, and in TRP’s opinion, the chance of success is high (50%). More info can be found at the TRP website & there are a couple of good research notes out there on TRP (Fox Davies & Hoodless Brennan). There are two prospects, the first targeting 100mmbbl. Tower suggests net recoverable resources for the block could be 225mmbbl.

So…. spudding in the next couple of months (with potential for 100mmbbl+ net to GBP if field is successful), already some revenue (Leighton), market cap less than cash in bank (or roughly equal if you take off the cost of the Uganda drill), experienced & well respected directors who are buying, SP is lower here than in UK (dual listed – an arbitrage opportunity over the last few days), & they haven’t hit the radar yet…looks like potential for excellent upside with very limited downside risk - DYOR!