Green Dragon Gas - Capital Network: Turnaround in Production Performance
Green Dragon Gas (GDG.LON) published FY16 results on April 27th. We are encouraged by the 5.6% production increase y-o-y, which although 8% lower than our expectation, demonstrates the positive impact of the improved compression at the wellhead in the GSS block. We believe that the drilling of 147 new wells in GCZ, following the recent approval of the ODP by the Chinese authorities, will participate in a turnaround in production performance. We are also pleased by the lower operating costs achieved compared to our forecasts. However, these results are negatively impacted by a very poor performance of the retail business. We view the imminent disposal of the retail operation as positive, as it will bring cash proceeds, eliminate a source of significant losses and provide more transparency into the CBM. We are encouraged by the focus on strengthening the balance sheet by refinancing the debt, selling non-core assets.
We reckon that concluding the debt refinancing, swapping USD for RMB debt and redeeming the Nordic bond would be value accretive. However, we would like more detail from management on the impact of a potential listing in Hong Kong.
Quick facts: G3 Exploration Ltd
Market Cap: £56.34 m
NO INVESTMENT ADVICE
The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...
In exchange for publishing services rendered by the Company on behalf of G3 Exploration Ltd named herein, including the promotion by the Company of G3 Exploration Ltd in any Content on the Site, the Company receives...FOR OUR FULL DISCLAIMER CLICK HERE
LEGAL NOTICE – IMPORTANT – PLEASE READ:
Proactive Research is a trading name of Proactive Investors Limited which is regulated and authorised by the Financial Conduct Authority (FCA) under firm registration...FOR OUR FULL DISCLAIMER CLICK HERE