thoughts on gpc / galoc

Just working through the timeline and updating the forecasts from OEL for the time Galoc has been offline.

15th Dec - "Cash Sweep" - Expected to consume all GPC cash until late 2nd or early 3rd Q 2009. Otto Share $US10.4MM @ 18% of 14,000 bbl/day @ $US30/bbl net (45-15) @ 90% uptime = $US68k/day => 150 days ~ 5 months (excluding interest).

16th Dec - Galoc goes offline.

18th Feb - Galoc still offline, expected back this week. 2 months offline to date.

Non recourse debt now paid out late Q3 early Q4??

I expect Vitol to put their share of GPC up for sale in the next 3-6 months. The field is unmarketable at the moment due to major questions about the reliability of the production system. Once there is a track record and it can be proved to be reliable I would be very surprised if Vitol wanted to keep their stake in GPC. They have been letting go other assets and it looks like they are scaling back "non core" activities to concentrate on shipping oil and trading the physical market (after a stern telling off for passing off their speculating as hedging by US authorities).

I would anticipate that GPC's share of the field would be worth $US150-175MM if the field can be proved reliable. That is worth around the $50MM mark to OEL less the debt (which is substantial, there is the recourse debt, non recourse debt and loan funds from OEL and Vitol - anyone know the number?).

In any case the next milestone is getting back on production...

p1000