Geoglobal Resources Up 24% on Major New Discovery in Krishna-Godavari Basin

Geoglobal Resources (GGR Charts) was up 24% today on good news from the Krishna-Godavari basin, a major natural gas field off the east coast of India in the Bay of Bengal. Testing of the KG-22 well has indicated a major new natural gas discovery. After making a low at $1.76, GGR was up significantly in the past week as it appears news of the discovery leaked out to drive the stock to $2.40 before the news was announced.

Geoglobal has a 5% carried interest in the discovery while the Gujarat government-owned Gujarat State Petroleum Corporation (GSPC) has the majority stake in the discovery. Jubilant Anpro also has a share.

Geoglobal and GSPC found a large natural gas field in the Krishna-Godavari basin in 2005 but delays in getting the gas out caused the stock to return to levels lower than before the natural gas was discovered! Now there are two large discoveries in the KG basin which could drive the stock back to prior highs, if not higher.

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Excerpts from News reports coming over the wires:

Financial Express: Major GSPC gas find in K-G basin

“Given the huge size of the discovery, Gujarat chief minister Narendra Modi is visiting the well site on Thursday to make a formal announcement,” said a senior company official.

This is the sixth gas discovery by GSPC in its K-G basin block so far. Given the flow of gas, estimated at the rate of 27.3 million cubic feet a day, the discovery is being considered a gigantic one.

The Times of India: Huge gas discovery by GSPC

There was a buzz of excitement all around Sachivalaya on Wednesday as the news of the discovery spread. Officials said the GSPC's success is bigger than any other wells it dug so far. Officials said the GSPC's success is bigger than any other wells it dug so far.

So far, the GSPC has drilled 10 wells in a 120 sq km off-shore area, called Deen Dayal. Gas has been struck in six of these wells. The discovery in KG-22 is believed to be the biggest so far and drilling had taken up at a depth of 6,000 metres — the deepest so far.

Press Trust of India: GSPC strikes gas field off AP coast

"During initial testing gas flowed at the rate of 23-27 million cubic feet per day...It is a good reservoir," he said.

Reuters: India's GSPC finds more gas in east coast block

A GSPC official confirmed the find. "We have found gas in the KG-22 well. Initial flow has been 27.3 mmscfd (million cubic feet a day) through a choke size of 28/64 inches," GSPC General Manager M.Y. Farooqui told Reuters.

Disclaimer: I purchased GGR for my newsletter portfolio between $0.94 and 2.25 in 2004 and I have shares purchased as low as 12¢ in my personal portfolio. I took a TON of profits when the stock was high, including twice in the $13s in late 2005, so I have huge profits in this already which may allow me to trade this more aggressively. For my specific buy and sell targets, you need to Subscribe to Kirk's Investment Newsletter

7/19/08 Update: GGR has more than doubled since making a low on July 2.


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