G3 Exploration: Accelerated Monetisation Of Production Assets
Edison | Oct 18, 2018 06:41AM ET
Potential equity released to G3 Exploration Ltd (LON:G3EG) stakeholders through the company’s planned Hong Kong listing of the producing assets remains a key catalyst and valuation benchmark. Management believes that net proceeds from the IPO will enable the company to redeem the Nordic and GIC bonds using the new capital raised within the Hong Kong listed vehicle to fund CBM drilling activity on the producing GSS and GCZ blocks. At this stage, G3E’s valuation is heavily dependent on the success of the planned Hong Kong IPO, their ability to reduce corporate debt and to fund drilling activity. We previously undertook a detailed analysis of valuation scenarios based on G3E accessing debt markets to monetise its key producing assets, GSS and GCZ. Ahead of further information on the planned listing, which should provide visibility on funding to support operational activity, we refer investors to our last published detailed valuation note. Our forecasts are under review.
Hong Kong-listed YieldCo
It is management’s intention to list its subsidiary GDG (YieldCo) on the Hong Kong stock exchange which will encompass the company’s interests in the producing assets, GSS and GCZ. The Hong Kong listed entity would then distribute free cash flow to G3E shareholders (expected to hold c 25% of GDG) as well as to new shareholders. We view the success of the IPO as key to determining a value for G3E assets.
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