It's an incredibly strange feeling for me to ignore the financials and, as you alluded to, this is a story stock. I've allocated the entirety of the high-risk portion of my portfolio to GSPE alone because the risk/reward payoff is at a level I am yet to find anywhere else. The qualitative case for GSPE ("this ex-CEO of Anadarko has a miss play on the GOM shelf") and the fact that their debt is owed entirely to executives is a story worthwhile of significant investment. We're completely aligned on literally all of that.
Where we're not aligned, though, is the potential difficulties that I would expect should Tau be a dry hole. I'm not arguing that John has the money--or even the willingness--to keep the company afloat. What I am saying, though, is that there exists a scenario where Delek pulls out should these sites disappoint. If that were to happen, it would be *exponentially* more difficult to find another partner with a contract set up similarly to the current operating agreement. If they do find a willing partner at that point, I would expect much less favorable terms considering the risk that the play is a dud would be higher. GSPE will also be more deeply in the red due to costs of drilling exploratory wells (although I believe they only shoulder 8% of the costs), and investors will be much, much harder to come by as a result. An uplisting will be much, much harder to come by as a result.
All of this is to say that, to me, there are significant hurdles that they could face as a result of poor financial performance even given Seitz' cash reserves and willingness to use them. If Delek pulled out, could Seitz keep the company afloat for years even without a willing partner? Probably. But I think there are deeper implications here should Tau flop. Is it the end of the company? Likely not, but it takes a path that is currently crystal clear and muddies it a bit.
Is it worth a hold? Absolutely. Even considering the risks I outlined above, the risk/reward ratio is absolutely astounding compared to anything I've ever seen, and we're in at (or close to) the ground floor. I'm certainly not attempting to dissuade anyone from buying the stock, just attempting to more accurately classify the risks
Recent GSPE News
- Form NT 10-Q - Notification of inability to timely file Form 10-Q or 10-QSB • Edgar (US Regulatory) • 08/14/2024 09:10:21 PM
- Form NT 10-Q - Notification of inability to timely file Form 10-Q or 10-QSB • Edgar (US Regulatory) • 05/15/2024 08:30:38 PM
- Form NT 10-Q - Notification of inability to timely file Form 10-Q or 10-QSB • Edgar (US Regulatory) • 02/14/2024 10:16:05 PM
- Form NT 10-K - Notification of inability to timely file Form 10-K 405, 10-K, 10-KSB 405, 10-KSB, 10-KT, or 10-KT405 • Edgar (US Regulatory) • 12/29/2023 09:21:09 PM
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