Great Eastern Energy Corp, the first firm to produce coal bed methane (CBM) in India, announced today an update on operations in advance of a presentation to be given in London later this month.
Great Eastern Energy is involved in the exploration, development and production of coal bed methane gas in the Damodar Valley, near the city of Asansol, West Bengal. GEECL was apparently criticised in last year's CBM auction for taking too long to start commercial production from the block licensed to it by Coal India Ltd more than 15 years ago, a claim GEEC denies.
Since the Company's interim results in November 2009, the total quantity of gas now under sales agreement has risen to 24.20 MMscfd, representing a 155% increase. During this period, various agreements have been put in place, including an accord with SAIL (Steel Authority of India Limited) for 12.85 MMscfd, and three other agreements totalling 1.84 MMscfd. Since November 2009, the number of wells drilled and fracced reportedly increased from 3 to 61, and from 4 to 30 respectively. Likewise, the number of wells already dewatering and producing gas rose from 2 to 28 despite the production of gas throughout that period remained broadly flat. The Company expects production to increase when the new wells, currently being drilled, and put into production.
Regional demand for the gas remains consistently strong according to the announcement, and gas prices realised under commercial arrangements continue to meet expectations. Since the completion of the Company's 77km distribution pipeline in October 2009, management have been focusing on developing commercial gas sales.
Commenting, Prashant Modi, President & COO of Great Eastern, said:
"Since increasing our focus on sales and marketing we have seen a very significant increase in the quantity of gas under commercial sales agreements. Demand for gas in India remains strong, with demand expected to continue to outstrip supply by some considerable margin. This is evident in our local target market, where there is considerable commercial need."
Going forward, the Company expects to drill and frac 300 wells on the block by 2016. An updated 'Competent Persons Report' on the area is anticipated for Q1 2010. Currently, 25 wells are connected to the Company's distribution infrastructure.
The cash position of the Company is US$ 27.10 million as on 31st Jan 2010. This is including the GBP28.8m placing…
