REG - Great Eastern Energy - Half Year Results

Great Eastern EnergyAnnouncement

07/11/2022 07:00

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RNS Number : 4504F  Great Eastern Energy Corp Ltd  07 November 2022

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR") which has been incorporated into UK law by the
European Union (Withdrawal) Act 2018.  Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this inside
information is now considered to be in the public domain.

 

7 November 2022

 

Great Eastern Energy Corporation Limited

("Great Eastern" or "the Company")

 

Unaudited Half Year Results for the six months ended 30 September 2022

 

Great Eastern Energy Corporation Limited (LSE: GEEC), the fully integrated,
pioneering Indian Coal Bed Methane ("CBM") Company, is pleased to
announce its unaudited half year results for the 6 months ended 30 September
2022.

 

Abridged Financials for H1 FY 2023:

 

                                     H1 FY 2023                                                           H1 FY 2022
                                              On previous Depreciation basis  On constant currency basis
 Revenue                             $13.13m  $13.13m                         $13.95m                     $13.42m
 EBITDA                              $5.85m   $5.85m                          $6.22m                      $6.75m
 PBT / pre MTM / DTE*/ Depreciation  $3.59m   $3.59m                          $3.81m                      $3.87m
 Depreciation**                      $2.88m   $1.89m                          $3.06m                      $2.04m
 Tax                                 $0.27m   $0.44m                          $0.29m                      $0.31m
 PAT / pre MTM / DTE*                $0.44m   $1.26m                          $0.47m                      $1.52m
 Cash Profit                         $3.32m   $3.15m                          $3.53m                      $3.56m
 EPS*** pre MTM / DTE                $0.37c   $1.06c                          $0.39c                      $1.28c
 Cash EPS***                         $2.79c   $2.64c                          $2.96c                      $2.99c
 Net Debt                            $35.58m  $35.58m                         $39.07m                     $47.96m
 Net Debt : Equity Ratio             0.42     0.42                            0.42                        0.53
 Price ($/mmbtu)****                 $10.25   $10.25                          $10.89                      $9.84
 Sales (mmscfd)                      7.60     7.60                            7.60                        8.09

 

* MTM (Mark to Market) is on account of the restatement of the foreign
currency loans; DTE (Deferred Tax Expense) is on account of difference in
depreciation rates used for financial accounts and tax accounts and other
expenses like exchange fluctuation / MTM

** Additional depreciation during H1 FY 2023 is $0.99m

*** Per GDR

**** Pricing is based in Indian rupee ("INR")

$ - U.S. Dollar

 

The Company had appointed S.N. Dhawan & CO LLP ("Firm") as its auditors, a
member firm of Mazars, an international audit, tax, and advisory firm. The
Firm has informed the Company that it had applied for registration as Third
Country Auditors to the Financial Reporting Council ("FRC") in accordance with
the laws and paid the registration fee on 3 October 2022.  The Firm is yet to
receive the registration certificate from FRC and is hopeful of receiving the
same soon.

 

The full set of the unaudited half year financial statement is available at
the following link: https://www.geecl.com/financials.php
(https://www.geecl.com/financials.php)

 

The Company is profitable, cash generative, and continues to maintain
sufficient liquidity to meet all its financial obligations on time.

 

As announced on 8 July 2022, while both the 3P and 3C numbers have increased,
there has been a reduction in the 1P number which has resulted in a higher
depreciation charge as per the accounting standards.

 

The average gas sales price received remained strong, and the Company
continues to be profitable.  Given the current pricing environment and
renewals effected after the six months reporting period ending 30 September
2022, the average selling price for the full financial year ending 31 March
2023, and 31 March 2024, is expected to be ~$12.77/mmbtu and ~$16.47/mmbtu
respectively. (Pricing is based in INR.  INR:$ exchange rate assumed is as
considered in the six months reporting period ending 30 September 2022)

 

Gas production decreased from an average of 15.86 mmscfd in FY 2022 to an
average of 15.58 mmscfd in October 2022, including choked production.  This
is due to the natural decline in CBM wells.  To mitigate this decrease, as
per the evaluation of DeGolyer & MacNaughton ("D&M"), the Company
plans to undertake an efficiency capital expenditure program of ~$20 million
in the next financial year.  This is expected to increase gas production from
the existing CBM wells.

 

The Company is further planning to undertake drilling of another 144 CBM wells
starting in the next financial year.  Thereafter, subject to government
approval, the Company may undertake drilling of another 506 CBM wells as per
D&M's evaluation.  The total expected investment of drilling these CBM
wells is ~$700 million at current costs, which is expected to be incurred over
the next few years.  This is expected to further increase gas production from
the Raniganj (South) block.

 

The Company is exploring various fund raising options, including but not
limited to, any form of debt, equity, and/or farm-in, for financing the
above-mentioned estimated capital expenditures.

 

As announced on 8 July 2022, the Shale gas and CBM reserves and resources in
the Raniganj (South) block are as follows:

 

Ø Original gas in place ("OGIP"): High estimate of 10.62 TCF

 

Ø OGIP: Best estimate of 6.13 TCF

 

Ø 3P + 3C + 3U of 3,628.19 BCF i.e., 3.63 TCF

 

Ø Undiscounted value of 3P + 3C + 3U: $29.36 billion

 

Ø PV 5% value of 3P + 3C + 3U: $17.17 billion

 

Ø PV 10% value of 3P + 3C + 3U: $10.94 billion

 

As announced previously, the Company is making plans for undertaking the
drilling of the initial Shale core wells and, based on the results obtained,
will then progress to undertake a development plan to drill pilot Shale
production wells.

 

Jagdishpur - Haldia & Bokaro - Dhamra pipeline:  The section up to
Panagarh was commissioned on 6 February 2021 by GAIL (India) Limited.
Further work for laying the pipeline up to Kolkata is underway and making
progress.  The transportation tariff of this pipeline has been fixed at INR
71.08/mmbtu ($0.89/mmbtu) including 12% Goods and Services Tax.

 

As per publicly available data, the long term delivered LNG price in India in
September 2022 was $19.58/mmbtu as compared to $13.41/mmbtu in September 2021
i.e., an increase of ~46%.  Transporting this gas to the eastern region of
India, via the above-mentioned pipeline, would entail an additional
transportation cost as mentioned above and other costs to customers.  Great
Eastern believes the resulting gas sales price ex-pipeline to customers in
eastern India will be in sync with its average selling price and, together
with the pipeline, will allow Great Eastern to sell additional gas sales
volumes to new customers that will be financially attractive.

 

Prashant Modi, Managing Director & CEO of Great Eastern, said:

 

"Given the strong set of results coupled with a conducive pricing environment,
gives us greater confidence to go ahead with our proposed capital expenditure
program.  With the amendment to our Petroleum Mining Lease, enabling us to
move forward with our Shale program, and the significant uplift in the
resource and reserves, it provides the Company a fantastic growth
opportunity.

 

With the steps being taken by the government to increase the share of natural
gas in India's energy mix along with the growth of the Indian economy, the
demand for hydrocarbons, especially natural gas, in India will continue to
grow.  This provides a fantastic opportunity to domestic producers like Great
Eastern.

 

On 7 July 2022, we were delighted to announce our inaugural ESG Report.  At
Great Eastern, we have found it imperative to establish a channel for
communicating and aligning our stakeholders with our values, and the steps we
have been taking to combat issues such as, but not limited to, environmental
damage, social injustice, and governance."

 

 For further information please contact:

 Great Eastern Energy Corporation Limited                    www.geecl.com (http://www.geecl.com/)

 Yogendra Kr. Modi     Executive Chairman
 Prashant Modi         Managing Director & CEO
 Jonathan Keeling      VP - Investor Relations               +44 (0) 7717 559 522

 

About the Company

 

A fully integrated gas production, development, and exploration Company in
India. Gas is being produced from the Raniganj (South) block in West Bengal,
which covers 210 sq. km with 10.62 TCF of Original gas in place.  The
Company's second license is the Mannargudi block in Tamil Nadu, which covers
667 sq. km with 0.98 TCF of Original gas in place.

 

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