GEEC.L Regulatory News (GEEC)

30 November 2015

Great Eastern Energy Corporation Limited

("Great Eastern" or "the Company")

Half year results for the six months ended 30 September 2015

Great Eastern Energy Corporation Limited (LSE: GEEC), the fully integrated, leading Indian Coal Bed Methane (CBM) Company, is announces its half year results for the six months ended 30 September 2015.

Highlights

Financials:

· Total revenue is US$ 16.45 m for the six month period ended 30 September 2015

· Total EBITDA is US$ 10.68 m for the six month period ended 30 September 2015

· Total Cash generation is US$ 7.21 m for the six month period ended 30 September 2015

· Total PBT pre MTM / DTE* is US$ 5.46 m for the six month period ended 30 September 2015

· Total PAT pre MTM / DTE* is US$ 5.36 m for the six month period ended 30 September 2015

· PAT post MTM / DTE* is US$ 2.37 m for the six month period ended 30 September 2015

· The Company has delivered on strategic focus of improving the debt:equity ratio; net debt of US$ 90.34 m as at 30 September 2015 with a debt:equity ratio of 1.04

*MTM (Mark to Market) is on account of the restatement of the foreign currency loans and derivatives

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

Operational and Corporate Highlights: optimisation strategy delivering results

· Production: FY 2015 - 12.81 mmscfd, July 2015 - 15.06 mmscfd, and November 2015 - 15.26 mmscfd

· Average Sales: FY 2015 - 10.23 mmscfd, H1 FY 2016 - 9.48 mmscfd

· As announced on October 19, 2015, one of the company's largest customer's plants incurred some short term operational issues. The GEEC team have addressed this and have now agreed a Minimum guaranteed offtake (MGO) quantity with the customer. This is in place to safe guard the company's interest going forward.

* Pricing is based in Rs.

· In line with strategic goal of well ramp up production

· A significant inventory of wells: total of 156 wells have been drilled, are continuing to be dewatered and further optimised. This provides a substantial base for production growth

· 150 wells have been fracced which are currently producing and / or dewatering

Outlook Highlights: confident for the future

· Decisive action taken to maximise production at Raniganj (South) block providing results and setting the scene for further upside

· 144 further wells planned to be drilled on the Raniganj (South) block which will take total wells on the Raniganj (South) Block to 300

· Operational strategy in place to continue to maximise production from existing wells and to continue to pursue sales opportunities in the highly industrialised region of Asansol-Raniganj-Durgapur through our own dedicated pipeline network

Favourable Indian Market conditions:

· Improved political and economic environment in India provides a positive demand outlook

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

"We are continuing to make strong progress with our strategic goals of further optimising well production, planning second phases of drilling on the Raniganj (South) block and identifying new reserves, whilst improving the debt:equity ratio. Our underlying performance during the period gives us confidence for the future."

About the Company

The Company is a fully integrated gas production, development and exploration company in India, providing gas to the growing industrial region of West Bengal. Gas is being produced (Coal-Bed Methane gas) from the Raniganj (South) license area, which covers 210 sq. km, with 2.62 TCF of Gas-in-Place. 

The Company's second asset is the Mannargudi license situated in the state of Tamil Nadu in India, which covers an area of 667 sq. km and 0.98 TCF Gas-in-Place.

In the year ended as on 31 March 2015, the Company had a turnover of US$ 37.46 m, EBITDA of US$ 24.80 m and cash generation of US$ 20.21 m.

For further information please visit www.geecl.com

For further information please contact:

Great Eastern Energy

Yogendra Kr. Modi Executive Chairman +44 (0)20 7614 5917

Prashant Modi Managing Director & CEO

Arden Partners

James Felix +44 (0)20 7614 5900

Ciaran Walsh

Camarco  

Ginny Pulbrook +44 (0)20 3757 4992

Billy Clegg

Georgia Mann

Executive Chairman's Statement

Financials

In the first six months of FY 2016, Great Eastern made material progress across the business, delivering significant growth in production, revenue, and profit.

Total revenue US$ 16.45 m for six month period ended 30 September 2015, while Total EBITDA is US$ 10.68 m. The Company has delivered on its strategic objective of improving the debt:equity ratio. As at 30 September 2015 net debt was US$ 90.34 m with a debt:equity ratio of 1.04 (1.22 as at 30 September 2014).

The supply and demand dynamic for Indian gas, and the pricing environment, remains attractive and the Board is confident that it is likely to remain so for some years to come.

As announced on October 19, 2015, one of the company's largest customer's plants incurred some short term operational issues. However, we have addressed this and have now agreed a Minimum guaranteed offtake (MGO) quantity with the customer. This is in place to safe guard the company's interests going forward.

Operational update: Reserves, Drilling & Production delivering results

As announced in June 2015, the independent reserve engineers, Advance Resources International, Inc., have increased the Recovery factor to 55% from 30%, in the low estimate and the Original-Gas-In-Place (OGIP) to 2.62 TCF (from 2.44 TCF), an increase of 7.38%. Since we listed in 2005, the OGIP has increased substantially from 1.39 TCF at that time.

Management's focus on improving production by the installation of new lower capacity pumps is now delivering a positive impact on current production and setting the scene for higher volume future production targets.

Production: FY 2015 - 12.81 mmscfd, July 2015 - 15.06 mmscfd, and in November 2015 - 15.26 mmscfd

* Pricing is based in Rs.

We continue to make progress in production and sales ramp-up. A total of 156 wells have now been drilled at our Raniganj (South) block, which, with planned dewatering and optimisation measures provides a substantial base for production growth.

Sales, Marketing, & Distribution

The Company has 43.30 mmscfd of gas under contract / MOU.

Great Eastern is well placed to supply gas in and around the highly industrialised region of Asansol-Raniganj-Durgapur through its own dedicated pipeline network.

Mannargudi CBM Block

The Company's second asset is the Mannargudi license situated in the state of Tamil Nadu in India, which covers an area of 667 sq. km and 0.98 TCF Gas-in-Place.

The Company has received Environment Clearance and approval is awaited from the State Government of Tamil Nadu.

The current minimum work programme consists of 30 pilot production wells and 50 core holes.

The block is currently under Arbitration with the Government.

Corporate Governance

During the period under review, the Board of Directors announced the appointment of Mr. Prashant Modi to the Board of the company as the Managing Director & Chief Executive Officer of the Company. Mr. Modi was the President & Chief Operating Officer of the Company.

CSR

Great Eastern has contributed towards improving the environment in this area through substitution of polluting fuels with the use of clean energy. We also sponsor a number of medical camps, blood donation camps, sporting activities, and community health initiatives in the region.

Great Eastern views itself as an integral part of the community in which it works, with the business designed to not only create value for the company but also to make a positive contribution to the sustainable development of the local area.

I would like to thank our management team and all personnel for their on-going contribution to our continuing success.

Indian Economy

Despite slow-down in major economies, India is showing robust growth in GDP and continued strong gas demand:

· India's position as an attractive investment destination has been confirmed by two leading global bodies

· India's ranking improved by 12 notches in World bank's "Ease of Doing Business Index"

· In the World Economic Forum's competitiveness ranking, India was placed 55 which showed a jump by 16 places

· Government has launched a campaign for promoting manufacturing in India, which has attracted fresh investments in the sector

· Power reforms announced - government is consider recasting ~ $ 66 billion of loans of nine power distribution companies 

· GDP growth rate is expected to cross 7% in 2015-16 and 8% in two years

· The Government has fast-tracked stalled projects like airports, railways, power etc. This can push up growth by 50 basis points

· The twin deficits are down with a fiscal deficit targeted at 4% and current account deficit at 1.6% of GDP in 2015-16

· Wholesale price inflation had entered negative territory, raising scope for further easing of monetary policy

· Consumer Inflation eased across the board to a low of 3.7% in August 2015 and the Government is taking proactive steps to contain food price rises

· Finance minister reiterated no fresh retrospective taxation. Finance ministry moving to settle all outstanding tax disputes

· Strong domestic consumption demand has given India resilience amongst emerging market economies (EMEs)

Outlook

During the first six months of the year, we have achieved consistent success in delivering on our optimisation programme and are driving future growth through increasing the production at the Raniganj (South) Block. Despite the short term impact of the customer issues, the Board is confident for the future performance of the Group in the year ahead.