GEEC.L Regulatory News (GEEC)

24 February 2012

Great Eastern Energy Corporation Limited

("Great Eastern" or "the Company")

Reserves upgrade and operational update

Great Eastern Energy Corporation Limited (LSE: GEEC), the fully integrated, leading Indian Coal Bed Methane (CBM) company is pleased to announce an increase in its reserve numbers as provided by independent reserve engineers Netherland Sewell & Associates, Inc. (NSAI).

·; Substantial increase of 411% in gross Proven, Probable and Possible reserves (3P) at Raniganj (South) Block

·; Contingent Resource (3C) increased by 295 BCF

·; On track to achieve target of completing 40 wells per year

·; Increase in PAT [pre MTM*]:

o Apr - Sep 2011 PAT [pre MTM*] at Rs. 97.80 million (6 months - limited review)

o Oct - Dec 2011 PAT [pre MTM*] at Rs. 81.18 million (3 months - unaudited)

·; Independent assessment of lower than anticipated production has revealed that under-saturated coal seams impacting dewatering time on the southern part of the Raniganj (South) Block

·; Under-saturation has minimal long-term effect on commercial production of the wells as well as the Expected Ultimate Recovery (EUR) per well

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

Operational Update

Upstream:

·; A total of 104 wells drilled (96 wells at 7 November 2011)

·; 80 wells dewatering & producing (68 wells at 7 November 2011)

·; 84 wells fractured (71 wells at 7 November 2011)

·; 6 more core wells drilled; 14 core wells drilled so far

·; Deviated drilling commenced; 5 wells drilled

With the commencement of deviated drilling, and fraccing of 13 wells in last 3 months, the Company is on track to achieve its target of completing 40 wells per year.

Downstream:

·; 36.14 mmscfd gas under contract/MOU (34.29 mmscfd at 5 November 2011)

·; The Company has sufficient contracts in hand to meet its projected production targets

·; Further discussions underway with major industrial customers

Production:

The current production of 8.45 mmscfd is lower than anticipated. The Company appointed Advanced Resources International, Inc. (ARI); an International firm specialising in reservoir study, well testing, frac design, simulation and history matching with production monitoring; to carry out an independent review into the causes for the lower levels of production at the Raniganj block, primarily in the southern side.

 ARI's findings and assessment is as follows:

·; The newly drilled core well studies completed in January 2012, have indicated that the coal seams of the southern area are under-saturated. Because of the under-saturation character of coal seams, the dewatering time has been pushed out to 8-12 months instead of 2-3 months, which is to be expected under these conditions. As a result, out of 28 wells fracced in the southern area, 3 wells have started some initial production.

·; This under-saturation of coal seams is widely seen in some CBM fields in USA. For example, Powder River, North Appalachian, and portions of the Uinta and San Juan basin where despite under-saturation more than 30,000 wells are commercially producing.

·; Historical studies demonstrate that this under-saturation has minimal long term effect on commercial production of the wells as well the Expected Ultimate Recovery (EUR) per well. Under-saturation will only lead to longer dewatering time of the well to achieve initial production.

·; Great Eastern has continued dewatering of these under-saturated coal seams to get initial gas production as soon as possible. Also the under saturated nature of the coal seams are beyond the control of the Company and we are positive about achieving the growth of the Company in the projected manner though the same will be delayed by around 6-9 months.

·; Reservoir-wise, the northern and southern side of the blocks are behaving differently from each other and there has been no interference effect seen yet amongst both the areas. This is due to the fact that the Damodar River has structurally controlled the basin, and therefore available faults and fractures are preventing communication between the northern and southern blocks. Recent simulation of the southern side (after receipt of the new core well study data) of the area indicated that some faults have boundary effect to reservoir and as a result the southern side of the block is acting differently to the north and taking longer time to dewater than expected.

Due to the above findings, exit production range for 31 March 2012 and 30 September 2012 would be deferred by another 9 months. Gas sales price for the Company have remained stable in Rupee terms.

Commenting Prashant Modi , President and COO of Great Eastern said:

"We have continued dewatering the under-saturated coal seams to achieve initial gas production as soon as possible. We remain positive about achieving the growth of the Company in the projected manner albeit with some delay.

This substantial reserves upgrade is a positive sign about the recoverability of the Raniganj Block."

Notes to Editors

Netherland Sewell & Associates, Inc. (NSAI), a leading, recognized independent petroleum evaluators with substantial international experience. NSAI has conducted this assessment in accordance with the classification guidelines set out in the Society of Petroleum Engineer's Petroleum Resource Management System (SPE, PRMS).