1 Sep 2008 07:00
September 1, 2008
Great Eastern Energy Corporation Ltd.
Trading Update
Great Eastern Energy Corporation Limited ("Company", "GEECL", "Great Eastern") (AIM: GEEC.L), a Company involved in the exploration, development and production of coal bed methane (CBM) in India, is pleased to provide the following trading update ahead of institutional shareholder meetings.
The Company has successfully entered into a contract with SAIL Growth Works, Kulti (part of Steel Authority of India Ltd.) for the initial supply of 6,600 SCMD (233 MCFD) of gas at a delivered price of $17.46 per mmbtu. The amount of gas supplied to this customer is expected to increase significantly as gas production increases and the steel pipeline for the supply of the gas has been successfully laid. Steel Authority of India Ltd. also has further large units within easy reach of Great Eastern's licence area.
In addition, Great Eastern has received confirmations from Kedia Group of Industries (for two of its units manufacturing steel products) for the purchase of 51,000 SCMD (1,801 MCFD) of gas at a delivered price of $17.32 per mmbtu for an initial three year period and $ 17.49 per mmbtu for a further two years. This will be the base price and the price will be revised again after 5 years. The tenure of the contracts will be for 20 years. Carbon credits arising from the contracts with Kedia Group will be available to Great Eastern. Supplies of gas are expected to begin next year.
The Company has also successfully renewed gas sales agreements for another year with those customers whose initial terms of agreement have expired. These renewal agreements are for the supply of approximately 5,000 SCMD (176 MCFD) of gas at a delivered price of $18.59 per mmbtu, representing a 20.6% increase over the previously agreed price of $15.41 per mmbtu.
The sale of Compressed Natural Gas (CNG) is also anticipated to strengthen further post the recent announcement by the West Bengal Government for conversion of vehicles to CNG. It is expected that part of the conversion cost of vehicles to run on CNG will be borne by the Government, as being done in other parts of India.
The second drilling programme of 30 wells, as outlined at the time of the results in June, is also making good progress, with 9 wells drilled and a further 10th well currently being drilled. Out of these 9 wells, 4 of the wells are fracced and one is currently dewatering. The 5th well is currently being fracced and should be completed within the next 2 days. The progress made has been despite the problems caused by the monsoon season, which typically runs from June to August. With the monsoon season over, the pace of drilling is expected to increase.
The wells are being drilled using the Company's Atlas Copco RD20 III rig, which was commissioned in January. As expected this rig has added significant flexibility to the second well drilling programme as well as reduced drilling costs.
Further to the agreement reached with the Steel Authority of India Ltd. in late July, establishing a 'right of way' for the 12" steel pipeline to the Central Gathering Station in Asansol, a key local market, a further 1 km has now been successfully laid. In total, 9 km of the required 11 km have been completed. In addition, a further 7 km, out of a required 11.2 km, of the 12" steel pipeline connecting the Company's Central Gathering Station to Kulti has also been completed.
-ENDS-
For further information:
Great Eastern Energy
YK Modi Chairman & CEO + 44 (0)20 7743 6363
Prashant Modi President & COO
Arden Partners
Richard Day +44 (0)20 7398 1632 Adrian Trimmings
Pelham Public Relations
Philip Dennis +44 (0)20 7743 6363
Hugh Barker