TIDMINDI
RNS Number : 8459K
Indus Gas Limited
27 September 2016
27(th) September 2016
Indus Gas Limited
('Indus' or 'the Company')
Preliminary Financial Results
Indus Gas Limited (AIM:INDI.L), an oil and gas exploration and
development company with assets in India, is pleased to report its
full year results for the 12 months to 31 March 2016.
Highlights
Operations:
-- Completed another full year of production at enhanced
capacity of 42 MMscf/d (33.5 MMscf/d net of CO(2) ) from SGL Field.
Initial Field Development Plan for the non SGL area of 2,000 sq.
kms. submitted in February, 2016. The company was allowed to drill
additional appraisal wells, test and acquire additional 3D seismic
up until the submission of the Field Development Plan. The company
has prepared a Geological Model in respect of SGL Field.The
Geological Model has identified potential reservoir sands in SGL
Field.
-- Successfully drilled development and appraisal wells with
encouraging gas shows.
-- The new gas sand reservoir (called P9) was successfully
exploited for production.
-- Price negotiations are continuing with GAIL/Rajasthan Rajya
Vidyut Utpadan Nigam for supplying additional gas to 160 MW Ramgarh
Stage-IV Power Plant. The gas turbine has already been purchased by
State Power Plant.
Financial:
-- Invoiced revenues increased 10.2% to US$ 45.60m
-- Reported operating profit up 10.4% to US$ 33.15m
-- Concluded full draw down on US$ 180m facility.
-- Concluded draw of first tranche of SGD 100m under new Medium
Term Note (MTN) programme of US$ 300m
Mr Peter Cockburn, Chairman of the Company commented:
"This financial period saw a continuation of the extremely
challenging conditions across the global oil and gas sector. Whilst
the Indus Gas share price has not escaped the industry wide
malaise, the Company's activities continue to pick up pace. The
submission of the Field Development Plan for the non SGL area was a
major milestone achieved in the period.
The Company's operational and financial performance has been
strong with another year of consistent revenues and profits
generated. The Company has also successfully secured additional
balance sheet capacity, on very attractive terms, from which to
fund future production growth and infrastructure investment.
The Field Development Plan for the non SGL area has been
submitted."
In accordance with AIM rules, Paul Fink, Technical Consultant, a
Geophysicist who holds an engineering degree from the Mining
University of Leoben, Austria and has 25 years of industry
experience is the qualified person that has reviewed the technical
information contained in this release.
-S-
For further information please contact:
Indus Gas Limited
Peter Cockburn
Bruce McNaught +44(0)20 7614 5900
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Arden Partners plc
Steve Douglas
Patrick Caulfield +44(0)20 7614 5900
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Bell Pottinger PR
Lorna Cobbett +44(0)20 3772 2500
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Introduction
Since flotation in June 2008 the Company has executed a clear
and consistent strategy with the central objective being to
maximise long term shareholder value creation from our licence
block. This strategy has delivered prolific exploration success as
evidenced by the rapid growth in our underlying reserves base and
the successful execution of the first production phase.
Exploration and appraisal activity has continued at a rapid pace
in the last twelve months. This drilling and appraisal programme
has delivered both a series of material new gas discoveries and
provided further valuable insight into the gas structures present
in the western half of our block.
Domestic energy security remains one of the key challenges
facing the government. India continues to be a major net importer
of energy. This energy deficit can only be addressed through major
investment programmes in long term infrastructure build and
incentivising domestic energy companies to increase exploration and
production.
Activity
Indus is pleased to announce another year of good gas sales
based on gas production capacity of 42 MMscfd (33.5 MMscfd net of
CO(2) ) achieving consolidated reported revenues of US$ 45.60
million. We have continued to build scale in our production profile
and our stated long term business plan remains on track. An
integrated Field Development Plan for the non SGL area of the
Block, for future enhancement of revenues, has been submitted to
the Managing Committee after carrying out additional appraisal
activities in the block. Tie ups for evacuation and sale of the
additional gas are in progress.
A summary of activities since April 2015 is provided below:
SGL Field Development
During the year, a total quantity of 15,097 MMscf of gas
(2014-15: 12,902 MMscf) was produced from the field out of which
10,768.75 MMscf (net of CO2) was supplied to GAIL, in the previous
year 9,781 MMscfwas supplied. The operations at Rajasthan
RajyaVidyutUtpadan Nigam Limited (RRVUNL), the State Electricity
Company in Rajasthan, have improved during the year resulting in
increased gas off take throughout the year. The operations have now
largely stabilized and GAIL expects to reach the gas offtake target
as per signed GSPA on a long term basis, without needing to make
"Take or Pay" payments. Invoiced revenues increased by 10% from the
previous year as the power plant progressed towards normalized
operations. The contribution under the "ToP" obligation was NIL,
reflecting full installed sales capacity of 33.5 MMscf/d being
available for the financial year.
Drilling, Seismic, Completion Operations
Operational activities over the last year have largely followed
the Group's various objectives:
a) appraisal drilling to support the Integrated field development plan;
b) drilling and completion of production wells for the SGL Field
Development continued as planned to meet contracted and planned gas
sale requirements;
c) testing various wells previously drilled, where gas shows
were encountered to enable the Group to increase its reserve base;
and
d) testing the B&B gas recovery potential in addition to gas
discovered in the Pariwar formation.
During the year, Indus has been acquiring, in phases, new
seismic data giving more clarity on the Block potential and
providing additional drilling prospects. The current drilling
programme is progressing on schedule and producing positive
results. We continue to test concepts and obtain log and core data
for analysis outside the SGL area. In the SGL area work continues
to expand the knowledge of the producing intervals. Additional
testing is part of a programme to enhance production and maximize
recovery of gas through good asset management. Activities such as
this will increase as we obtain and act on new data and production
history. An important development in respect of SGL Field was
discovery of a new sand system called P9 or lower P10 sands,
located just below the existing producing upper P10 sands in
Pariwar formation. This new sand system was successfully exploited
for production and going forward will add to the reserves and
production from existing as well as new wells.
Financials
During the financial year, the Company supplied 10,768.75 MMscf
of gas and invoiced revenues of US$ 45.60 million (2014-15 US$
41.39 million), resulting in reported operating profit of US$ 33.15
million (2014-15 US$ 30.02 million). The reported profit after tax
was US$ 15.71 million (2014-15 US$ 16.24 million) after a foreign
exchange loss of US$ 0.37 million (2014-15 US$ 0.02 million)
While the Company is not expected to pay any significant taxes
on its income for many years in view of the 100% deduction allowed
on the capital expenses in the Block, the Company has accrued a
non-cash deferred tax liability of US$ 14.00 million as per IFRS
requirements.
Post this deferred tax liability provision, the net profit for
the year was US$ 15.71 million.
The expenditure on purchase of property, plant & equipment
was US$ 89.50 million. The property plant and equipment including
development assets and production assets increased to US$ 562.44
million.
The current assets (excluding cash) as of 31 March 2016 stood at
US$ 7.62 million, which includes US$ 4.11 million of inventories
and US$ 3.27 million of trade receivables. The trade receivables
are mainly on account of fortnightly receivables from GAIL billed
on the last day of the year. The current liabilities of the
Company, excluding the related party liability of US$ 7.18 million
and current portion of long term debt of US$ 37.56 million, stood
at US$ 5.25 million. This comprised mainly of deferred revenue of
US$ 5.08 million (GAIL Take or Pay Payment) and other liabilities
of US$ 0.17 million.
As of 31 March 2016, the outstanding debt of the Company was US$
321.34 million, out of which US$ 37.56 million was categorised as
repayable within a year and the remaining US$ 283.78 million has
been categorised as a long term liability. During the year, the
Company has received proceeds of US$ 116.34 million from
incremental term loan facility and unsecured Bond facility net of
expenses and repaid an amount of US$ 17.32 million of the
outstanding term loan facilities, as per the scheduled repayment
plan.
Outlook
During the next twelve months, we expect a further step change
in the growth of the Company. Following FDP approval we shall look
to develop the significant potential of the Block beyond our
existing SGL Development Area. Revised Field Development Plan will
be submitted for SGL area to increase the production from SGL area.
We look forward to continued drilling success in both Pariwar and
B&B. Negotiations on the new gas sales contract with GAIL for
offtake by the power plant are ongoing. The company is also
discussing connection arrangements for the non SGL gas to the
Pipeline which will provide connectivity to the national gas grid
supplying customers in Gujarat, Rajasthan and Punjab.
The company news service from the London Stock Exchange
END
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