GEECL shows resilience during Covid; Reduces debt and generates healthy cash profits.
Great Eastern Energy Corporation Limited (“GEECL”), the fully integrated, Coal Bed
Methane (“CBM”) company, is pleased to announce its Full Year Results for the 12 months
ended 31 March 2021.
Abridged Financials for FY 2021:
FY 2021 FY 2020
Revenue Rs. 1,951.46m Rs. 2,569.40m
EBITDA Rs. 1,012.83m Rs. 1,484.94m
PAT / pre MTM / DTE* Rs. 178.82m Rs. 495.45m
Cash Profit Rs. 480.82m Rs. 826.46m
Net Debt Rs. 3,851.40 Rs. 4,225.61
Net Debt : Equity Ratio 0.58 0.65
* 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
FY 2021 was an unprecedented year with the COVID-19 pandemic impacting global
supply chains, amidst the biggest global health crisis ever faced.
As announced on November 11, 2020 in the Half Year Results to 30 September 2020,
the COVID-19 pandemic had an adverse impact on Sales that were further
compounded by the subsequent national lockdown that occurred in India. However,
to mitigate this impact, the Company has taken appropriate measures to optimize
costs and increase efficiencies.
Sales volumes were impacted by the economic impact of the COVID-19 pandemic,
reassuringly, the Company remained profitable. Encouragingly, operations continue
to grow with gas production increased from a full year average of 15.20 mmscfd to an
average of 15.88 mmscfd in June 2021, including choked production.
The Company continues to focus on optimising its debt coupon rate and has been
able to reduce the same from 10.32% in FY 2021 to 9.58% in the ongoing FY 2022.
Due to this, there will an annual saving, in FY 2022, of ~ Rs. 37.50m. The Company is profitable and cash generative and continues to maintain sufficient
liquidity to meet all of its financial obligations on time.
Shale gas and CBM reserves and resources in the Raniganj (South) block (as
previously announced on November 15, 2018):
o OGIP of 6.13 TCF (best estimate) / 9.25 TCF (high estimate)
o 3P + 3C + 3U is 2,988.40 BCF (2.99 TCF)
Undiscounted value of $13.78 billion
Discounted value of $4.31 billion
The Company had obtained the environment clearance for starting its Shale
exploration program and continues to be in the process of obtaining the balance of
final approvals expected later this year. The Company is engaging with various
vendors for commencing the Shale program. Subject to the results obtained and
analysed from the core wells, the Company intends to drill an optimum number of
pilot production wells.
GAIL (India) Limited partially commissioned the "Jagdishpur - Haldia & Bokaro -
Dhamra pipeline" on February 6, 2021. Further work on laying the pipeline section to
Kolkata is underway and it is expected to be completed by August 2022 as per the
media reports. This will provide the Company with the opportunity to expand its
customer base and sales significantly by accessing the huge market of Kolkata and
also to the wider State of West Bengal. The transportation tariff of this pipeline has
been fixed at Rs. 71.08/mmbtu ($0.94/mmbtu) including 12% for Goods and Services
Tax.
India’s LNG imports for the month of May 2021 were higher than the corresponding
month of the previous year and the cumulative imports for the current year till May
2021 was higher by 24.86% compared with the corresponding period of the previous
year. As per the publicly available data, the current average long term delivered LNG
price in India is US$ 12.20/mmbtu. Transporting this gas to the eastern region via
the above mentioned pipeline would entail additional transportation costs mentioned
above and other costs to customers in eastern India.
Prashant Modi, Managing Director & CEO of Great Eastern, said:
“Despite the impact of a slowing World economy during the reporting period, the Global
COVID-19 pandemic, and a slowdown in the growth rate of the Indian economy, gas sales
prices, revenue and sales volume have largely remained resilient. The Board would like to
highlight that the Company’s business and balance sheet has been able to comfortably
withstand the severe impact of these unpreceded events.
“In response to the pandemic, we have implemented a focused plan of optimising
production, cutting costs, increasing efficiencies, and additional improvements continue to be
systematically pursued. “Encouragingly, post balance sheet year end, World growth rates are rebounding and energy
prices, that fell dramatically in March 2020, have returned to pre-pandemic levels with
international oil prices currently above US$70 per barrel.
“We are at an important point in the growth of our core business as a result of the
opportunities offered by the GAIL pipeline that will allow us to expand our customer base
and sales volumes and take advantage of our significant proven but as yet uncommitted gas
reserves. On completion, the GAIL pipeline will allow us to pursue further material organic
growth into the large and untapped industrial market of Kolkata and into the wider State of
West Bengal and we look forward to reporting on our new gas marketing initiatives as they
unfold. We also look forward to progressing our Shale exploration and appraisal project that
represents another excellent organic growth opportunity for Great Eastern once all approvals
are in place.
“With the steps being taken by the government to accelerate the growth of the Indian
economy, demand for hydrocarbons in India will continue to grow, as is evident from rising
LNG imports and where development of indigenous gas reserves like those held by Great
Eastern can make a meaningful contribution. Given climate change concerns and the need
to control emissions, Great Eastern is encouraged that its business focus on gas,
increasingly seen as an energy transition fuel, can assist in the global trend towards low
carbon/carbon neutral energy supplies.”
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 9.25 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.
Chairman's Statement
While the Indian economy faces a difficult situation in the wake of COVID-19 pandemic, the
country has certain fundamental resilience which would help it tide over the crisis.
In the midst of the otherwise gloomy situation, the government has made an attempt to
convert the crisis into an opportunity to push new and bold reforms which should yield
positive results.
The Board is confident that the overall state of the economy will recover soon and continue
to remain robust. Encouragingly, post balance sheet year end, World growth rates are
rebounding and energy prices, that fell dramatically in March 2020, have returned to prepandemic levels with international oil prices currently above US$70 per barrel.
The Company has achieved a strong financial performance and continues to drive future
growth through increasing the production at the Raniganj (South) Block.
Great Eastern has contributed towards the national effort of reducing pollution through use of
clean fuel. By using gas in its own operations and by supplying gas to its customers, Great
Eastern has helped improve the air quality and environmental footprint in the Company’s
operational area. Given climate change concerns and the need to control emissions, Great Eastern is encouraged that its business focus on gas, increasingly seen as an energy
transition fuel, can assist in the global trend towards low carbon/carbon neutral energy
supplies.
The Company has continuously engaged with the local community and raised their quality of
life by distributing food, organising medical camps, health initiatives, and sports activities,
which have been widely appreciated. The Company is also engaging with the local
administration and community to help during these trying times of COVID-19.
The Company's second asset, Mannargudi block, is situated in the state of Tamil Nadu, and
covers an area of 667 sq. km with 0.98 TCF Original Gas-in-Place. The block is currently
under arbitration with the Government.
