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ONGC blow shatters Great Eastern listing plan

Co shelves IPO after ONGC calls off deal to sell stake in abutting CBM block

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It's end of the road for country's first coal-bed methane (CBM) gas producer Great Eastern Energy Corp's plans to get listed on domestic bourses for now.

The YK Modi group company, which has been producing and fast ramping up output at its CBM block Ranigunj South in West Bengal for past several years and already listed at the London Stock Exchange, has decided to call off its plan for domestic listing nine months after getting its draft prospectus approved by the market regulator Sebi in March.

"The management has taken a decisive action to shelve the Indian IPO process," Prashant Modi, chief executive officer of Great Eastern Energy has told LSE investors.

The company has challenged the decision of oil exploration major ONGC in October to call off sale to Great Eastern of 25% participating interest in Ranigunj North, a CBM block lying next to Great Eastern's own operating field, he said.

Great Eastern chairman Y K Modi had earlier disclosed to dna that the company has received a letter from ONGC having a controlling stake of 74% in the Ranigunj North block, deciding to call off the sale process without assigning any reason. Great Eastern had written to the public sector oil explorer protesting that its decision was arbitrary and unreasonable.

ONGC undertook a competitive bidding process in January 2013 to divest 25% of its stake in Ranigunj North having a gas in place reserve of 1.5 trillion cubic feet.

Great Eastern's bid was accepted in May that year and following that ONGC was supposed to sign farm-in and joint operatorship agreements with ONGC. ONGC's rejection of the deal is the second set back for Great Eastern.

In 2011, Great Eastern received a licence to explore CBM at Mannargudi in Tamil Nadu and a production sharing agreement was signed.

While the company started preparedness for the project including plans to dig exploratory wells, there were reports of ground water contamination and environment pollution in that area prompting the state government to force Great Eastern stop all work till an expert committee gives its report followed by a go-ahead by Tamil Nadu Pollution Control Board.

The Mannargudi block approvals are still being processed, Prashant Modi said in communication to the LSE Tuesday.

Great Eastern is now left with just one block to work on for the time being.

"We have a focused plan to maximise production with our current portfolio of acreage as well as pursuing new opportunities," Modi said.

The current portfolio has performed well, generating a revenue of $19.45 million for the six months period till September, up 21% on year generating a profit of $8.9 million, which has grown 24%.

"A total of 156 wells have been drilled, which provides a substantial base for production growth, as they continue to de-water and are further optimised," he said. Average daily gas sales from the wells has gone up 28% during the half year at 10.38 million standard cubic feet at a price of $11.28.

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