A strong increase in gas sales and lower exchange rate losses helped Great Eastern Energy (GEEC) return to profitability at the half-year stage. Production from the coal bed methane producer's Raniganj (South) block rose 40 per cent from May, to 12.5m standard cubic feet per day (mmscfd), while new drilling should bolster output to as much as 24.1 mmscfd by June. Such robust prospects leave the shares set for a re-rating
The group operates a vertically-integrated model whereby it drills for and collects methane gas, processes it and then sells it on. Moreover, its block is ideally situated close to several major industrial centres. Output was also boosted by a 59 per cent increase in the number of wells to 108 and the group has also secured clearance to proceed with 30 pilot production wells at its 667 sq km Mannargudi block. That has an estimated original gas in place reserves (OGIP) of 980bn cubic feet, which is in addition to the 2.35 trillion cubic feet at the Raniganj block. The company is having little difficulty securing sales, either, with gas under contract or through a memorandum of understanding up 11 per cent at 38.1mmscfd.
Broker Arden Partners expects full-year adjusted pre-tax profit of $10.7m, giving EPS of 7.2¢ (from $5.4m and 4.6¢ in 2012).
| GREAT EASTERN ENERGY CORPORATION (GEEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 270p | MARKET VALUE: | £322m | |
| TOUCH: | 260-275p | 12-MONTH HIGH: | 328p | LOW: 255p |
| DIVIDEND YIELD: | nil | PE RATIO: | 25 | |
| NET ASSET VALUE: | 64¢ | NET DEBT: | 118%* | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 11.3 | -4.92 | -8.50 | nil |
| 2012 | 14.5 | 4.03 | 6.90 | nil |
| % change | +28 | - | - | - |
Ex-div: - Payment: - *Includes £3.75m of restricted deposits £1=$1.61 | ||||
