Indus Gas sees cash flow surge

Indus' operating profit increased fivefold year-on-year to $7m, but the debt overhang meant a $2m hit during the period, while another $2.4m in deferred tax liabilities also weighed on the bottom line. However, Indus points out that its level of capital depreciation allowances carried forward means that the tax is "not likely to crystallise for many years, if at all". The debt pile, meanwhile, remains an issue, although the group's ability to cut its back borrowings was demonstrated by an 88 per cent hike in net operating cash flow in the half. Indus' management also recently ratified a new $180m term debt facility, although the full syndication details have yet to be announced.

Indus' production profile has steadily been improving, too. That was given additional impetus in November when it submitted a Declaration of Commerciality request for the RJ-ON/6 Block, in relation to a gas discovery that was announced in early 2013. Meanwhile, the strong half-year profit performance was underpinned by contracted gas sales volumes of 33.5m cubic feet of gas per day (mmscf/d). With another contract with India's state-owned natural gas distributor GAIL (India) on the cards, together with a tender to supply a land-based liquefied natural gas scheme, Indus is now confident of driving up sales to 110 mmscf/d by 2016.

From April, revenues should also be bolstered by the indicative gas price formula from the Rangarajan Committee. At $8.42 per million British thermal units (mmbtu), that represents a significant step-up from the $5/mmbtu rate that Indus announced at the 2012 half year.