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Great Eastern Energy hit by plant disruption

Published: 10:36 25 Jul 2016 BST

Coal bed
The group warned last October that results would likely fall below expectations.

Great Eastern Energy Corporation Limited (LON:GEEC) reported a drop in revenues and earnings for the year to March, as operating issues continued at one of its largest customer’s plants.

The Indian Coal Bed Methane group warned last October that results would likely fall below expectations.

Investor concerns were realised Monday after the group said major disruption at the plant shaved US$8.7mln off revenue and US$8mln off cash generation.

The customer could not take any deliveries due to issues with the plant.

Great Eastern agreed a minimum off-take agreement with the customer to help mitigate the problem whilst the plant issue is resolved, which is expected to continue until September this year

The group adopted a new accounting policy in which it charges most of its expenses and interest to operating results, stating this was "in line with best industry practice".

Without the new accounting method, the group fared much worse compared to the previous year.

Great Eastern reported a pre-tax loss before certain items of US$1.9mln compared to a US$16.8mln profit last year. Adjusted earnings (EBITDA) fell to US$14.7mln from US$24.8mln. Cash generation dropped to US$3.8mln from US$20.1mln.

However, production rose 15% to 14.8mln standard cubic feet of gas per day from 12.8mln. The rate of monthly growth since November last year was also more than three times higher compared to the same period last year.

"We are continuing to make strong progress with our strategic goals of further optimising well production, planning second phases of drilling on the Raniganj (South) block and identifying new reserves, whilst maintaining our strong balance sheet. Our underlying consistent performance during the period and favourable market conditions gives us confidence for the future," said chief executive Prashant Modi.

Shares were down 4% to 27.36p.

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