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Niko Resources, has reported a 5% drop in loss at $55 million (Rs 335 crore) during the quarter ended June 2014 against $59 million (Rs 354 crore) during the corresponding previous quarter.
The company, which partners Reliance Industries (RIL) in a few blocks in India, including RIL's flagship KG block, reported EBITDAX (earnings before interest, tax, depreciation, amortisation and exploration expenses) at $26 million during the first quarter of this fiscal against $20 million in the corresponding previous quarter.
"While the Company is disappointed with the lack of progress on the Indian gas price issue, it has continued to execute on its strategy. The Company has focused its spending on its core assets and has achieved an increase in EBITDAX in the quarter," the company said in a press statement.
This June, Niko said, along with its partners (RIL and British Petroleum), the company will not make investments in planned development projects without achieving the pricing as provided in the production sharing contract to provide adequate returns on the investments. Niko holds 10% stake in the KG block while RIL holds 60% and BP holds the rest of 30%.
"As previously announced, in June 2014, the Government of India decided to further defer until October 1, 2014 the implementation of a new gas pricing formula for domestic natural gas sales in India to allow time for consultation with all stakeholders and comprehensive discussions on the issues," it said, adding : "The company has provided input to the GOI about the requirement for market price for natural gas sales as per the production sharing contracts awarded during the New Exploration Licensing Policy rounds and the fundamental principle of sanctity of contract as a required underpinning for long-term investments in any country.
Niko said spending in other areas has been minimised, conserving cash for future funding of value generation opportunities in the D6 Block in India. "The company maintained its liquidity at approximately $160 million of available cash through the quarter and will manage this liquidity consistent with the principles outlined above," it said.
Total sales volumes in the first quarter of fiscal 2015 from the D6 Block in India were flat compared to the fourth quarter of fiscal 2014 primarily due to production from the MA-6H sidetrack well brought on-stream in April 2014.
The company added that the MJ field remains a material discovery for the D6 Block partners and is well positioned to take advantage of the existing D6 Block infrastructure. Niko and its partners are currently finalizing the optimal location for the third appraisal well in this field.
The final decision to proceed with the R-Cluster development project in the D6 Block approved by the GOI, providing the opportunity for significant production growth for the Company in the future, is pending resolution of the gas pricing issue noted above, Niko said.
