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Great Eastern Energy Corporation Ltd.: Interim Results Six Months Ended 30th September 2007

Posted on: Tuesday, 20 November 2007, 09:00 CST

LONDON, November 20 /PRNewswire-FirstCall/ -- Great Eastern Energy Corporation Ltd. (Great Eastern), a Company involved in the exploration, development and production of coal bed methane (CBM) natural gas in India, is pleased to announce its results for the six months ended 30th September 2007.

Great Eastern is pleased to report it has completed its debt programme, putting in place the key component needed to progress the next phase of drilling and achieve the production target outlined at the time of the IPO. Other key elements needed to achieve this production target are also progressing ahead or in line with expectations.

Highlights: - Gas Production increased to 2.4 MMSCFD: - 367% increase on June update - 60% increase on August trading update - Finance: - Completion of debt programme - secured US$ 88 million - Cash position as at Nov 16, 2007 - US$ 5 million - Sales progressing well: - First commercial sales of CBM gas commence - One CNG outlet established at well 10 - Two additional CNG outlets being commissioned - Franchise agreement signed with Indian Oil Company (IOC) - 5 additional CNG stations at IOC outlets. More will be established in due course - Infrastructure: - Gas Gathering Station on target to be completed Jan '08 - Rig on site and being commissioned Commenting, YK Modi, Chairman and CEO of Great Eastern, said:

"We have made solid progress in the last six months. Production has increased significantly and we have achieved our first commercial sales of CBM natural gas. The debt facility is now in place which will enable us to commence the next phase of our drilling programme and acts as a further validation of the commercial potential of CBM production in India."

Chairman's statement

I am pleased to report Great Eastern has made solid progress in the six months to 30th September, 2007. The Company now has proven Gas production and the finances in place to achieve its stated medium term objective of 35MMSCFD.

The rate of current production is 2.4 MMSCFD, an increase of over 60% since the last update in August. Average production per well is substantially ahead of independent forecasts and we are confident this rate will continue to further increase significantly as the rate of dewatering increases and we frac additional seams.

Great Eastern is able to supply gas across the full spectrum of markets within its immediate locality. These markets include compressed natural gas ('CNG') for vehicles as well as small and large industrial units.

As previously stated, the Company has commenced initial industrial sales of CBM as well as sales of CNG for vehicles in and around Asansol, West Bengal, India. The delivered price obtained is currently between $13 to $15 / mcf. We have established a CNG outlet at well 10 and have commissioned two further CNG outlets at wells 16 and 20.

In October we entered into a franchise agreement with the Indian Oil Corporation ("IOC"), a Fortune 500 company and India's largest downstream operation, to establish CNG dispensing stations at IOC retail outlets in the cities located in and around the licence area. We expect the first of these to be fully operational in December 2007, with four further outlets due for completion in the coming months. We expect these five stations to dispense approx. 1.5 mmscf of CNG per day at an average delivered price of over $15 / mcf. IOC has a substantial number of retail outlets and as such there is scope for the number of stations supplied with CNG to increase in line with production. The supply of CBM natural gas direct as CNG is a world first.

With the Indian economy continuing to see strong growth, the corresponding market for natural gas has also remained buoyant. The market for CNG is also being driven by a combination of cost and environmental concerns, encouraging vehicle owners to switch from traditional diesel to gas.

As at 16th November, the Company had cash on its balance sheet of US$ 5 million. I am pleased to report that further to the announcement in August we have now secured US$88 million of debt facilities. This completes our debt programme, putting in place the key outstanding element needed to progress the next phase of drilling and associated infrastructure and in turn achieve the productions targets outlined at the time of the IPO.

The debt facility is provided by a consortium of 8 banks, led by the State Bank of India. Prior to providing this facility, each bank conducted its own independent due diligence on the project, which further validates the potential of the Company's asset. The facility has been offered over an eight year tenure and represents the first project financing of its kind in India.

The rig was delivered to the site at the beginning of November and is currently in the process of being commissioned. It will be ready for use by January at which point the next phase of drilling will commence. The rig will bring added flexibility to this campaign and also result in a reduction in drilling costs. The Gas Gathering Station is also on target for completion in January and the pipeline construction is progressing well.

Outlook

We are confident that with the Gas Gathering Station and pipeline completed we can achieve further meaningful sales of gas in the next six months. Furthermore, we look forward to starting the next phase of our drilling programme on time in January 2008.

With all the key elements now in place, combined with continuing strong gas demand fundamentals, we remain confident of the Company's prospects for the for the coming six months and beyond.

Interim Condensed Balance Sheet as at 30 September 2007 (In US Dollars unless otherwise stated) As at As at 30 September 31 March Notes 2007 2007 Assets Non-current assets Property, plant and equipment 8 3,804,803 1,181,024 Capital work-in-progress 10 38,285,971 31,913,627 Intangible assets 9 385,328 368,571 Prepayments 5 132,674 66,122 Other financial assets 99,965 57,689 42,708,741 33,587,033 Current assets Prepayments 5 3,241,562 459,929 Advance income tax 759,698 629,129 Other financial assets 1,148,273 968,431 Cash and cash equivalents 3 1,910,468 11,032,180 Restricted deposit with bank 4 647,531 - 7,707,532 13,089,669 Total Assets 50,416,273 46,676,702 Equity and liabilities Issued capital 12,246,781 12,246,781 Share premium 33,301,944 33,301,944 Retained earnings (2,939,555) (2,305,483) Translation reserves 5,208,839 945,822 Total equity 47,818,009 44,189,064 Non current liabilities Provisions 50,327 45,882 Employee benefit liability 42,362 40,122 Deferred income tax liability 6 - - 92,689 86,004 Current liabilities Trade and other payables 2,492,993 2,387,869 Provisions 12,582 13,765 2,505,575 2,401,634 Total liabilities 2,598,264 2,487,638 Total equity and liabilities 50,416,273 46,676,702 Interim condensed income statement for six months ended 30 September 2007 (In US Dollars unless otherwise stated) For six months period ended 30 September Notes 2007 2006 Revenue 7272 - Other income 2460 - Personnel expenses (232,511) (213,262) Depreciation and amortization 8&9 (52,534) (20,254) Other operating expenses (670,031) (735,709) Foreign exchange gain/(loss) 3145 (1402) Operating profit/(loss) (942,199) (970,627) Finance income 323,210 780,011 Finance expense (15,083) (6,672) Finance income/(expense), net 308,127 773,339 Profit/(loss) before income tax (634,072) (197,288) Income tax expense - - Profit/(loss) for the period (634,072) (197,288) Loss per share - basic and dilutive (in cents) (0.1164) (0.0362) Consolidated statement of changes in equity for the six months ended 30 September 2007 (In US Dollars unless otherwise stated) Issued Share Retained Translation Total capital premium earnings reserve equity At April 1, 2007 12,246,781 33,301,944 (2,305,483) 945,822 4,189,064 Currency transaction differences - - - 4,263,017 4,263,017 Loss for the period - - (634,072) - (634,072) At September 30, 2007 12,246,781 33,301,944 (2,939,555) 5,208,839 47,818,009 Consolidated statement of changes in equity for the six months ended 30 September 2006 (In US Dollars unless otherwise stated) Issued Share Retained Translation Total capital premium earnings reserve equity At April 1, 2006 12,246,781 33,301,944 (1,980,192) (103,291)43,465,242 Loss for the period - - (197,288) - (197,288) Input credit for VAT and service tax recognized - - 16,437 - 16,437 Currency transaction differences - - - (1,248,519)(1,248,519) At September 30, 2006 12,246,781 33,301,944 (2,161,043)(1,351,810)42,035,872 Interim Condensed Statement of Cash Flows for the six months ended 30 September 2007 (In US Dollars unless otherwise stated) Six months ended September 30, 2007 2006 A. Cash flows from operating activities Profit/(loss) after tax (634,072) (197,288) Adjustments for: Interest expense 15,083 - Interest income (323,210) (780,011) Depreciation and amortization 52,534 40,210 Foreign exchange loss/(gain) (5,716) 1,402 Provisions (4,181) 8,650 Operating profit /(loss) before working capital changes (899,562) (927,037) (Increase)/decrease in debtors (1,023) - (Increase)/decrease in other receivables/prepayments (2,848,082) (1,038,017) Increase / (decrease) in payables and accruals (117,037) 3,095,366 Net cash flows from operating activities (3,865,704) 1,130,312 B. Cash flows from investing activities Cash paid for purchase of property, plant and equipment (486,918) (56,120) Cash paid for capital work in progress (including well development cost) (5,175,092) (11,943,408) Cash paid for purchase of intangible asset (3,010) (131,308) Cash paid for purchase of leasehold land (58,799) (30,258) Proceeds/(payment) on encashment/(acquisitions) of short term bank deposits (Net) (629,782) 15,186,840 Interest received from investments 323,210 702,142 Net cash flows from investing activities (6,030,391) 3,727,888 C. Cash flows from financing activities Interest expense (15,083) - Net Cash flows from financing activities (15,083) - Net changes in cash and cash equivalents (A+B+C) (9,911,178) 4,858,200 Cash and Cash equivalents as on 1 April 11,032,180 4,271,906 Foreign currency translation difference on cash balances 789,466 (126,537) Cash and Cash equivalents as on 30 September 1,910,468 9,003,569 a) Cash and cash equivalents are same as that disclosed under note 3.

b) Closing cash and cash equivalents include restricted deposits amounting to $1,019,762 (30 September 2006: 663,620).

Notes to Interim Condensed Financial Information 1. CORPORATE INFORMATION

Great Eastern Energy Corporation Limited ('GEECL' or 'the Company') is a public limited company incorporated in India with its registered office at 1D, 'Bally High', 1 Ballygunge Park Road, Kolkata, India.

The Company was incorporated in 1992 to explore, develop, distribute and market Coal Bed Methane or CBM in India. GEECL originally entered into a license agreement in December 1993 with Coal India Limited ('CIL') for exploration and development of CBM over an area of approximately 210 Sq. km (approximately 52,000 acres) in the Raniganj coalfields of West Bengal (the Block). Following the transfer of CBM administration in India from the Ministry of Coal to the Ministry of Petroleum and Natural Gas ('MoPNG'), the Company entered into the existing CBM production sharing contract ('PSC') on 31 May 2001 for the Block.

The PSC is effective from 9 November 2001 as a result of the granting by Government of West Bengal of the Petroleum Exploration License on the same date and provides for a five year initial assessment and market development phase, followed by a five year development phase and then a twenty-five year production phase, extendable with the approval of the Government of India (GOI). The PSC also provides that the Company can produce gas during any phase with the prior approval of the GOI. Out of 23 wells, 2 wells have started producing gas, since 14 July 2007 and 28 August 2007 respectively. The Company has started selling such gas produced to small industries in nearby areas. Other 21 wells are still in the exploratory and market development phase with dewatering and production testing underway.

The Company has its primary listing on Alternative Investment Market.

This condensed consolidated interim financial information was approved for issue on 16 November 2007.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of preparation

The interim condensed financial information for the six months period ended 30 September 2007 have been prepared in accordance with IAS-34 Interim Financial Reporting.

The interim condensed financial information do not include all the information and disclosures required in the annual financial information, and should be read in conjunction with the Company's annual audited financial information as at 31 March , 2007.

The financial information are presented in US Dollar ('$') and all values are rounded to the nearest US dollar except when otherwise indicated.

Significant Accounting Policies and estimates

The accounting polices adopted in preparation of the interim condensed financial information are consistent with those followed in the preparation of the Company's annual audited financial information for the year ended 31 March 2007.

The following new standards, amendments to standards and interpretations are mandatory for financial year beginning 1 April 2007.

- IFRS 7, 'Financial instruments: Disclosures', and the complementary amendment to to IAS 1, 'Presentation of financial information- Capital disclosures' effective for annual periods beginning on or after 1 January, 2007, introduces new disclosures relating to financial instruments. The Company is in the process of assessing the impact of IFRS 7 and the amendment to IAS 1. These disclosures are not required for the interim reporting period.

- IFRIC 8, 'Scope of IFRS 2', effective for annual periods beginning on or after 1 May 2006. This Interpretation applies to transactions in which an entity or an entity's shareholders have granted equity instruments or incurred a liability to transfer cash or other assets for amounts that are based on the price (or value) of the entity's shares or other equity instruments of the entity when the identifiable consideration received (or to be received) by the entity, including cash and the fair value of identifiable non-cash consideration (if any), appears to be less than the fair value of the equity instruments granted or liability incurred. This standard does not have any impact on the Company's financial information.

- IFRIC 9, 'Reassessment of Embedded Derivatives', effective for annual periods beginning on or after 1 June 2006. An interpretation requires an entity shall assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. This standard does not have any impact on the Company's financial information.

- IFRIC 10, 'Interim financial reporting and impairment', prohibits the impairment losses recognized in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. Interpretation is effective for annual periods beginning on or after 1 November 2006. This standard does not have any impact on the Company's financial information.

- IFRIC 11, 'IFRS 2 - Group and treasury share transactions' effective for annual period beginning on or after 1 March 2007, IFRIC 11 provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parent's shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and group companies. The interpretation is not relevant to the Company's operation as the Company do not share-based payments transactions

The following new standards, amendments to standards and interpretations have been issued but are not effective for financial year beginning 1 April 2007 and have not been early adopted:

- IFRS 8, 'Operating segments' (effective from 1 January 2009). IFRS 8 replaces IAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131, 'Disclosures about segments of an enterprise and related information'. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. This standard does not have any impact on the Company's financial information.

- IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction' (effective from 1 January 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The Company will apply IFRIC 14 from 1 April 2008, but it is not expected to have any impact on the Company's accounts.

Interpretations to existing standards that are not yet effective and not relevant for the Company's operations.

The following interpretations to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after 1 April 2008 or later periods but are not relevant for the Company's operations:

- IFRIC 12, 'Service concession arrangements' (effective from 1 January 2008). IFRIC 12 applies to contractual arrangements whereby a private sector operator participates in the development, financing, operation and maintenance of infrastructure for public sector services. IFRIC 12 is not relevant to the Company's operations because the Company do provide for public sector services.

- IFRIC 13, 'Customer loyalty programmes' (effective from 1 July 2008). IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement in using fair values. IFRIC 13 is not relevant to the Company's operations because the Company do not operate any loyalty programmes.

3. Cash and Cash equivalents As at 30 September 2007 31 March 2007 Cash in hand 988 348 Cash at banks - on current account 273,848 105,400 - on fixed deposit 1,635,632 10,926,432 1,910,468 11,032,180

Fixed deposits with banks include $1,019,762 (31 March 2007: $29,239) kept as margin money deposits against letter of credit issued by banks on behalf of the Company.

4. Restricted deposits with bank

Restricted deposits with bank represent margin money deposits against letters of credit issued by banks on behalf of the Company. Restrictions on such deposits including those considered as part of Cash and Cash equivalents (refer note 3 above) are released on the expiry of the terms of the respective arrangements.

5. Prepayments

Prepayments includes advances of $3,206,908(31 March 2007: $405,662) made to various vendors for purchase of equipment and construction of Gas Gathering Station('GGS')

6. Income tax

There is no current tax liability in view of losses for the period. The Company has not carried forward the losses incurred till 31 March 2005, however from the year ended 31 March 2006 the Company has carried forward losses for set-off against future taxable profits. Further as the Company will be enjoying a tax holiday period in accordance with the Income Tax Act in India, no deferred tax assets has been recognized during this period.

7. Segment reporting

The Company operates in a single geographical segment, being India, and in a single business segment, being the production and sale of gas. Hence, no separate segment information has been furnished herewith.

8. Property, plant and equipment

During the six months ended 30 September 2007, the Company has capitalised 2 wells and acquired cascades, generator sets and other machinery. There were no disposals during the period.

As at September 30, 2007 2006 Opening net book balance as on 1 April 1,181,024 1,039,640 Additions (including capitalisation of 2 wells (refer note 11)) 2,508,499 65,729 Depreciation (67,921) (40,136) Foreign exchange fluctuation on translation 183,201 (1,828) Closing net book balance as on 30 September 3,804,803 1,063,405 9. Intangible assets

Intangible assets comprises of cost of SAP implementation and cost of acquisition of rights for gas exploration. The amortization during six months ended 30 September 2007 charged to statement of income amounts to $21,440 (30 September 2006: $14,668). The Company has acquired computer software during six months ended 30 September 2007 capitalized as intangible of $3,010 (31 March 2007: $128,681)

Cost of SAP implementation is being amortised over a period of 5 years which is the useful life of such software as assessed by the management. Gas Exploration rights are being amortised over a period of 25 years commencing from the current year when commercial production has started.

10. Capital work-in-progress

During the six months period ended 30 September 2007, the Company has not drilled any new wells. However, the cost of workover expenses like sand cleaning, remedial cementing, pump setting and related services, which have been outsourced, has been taken to capital work-in-progress for existing 23 wells including 2 producing wells till commencement of commercial production. All other expenses incurred with respect to developing and maintaining wells, till they become producing properties are capitalised and included under capital work-in-progress. During the period, the Company has incurred $ 8,390,295 (30 September 2006: $11,013,021 ) as additions to capital work-in- progress.

As at 30 September 2007 2006 Opening net book balance as on 1 April 31,913,627 15,418,158 Additions 8,392,602 11,013,021 Capitalisation (2,020,258) - Closing net book balance as on 30 September 38,285,971 26,431,179

During the six months ended 30 September 2007, the Company has written down damaged and unusable materials amounting to $nil (30 September 2006: $6,672)

11. Well capitalisation

a) During the period the Company has capitalized two wells amounting to $20,20,258 (March 2007: $nil). All exploration cost involved in drilling, cementing, fracturing and drilling of exploratory core holes are initially capitalized as Capital work-in-progress till the time these are ready for commercial use. Cost of exploratory wells including apportionment of pre operative expenses and allocated depreciation of support equipment.

b) Depletion : Commercially producing wells are depleted using unit of production method based on related proved reserves. Proved reserves of gas per well are technically re-assessed in house every year at the end of period/year based on technical data available.

12. Retirement benefits

The Company has two post employment unfunded benefit plans, namely gratuity and superannuation and one state administered provident fund, which is a funded defined contribution plan. Gratuity and superannuation are defined benefit schemes. The Company has made provision for gratuity and superannuation benefits on the basis of actuarial valuation.

13. Leases and arrangements containing lease

The Company has entered into Equipment lease and other arrangements with various contractors for development of its wells, whereby the specific assets leased by the contractors are used only at the Company's well development site and such arrangements convey the right to use the assets. Some of these arrangements contain lease as per IFRIC 4. The significant terms and arrangements are described below.

a) Drilling rig has been taken on Lease from John Energy Limited, till 31 December 2007. The arrangements have terms describing the operating rate per hour, the standby rate per hour and the repair rate per hour. The Lease arrangement is not cancelable and terminates only on happening of a 'force majeure' event. The total lease payments made under this contract during the period are $284,361 (30 September 2006: $115,981)

The future minimum rentals payable under such type of lease are 30 September 2007 2006 Within one year 111,122 39,164 After one year but not more than five years Nil Nil

b) For cementing services during workover operation, equipment and personnel from Schlumberger Asia Services Limited have been hired. The arrangement is cancelable at the option of either party to the contract.

c) Wire-line logging of core holes has been contracted to Scintrex Geophyscial Services (India) Private Limited, which includes hiring of drilling equipments along with the services of its crew. The lease terms include rate of equipments hiring along with the payments towards non-lease elements. The lease arrangement is not cancelable and terminates only on happening of a 'force majeure' event. The work was completed as on 30 September 2006 under this arrangement. The Company has not entered into a new arrangement with the contractor during the current period under review.

d) The Wire-line logging and perforation services for production wells have been contracted to HLS Asia Limited. The terms of contract include separate payment arrangements towards lease and non-lease payments. The lease arrangement is cancelable at the option of either party to the contract. The work was completed as on 20 December 2006 under this arrangement. The Company has not entered into a new arrangement with the contractor during the current period under review.

e) The Company has entered into two different arrangements with Mitchell Drilling Operations PTY Limited and Mitchell Drilling International PTY Limited for drilling of production wells and core holes respectively. The terms of contract include comprehensive payment rates to include both lease and non-lease elements which are not separable. The arrangement is cancelable at the option of either party to the contract. The work was completed on 6 October 2006 under these arrangements. The Company has not entered into a new arrangement with the contractor during the current period under review.

f) For cementing and fracturing of wells, equipment and personnel from BJ Services Company Middle East Limited have been hired. The arrangement is cancelable at the option of either party to the contract. The terms of contract include separate payment arrangements towards lease and non-lease elements. The work was completed as on 21 December 2006 under this arrangement. The Company has not entered into a new arrangement with the contractor during the current period under review.

The arrangements mentioned in (b) to (f) include non-lease elements also and are being treated as capital work-in-progress along with other costs. The segregation of lease and non-lease elements under some of these arrangements is not possible. The details of total expenses during the six months period ended 30 September 2007 are as follows.

For six months period ended 30 September 2007 2006 Towards Minimum Lease payments:- Cementing and fracturing charges 229,100 834,937 Logging and wire-line charges NIL 502,400 Towards Lease payments under arrangements where lease and non-lease payments are combined Drilling Charges (including core hole drilling) 20,093 2,881,239

g) The Company has taken a building on finance lease, the net carrying amount of which is $293,894 (30 September 2006: $273,524). The entire consideration has been paid during the year 2005-06(and there are no future lease rentals payable.

h) The Company has acquired a property under an operating lease for an initial period of three years renewable by mutual consent on mutually agreeable terms. The lease is also cancelable at the option of either party by serving of appropriate notice. The lease rental of $ 50,511(30 September 2006: $42,768) incurred has been charged to the profit and loss account.

i) The Company has entered into a contract with Indian Compressor Limited for hiring of compressors on operating lease basis, which is cancellable subject to certain conditions. The lease period is for two years and further renewable for same period of time. The lease rentals of $12,790 (30 September 2006: Nil) has been paid during the year.

j) The Company has taken land on lease on which wells are being developed. The lease period ranges from 30-99 years. The entire amount of consideration in the form of lease premium has been paid upon acquisition. The premium paid for the period amounts to $58,799 (30 September 2006:$20,593), which has been disclosed separately under the head current and non- current assets.

14. Commitments and Contingencies

a) The claim from Directorate General of Hydrocarbons (DGH), Government of India, towards additional fee of $ 103,171 (31 March,2007 -$ 94,058) for Gas Exploration Licence, continues to be under arbitration with both the parties to the dispute filing their additional comments on the matter with the Arbitrator. During the period, DGH has also raised claim towards interest on the amount of shortfall, since the date of the contract. Such additional amount of interest amounts to $ 137,518 (31 March 2007: $209,271) which along with the original claim has been treated by the Company as a Contingent Liability. There has been no other change to the Contingencies as were existing as at 31 March 2007.

b) Prepayments (Current) include $54,439 (31 March 2007: $49,630) recoverable M/s Adkins Services Inc., (Adkins), a drilling contractor which has been fully impaired. The contract with Adkins was terminated by the Company on the ground of non-performance and continued breach of contract. The Company in addition to the above amount has made a claim of $4.98million (31 March 2007 : $4.54 million) for damages on account of delay in providing the services by the said contractor. The Contractor has also filed a counter claim of $7.00 million (31 March 2007: $6.38 million) against the Company for loss of profit, damages etc which the Company disputes. The contractor has also claimed, interest at the rate of 15% per annum from August 2004 till the date of realization, interim award and costs incurred on litigation. The Company had filed an application before Hon'ble High Court at Calcutta for the appointment of Presiding Arbitrator for the arbitral proceedings to be started. The Hon'ble High Court at Calcutta vide its order dated 18 March 2004 has appointed the Presiding Arbitrator. Necessary adjustments, if any, will be made in the financial information once the arbitration proceedings are complete.

There are no new contingencies existing for the Company, other than those mentioned above arising out of activities and operations during the six months period ended 30 September 2007.

15. Capital Commitments At 30 September 2007, the Company has following Capital Commitments. As at September 30 2007 2006 Capital Assets 8,750,868 1,932,215 16. Key business developments

a) During the period the Company has awarded the contract for lying of MDPE pipe line, to Universal Energies Ltd . Laying of MDPE pipeline pursuant to the contract has commenced during the period. This pipeline would facilitate interconnection of wells to GGS. Pipeline laying activities are expected to be completed by December 2007.

b) The Company has also awarded contract to Sopan O & M (P) Ltd for supply and commissioning of GGS packages. It is expected that installation of process equipment will be completed by December'07 end. After completion of process equipment installation, GGS will be able to compress CBM into CNG as well as be able to deliver the gas through pipeline.

c) The Company has awarded contract to M/s. Universal Energy Ltd for lying LPE coated steel pipe line. This pipe line will be used for the transportation of CNG from Gas Gathering Station ('GGS') to nearby City Gas Station (CGS) and different small outlets from where gases will be distributed to the different customers

d) Pursuant to the Company's plan to drill addition wells in the next phase and to meet the capital requirement thereof, the Company has appointed SBI Capital Markets Limited ('SBI Cap'), a consultant to facilitate raising of funds. The Company intends to borrow $ 88.07 million from a consortium of banks and financial institutions to fund the future project expenses. The Company has obtained sanction letters for an amount of $74.23 million as at 12 November 2007. Disbursement of entire loan amount would be dependent upon obtaining the sanctions for remaining balance of $ 13.84 million.

17. Events occurring after balance sheet date

The Company has entered into an agreement with Indian Oil Corporation Limited (IOC) on 30 October 2007, for sale of Coal Bed Methane Gas and developing City Gas Distribution network including CNG retailing in the state of West Bengal in India

18. Foreign Currency Translation

The Company has converted Indian Rupees ('INR') balances to $ equivalent balances on the following basis:

- For conversion of all assets and liabilities, other than equity, as at the reporting dates, the exchange rates prevailing as at the reporting date have been used, which are as follows:

- as at 30 September 2007: $1 = INR 39.74 - as at 30 September 2006: $1 = INR 45.96

- For conversion of all expenses and income on income statement and the cash flow statement, for the respective periods, periodic average exchange rates have been used, which are as follows:

- For the six months period ended 30 September 2007: $1 = INR 40.86 - For the six months period ended 30 September 2006: $1 = INR 45.95

- For conversion of issued Share Capital and Share Premium, historical exchange rates prevailing on the respective dates of issue of shares have been taken into consideration.

- For conversion of authorized share capital, historical exchange rates prevailing on the respective dates of authorization of such share capital have been taken into consideration.

19. Related Party Disclosures

The Company has transactions with following related parties during the periods ended 30 September 2007 and 2006.

As at 30 September As at 30 September 2007 2006 a) Shareholders having - YKM Holdings Pvt. - YKM Holdings Pvt. Significant influence Ltd. Ltd. b) Key Management - Mr. Y K Modi - Mr. Y K Modi Personnel - Mr. P Murari - Mr. P Modi (upto 31July,2006) - Mr. Kashi Nath Memani - P K Roy (upto 17 August 2006) - Mr Haigreve Khaitan - Mr. P Murari - Mr. Serajul Haq Khan - Mr. Kashi Nath Memani - Mr Paul Sebastian Zuckerman - Mr Haigreve Khaitan - Mr. Serajul Haq Khan - Mr Paul Sebastian Zuckerman c) Relative of key management - Mr Prashant Modi personnel d) Entities that are - Indian Purchase.com - Indian controlled, jointly Infoware Limited Purchase.com controlled or significantly Infoware Limited influenced by, or for which significant voting power in - Khaitan & Co. - Khaitan & Co. such entity resides with, directly or indirectly, any - Centurian Bank of individual or close family Punjab Limited member of such individual Referred to in (b) above - KNM Advisory Private Ltd For further information: Great Eastern Energy, YK Modi, Chairman & CEO, +44(0)20-7743-6663, Prashant Modi, President & COO, +44(0)20-7743-6663; Pelham Public Relations Philip Dennis, +44(0)20-7743-6663, Hugh Barker, +44(0)20-3008-5009; Arden Partners Richard Day, +44(0)20-7398-1632, Tom Fyson.

Great Eastern Energy Corporation Ltd.

CONTACT: For further information: Great Eastern Energy, YK Modi,Chairman & CEO, +44(0)20-7743-6663, Prashant Modi, President & COO,+44(0)20-7743-6663; Pelham Public Relations Philip Dennis,+44(0)20-7743-6663, Hugh Barker, +44(0)20-3008-5009; Arden Partners, RichardDay, +44(0)20-7398-1632, Tom Fyson.

Source: PRNewswire-FirstCall

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