Indus Gas : Preliminary financial results

29th September 2017

Indus Gas Limited ('Indus' or 'the Company')

Preliminary Financial Results

Indus Gas Limited (AIM:INDI.L), an oil and gas exploration and development company, is pleased to report its full year results for the 12 months to 31 March 2017.

• The Integrated Field Development Plan for the SSG (Pariwar) & SSF (B&B) area of 2,000 km2 was approved by the Directorate General of Hydrocarbons (DGH) and Ministry of Petroleum and Natural Gas (MoP&NG).

• The revised Field Development Plan ('FDP') in respect of the SGL area for the enhancement of production to about 90mmscfd has been approved by the Management Committee having representative of MoP&NG, DGH & Contractors/Companies.

• Successfully drilled development wells, which showed good results.

• The new gas sand reservoir was successfully exploited for production.

• Discussions are ongoing with potential buyers including GAIL for finalizing the prices of additional gas. Discussions are also being held for finalising the gas pipeline to evacuate additional gas supply from the SSG & SSF Development area of 2000 km2 of the block. The additional production of SSG & SSF area has been approved to be about 200mmscfd.

  Financial:

• Total revenues increased to US$ 54.57m (2015-16: US$ 45.60 million).

• Reported operating profit increased to US$ 41.51m (2015-16: US$ 33.15 million).

• The profit before tax increased to US$ 43.78 million (2015-16: US$ 29.71 million).

• Investments were made in property plant equipment, exploration and evaluation assets amounting to US$ 88.80million.

The financial period witnessed a continuation of the extremely challenging and volatile conditions facing the global oil and gas sector. However, the Company's activities continue to gather momentum. The approval of the integrated FDP for the SSG and SSF area coupled with the revised FDP for the SGL acreage represented major milestones achieved in 2017.

The Company's strong operational and financial performance is highlighted by another year of improved revenue and profit generation. The Board continues to anticipate a substantial increase in revenues once the additional gas supplies commence under the new FDP approval for SSF and SSG.

In accordance with the AIM rules, Paul Fink, Technical Consultant, a Geophysicist who holds an engineering degree from the Mining University of Leoben, Austria and has 25 years of industry experience is the qualified person that has reviewed the technical information contained in this release.

-ENDS-

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Since flotation in June 2008 the Company has executed a clear and consistent strategy with the central objective being to maximise long term shareholder value creation from our license block. This strategy has delivered prolific exploration success as evidenced by the rapid growth in our underlying reserves base and the successful execution of the first production phase.

Development and appraisal activity has continued at a rapid pace in the last twelve months. This drilling and appraisal programme has provided further valuable insight into the gas structures present in the western half of our block.

Indian energy security remains one of the key challenges facing the government. India continues to be a major net importer of energy. This energy deficit can only be addressed through major investment programmes in long term infrastructure build and incentivising domestic energy companies to increase exploration and production.

Indus is pleased to announce another year of good achieving consolidated total revenues of US$ 54.57 million. We have continued to increase operating profits and our stated long term business plan remains on track. An integrated FDP for the SSG & SSF area of the Block, for future enhancement of revenues, has been approved by Managing Committee. Tie ups for evacuation and sale of the additional gas are in progress.

A summary of activities since April 2016 is provided below:

The company has achieved total revenue of US$ 54.57 million in the financial year ended March, 2017.

Operational activities over the last year have followed the Group's key objectives:

1. appraisal drilling to support the integrated FDP;

2. drilling and completion of production wells for the SGL field development continued as planned to meet contracted and planned gas sale requirements;

3. testing various wells previously drilled, where gas shows were encountered to enable the Group to increase its reserve base; and

4. testing the B&B gas recovery potential in addition to gas discovered in the Pariwar formation.

The current drilling programme is progressing on schedule and producing positive results. Now that the FDP for SSG & SSF Development area has been approved, we continue to test concepts and obtain log and core data for analysis outside the SGL area. In the SGL area work continues to expand knowledge of the producing intervals. Additional testing is part of a programme to enhance production and maximize recovery of gas through good asset management. Activities such as these will increase as we obtain and act on new data and production history. An important development in respect of SGL Field was the discovery of new sands within Pariwar. These were located just below the existing producing upper P10 sands. These reservoirs were successfully exploited for production and going forward will add to the reserves and production from existing and new wells.

During the financial year, the Company achieved total revenue of US$ 54.57 million, resulting in reported operating profit of US$ 41.51 million (2015/16 US$ 33.15 million). The reported profit after tax was US$ 25.38million (2015/16 US$ 15.71 million) after a foreign exchange gain of US$ 2.27 million (2015/16 foreign exchange loss of US$ 0.37 million).

While the Company is not expected to pay any significant taxes on its income for many years in view of the 100% deduction allowed on the capital expenses in the Block, the Company has accrued non-cash deferred tax liability of US$ 18.40 million as per IFRS requirements.

Post this deferred tax liability provision, the net profit for the year was US$ 25.38million.

The expenditure on the purchase of property, plant & equipment was US$ 88.80 million. The property plant and equipment including development assets and production assets increased to US$ 639.86 million.

The current assets (excluding cash) as of 31 March 2017 stood at US$ 7.66 million, which includes US$ 5.58 million of inventories and US$ 2.04 million of trade receivables. The trade receivables are mainly on account of receivables from GAIL. The current liabilities of the Company, excluding the related party liability of US$ 5.57 million and current portion of long term debt of US$ 46.61 million, stood at US$ 5.21 million. This comprised mainly of deferred revenue of US$ 5.08 million (GAIL Take or Pay Payment) and other liabilities of US$ 0.13 million.

As of 31 March 2017, the outstanding debt of the Company was US$ 286.26 million, out of which US$ 46.61million was categorised as repayable within a year and the remaining US$

239.65 million has been categorised as a long term liability. During the year, the Company has repaid an amount of US$ 34.22 million of the outstanding term loan facilities, as per the scheduled repayment plan.

During the next twelve months, we expect a further step change in the growth of the Company. Following FDP approval for both SGL and SSG & SSF Development area, we shall look to develop the 2176 km²of the Development area. Existing production from SGL area is also expected to increase with the approval of FDP. We look forward to continue drilling success in both Pariwar and B&B. Negotiations on the new gas sales contract with GAIL are on-going. The Company is discussing connection arrangements to the pipeline for the additional gas which will enable connectivity to the national gas grid supplying customers in Gujarat, Rajasthan and Punjab.