India focused Hardy Oil & Gas (HDY) slumps 11.6% to 95p as it announces that, along with its partners, it is reviewing its investment in its key D3 project in the Krishna-Godavari basin due to gas price uncertainty.
This follows the introduction of a new formula by the new Indian government, unveiled in October, which prescribes a much lower price than the $8.4 per million British thermal units (mmBtu) approved by the previous regime. The group has also not yet finalised a field development plan (FDP) for the PY-3 development which is critical to its target of recommencing production in 2015.
The company says it has 'made good progress towards this goal' but notes there remain key commercial considerations - principally regarding levy obligations - which need to be resolved by the government prior to the FDP being formally considered.
The news accompanies interim results from Hardy Oil & Gas which show a loss of $1.4 million for the six months to 30 September compared to a loss of $3.1 million for the same period in 2013. The narrowing is due to forex movements and unrepeated one-off charges. With cash of $22.9 million as at 30 September 2014, and no debt, the company is not under immediate pressure in terms of its balance sheet in the context of a first half cash outflow of $1.8 million.