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(Reuters) - Canadian oil and gas producer Niko Resources Ltd (NKO.TO) posted a quarterly loss on lower production from the D6 block off India's east coast, and warned output decline could continue at the site majority-owned by Reliance Industries (RELI.NS).
Natural gas production from the D6 block, which contributed 79 percent of Niko's total production last year, has been declining as fewer wells were drilled than planned and six wells ceased to produce due to the entry of sand or water.
Third-quarter production at the D6 block fell to 143 million metric cubic feet per day (mmcfd) from 195 mmcfd a year ago, Niko said in a statement.
The decline is expected to continue until workovers are completed and additional wells are tied in, it said.
Total gas output from the block could fall below the current 38-39 million cubic meters a day (mmscmd), under half of the estimated peak rate of 80 mmscmd, India's upstream regulator said last month.
Reliance last year tied up with BP (BP.L) to develop the D6 block, and the British firm has said production from the field could rise from 2014.
Niko's October-December loss was $40.4 million, or 78 cents a share, compared with a profit of $25.8 million, or 50 cents a share, a year ago.
Revenue fell about a quarter to $74.79 million.
Shares of Niko, which have lost about 17 percent of their value in the last three months, closed at C$47.79 on Wednesday on the Toronto Stock Exchange.
Reporting by Shounak Dasgupta in Bangalore; Editing by Don Sebastian