(Reuters) - Oil and gas producer Niko Resources Ltd (NKO.TO) said the sale price of gas from its wells in India may nearly double, offering a ray of hope as the company reported its seventh quarterly loss in a row on Thursday.
Niko said the gas price was likely to rise to between $8 and $8.50 per million British thermal units (mmBtu) based on a pricing formula recommended by an Indian government panel. The recommendation now goes to the Indian cabinet for consideration.
Niko has a 10 percent working interest in the Krishna Godavari (KG) D6 block off India’s east coast, which accounted for 61 percent of the company’s sales in the third quarter.
Niko has suffered a string of setbacks. It has abandoned wells in Indonesia and Trinidad, cut its production forecast due to mechanical issues at a block in Bangladesh and faced declining output from the D6 block in India.
Niko’s net loss doubled to $93.7 million, or $1.64 per share, in the October-December quarter from $40.4 million, or 78 cents per share, a year earlier.
The government gas pricing panel, headed by C. Rangarajan, a key adviser to the Indian prime minister, recommended a pricing mechanism for domestic gas production based on the average of the import price for liquefied natural gas into India and a volume-weighted average of gas prices in North America, Europe and Japan.
However falling production in the D6 block will erode the effect of a higher price, unless new supplies come on line, Niko said.
Output is likely to continue to fall unless production is added from new fields in the D6 block, it said.
The company has identified three additional areas in the D6 block for potential development.
Niko’s global quarterly production of 145 million cubic feet equivalent per day was 34 percent lower compared to a year earlier.
The company’s oil and natural gas revenue fell 38 percent to $46.5 million in the quarter ended December 31, mainly due to production declines and greater-than-anticipated presence of water in the D6 Block.
Reporting by Bhaswati Mukhopadhyay and Swetha Gopinath; Editing by Sreejiraj Eluvangal and Rodney Joyce