Final Results

Jubilant Energy N.V.

("Jubilant" or "the Company")

AUDITED RESULTS FOR THE YEAR ENDED 31st MARCH 2011

Jubilant Energy N.V., the upstream oil and gas company with assets in major proven and prolific hydrocarbon basins in India, is pleased to announce its audited consolidated results for the year ended 31st March 2011.

HIGHLIGHTS

Producing Asset

·; Average gross production of 1,809 bopd in FY 2010-11, equating to 452 bopd net to Jubilant.

·; Multiple work programmes in place to achieve increased production from the Kharsang field.

·; Development drilling programmes of five commitment and two contingent wells, to further increase production will commence in July 2011.

·; Programme also includes the drilling of a deeper exploration target in August 2011. Management estimate of the gross un-risked prospective resources is 450 Bcf.

·; Updated reserve estimates and new production profile of Kharsang field are expected to be announced before the end of the financial year.

Exploration and appraisal activities

·; Appraisal well DDE-APP-1 in KG, spudded on 1 January 2011, has been drilled to a measured depth of 5,621 meters and is currently under testing.

·; Over 85% of 187 lkms of appraisal seismic acquisition programme in Tripuracompleted to date.  

·; Srikantabari well in Tripura due to be spudded in July 2011. The well will be drilled to 3,100 metres TVDss with Managed Pressure Drilling (MPD). Management estimate of gross un-risked prospective resources is 480 Bcf.

·; Retesting of the Kathalchari well is planned and will be undertaken after Srikantabari well drilling.

·; First stage of surface geological mapping in the two Manipur blocks, started in January 2011, has been completed.

·; First stage seismic acquisition programme of 65 lkms in Manipur north block commenced in April 2011. The second stage seismic programme and gradiometry survey have been planned for October 2011.

·; First exploration well in Golaghat, spudded in March 2011, was plugged and abandoned.

Development activities in the KG Basin

·; Development drilling in Deen Dayal West expected to commence in August 2011.

·; Well head jacket and platform have been set and the platform is ready for drilling.

·; Onshore gas terminal (OGT) progress is ahead of schedule and is 23% complete.

·; Production Living Quarter Platform (PLQP) tender was awarded to Larsen & Toubro in April 2011 for USD 317 million. Pipeline letter of award for USD 185 million has been issued to Punj Lloyd.

·; KG Management Committee has recommended the grant of an extension to the existing development area by 20.5 square kms. The Company expects that this extended area will increase the existing 2P reserves and 2C resources for KG block. An update on reserves and resources will be announced once the necessary approvals have been received.

Financial Highlights

·; Raised equity of USD 85 million (GBP 53.4 million) as part of an AIM float in November 2010.

·; Revenues of USD 13.6 million, 8% higher compared to the previous financial year.

·; Average oil price realised over the year was USD 84.9 per barrel (premium to Brent), 22% higher compared to previous year.

·; Loss before tax of USD 42 million, against a loss of USD 33 million in the previous financial year, mainly due to higher interest expense and Mehsana Block impairment of USD 23.7 million.

·; Capital expenditure of over USD 30 million during the year, USD 113 million budgeted for FY 2011-12.

·; Secured a new debt facility of USD 72 million with a four year capital repayment moratorium.

·; Repaid USD 50 million EXIM loan along with accrued interest of USD 20.9 million in March 2011.

·; New loan sanction of USD 50 million from EXIM Bank, subject to completion of loan documentation, expected to be complete in the next quarter.

·; Current total debt facilities of USD 345 million (excluding new EXIM loan sanction of USD 50 million), of which USD 97 million was undrawn as on 31st March 2011; Net debt of USD 213 million.

·; Strong cash position of USD 34.8 million on 31st March 2011. Post completion of the new EXIM loan, available Cash and undrawn facilities of USD 182 million, adequate to fund the work programme until mid 2012.

The Annual General Meeting has been convened on 5th August, 2011 in Amsterdam. The full version of the annual report for the year ended 31 March 2011 and the notice of the AGM will be posted to the shareholders and will be available on the Company's website at www.jubilantenergy.com on 6th July 2011.

Shyam Bhartia, Chairman and Hari Bhartia, Co-Chairman of the Company commented:

"This has been a historic year for the Company from a corporate point of view and 2011-12 promises to be an exciting year from an operational perspective. Jubilant has a clear and focussed strategy with sufficient funding to maximise the opportunities that the Indian macroeconomic environment offers. The diverse and balanced portfolio of assets provides huge growth opportunities. This is an exciting time to be involved and invested in Indian oil and gas and Jubilant is well positioned to maximise these opportunities."

30 June 2011

For further information, please contact:

Competent Person's - Consent for Release: Maxwell Birley, BSc in Geological Geophysics, the Company's Chief Operating Officer, has 30 years of international experience in the exploration and production industry. He has reviewed and approved the technical information contained in this announcement pursuant to the AIM guidance note for mining and oil and gas companies.

Chairman and Co-Chairman's Statement

Last year was a historic year for the Company. The undoubted highlight was Jubilant's successful listing on the AIM market of the London Stock Exchange in November 2010. This was the culmination of many months of hard work and determination by the team. This was a huge achievement for the Company and everyone involved, especially considering the prevalent economic and market conditions. Jubilant raised USD 85 million, which, together with available bank facilities and the new EXIM facility, funds the Company's exciting work programme to the middle of 2012. We are also delighted, as principals of the Jubilant Bhartia Group, that Jubilant Energy has achieved our long held aim of one of our companies gaining a listing in London.

Following the IPO, this is our first disclosure of annual results for Jubilant Energy and we would also like to take this opportunity to welcome all our new shareholders of the Company. We look forward to keeping you apprised as the Company continues to develop and grow in the future.

Jubilant continues to deliver on its strategy of maximising E&P opportunities to create sustainable shareholder value. This strategy, of exploiting the prevailing macroeconomic drivers in India through the development of the Company's diverse portfolio of exploration, development and producing assets, is to create a pure play on the Indian energy market and to exploit the opportunities that the market offers. In particular, the development of the Deen Dayal West field in KG block is on course to deliver first gas production in 2013, demonstrating that the development of our assets is gathering pace. Further, the Company is well positioned to add value through its on-going work programme and continues to strengthen its portfolio in areas that play to the strengths and expertise of the Jubilant team.

Indian Macro Environment

India is one of the fastest growing economies in the world and the fourth largest economy in terms of GDP (in PPP terms). The primary growth drivers for boosting energy demand in any economy are growing population and rising income levels. India has both of these combined with a favourable demography and increasing disposable income. More people with increasing income suggest that the production and consumption of energy may continue to rise. Currently, India is the fifth largest energy consumer and expected to be third largest after US and China by 2025. With a targeted GDP growth rate of over 9 per cent, India's energy demand is expected to grow at approximately 5.2 per cent.

Natural gas is projected to be the fastest growing fossil fuel globally until 2030. In 2009, the world's proven gas reserves were estimated at approximately 6,621Tcf, sufficient to cater to current levels of production for 63 years. In addition to this, unconventional sources could add another 30 years of gas supply globally. Asia is likely to account for the world's largest production and consumption increments.

India's per capita energy consumption as compared to the rest of the world is strikingly low. To put it into perspective, India only consumes a quarter of the energy per capita as China does. The primary source of energy for India continues to be coal, but this dependency on coal is expected to decrease due to heightened environmental concerns and the availability of cleaner sources of energy such as natural gas. Natural Gas currently accounts for around 10% of India's energy basket which is expected to reach 20% by 2030 (i.e., nearly 600 mmscmd). It is worth highlighting that 65-70% of India's population is dependent on agriculture for livelihood and any adverse effect brought about by climate change would have a much bigger impact on the overall growth of the country as compared to other developed economies. This realisation has dawned upon the policy makers and even the Honourable Supreme Court of India has mandated the introduction of CNG in many of the highly polluted metro cities.

At present, the demand for natural gas is largely met through domestic production with imports contributing to 20% of total consumption, whereas 80% of crude oil is imported. It is predicted that India could become the second largest natural gas consumer in Asia by 2015, implying that there is considerable potential for the use of natural gas to increase.

The strong economic fundamentals coupled with the ongoing demand and supply gap indicate that LNG could be the price setter in the market. This, in conjunction with certain contracts (such as the Reliance KG contract) coming to an end, could ensure that in the near future India will have a favourable pricing regime and a deregulated gas market that allows for free marketing and pricing of gas.

The Indian natural gas market has undergone numerous changes in recent times that have helped attract investments and create new sources of demand and supply. The increased emphasis on gas usage can be seen by the fact that India is planning to double the capacity of its natural gas trunk pipeline over the next three to five years. This expansion aims to bridge all the major gaps in the current pipeline network to ensure access to gas across the country. This expansion programme would see addition of about 7,000 km trunk pipeline length by 2013 and another 7,000 km of pipeline to be installed by 2018.

India is undoubtedly a land of enormous opportunity and even more so in the case of the oil and gas industry. Only 22% of the country's sedimentary basins have been well explored in depth and 34% of the basins are either unexplored or poorly explored. These unexplored and poorly explored basins offer huge opportunity to an emerging Indian oil and gas company such as Jubilant.

These growth catalysts and value drivers are key to both India and to Jubilant. The ever expanding gap between supply and demand coupled with growing gas demand and increased awareness about cleaner fuel marks a very exciting time for the Indian gas market. These are the opportunities that Jubilant is well positioned for and is looking to capitalise upon through its holistic growth strategy.

Year Under Review

Jubilant has made good progress across its assets during the period under review as well as after the period end. Whilst the Company's current portfolio consists of seven blocks, the main focus of our operations has centred upon KG Deen Dayal structural complex, Kharsang oil field, Tripura and the two Manipur blocks. These blocks will continue to be the mainstay of the Company's focus going forward.

Jubilant's only producing block is Kharsang. Average gross production was 1,809 bopd, equating to 452 bopd net to Jubilant. The marginal decline from the previous year can be attributed to the need for work over activities designed to increase production and improve recovery in the future. Multiple work programmes are in place to achieve increased production from the Kharsang field with the operator currently planning to undertake the Phase-III drilling programme in July 2011. This drilling programme includes five commitment wells and two contingent wells. The programme also includes the drilling of a deeper exploration well in August 2011, targeting a total depth of approximately 2,600 metres, which will be below the Kharsang thrust. The new reserve estimates and production profile of the Kharsang field are expected to be announced before the end of the financial year.

The development of the Deen Dayal West Field in the KG Block is ongoing. The appraisal well DDE-APP-1 was spudded on 1st January 2011. This is the second appraisal well in the DD East area of the KG block. The well was drilled with the objective of appraising the hydrocarbon bearing sands discovered by the KG-16 well. The results of this well are expected in July 2011 on completion of the testing programme. Jubilant is also delighted to announce that post year end the Management Committee for the KG Block has recommended the grant of an extension to the development area by 20.5 sq kms.

On the appraisal and exploration side, Jubilant has continued to move ahead with its activities on the Tripura, Manipur and Golaghat Blocks. Tripura is a highly prospective gas area surrounded by the Bangladeshi gas fields. The Company has continued with an exploration and appraisal programme at Kathalchari-1 and is expecting to begin testing in Q3 2011. The Srikantabari well will be spudded in July 2011 with the results expected by the end of September 2011.

On the Manipur blocks, Jubilant has completed a topography reconnaissance survey and the first stage of seismic programme is nearing completion. This makes Manipur the most advanced of any of the NELP-VIII blocks. The first stage of the seismic programme may potentially advance the drilling programme to 2012.

The first exploration well in the Golaghat block was spudded in March 2011. Whilst it was disappointing that no hydrocarbons were encountered, this is a non core asset and it is unlikely any further drilling will take place in the next 1-2 years.

Finance Overview

The highlight of last year from the financial side was the Company's USD 85 million fund-raising in November 2010, which, along with the Company's debt finance, provides Jubilant with sufficient funds to carry out the Company's work programme until middle of 2012. Jubilant plans to raise further funds through optimal sources. In the period under review, the Company achieved revenues of USD 13.6 million, up 8% on the previous year.

Corporate

We were delighted to announce the appointment of Mr. Shahzaad Siraj Dalal, as a Non Executive Director of the Company. Mr. Dalal brings a wealth of experience across a wide range of industries, including oil and gas, and his appointment further deepens the industry expertise within the Company. His knowledge and understanding of overall planning and of raising resources in infrastructure projects will be invaluable for the Company as it moves forward. We would also like to take this opportunity to thank our exceptional Board who have continued to work with the Company's executive team providing invaluable support and guidance throughout the last year especially around the IPO.

There has been much organisational change within Jubilant during the last year and we would again like to take the opportunity to thank all the people involved in making 2010-11 a memorable year for Jubilant - their time, energy, patience and hard work has been greatly appreciated and we cannot thank them enough.

Outlook

This has been a historic year for the Company from a corporate point of view and 2011-12 promises to be an exciting year from an operational perspective.

Jubilant has a clear and focussed strategy with sufficient funding to maximise the opportunities that the Indian macroeconomic environment offers. The diverse and exciting portfolio of assets provides huge growth opportunities. This is an exciting time to be involved and invested in Indian oil and gas and Jubilant is well positioned to maximise these opportunities.

CEO Statement

This was a year of significant achievement for Jubilant. The Company continued to make excellent progress operationally whilst the highlight from a corporate point of view was Jubilant's successful listing on the AIM market of the London Stock Exchange in November 2010 raising USD 85 million. This was achieved against a backdrop of tough economic conditions, putting us in the enviable position of being fully funded until the middle of next year.

Operationally, Jubilant delivered a strong performance during the year under review, reinforcing the Company as one of India's key emerging oil and gas businesses. Jubilant has built, and will continue to build, an exciting portfolio of assets, across all aspects of the E&P cycle, in the proven and prolific hydrocarbon basins of India. The Company's continued focus has been on the early monetisation of its key assets as it looks to continue its ethos of creating sustainable shareholder value by building and exploiting its diverse portfolio of exploration, development and producing oil and gas assets.

Strategy

Jubilant Energy is an emerging oil and gas player in India. Jubilant is in an ideal position to "fill" the gap in the Indian Oil & Gas market which exists amongst large state owned companies, few big independent companies and some smaller private companies. We plan to capitalise on the opportunities and key growth drivers that currently prevail in the Indian macro environment. We see the following growth drivers:

- Strong economic fundamentals and the demand and supply gap: The demand for gas in India far exceeds supply and by 2015 some forecasts suggest that India will have overtaken Japan to become the second largest gas market in the Asia-Pacific region. This is driven by favourable demographics, increasing gas infrastructure and impressive pace of industrial growth. With the gas supply historically constrained, India's current energy mix is skewed towards coal. Whilst coal is expected to remain a major energy provider, the share of natural gas in this mix is expected to double between 2010 and 2020.

- Favourable pricing regime: The prevailing gas price of the majority of domestic gas ranges from USD 4.2/mmbtu (for core sector) to USD 5.7/mmbtu, however there are a number of factors applying pressure for a further increase in price. With the evolving market dynamics of gas contracts in India where a large number of such contracts are coming to an end in the near future, and some recently signed LNG contracts in Asia, this suggests that Indian gas prices may increase. With no further APM gas allocation combined with continued domestic production limitations and a growing share of crude prices linked LNG, Indian gas prices could potentially increase. At present, a large number of industrial and commercial enterprises are dependent on liquid hydrocarbons for meeting their energy requirements and it is expected that the natural gas with its winning attributes of being a clean and economical fuel will induce a switch. 

- Pipeline Infrastructure: India is planning to double the capacity of its gas pipeline infrastructure over the next three to five years with the aim of providing market access to almost all of India. This should certainly enable the Company to commercialise its gas at competitive prices.

- Unexplored Basins: India has approximately 3.14 million sq km of sedimentary area across 26 basins. Of these only 22% have been well explored, with 44% having exploration initiated and 34% being unexplored or poorly explored. With highly evolved NELP licencing rounds, which provides a level playing field and expected introduction of the Open Acreage Licensing Policy (OALP) in 2012, Jubilant has significant opportunities to gain further domestic acreage in the near future.

- Industry Structure Opportunity: Currently, the Indian oil and gas market is made up of some large Government-backed entities and a few big independent operators, with a huge gulf in terms of scale to the next tier of companies such as Jubilant. With its balance portfolio, established technical skills and local focus, our Board believes that Jubilant is uniquely and advantageously placed compared to its peers in India to reap the benefits that the Indian Oil & Gas sector has just begun to offer.

Operations Overview

The Company's portfolio consists of seven oil and gas assets at various stages of exploration, appraisal, development and production both on and offshore India. During the last year, Jubilant has continued to focus on the key blocks in its portfolio. These are the assets that the Company believes offer the most upside and most immediate growth prospects for the group as well as delivering future shareholder value.

Production and near term production upside - Kharsang Field (WI 25%)

The Kharsang Field, located in the Upper Assam basin in the north-eastern region of India, is the Company's oldest and only producing asset. The block is operated by Geo Enpro Petroleum Ltd and Jubilant has a 25 per cent working interest. The field has 56 wells, of which 32 wells were in production as at 31st March 2011. Production for the period averaged 1,809 bopd, with net production of 452 bopd to Jubilant, compared with the previous year which stood at 1,895 bopd and 474 bopd respectively. The marginal decline can be attributed to work-over activities carried out by the operator, in order to achieve an increased production and recovery factor in the future. The current recovery factor as estimated by Gaffney Cline and Associates (GCA) is 11% and we plan to increase it to about 20% in line with the industry standards. The cumulative oil production from this field up to March 2011 has been 9.5 MMBbls. The nominated buyer for the oil is Indian Oil Corporation Limited, one of the India's large commercial enterprises.

The Company is actively working with the operator to increase gross production significantly above the earlier target of 2600 bopd by December 2012. This is part of the Company's strategy to maximise the potential of its producing assets. The operator is currently carrying out a work over campaign and the Phase-III drilling programme has been internally approved by the partners. This programme includes five commitment wells and two contingent wells and is expected to commence in July 2011. The programme also includes drilling a deeper exploration well in August 2011, which is expected to reach a total depth of approximately 2,600 meters in a section below the Kharsang thrust. The management estimate of the gross un-risked prospective resources is 450 Bcf.

The operator is currently working to update the existing field static model with the help of Geolink in France. The new model will include the 15 wells from the previous Phase-II drilling campaign. After this, the field dynamic model will be updated to assist the future development decisions of the field. After these two pieces of work are complete, it is expected that Jubilant will have new reserves and resources estimates audited and will provide updated guidance on a significantly improved production profile for the field by the end of the financial year. After the completion of the new static and dynamic models the JV partners will decide if further geophysical data is required to further improve the subsurface understanding of the field.

GCA has been retained to review the current work over, the Phase-III drilling plans and to provide development expertise where required. GCA and the operator will be evaluating various further projects that could significantly add to the future production from the field. These projects include the development of the heavy oil in the AB sands, water and gas reinjection to provide pressure maintenance and liquids removal from the gas stream.

The Company is also working on the acquisition of an additional 5 per cent effective stake in the block, from the wider Jubilant Bhartia Group, thereby strengthening its reserves, resources and production position. The techno-commercial evaluation is underway to determine the arm's length consideration. The transaction is expected to be complete by September 2011 and is subject to shareholders' approval.

Development programme - Deen Dayal Field, in the Krishna Godavari basin (WI 10%)

Facilities are currently under execution and the work programme is on schedule to achieve the first gas in 2013. Engineers India Limited is the project management consultant. The well head jacket and platform have now been set and the platform is ready for drilling. The Onshore gas terminal is 23% complete and ahead of schedule. The Production Living Quarter Platform tender has been awarded in April 2011 to Larsen & Toubro for USD 317 million, while the pipeline letter of award for USD 185 million has been issued to Punj Lloyd. The drilling of the development wells in DDW is likely to commence in August 2011. In total, 15 development wells are planned including 11 new wells and the re-completion of four existing wells as per the approved development plan.

The appraisal well DDE-APP-1, part of DDE, is located in 101 meters of water and was spudded on 1 January 2011. This is the second appraisal well in the DDE area and has been drilled to a measured depth of 5,621 meters, with the objective of appraising the hydrocarbon bearing sands of the KG-16 discovery well. The results of this well are expected by the end of July 2011. The cost of drilling this well is well below the original estimated cost of approximately USD 50 million.

The Management Committee of the block has recommended the grant of an extension to the existing development area by 20.5 square kms. The Company believe that this extended area will increase the existing 2P reserves and 2C resources for KG. An update on reserves and resources will be announced in due course after necessary approvals.

Exploration and appraisal upside

Tripura (WI 20%)

One of the Company's key aims is to unlock exploration potential in the North East of India within the Tripura Block, which is a proven low risk exploration asset. Under Phase-I of the Tripura exploration licence, which expired on 8th July 2010, the Consortium drilled three wells - Jailungpara-1, Kathalchari-1(K-1) and Ambasa North-1. The Kathalchari-1 well was declared as a discovery. The K-1 well was drilled to a depth of 3,428 meters and flowed at the rate of 5.2 mmscfd from the Middle Bhuban Sandstones. The consortium submitted Format A and Format B (Declaration and Details of Discovery respectively) for the K-1 discovery on 29th December 2009 and 25th February 2010 respectively. The Director General of Hydrocarbons approved the appraisal programme of K-1 on the 28 February 2011 and the plans include retesting the K-1 well and the acquisition of 187 lkms of 2D appraisal seismic. Based on these results, up to two appraisal wells may be drilled to evaluate the original discovery by early 2012.

The combined meterage drilled in the Phase-I wells was 10,181 meters against the MWP commitment of 10,000 meters. The Ambasa North-1 well could not be drilled to the targeted depth of 4,000 meters due to technical and operational difficulties. The Consortium has applied to the Government for substitution of excess meterage drilled in two wells against short meterage drilled in one well under the "Substitution Policy". The same is under consideration.

The appraisal programme at K-1 has been approved by the Operating Committee whilst the due date for the submission of the DOC for the discovery is not until 28th December 2012. Jubilant is currently acquiring the seismic data for the appraisal of K-1. As of date, 85% of 187 lkms have been acquired. It is envisaged that the survey will be completed by early July 2011 subject to rain conditions.

The Srikantabari well is due to be spudded in July 2011. The rig has been mobilised and assembled at the site. The well, which is targeted to test Middle Bhuban, is estimated to cost approximately USD 11 million. The well will be drilled with managed pressure drilling (MPD) to a depth of 3,100 meters TVDss and is estimated to take about ten weeks. The management estimate of the gross un-risked prospective resources is 480 Bcf.

Manipur (WI 100%)

Jubilant was awarded two Manipur Blocks as an operator with a 100 percent participating interest under the NELP-VIII round. The gross unrisked best estimate prospective resources for each of the five anticlines range from 380 Bcf to 1.43 Tcf. The knowledge and experience gained at Kharsang and the other blocks will be utilised to unlock the potential of these blocks.

Geological mapping within the blocks has already commenced and the topography reconnaissance survey of both blocks has been completed in order to clearly identify any logistical issues in the area. The work was carried out with the aid of the latest SPOT satellite imagery and the most up to date digital elevation model for the area. The survey was also followed up by a detailed helicopter reconnaissance to locate exposures of rock for the geological survey and to record in detail the accessibility of both blocks for the land base gravity and seismic surveys.

The first stage of surface geological mapping started in January 2011 and has been completed. Traverses were made across the whole area in order to understand the surface and subsurface geology in more detail. Based on this work, balanced cross sections and revised geological maps will be prepared. The anticlines identified from the existing geological map work were examined and numerous rock samples were taken to understand the stratigraphy, reservoir quality and geochemical potential for the area.

Initial reports from the survey seem encouraging from both a structural and source rock point of view. Jubilant has always felt that a petroleum system for gas exists on this acreage and based on some recent regional work the Company is now working to demonstrate the oil potential of this acreage in addition to the gas potential.

The area of both blocks amounts to 3,957 sq kms, which equates to nearly 22 North Sea Blocks or 70% of a North Sea Quadrant. As the exploration area is so large and as there is no geophysical data or well data available on these blocks, the Company is acquiring regional geophysical data to help guide the exploration programme in the future. Jubilant will be undertaking a land based regional and detailed gravity and magnetic survey in the near future. The Company has also contracted Bell Industries to undertake airborne gradiometer survey. This is the first time a gradiometer survey is being acquired in India and the approvals to acquire the survey may take some time.

The first stage 2D seismic programme of 65 lkms commenced in April 2011 and the consortium will continue to acquire data until the onset of the monsoon season. The Company is in process of evaluating on how to acquire the seismic for the second stage in the areas that have poor access away from the limited road network.

Survey is also taking place to see if any of the currently mapped surface anticlines can be drilled from a well location on or near an existing road. If a suitable location can be found on a structure, then the Company will consider spudding the first exploration well in the first half of 2012.

Other assets

Golaghat (WI 10%): Jubilant drilled its first exploration well on this 81 square km block in April 2011 to a total depth of 1,625 meters into the granitic basement without any show of hydrocarbons. The well, which is the first well of a seven well minimum work program commitment, was plugged and abandoned. According to the PSC the Joint Venture is committed to drill 6 additional wells as part of the Phase-1. However, the Joint Venture is still waiting for the forest land clearances from Ministry of Environment & Forest and is unlikely to undertake any further exploration drilling in next 1-2 years.

Sanand-Miroli (WI 20%): 20 wells have been drilled on the block so far, including three appraisal wells, with seven hydrocarbon discoveries. A DOC for the M1-M6 discoveries submitted in 2009 has been approved by the DGH and the FDP is currently under review by the consortium partners. A DOC for the south eastern cluster of wells was submitted to the DGH for approval at the end of July 2010. A farm out of the licence is being considered in order to focus on the Company's other assets.

Australia: Jubilant is in the process of evaluating ways of transferring the commitments to other offshore acreages in Australia. The Company has disputed the cash calls raised by the operator and the matter is currently under arbitration. The Company is also in discussion with operator for an amicable settlement.

Transfer of assets

The transfer of a 35% interest in the Golaghat block and 20% interest in the Ankleshwar block from the wider Jubilant Bhartia Group is pending subject to obtaining the Government's approval. The Company is also looking at a potential transfer of additional 5% effective interest in Kharsang block and the interest in Yemen blocks.

Health & Safety

The Company is committed to ensure the health and safety of all who work with Jubilant and to protect the environment in which it operates. Jubilant is committed to achieve excellent health and safety standards, to reduce accidents and ill health within the workplace and to minimise the impact of the Company's operations on the environment. The Company insists that all contractors should maintain the same high standards. Jubilant liaises closely with government departments, partners and other interest groups to comply with local laws and regulations and to minimise any disruption to the environment.

Jubilant seek to continuously improve the ways in which the Company contribute directly or indirectly to the economy and the well-being of the communities where Jubilant operates. Understanding and respecting local communities is essential to ensure Company's continued presence in the locations where it works. The Company maintains a continual dialogue with local communities and authorities through its local staff and senior management when visiting the operational locations.

People

One of the Company's key objectives during the year has been to add both technical depth and project execution skills not only at the Board and executive level, but throughout the business. Jubilant has considerably upgraded its human resources by significantly strengthening the technical team with experts with international exposure and local expertise. To ensure the Company could meet the increased challenges of being a listed entity, Jubilant also made several additions to the finance and commercial teams which have provided further depth and expertise to the company.

I would also like to add to the Chairman's words in thanking all our employees, contractors, consultants and their families for all their hard work during the year. Jubilant has an exceptional team of people in place and I look forward to continue to work with them in the year ahead delivering the Company's work programme and strategy.

Outlook

Last year, Jubilant continued to make excellent progress across its portfolio. The production at Kharsang has been in line with the plans and the aim is to increase production through various ongoing initiatives. The Company's exciting exploration programme for the next year with a number of wells either being drilled currently or planned as well as numerous seismic programmes which are already underway, will shape the Company's future drilling programmes.

Jubilant has a diverse and exciting portfolio of assets, an exceptional team in place to carry out the work and following our successful IPO last year, the Company has the funds in place to execute the work programme until the middle of 2012. This is a crucial time for the Company as Jubilant enters another active year across its portfolio and looks to maximise the opportunities that are available to the Company.

CFO's Statement

Overview

The year 2010-11 was a year of considerable activity for the Company. A successful listing on AIM coupled with obtaining additional debt facilities resulted in a stronger cash position. The Company is in a strong position to finance its work programmes until the middle of next year. We are targeting a significant increase in production and revenues from Kharsang field through ongoing work-over programmes.

Production and Revenues

The average gross production during the year was 1,809 bopd and net production was 452 bopd. In previous year, gross production was 1,895 bopd and net production was 474 bopd. The marginal decline in the current period is owing to work over activities undertaken in order to achieve an increased production and recovery factor in future. Revenues totaled USD 13.6 million during the year, which was approximately 8% higher than the previous year. This includes operating revenues of USD 12.3 million on an entitlement interest basis, representing an increase of 10.9% against the previous year.

The average oil price realised was USD 84.9/Bbl (premium to Brent) and for the previous year it was USD 69.5/Bbl, an increase of 22%.

Income statement

During the year ended 31st March 2011, the Group incurred a loss of USD 42 million before tax as compared to a loss before tax of USD 33 million during the year ended March 2010. The increase in loss is mainly attributable to (a) an increase in personnel cost mainly due to a higher stock option charge and (b) an increase in finance expenses from USD 4 million in previous year to USD 12.3 million in FY 2010-11 due to additional drawdown of term loans. The increase in operating revenues by USD 1.2 million is offset by corresponding increase in production and operating expenses. The increase in the production and operating expenses were due to the work-over activities at Kharsang. The overall loss during the year is high mainly due to impairment charge of USD 26.5 million and finance expenses of USD 12.3 million.

Cash flow

Closing cash was USD 34.8 million (March 2010: USD 19.4 million). During the year, the Company had cash outflows of USD 3.9 million (2010: USD 0.4 million) from operating activities and USD 24.2 million (2010: USD 98.1 million) from investing activities, which were mainly funded by IPO proceeds and loans. The outflows from operating activities were primarily on account of an increase in the cash deployed for working capital (USD 2.1 million) and Income taxes paid (USD 3.6 million). The outflows on investing activities encompass the investment in exploration and tangible assets to the tune of USD 37.1 million which is partly funded by loans received back from other companies to the extent of USD 11.1 million and disposal of non-trade investments to the tune of USD 1.9 million.

The Group has aggressive plans for investment in exploration and development activities for next financial year with a budgeted spend of more than USD 113 million. The investment will be funded by available cash and credit facilities.

Financing

One of the most significant milestones for the Company occurred during the year was successful completion of its listing on AIM market and raising new equity of USD 85 million.

In addition the Company repaid a USD 50 million EXIM loan facility together with USD 20.9 million of accrued interest in March 2011. A secured facility from Central Bank of India (CBI facility) was available to fund this loan repayment through the repatriation of proceeds to an offshore entity. As part of its treasury management, the Company has used IPO proceeds for the loan repayment and will use the CBI facility to fund the capital expenditure and other requirements, for which IPO money was raised. The terms of CBI facility have been suitably amended to use the loan proceeds for funding the capital expenditure and other requirements. The drawdown of the CBI facility will be made in tranches as and when funding is required, resulting in lower interest payable by the Company.

The Company has net debt of USD 213 million. The Company has received a new loan sanction of USD 50 million from EXIM Bank, subject to completion of loan documentation, which will further strengthen company's position in terms of available funds. The documentation for this new loan is in progress and is expected to be completed in the next quarter. Cash balance and available facilities post completion of the new EXIM loan to the Company are expected to total USD 182 million.

Asset impairment

The Group has made provision for impairment amounting to USD 26.5 million, mainly pertaining to the Mehsana Block. The block was awarded to Group in 2004 and Group had a participating interest of 30% in this block with Gujarat State Petroleum Corporation (GSPC) as a majority partner with 60% stake. Over the last few years, the Group has carried out exploration activities in this block and had drilled eight exploratory wells out of which six resulted into dry wells. In one of wells, hydrocarbon reserves were found, however these were not in commercial quantities. Considering the non-commercial discoveries in the block, the fact that time period for minimum work program has expired, the contingent reserves established so far and the fact that the majority partner has expressed its unwillingness to continue with exploration activities in the block, management has decided to make a provision for impairment.

Financial Strategy & Outlook

The Company is looking at a multi pronged strategy of improving cash flows through increased revenues from Kharsang, reducing finance costs and achieving operational efficiencies. We are working to reduce the overall finance cost through debt restructuring, swap and a number of other financial instruments. The Group plans to strengthen its internal controls and processes by implementing SAP in the current financial year. The other big focus of the Group this year is to rationalise and simplify the corporate structure to achieve overall operational, administrative and tax efficiencies.

Consolidated Statement of Comprehensive Income for the year ended 31 March 2011

Consolidated Statement of Financial Position as at 31 March 2011

Consolidated Statement of Cash Flows for the year ended 31 March 2011

Consolidated Statement of Changes in Equity for the year ended 31 March 2011

Consolidated Statement of Changes in Equity for the year ended 31 March 2011 (contd.)

Notes to the accounts

1. General and principal activities

Jubilant Energy NV ('the Company' or 'JENV') was incorporated on 12 June 2007, in Amsterdam, the Netherlands, as a company with limited liability. The registered office of the Company is Orlyplein 10, Floor 24, 1043 DP Amsterdam, the Netherlands. The Company is a subsidiary of Jubilant Energy (Holdings) B.V. (JEHBV), a Netherlands company, which in turn is a wholly-owned subsidiary of Jubilant Enpro Private Limited ('Jubilant Enpro'), a company incorporated under the laws of India. On 24 November 2010, the Company commenced trading on Alternative Investment Market (AIM), London.

The abbreviated consolidated financial information as at and for the year ended 31 March 2011 comprises the Company and its subsidiaries (together referred to as the 'Group' and individually as 'Group entity') and the Group's proportionate interest in jointly controlled assets in unincorporated joint ventures.

The Group is engaged in the exploration for and development and production of oil and natural gas. It conducts many of its activities jointly with others. The abbreviated consolidated financial information reflects only the Group's proportionate interest in such activities.

2. Summary of significant accounting policies

The abbreviated consolidated financial information has been derived from the Company's Consolidated Financial Statements for the year ended 31 March 2011 and the Company's Consolidated Financial Statements for the year ended 31 March 2010 which has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. These standards have been consistently applied throughout the Group and in previous year. The Company's Consolidated Financial Statements for the year ended 31 March 2011 and the Company's Consolidated Financial Statements for the year ended 31 March 2010 were authorised for issue by the Board of Directors on 29 June 2011 and on 8 September 2010 respectively.

Basis of preparation

The abbreviated consolidated financial information, which comprise the abbreviated statement of financial position as at 31 March 2011, the abbreviated statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and related notes, have been derived from the Company's Consolidated Financial Statements for the year ended 31 March 2011, and the Company's Consolidated Financial Statements for the year ended 31 March 2010, on which the Company's audit firm KPMG Accountants N.V. ("KPMG") provided an unqualified audit opinion dated 29 June 2011 and on 8 September 2010 respectively.

For a better understanding of the Company's financial position and results, we emphasize that the abbreviated consolidated financial information should be read in conjunction with the Company's Consolidated Financial Statements as of 31 March 2011 and for the year then ended and the Company's Consolidated Financial Statements as of and for the year ended 31 March 2010, from which the abbreviated consolidated financial information was derived.

3. Trade and other receivables - current

Footnotes:

a) Represents amounts due from co-venturers on account of non-payment of cash calls raised by the Group in respect of operated blocks and / or advance payments made by the Group in respect of non-operated blocks.

b) Restricted cash - margin money represents margin money against guarantees and letters of credit. Restrictions on margin money deposits are released on the expiry of the terms of guarantees and letters of credit.

4. Loans and borrowings (including accrued interest)

Details of interest rates of loans and borrowings are given below: -

5. Share capital

Issued and paid-up share capital

 Share premium

Footnotes:

I. The authorised share capital of JENV as at 31 March 2011 is USD 12,145 thousand equivalent to EUR 8,742 thousand (31 March 2010: USD 12,145 thousand equivalent to EUR 8,742 thousand).

II. Share capital

Year ended 31 March 2010

The share capital as at 31 March 2010 is the issued share capital of JENV amounting to USD 4,298 thousand (325,297,300 ordinary shares of EUR 0.01 each amounting to EUR 3,253 thousand).

Year ended 31 March 2011

The issued share capital as at 31 March 2011 is the issued share capital of JENV amounting to USD 5,581 thousand (416,306,787 ordinary shares of EUR 0.01 each amounting to EUR 4,163 thousand).

(i) On 24 November 2010 the Company commenced trading on Alternative Investment Market (AIM), London, having raised GBP 53,422 thousand (USD 85,000 thousand) by way of a placing of 69,379,430 new ordinary shares in the capital of the Company at a placing price of GBP 0.77 (equivalent USD 1.23) per share.

(ii) As per the modification agreement dated 22 July 2010 with EXIM bank, as on 24 November 2010, USD 10,000 thousand of loan from EXIM bank to JENV, was converted to equity shares by issuance of 8,162,285 new ordinary shares at the placing price of GBP 0.77 (equivalent USD 1.23) per share.

(iii) As per the terms of deed of modification dated 21 June 2010 with the Dynamic funds, the outstanding loan amount of USD 16,500 thousand as on 24 November 2010, given to JEL Canada by Dynamic funds, was converted to equity shares by issuance of 13,467,772 number of new ordinary shares at a price of GBP 0.77 (equivalent USD 1.23) per share of JENV.

All issued shares are fully paid up. The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share at the meetings of the Group.

III. Share premium

During the year ended 31 March 2011, the Group has issued a total of 91,009,487 ordinary shares (refer sub note 2 above) at a premium amounting to USD 110,217 thousand. Further during the year ended 31 March 2011, the Group has adjusted share issue expenses amounting to USD 5,170 thousand (including USD 2,482 thousand paid to underwriters and balance paid to various consultants) against the share premium.

6. Impairment

The Group has identified each of its blocks (i.e. a 'production sharing contract'/'permit') as a separate Cash Generating Unit (CGU) for the purpose of impairment testing. The Group has ten CGUs. If facts and circumstances suggest that the carrying amount exceeds the recoverable amount, E&E assets are assessed for impairment. These facts and circumstances include expiry of the license period to explore in the near future, substantial expenditure on further E&E activities not being budgeted/planned, no discovery of commercial quantities of mineral resources, management's decision to discontinue activities in the specific areas etc.

Mehsana block

The Group as an operator of Mehsana block has completed first phase of minimum work programme during which seven wells have been drilled in part A and one well has been drilled in part B of the block. Of the said wells, CB-5A showed discovery and the Operator has submitted application to the DGH. However the Group has assessed that there is no commercially viable potential in this well. The other wells have been plugged and abandoned and the land pertaining to these wells has been handed over to the land owners.

Accordingly, during the year, the Group has recognised impairment loss on Mehsana block in respect of entire amount of its share of the expenditure incurred amounting to USD 23,745 thousand.

Cauvery block

In respect of Cauvery block, the operator has drilled three wells until 31 March 2009. Out of these wells CY-1 well was tested and it discovered oil. The same was suspended for detailed testing. During the quarter ended 31 December 2009, the process of re-testing of wells was started and the test results became available in first quarter of 2010. Based on test results, the consortium decided to plug and abandon all the three wells. Accordingly, the Group had decided to impair the Cauvery block during the year ended 31 March 2010. During the year ended 31 March 2011, the Group has further incurred USD 644 thousand, against which impairment loss has been recognized.

Australia block

The Phase I for the block was started from 5 June 2007 and the Operator had to drill two exploratory wells within a period of three years from that date. On account of low view of prospects for the block, the Group is in the discussion with the partners to find ways for cancelling future commitments and has expressed its intention to the Operator to exit via Good Standing Agreement. Based on this assessment, the Group had decided to impair the Australia block during the year ended 31 March 2010. During the year ended 31 March 2011, the Group has further incurred USD 2,146 thousand, against which impairment loss has been recognized.

7. Earnings per share

The following is the reconciliation of the loss attributable to ordinary shareholders and weighted average number of ordinary shares used in the computation of basic and diluted earnings per share:

The Group has issued options to its employees during the year. Since the Group does not have profits for the current year, the options issued are considered to have anti-dilutive effect. Therefore, the basic and diluted EPS are the same.

8. Related Parties

(a) Related parties and nature of relationships where control exists

(b) Related parties and nature of relationships where transactions have taken place during the year

(c) Related party transactions

(c) Related party transactions (continued)

(d) Guarantees given by ultimate holding company

i. Secured foreign currency term loan taken by JENV from EXIM: Corporate guarantees in respect of this loan have been given by Jubilant Enpro.

ii. Secured term loan taken by JEKPL from banks: These loans are secured by primary charge on all present and future receivables of Jubilant Enpro relating to Kharsang field.

iii. Non-fund based limit taken by JOGPL, JODPL and JEKPL to furnish bank guarantee: Corporate guarantee in respect of this non-fund based facility has been given by Jubilant Enpro.

(e) As at 31 March 2011, performance guarantee amounting to USD 1,035 thousand (31 March 2010: USD 1,043 thousand) given on behalf of Jubilant Securities Private Limited against a lien on the term deposits of JENVPL in respect of Golaghat block.

(f) As at 31 March 2011, performance guarantee amounting to USD 2,183 thousand (31 March 2010: USD 2,221 thousand) given on behalf of Jubilant Capital Private Limited against a lien on the term deposits of JEKPL in respect of Ankleshwar block.

(g) As at 31 March 2011, performance guarantee amounting to USD 1,024 thousand (31 March 2010: USD 1,033 thousand) given on behalf of Jubilant Capital Private Limited against a lien on the term deposits of JENVPL in respect of Ankleshwar block.

(h) Pledge of 51% of promoter's shareholding in JEKPL in respect of term loan facility from banks.

(i) Non-disposal undertaking along with power of attorney in respect of 51% of the total issued and paid-up shares of JODPL held by JEIL.

(j) BG limit of USD 4,405 thousand is available for JCPL and JSPL within the overall limit of USD 16,741 thousand of JOGPL and negative lien on participating interest of JCPL and JSPL in the blocks.

9. Contingencies

Contingent liabilities in respect of matters currently in dispute comprise:

i. Jubilant Oil and Gas Private Limited (JOGPL):

a. During the year ended 31 March 2008, JOGPL had received a demand of USD 72 thousand, together with penalty/interest of USD 132 thousand to the extent determined/quantified in the order, from the service tax authorities for alleged non-payment of service tax on advisory and assisting services provided to various foreign entities for their operations in India. During the year ended 31 March 2009, JOGPL has deposited under protest 50% of the demand amounting to USD 36 thousand with the authorities. Further, during the year ended 31 March 2009, JOGPL has filed an appeal against the said demand which is pending for hearing with Customs, Excise and Service Tax Appellate Tribunal. During the year ended 31 March 2011, JOGPL deposited an amount of USD 11 thousand for staying the demand. Considering the facts and current status of the case, management is confident that there shall not be any liability devolving on the Company in this matter.

b. During the year ended 31 March 2009, JOGPL received a show cause notice from the Commissioner of Service Tax for USD 5,135 thousand (excluding interest/penalty). This show cause notice has been issued in respect of Mehsana, Cauvery and Tripura PSCs for alleged non-payment of service tax on services provided by the Operators to respective JV partners of each block. JOGPL has filed a reply against the said notice with the appropriate authorities and the order in respect of the matter is awaited. Considering the facts and current status of the case, management is confident that there shall not be any liability devolving on the Company in this matter.

c. During the year ended 31 March 2010, JOGPL received a show cause notice from the Commissioner of Service Tax, Delhi amounting to USD 4,081 thousand (including interest/penalty, to the extent quantified / determined in the notice). This show cause notice has been issued in respect of Mehsana, Cauvery, Golaghat and Tripura PSCs for alleged non-payment of service tax on services provided by the Operator to respective JV partners of each block. JOGPL has already filed a reply against the said notice with the appropriate authorities and the order in respect of the matter is awaited. Considering the facts and current status of the case, management is confident that there shall not be any liability devolving on the Company in this matter.

d. During the year ended 31 March 2010, JOGPL (as an Operator of Tripura block) has received a show cause notice from the Commissioner, Central Excise & Service Tax, Shillong for USD 1,190 thousand (JOGPL share USD 238 thousand) (excluding interest/penalty). This show cause notice has been issued in respect of Tripura PSCs for alleged non-payment of service tax for the financial years ended 31 March 2005, 31 March 2006, 31 March 2007 and 31 March 2008. JOGPL has already filed a reply against the said notice with the appropriate authorities and the order in respect of the matter is awaited. Considering the facts and current status of the case, management is confident that there shall not be any liability devolving on the Company in this matter.

e. During the year ended 31 March 2010, JOGPL (as an Operator of Tripura block) has received a show cause notice from the Commissioner, Central Excise & Service Tax, Shillong for USD 1,965 thousand (JOGPL share is USD 393 thousand) (excluding interest/penalty). This show cause notice has been issued in respect of Tripura PSCs for alleged non-payment of service tax for the financial year ended 31 March 2009. JOGPL has already filed a reply against the said notice with the appropriate authorities and the order in respect of the matter is awaited. Considering the facts and current status of the case, management is confident that there shall not be any liability devolving on the Company in this matter.

f. JOGPL (as Operator of Tripura Block) is involved in a dispute with Dewanchand Ramsaran Industries Private Limited ('DRIPL') for alleged delays in mobilising a rig. As a result of these delays, JOGPL incurred stand-by costs with other service providers. JOGPL has claimed for liquidated damages from DRIPL of USD 450 thousand and cost of hire of various equipments by it on behalf of DRIPL amounting to USD 79 thousand. JOGPL has made a net claim of USD 305 thousand against DRIPL on the aforesaid account after adjusting its invoice for USD 224 thousand. JOGPL has further disputed DRIPL invoices to the extent of USD 29 thousand. JOGPL was also in possession of a performance bank guarantee amounting to INR 3,750 thousand (USD 83 thousand) from DRIPL towards due performance of the contract. Besides this, DRIPL has failed to remove its rig from the well site. JOGPL has issued several reminders to DRIPL for removal of the rig followed by a notice of criminal trespass. DRIPL has disputed that it has committed criminal trespass.

g. DRIPL has filed a civil suit before the Civil Judge (Senior Division), South Tripura - Udaipur inter alia applying for the demands raised by JOGPL to be quashed, a permanent injunction be granted against JOGPL encashing the bank guarantee and JOGPL be directed to pay the amounts owed to DRIPL with interest. DRIPL has also obtained an ex-parte injunction from the said court against encashment of the bank guarantee by JOGPL. Pursuant to a court order in March 2011, the ex-parte injunction order has been vacated and JOGPL has invoked the performance bank guarantee. An application filed by the group for removal of the rig from the site, was heard by the court and was rejected post year end. The Group is in a process of settlement talks with DRIPL. Considering the current status of the case, the management believes that there shall not be any liability in this regard.

h. JOGPL received a show cause notice from the Commissioner of Service Tax dated 22 October 2010 for USD 3,589 thousand (including education cess). This show cause notice has been issued in respect of unincorporated joint venture (operated by JOGPL) for alleged non-payment of service tax on services provided by the Operator. JOGPL is in the process of filing a response with the appropriate authorities and believes that there will not be any liability in this regard.

ii. Jubilant Energy (Kharsang) Private Limited (JEKPL):

a. The Ministry of Petroleum and Natural Gas (MOPNG) had prescribed the effective rate of oil cess being USD 19.82 (INR 900) per metric tonne (PMT). During the period upto 31 March 2005, the Operator paid oil cess at USD 18.78 (INR 853) PMT. The differential amount of USD 1.04 (INR 47) PMT was paid as additional royalty to the State Government. The excise department considered short payment of oil cess of USD 1.04 PMT (INR 47) and demanded the differential oil cess of USD 129 thousand (JEKPL's share), along with interest/penalty of USD 62 thousand. Though the principal amount of demand i.e. USD 129 thousand has been paid to the excise department, interest and penalty amounting to USD 62 thousand and USD 1 thousand have not been paid and an appeal has been filed before the Commissioner, Central Excise (Appeals) Guwahati against the levy of interest and penalty.

The department has waived the requirement of pre-deposit of the penalty/ interest during the pendency of the appeal. The Operator is contesting and believes that its position is likely to be upheld. Therefore, no provision for the same has been made in the books of account.

b. The Operator of the Kharsang field, Geoenpro had received a notice dated 8 November 2004, from the Conservator of Forests stating that under the Indian Forest Conservation Act, 1980, the Primary Mining Lease (PML) was required to be approved by the Government of India prior to the grant of PML. The notice also required the Operator to submit the necessary proposal for the diversion of 11 square kilometer of forest area in the Kharsang field, failing which action would be initiated against it under the relevant provisions of the Forest Act.

The Government of Arunachal Pradesh (GoAP) vide letters dated 15 January 2008 and 11 March 2008 to the Operator conveyed that the Department of Environment and Forests (DoEF), GoAP has requested to revoke the mining lease for the Kharsang field and requested the Operator to submit a proposal for grant of a fresh mining lease. The GoAP in its letter dated 11 March 2008, requested the Operator to submit a fresh proposal for grant of mining lease/forest clearances for the Kharsang field by 31 March 2008. The Operator by a letter dated 25 March 2009 requested the MOPNG to take up the matter with the Ministry of Environment and Forest (MoEF) to regularise/resolve the issue. The MOPNG vide letter dated 27 March 2009 and the Government of Arunachal Pradesh vide letters dated 21 April 2009 and 17 July 2009 have already written to MoEF to appropriately resolve the issue. No further communication has been received from the GoAP. The Group considers it as a procedural issue and believes that it would not result into any financial implication.

c. The Operator had entered into a contract with Geophysical Institute of Israel (GII) for acquisition, processing and interpretation (API) of 3D seismic data of Kharsang Oil Field area. During the financial year 2009-10, GII has filed a claim of USD 3,648 thousand with interest against the Operator before the Arbitration Tribunal for remaining portion of job completed, damages and theft of their equipments, loss due to non availability of TDS certificates, payment of performance bonds and reimbursement of various administrative costs, etc. The claim is disputed by the Operator due to non performance of entire 3D seismic project by GII in accordance with Contract provisions and also most of the claims are out of contractual provisions and hence not payable.

The Operator has also filed a counter claim of around USD 2,466 thousand for loss suffered due to non completion of entire 3D seismic project in accordance with Contract provisions. Pending resolution, the Operator has not acknowledged and accounted for the claim amounting to USD 3,262 thousand (net of performance guarantee amount of USD 385 thousand) plus interest as liability. The Operator is of the belief that its position is likely to be upheld. Therefore, no provision for the same has been made in the books of account.

iii. Jubilant Offshore Drilling Private Limited (JODPL):

a. GSPC as an Operator has received a demand of USD 2,493 thousand (JODPL's share USD 249 thousand) towards service tax, a penalty of USD 2,423 thousand (JODPL's share USD 242 thousand) and interest, as applicable under the Finance Act, 1994, from the Commissioner of Central Excise, Ahmedabad pertaining to service tax on the off-shore services received by the Block during the period from 12 March 2003 to 31 March 2007. In response to this demand, the Operator has made an appeal in the Custom Excise and Appellate Tribunal (CESTAT) although the Operator has paid an amount of USD 1,364 thousand (JODPL's share USD 136 thousand) under protest to the authorities. The Operator has received an order from CESTAT waiving the requirement of deposit of the balance amount of service tax and penalties imposed upon the Operator and for stay of recovery of the same during the pendency of the appeal. Further, based on the legal opinion taken by the Operator in the matter, the Block is not liable to service tax on the services availed in the matter under appeal and hence under the facts and circumstances, the balance demand (net of deposit) has been classified and disclosed as contingent liability.

b. GSPC as an operator has entered in to contract with Tuff Drilling Private Limited for supply and installation of 3000 hp modular rig in the month of May 2010. Due to inability of Tuff Drilling to provide the rig in the stipulated timelines, the operator has cancelled the contract and encashed the performance bank guarantee amounting to USD 3,422 thousand [JODPL's share USD 342 thousand]. Against the above actions of Operator, Tuff Drilling has given notice of arbitration proceedings and the amount encashed has been included under the head "Trade and other payables".

c. GSPC as an Operator has entered in to Contract with Saipem (Portugal) Comercio Maritimo Su Lda ("Saipem") for hiring drilling rig Perro Negro III for exploration in the Block. Saipem has represented to have performed certain drilling and operational activities which were beyond the scope of work as stipulated in the Contract dated April 1, 2004 whereby the drilling activities got extended over additional time period. However, the Operator did not agree to accept the claim of the Saipem including service tax thereon. Accordingly, Saipem has initiated arbitration proceeding against Operator, claiming higher day rate on the ground that the contract is for the number of days and for the days beyond contract period, it should be paid at higher rates than the contract rate. However, GSPC has maintained the stand that contract is for number of wells drilled and not for days/period and hence Saipem is contractually liable to work at contract rate. Further, GSPC has put counter claim against Saipem for poor performance of the drilling equipments. The claim made by Saipem which is subject to arbitration proceedings is for USD 143,452 thousand (JODPL's share USD 14,345 thousand ) while counter claim made by GSPC is for USD 28,567 thousand (JODPL's share USD 2,857 thousand).

Apart from the stated claim, Saipem has also claimed an amount of USD 10,827 thousand (JODPL's share USD 1,083 thousand) from the Operator towards Service Tax (including interest thereon), which Saipem was liable to pay on the services provided to the Operator. As per the legal opinion obtained by the Operator, the Block is not liable to service tax on the services received from Saipem as rates in the Contract is inclusive of all taxes. Since, the matter is pending in arbitrations till date the claims have not been provided for in the books.

iv. Jubilant Energy Limited (JEL):

The Operator of T-47/P permit in Australia had issued default notices to Jubilant for failing to pay its share of joint account expenses (excluding accrued interest). The total amount of claim is USD 3,919 thousand. Jubilant has replied to the letter inter alia stating that Operator intends to force its decision to drill a low-prospective well location upon the minority partners. Jubilant has also alleged gross negligence and mismanagement of the permit on the part of Operator. Jubilant has received a notice of arbitration from Operator. Further to the same, an arbitral tribunal has been constituted. During the year ended 31 March 2011, pending the final outcome, the Company had already accrued its best estimate of the settlement amount.

10. Events occurring after the balance sheet date 

The Group is planning to merge/amalgamate all the Indian entities namely JOGPL, JODPL, JEKPL and NELPV. For this, the Company has already initiated the preliminary activities and is in the process of filing the proposed merger application with the appropriate authorities.

Glossary