For the D6 Block, the Company is able to use up to 90 percent of revenue to recover costs. The Government of India was entitled to 10 percent of the profits not used to recover costs during the year. Profit petroleum expense will continue at this level until the Company has recovered its costs.
The Government of India was entitled to 25 percent and 20 percent of the profits from the Hazira Field and the Surat Block, respectively.
Production and Operating Expenses
Operating costs at the D6 Block decreased as less maintenance was conducted during the period compared to the prior year's period.
Depletion Expense
The depletion rate for the D6 Block increased compared to prior periods as a result of the revision to the reserve volumes and future costs included in the March 31, 2012 reserve report. The effect of the increased depletion rate on the depletion expense was partially offset by decreased production.
Income Taxes
There was a current income tax recovery on year to date basis as a result of the adjustment to profit petroleum described above, which is deductible for tax purposes.
Minimum alternate tax expense is calculated on accounting income from the D6 Block. Higher depletion rates reduced accounting income and minimum alternate tax expense.
Contingencies
The Company has contingencies related to natural gas sales contracts and the profit petroleum calculation for the Hazira Field and related to income taxes for the Hazira Field and the Surat Block as at December 31, 2012. Refer to note 14 to the consolidated financial statements for nine months ended December 31, 2012 for a complete discussion of these contingencies.
Bangladesh
---------------------------------------------------------------------------- Three months ended Nine months ended Dec Dec 31, 31(thousands of U.S. dollars) 2012 2011 2012 2011----------------------------------------------------------------------------Natural gas revenue 10,755 12,453 35,898 36,775Condensate revenue 1,591 1,970 5,375 5,934Profit petroleum (4,177) (4,882) (13,969) (14,459)Production and operating expenses (2,204) (2,277) (6,853) (5,998)Depletion and depreciation expense (3,215) (3,267) (10,724) (9,190)Exploration and evaluation expenses - (541) (180) (933)Asset Impairment - (143) - (74)----------------------------------------------------------------------------Segment profit (loss)(1) 2,750 3,313 9,547 12,055----------------------------------------------------------------------------Daily natural gas sales (Mcf/d) 50,498 58,428 56,352 57,952Daily condensate sales (bbls/d) 160 189 179 187Operating costs ($/Mcfe) 0.38 0.34 0.40 0.32Depletion rate ($/Mcfe) 0.68 0.61 0.68 0.57---------------------------------------------------------------------------- (1) Segment profit is a non-IFRS measure as calculated above.
Revenue, Profit Petroleum, Depletion and Operating Expenses
The Company's oil and gas revenues for the quarter decreased from the prior year's quarter, primarily due to the curtailment of production from one of the three wells in the Bangora field due to operational issues. Production from this well is expected to be restored in the first quarter of fiscal 2014.
