Deep Energy Resources Ltd Management Discussions.

Deep Energy Resources Limited (Formerly known as Deep Industries Limited) is engaged in the business of exploration and production of Oil and Gas resources and Coal Bed Methane and related engineering solutions.

OPPORTUNITIES AND THREATS

The Oil and Gas sector in India is full of opportunities across its value chain and sub sectors. This sector offers great future opportunities driven by factors such as vastly unexplored and under explored sedimentary basins, Unconventional hydrocarbon exploration activities gaining momentum in India.

The Oil and Gas sector has many opportunities but at the same time, some fundamental issues can hinder its progress and thwart the achievement of its growth objectives. Shortages of skilled manpower, technology and equipment in upstream sector and general low oil & gas price regime may throw some critical challenges for the sector. However the Company has been able to provide stellar growth in these difficult market conditions through its commitment to provide cost effective and timely solutions.

STRATEGY OF THE COMPANY

The Company is focused on exploring and developing the acreages that it has acquired in NELP and CBM rounds.

OIL AND GAS EXPLORATION AND PRODUCTION BUSINESS

The Company and its subsidiary companies are holding large acreage of onshore exploration & production assets in both conventional and unconventional category. Out of 10, 4 assets are in development phase, 3 assets are in exploration phase and 3 have been relinquished. The Company holds 25% stake in North Karanpura CBM block through its subsidiary Prabha Energy Private Limited. This asset is in development phase. PEPL is the joint operator of this asset along with ONGC and IOCL. The Company has a strong management team with decades of experience in oil & gas and CBM development businesses.

OIL AND GAS BLOCKS North Karanpura CBM Block:

North Karanpura CBM block was awarded to consortium of ONGC & IOCL during first CBM bid round in 2001. After successful exploration, ONGC through international competitive bidding process awarded its 25% participating interest and joint operatorship to Prabha Energy Private Limited (PEPL), a subsidiary of the Company. ONGC has already completed drilling of 9 core holes and 7 test wells during the Exploration Phase I & II. Exploration work by ONGC had indicated good CBM reservoir parameters like coal thickness, gas content, saturation levels and permeability. Gas-In-Place (GIP) for the development area is about 22.93 billion cubic meter (BCM) of gas. Field Development Plan has been approved by the Government of India in 2012. The statutory clearance like environmental clearance, mining lease and other approvals has been granted by the government. PEPL has already started development activities in the block wherein a total of 68 wells are planned to be drilled. The First stage of development work is in advance stage of completion. Some of the wells drilled and completed so far shown good CBM gas production. Steps being taken for commercial production from its assets.

FINANCIAL PERFOMANCE OF DEEP ENERGY RESOURCES LIMITED

Financial highlights of the Company are as under

(Rs in Lakhs)

Particulars 2019-20 2018-19
Total Income 0.18 29.92
Total Expense 7.76 7.14
Profit Before Tax -7.59 22.78
Profit After Tax 44.45 16.63
EPS 0.14 0.05

RISK & CONCERNS

1. Scarcity of skilled personnel in market.

2. Material Risk as not being able to procure right configuration units in timely manner.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has built adequate systems of internal controls to safeguard all assets against loss from unauthorized use or disposition as well as ensuring the preparation of timely and accurate financial information. Regular internal audits and checks are carried out to provide assurance that adequate systems are in place and that the responsibilities at various levels are discharged effectively.

HUMAN RESOURCES & DEVELOPMENT

The Company values its Human Resources most and continued in its endeavors to ensure work-life balance of its employees. The Company believes that employees are the key to achievement of Companys objectives and strategies. The Company provides to the employees a fair and equitable work environment and support from their peers with a view to develop their capabilities leaving them with the freedom to act and to take responsibilities for the task assigned. We provide our employees outstanding career development opportunities and reward to the staff for their good performance and loyalty to the organization. In order to meet steady flow of talent, Company has appointed experienced professionals in Technical as well as Commercial Departments. Apart from that, as a strategic policy, every year, Company hires new pool of talent from reputed technical / petroleum institutes through campus selection process.

HEALTH, SAFETY & ENVIRONMENT

Being a service provider to high risk industry, safety of employees is utmost priority of Company. While providing services, Company ensures compliance to all Rules and Regulations regarding Health, Safety and Environment protection. Imparting essential health and safety training such as MVT, Firefighting etc is being followed on regular basis.

CAUTIONARY STATEMENT

Statement in Management Discussion and Analysis may be forward looking within the meaning of applicable securities laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook.

The Company assumes no responsibilities in respect of the forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.

For and on behalf of the Board of Directors
Date : September 14, 2020 PARAS SAVLA
Place : Ahmedabad Chairman & Managing Director
DIN:00145639