By Tapan Panchal

LONDON--Shares of Hardy Oil & Gas PLC (HDY.LN) plummeted 12% early Thursday after the India-focused oil explorer said the country's new gas pricing policy is below its expectations and the partners of the D3 exploration license are reviewing their future activity.

At 1345 GMT, shares were trading 11.6% lower at 95 pence each. Year-to-date they are up 7.2%.

Hardy, which earlier in the day posted a smaller pretax loss for the first half of its financial year, has a 10% participating interest in the D3 license. In total, it has a participating interest in one producing property and three exploration licenses in the country.

Reliance Industries (500325.BY) owns a 60% stake and BP PLC (BP.LN) holds the remaining 30% in the D3 license.

Arden Partners analyst Daniel Slater said the fall in the share price was due to increased market uncertainty over the future of the D3 license as a result of the new gas pricing policy of India. But he expects a positive outcome for the license.

According to a research note by Mr. Slater, the newly elected Indian government has set a base price of $5.6 per thousand cubic feet of natural gas, significantly lower than the previously announced, but not implemented, base price of $8.4 per thousand cubic feet of natural gas.

Arden Partners, who serves as corporate broker to Hardy, currently has a buy rating on the company.

Hardy posted a pretax loss of $1.8 million for the six months ended Sept. 30, compared with a $3.4 million pretax loss in the year-earlier period. It didn't record any revenue for the interim period.

Write to Tapan Panchal at tapan.panchal@wsj.com

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