Sino Oil and Gas Holdings Ltd
Sino Oil and Gas (00702.HK) Turnover of 2015 Increased by 300%
For Immediate Release Sino Oil and Gas Holdings Limited Turnover of 2015 Increased by 300%
Business Overview During the year, the total CBM sales revenue including trial sales of CBM from January to November in 2015 together with related government subsidies of 2014 are disclosed under the item of “other revenue “and the CBM sales for the month of December 2015 are disclosed under turnover of principle activities, was approximately HK$87,237,000(2014: HK$63,441,000), which increased by approximately 37.5%. During the year, the technology of Sanjiao CBM Project was improved and its productivity per well wasn increased accordingly. At the same time, the ground facilities of the Project, including CBM processing station and sales pipelines, wereexpanded in line to fulfill the needs of the increasing production. In addition, the ODP was officially approved and Sanjiao CBM Project has entered into large scale development stage, the Group believes that this Project will become the investment highlight and bring stable and considerable income. Although the CBM business has a decent growth,the attributable to the asset impairment of HK$413,626,000 in respect of the oilfields of the Group located in Shaanxi Province, together with the equity-settled share-based payment expenses of HK$77,518,000 incurred due to the grant of share options under its share option scheme, the Group recorded a net loss of HK$477,711,000 for the year (2014: net profit of HK$10,420,000). Both of the assets impairment in respect of aforesaid oilfields and the share option expenses are non-cash items in accordance with Hong Kong Financial Reporting Standards and have no impact on the cash flow for the Group’s operation. Sanjiao CBM Project In addition, at the end of 31 December 2015, the Sanjiao CBM project has successfully added 7 completed wells, comprising 2 multilateral horizontal wells and 5 vertical wells. The Sanjiao CBM project has completed a total of 80 wells, comprising 42 multilateral horizontal wells and 38 vertical wells. Out of the total 80 wells, 68 wells were in the normal dewatering stage, of which 58 wells had accessed to a gas collection pipeline network. A ground pipeline network of approximately 18 kilometers, inter-well pipelines of approximately 39 kilometers, and outbound pipelines of approximately 17 kilometers were completed. Approximately total 55.5 kilometers of 10KV power grid and branch power line were also completed. During the year, Sanjiao Project also attained breakthroughs in many aspects, including: – Listed on the Official Announcement of Key Construction Works for two consecutive years in 2015 and 2016 – Attained breakthroughs in key technology and obtained two patents from State Intellectual Property Office of the P.R.C – Conducted an overall update on the reserve report, the net gas reserve (Proved + Portable) increased by 23% and the net present value of the future revenue also increased by 33% Regarding the achievements of Sanjiao CBM Project, Dr. Dai Xiaobing, Chairman of the Group said, “The ODP of Sanjiao Project has been officially approved. The Group will explore and develop based on local geological circumstances and target to complete CBM production capacity of 250 million cubic meters by the end of 2016. The Group will adopt the principle of progressive implementation based on the overall plan. The new wells development will be started from areas where the Group enjoyed comparative advantages and developed beyond these areas on a rolling basis. The Group will also build stations, centralized gas transmission pipelines and networks as well as power grid.” Raw Coal Washing Project Located in Shanxi Province In order to expand its business in China, the Group successfully acquired a 75% equity interest of a raw coal washing project company located in Qinshui Basin, Shanxi Province in May 2015. The raw coal supplier of the project is a sizable state-owned coal enterprise in Qinshui basin and thereby the raw materials supply is stable. The project has been officially launched on 1 July 2015. It has already entered into stable production phase and also gradually developed sales channels. During the period, the project had a total sales of refined coal approximately 84,000 tonnes. The Group expects this project will bring a steady income and cash flow. The raw coal washing project has provided the company with a good platform to deepen its cooperation with local sizable coal enterprises. In January 2016, the Group entered into a non-legally binding Strategic Cooperation Framework Agreement with Shanxi Guxian Lanhua Baoxin Coal Company Limited, which benchmarked the Group’s official entrance into the CBM market of Qinshui Basin. In this regard, Dr. Dai said, “The Group will continue to actively seek to diversify the business model and cooperation projects, continuously to improve the CBM development business model and inject new momentum for the Group’s growth.” Crude Oil Business The Group’s three oilfields in Liuluoyu, Yanjiawan and Jinzhuangin the Ordos Basin, Shaanxi Province are oilfields in production. However, because the oil price continues to drop in the area, the project’s overall returns has gradually decreased every year. After careful consideration, the Group has decided to concentrate the resources for development of Sanjiao CBM Project and suspend the investment to those three oilfields. During the year ended 31 December 2015, the three oilfields in Liuluoyu, Yanjiawan and Jinzhuang in the Ordos Basin, Shaanxi Province, yielded an aggregate crude oil production of approximately3,570tonnes (2014: approximately 4,657 tonnes). As the same time, in order to balance the development of the gas and oil business portfolio, the Group is also actively looking for the opportunities to expand its overseas upstream business. The Group hence entered into two non-legally-binding memorandums of understanding (“MOU”) in June and September 2014. The acquisition target is certain oilfields located in Alberta Province, Canada. According to the MOUs, the Group is now conducting due diligence review on the resources and financial aspect of the target groups. In order to comply with the Group’s requirement on the due diligence review on the assets of the Target Groups, the Vendor has engaged professional geology consultancy firm to perform geology research by surveying and mapping surface and subsurface geologic features so as to identify areas where oil and gas may have accumulated. Since seismic data has been collected, exploratory drilling is required to verify that the site can produce enough oil or gas to make it economically viable to develop. Prospects About the Group’s future development strategies, Dr. Dai said, “Gas and oil exploration and development will continue to be the Group’s core business: strengthening the core competitiveness, optimising resource allocation and enhancing business return. The Group strives to become a professional international oil and gas upstream player and is committed to provide all shareholders with fruitful returns.” For further enquiries, please contact: About Sino Oil and Gas Holdings About Sanjiao CBM Project Sanjiao CBM Project was listed as one of the national key development project in 2014. In 2015 and 2016, was listed as one of the key construction projects in Shanxi Province for two consecutive years which is a key promotion CBM project of’Gasification for Shanxi’. For more information, please visit http://www.sino-oilgas.hk/ . End of Press Release +++++ Document: http://n.eqs.com/c/fncls.ssp?u=CPBOYPBYOC Document title: Sino Oil and Gas (00702.HK) Turnover of 2015 Increased by 300% Key word(s): Final Results
31/03/2016 Dissemination of a Press Release, transmitted by EQS TodayIR – a company of EQS Group AG. |