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AAG Energy Achieves Significant Growth in 2018 Annual Results All Indicators Perform Well

Release date: 21-Mar-2019

(Hong Kong, March 21, 2019) – AAG Energy Holdings Limited (“AAG Energy” or the “Group”; HKEX stock code:2686), the leading independent coalbed methane (“CBM”) producer in China, announced its annual results with net profit of RMB413 million, up 125.4% year-on-year (“YoY”), for the year ended 31 December, 2018 (“the review year”).

AAG Energy places great value on Health, Safety, Environment (“HSE”) and makes efforts on assuming its social responsibilities. In 2018, AAG Energy recorded zero on lost time injury rate, total recordable incident rate and preventible motor vehicle accidents in respect of its safety and environmental protection performance. As of 31 December 2018, the Group has achieved record of zero lost time injury for approximate 1,600 days.

During the review year, the Group’s gross production increased by 27.4% YoY to 802 million cubic meters (“MMCM”) (28.3 billion cubic feet (“bcf”)), comprising Panzhuang’s gross production of 705 MMCM (24.9 bcf) and Mabi’s gross production of 97 MMCM (3.4 bcf).

The Group achieved a higher realized average selling price (“realized ASP”) of RMB1.64 per cubic meter (“cm”), which was driven by the government policy of unifying the city-gate prices of natural gas for residential and non-residential use and the increased prices of natural gas and growth of natural gas consumption brought about by the ongoing implementation of prevention measures towards air pollution. The realized ASP per cm in respect of Panzhuang increased by 27.5% YoY to RMB1.67; while the realized ASP per cm in respect of Mabi increased by 21.9% YoY to RMB1.39.

Revenue increased by 71.0% YoY to RMB1.258 billion. Net profit surged by 125.4% to RMB413 million. Earnings per share increased by 123.6% to RMB0.123. The Board recommends a final full year dividend of RMB0.0737 per share (equivalent to approximately HKD0.0862 per share).

AAG Energy has achieved considerable progress towards key operational objectives during the year:

Panzhuang concession - Stable production growth and facilities achieved continuous progress

  • Gross production increased by 23.4% YoY to 705 MMCM (24.9 bcf), 12.7% higher than the original target
  • The average daily gas production reached 1.93 MMCM.
  • By the end of 2018, 243 wells were in production, including 67 pad drill wells (“PDW”), 49 multi-lateral wells (“MLD”) and 127 single lateral horizontal (“SLH”) wells.
  • In November 2018, 34 wells originally operated by CUCBM were officially transferred to the Group, which increased the production of Panzhuang project by about 60,000 cm per day.
  • In 2018, a total of 63 wells (comprising 50 SLHs and 13 PDWs) were drilled in Panzhuang concession, and 8 more wells have been drilled compared to that of 2017. The average drilling time for SLH wells was shortened to 16.53 days only, representing an increase of 2.19% in drilling efficiency when compared with that of 2017.
  • The 34 15# SLHs successfully completed exploration and applied a series of engineering technologies.

Mabi concession - Promising success in production and approval of Mabi ODP

  • Gross gas production increased by 65.9% YoY to 96.68 MMCM (3.4 bcf).
  • The average daily production increased by 62.5% YoY to 260,000 cm.
  • By the end of 2018, Mabi had a total of 175 pilot test wells in production.
  • In October 2018, NDRC has formally announced the Approval Regarding on the Overall Development Plan (“ODP”) in respect of the Foreign Cooperation Project within the Southern Block in Mabi concession, Qinshui Basin, Shanxi Province. Pursuant to the approval, the project construction scale is 1 billion cubic meters per year, and the construction period is 4 years. At present, preliminary design of surface facility of the projects been approved by PetroChina, and we are now preparing to kick off the development according to the ODP approval.

In 2019, the Group will continue investing in Panzhuang concession and Mabi concession as follows:

  • Panzhuang Concession The Group will implement the full year plan upon receiving the government approval on Panzhuang concession, including the planned completion of pre-drilling works of 17 well sites, 75 SLHs and 23 PDWs, the purchase of pumping equipment and production of new wells and the execution of related ancillary surface facilities engineering. With the scheduled project implementation and government approval associated, the anticipated gross production of Panzhuang concession is 810 MMCM (28.6 bcf).
  • Mabi Concession The Group will focus on the ODP approved area in the southern part of Mabi. The full year plan includes the ground surface construction of 36 development test wells and related surface to ensure that the output of new wells can be contributed to the pipe network sales on schedule. Based on the performance of the 36 wells above, the Group will continue to prioritize the allocation of 100 pilot test wells in the Sweet Zone and invest in the construction of related ancillary facilities. Meanwhile, the application of certain new technologies and techniques identified by the Group is also the focus of Mabi concession, which will be implemented as scheduled. With the scheduled project implementation and government approval, the anticipated gross production of Mabi concession is 71 MMCM (2.5 bcf).

Going forward, besides the coal-to-gas policy encouraged by the government, the State Council of China issued “Some Opinions on Facilitating the Stable and Coordinated Development of the Natural Gas Industry”, stating that it is necessary to speed up the establishment of a system for the production, supply, storage and sale of natural gas so as to facilitate the stable and coordinated development of the natural gas industry. These policies drive the demand for natural gas, supporting the Group to grow continuously. Meanwhile, the Chinese government attaches stringent requirements to the protection of ecological environment, which encourages the Group to explore new technologies and techniques, thereby developing to be a sustainable clean energy corporation with a leading position in the international market.

  • Press Contact

    Jiayi Wu, Joint Company Secretary's Assistant, +86 1592-859-9449,