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AAG Energy’s 2019 Interim Net Profit Surges 65%

Release date: 20-Aug-2019

(Hong Kong, August 20, 2019) – AAG Energy Holdings Limited (“AAG Energy” or the “Group”; HKEX stock code: 2686), a leading independent coalbed methane (“CBM”) producer in China, has announced its interim results. The Group achieved a net profit of RMB339 million, up 64.60% year-on-year (“YoY”), for the six months ended 30 June 2019 (“1H2019” or “the review period”).


The Group’s revenue for 1H2019 (including subsidy and VAT refund) increased YoY by 37.77% to RMB764 million. Net profit surged 64.60% to RMB339 million, with EBITDA climbing 59.15% to RMB585 million. Earnings per share rose by 61.29% to RMB0.100.

 

During the review period, the Group’s gross production rose by 18.92% YoY to 453 million cubic meters (“MMCM”) (16 billion cubic feet (“bcf”)), comprising Panzhuang concession’s gross production of 416 MMCM (14.7 bcf), representing a YoY increase of 25.48%, and Mabi concession’s gross production of 37 MMCM (1.3 bcf). Daily production during the review period grew by 18.48% YoY to 2.50 MMCM.


Benefiting from strong demand for natural gas during the winter, the realized average selling price of the Group’s Panzhuang concession was RMB1.80 per cubic meter, representing growth of 17.65%, while the realized average selling price of Mabi concession amounted to RMB1.40 per cubic meter due a change in customer mix.


AAG Energy has achieved considerable progress towards its key operational objectives during the review period:

Panzhuang concession – Accelerated growth in production and continuing increase in production capacity of its facilities

  • Gross production increased by 25.48% YoY to 416 MMCM (14.7 bcf)
  • Daily average gas production reached 2.30 MMCM (81.1 million cubic feet)
  • By 30 June 2019, 273 wells were in production, including 49 multi-lateral drilling wells (“MLD”), 74 pad drilling wells (“PDW”) and 150 single lateral horizontal wells (“SLH”).
  • A total of 22 wells have been drilled, 19 of which were SLHs and 3 were PDWs. Average drilling time for SLH wells, being the main type of well, was 16.7 days
  • 7 PDWs were fracture stimulated and 30 wells were added into production
  • Production capacity of surface facilities has exceeded 3 MMCM per day, including 6 gas gathering stations, 24 wellhead compressors, 62.4 km of trunk links and 97.8 km of single well pipelines completed

 

Mabi concession – Promising production with preparations underway for further sizable development

  • Gross production reached 37 MMCM (1.3 bcf), 4.67% higher than the original target
  • Daily average production at 0.2078 MMCM (7.34 million cubic feet), 0.0093 MMCM higher than the production target
  • As there was no new well put into production, technological optimization, which includes such activities as ultrasonic stimulation trial and downhole equipment modification, was conducted on existing wells. The number of pump inspections recorded a YoY decrease of 53%
  • Following the comprehensive optimization of the 2019 drilling plan, the drilling plan will be implemented in 2H2019 in order to prepare for further sizable development

 

Total demand for natural gas in China continued to grow in 1H2019. At the same time, the national and local governments have introduced policies regarding energy reform and renewable energy development that will drive the Group’s rapid development in the field of natural gas. For 2H2019, the Group has set the following development plans for the Panzhuang concession and Mabi concession:


Panzhuang concession
The Group will continue to facilitate the drilling work of 76 wells, the purchase of pumping equipment, the production of new wells and the execution of related ancillary surface facilities engineering. Increased drilling in 2H2019 will begin to contribute to production in 2020. With the scheduled project implementation and government approval, the projected gross production at the Panzhuang concession in 2H2019 will exceed that of the 1H2019.

 

Mabi concession
The Group will commence drilling of 20 PDW and 4 SLH wells, as well as conduct surface facilities engineering and construction. The optimized plan will be more specific and economical. Such wells will begin to contribute to production in 2020. In addition, the Group plans to operate 2 multistage fracturing SLHs, 3 separate pressure production PDWs, and fracture the unfractured coal seams in 3 existing wells in northern area of Mabi. To boost production of single well, new techniques and technologies will be used for these new wells. In view of the project’s scheduled implementation, anticipated gross production at the Mabi concession will remain unchanged.

 

Going forward, benefiting from the rising demand for natural gas in China and associated incentive policies, the Group will maintain production growth through effective cost management. The Group will continue to innovate in respect of technologies and management, and thereby lay a solid foundation for the stable production and development of its existing wells in Panzhuang and the advancement of development technologies at Mabi. At the same time, the Group will look for new development opportunities in China and other markets as it plans to expand business, so as to provide more clients and relevant communities with clean energy and create higher returns for its shareholders.

  • Press Contact

    Jiayi Wu, Supervisor of the Board Office, +86 1592-859-9449, jiayi.wu@aagenergy.com