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Revenue and Net Profit of AAGEnergyHitRecord High in FY2021
Revenue increases by 55.69% to RMB1.991 Billion
Net Profit increasesby59.84% to RMB816 Million
Gross Production and Gross Sales Volume Reach New Highs

Release date: 30-Mar-2022

 
(Hong Kong, 30 March 2022) – AAG Energy Holdings Limited (“AAG Energy” or the “Company”; HKEX stock code: 2686), a leading international energy company in the field of Coalbed Methane (CBM) exploration and production in China, together with its subsidiaries, collectively the (“Group”), has announced its annual results for the year ended 31 December 2021 (the “Year”). The revenue and net profit of theGrouphitrecord highs in 2021, revenueincreased by 55.69% to RMB1.991 billion, and net profit increasedby59.84% to RMB816 million.
 
The year 2021 is the first year for China to widely promote the development of natural gas under the “14th Five-Year Plan”. With the promotion of the “dual carbon” goal, natural gas consumption has grown rapidly. The fundamentals of the development of the domestic natural gas industry continue to improve withvibrant performance andthe Group has also achieved encouraging results. TheGroup’s revenue and other income (including subsidies and VAT refunds) for 2021 increased by 55.69% to RMB1.991 billion, while net profit and EBITDA for the year increased by 59.84% and 55.25% to RMB816 million and RMB1.545 billion, respectively. Earnings per share increased by 60.00% to RMB0.24.For the year ended December 31, 2021, the Board recommended a final full-year dividend of RMB 0.0589 per share (equivalent to approximately HKD 0.0724 per share).
 
The Group continued to execute its investment strategy and step up its investment in 2021,forming a solid foundation for the improvement in its annual production and sales volume. During the Year, the Group’s gross production in 2021 increased by 25.52% from that of 2020 to 1,298 million cubic meters (“MMCM”) (or 45.8 billion cubic feet (“bcf”)), including the Panzhang concession’s gross production rising 21.46% year–on–year (“YoY”) to 1,175 MMCM (or 41.5 bcf) and the Mabiconcession’s gross production significantly up 84.22% YoY to123 MMCM (or 4.3 bcf).
 
The gross sales volume for 2021 reached 1,250 MMCM, representing an increase of 24.49% YoY.The realized ASP in respect of the Panzhuang concession for 2021 increased by 26.76% to RMB1.80 per cubic meter compared with RMB1.42 for 2020; while the realized ASP in respect of the Mabi concession for 2021 increased by 21.01% to RMB1.67 per cubic meter compared with RMB1.38 for 2020.
 
During the year, AAG Energy achieved progress towards its key operational objectives.
 
Panzhuang Concession— Production volume exceeded the target and annual drilling task
  • Panzhuang concession, which is in partnership with China United Coalbed Methane Corporation Ltd. (“CUCBM”), continued to be the Coalbed Methane (“CBM”) project with the highest output in China, and was listed as China’s key CBM project in production under the “14th Five-Year Plan” for the development and utilization of CBM (coal mine gas) prepared by the National Energy Administration (the “NEA”) and issued by the NDRC of the PRC
  • The gross production of Panzhuang concession reached 1,175MMCM (41.5bcf),  8.78% higher than the original target of 1,080 MMCM (38.1 bcf)
  • The average daily gas production was 3.22 MMCM, representing an increase of 21.97% compared with 2.64 MMCM in 2020.
  • By the end of 2021, there were a total of 504 wells in production, including 158 pad drilling wells (“PDW”), 49 multi-lateral drilling wells (“MLD”) and 297single lateral horizontal wells (“SLH”) in Panzhuang concession.
  • A total of 62 wells were drilled(including 21 SLHs and 41 PDWs). The average drilling time of SLHs was only 15.97 days.
  • Committed to the geological research of thinseamCBM reservoirs, the gas production performance of the 13 tested wells was satisfactory, of which 9 wells have achieved high production and stable production, with an average daily gas production per well of 6000-7000 m³/d, and the stable gas production volume of 4 wells exceeds 10,000 m³/d 
  • The surface facilities include 6 gas gathering stations, 58 wellhead compressors, 68 km of trunk lines and 135 km of inter-well pipelines
  • The central gas gathering station has a secondary processing capacity of 1.20 MMCM per day, and compressors at remaining stations and wellheads have a processing capacity of 4.56 MMCM per day
 
Mabi Concession— Daily average production volumeup significantly as drilling investment reached a new high
  • Mabi Concession, listed as China’s key CBM project under construction under the “14th Five-Year Plan” for the development and utilization of CBM (coal mine gas) prepared by the NEA and issued by the NDRC, and was also one of the key CBM construction projects in Shanxi Province in 2021
  • The gross production of Mabi concession was 123 MMCM (4.3 bcf) with an average daily gas production of 0.34 MMCM, representing an increase of 86.10% compared with 0.1827MMCM in 2020
  • A total of 327 wells were in production, including 272 PDWs, 1 MLD and 54 SLHs 
  • A total of 190 wells were drilled (including 89 SLHs and 101 PDWs), representing an increase of 192% as compared with 2020. The drilling investment in Mabi concession reached a new high. 
  • The average drilling time of SLH was only 14 days, and the length of the single horizontal section increased by 140 meters on average compared with 2020, representing an increase of 15%, which greatly improved the development economy
  • Completed a total of 108 wells and a total of 725 stages of fracturing, representing an increase of 33% and 68%, respectively
  • The maturity of the fracturing process, selection of fracturing tools, and innovative and efficient management of common tubing with bottom sealing, drag and fracturing greatly improved the fracturing quality and reduced the fracturing cost. In 2021, the single-stage fracturing cost of SLH wells decreased by 10% YoY. At the same time, the test of ultra-low-density ceramic proppant showed an obvious production enhancement effect
  • Accelerated the construction of the No. 2 gas gathering station and regional facilities, completed a total of 11.9 kilometers of outbound pipelines, 24 kilometers of inter-well pipelines, and 43% of the main construction of the 35 kilovolt single tower double circuit and substation, which will effectively guarantee the increase of production after completion.
  • Through continuous monitoring of the pumping test of three No. 3 coal SLH wells in the northern area, the three wells are currently in the stable gas production stage.Meanwhile, the Group has selected 64 square kilometers of production areas in the northern area, and is conducting 3D seismic exploration and preparation of the development plan
 
On 3 June 2021, the Shanxi Provincial Government issued the “Approval Procedure for Coal-Formed Gas Mining Projects in Shanxi Province” (《山西省煤成氣開採項目審批流程》), which requires that, according to the characteristics of coal-formed gas projects, the coal-formed gas mining process shall be divided into four stages: acquisition of mining rights, exploration, development and production, and relinquishment. Through optimization of the approval procedure, the approval time frame is considerably shortened, further accelerating the development progress of CBM exploration and development.
 
In addition, on 24 October 2021, the Central Committee of the Communist Party of China and the State Council issued the “Opinions on Fully and Accurately Implementing the New Development Concept to Work on Carbon Peak and Carbon Neutrality” (《關於完整準確全面貫徹新發展理念做好碳達峰、碳中和工作的意見》), which requires arrangement and deployment for the dual-carbon work at national level, and the construction of a clean, low-carbon, safe and efficient energy system. As the most clean and low-carbon fossil energy, natural gas is a key way to achieve the adjustment of the energy industry structure. As an upstream CBM exploration and development enterprise, the Group will benefit from the dual effects of policies and market in the current and long term in the future, and further increase the release of CBM producton capacity and economic benefits.
 
The year 2022 will be marked by opportunities and challenges for AAG. The Group will continue to make the following investments:
 
Panzhuang Concession — Continuously explore the concession’s potential and drive output to reach another record high
The full year plan including of completing pre-drilling construction of 16 well sites, the drilling work of 61 new wells, the fracturing construction work of 63 new wells, the pumping equipment purchase and commencing production of 72 new wells, as well as implementing related ancillary surface facilities engineering. With the scheduled project implementation and related government approvals, the anticipated gross production of the Panzhuang concession is 1,188 MMCM (42.0 bcf). Due to the frequent coal mining activities in the surrounding coal mines adjoining thePanzhuang concession, the Group will continue to strengthen communication and cooperation with these coal mines in 2022, to optimize mutual guarantee agreements and to identify new development opportunities and cooperation channels.
 
Mabi Concession —Enhance the investment and construction of ODP andoptimize the development of the northern area 
The Group will continue to enhance the investment and construction per the ODP in the southern area of the Mabi concession and optimize the development of the northern area. In 2022, it plans to implement drilling of 176 CBM wells in theMabi concession (including 158 CBM wells in the southern area and 18 CBM wells in the northern area),and will also focus on the development and construction in the area around the No. 2 gas gathering station. With the scheduled project implementation and related government approvals, the gross production of theMabi concession in 2022 is expected to be 254 MMCM (9.0 bcf).
 
OUTLOOK
 
The Group is highly confident in focusing on and dealing with uncertainties, and remains committed to cost reduction and efficiency enhancement to deliver promising operating results. Meanwhile, the Group will continue to enhance technological innovation, thereby laying a solid foundation for the stable production and development of the Panzhuang concession and the large-scale development of the Mabi concession. Besides, the Group will leverage its groundbreaking technological advantages to identify new development opportunities mainly in China’s market as planned and actively expand new concessions and businessesso as to provide clean energy for more clients and relevant communities and create higher returns for shareholders.
  • Press Contact

    Jiayi Wu, Joint Company Secretary's Assistant, +86 1592-859-9449, jiayi.wu@aagenergy.com