(Hong Kong, 26 August 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 interim results for the six months ended 30 June 2022 (the “Period”), with key business indicators hitting record high again, revenue up 78.43% to RMB1.496 billion, net profit up 94.18% to RMB739 million and earnings per share up 94.64% to RMB0.218.
During the first half of 2022 (“1H2022”), affected by changes in international situations and intensifying geopolitical conflicts, global commodity prices, including that of oil, natural gas and coal, trended high and energy prices climbed markedly. For the Group though, with resources mainly in Shanxi, and the natural gas market in the peripheral area of Henan, boasting strong sustainable development potential and market size advantage, allowing it to balance peak and slow season business difference, it achieved better than expected performance. Its revenue and other incomes (including government subsidies and VAT refunds) in 1H2022 increased by 78.43% to RMB1.496 billion, net profit increased by 94.18% to RMB739 million, while EBITDA swelled 65.84% to RMB1.133 billion, and earnings per share climbed 94.64% to RMB0.218.
In 1H2022, the Group has gained fuller recognition of the geology of the stock concessions, gradually optimized project engineering adaptability and steadily improved project management, and made effective investment according to plan. The Group’s total CBM production in 1H2022 increased by 15.41% to 712 million cubic meters (“MMCM”) (or 25.1 billion cubic feet (“bcf”)), which included the gross production from the Panzhuang concession and the Mabi concession of 598 MMCM (or 21.1 bcf) and 114 MMCM (or 4.0 bcf), respectively.
The Group’s total CBM sales volume in 1H2022 increased by 16.81% year-on-year to 688 MMCM. The realized average selling price (“ASP”) of output form the Panzhuang concession increased by 40.85% from RMB1.64 per cubic meter in 1H2021 to RMB2.31 per cubic meter in 1H2022 and the realized ASP of the Mabi concession increased by 28.78% from RMB1.39 per cubic meter in 1H2021 to RMB1.79 per cubic meter in 1H2022.
During the Period, AAG Energy has achieved operating results towards certain key operational objectives:
Panzhuang Concession — Technological innovation continued Development tests yielded promising results
Mabi Concession — Increased investment in tests Production capacity rose quickly
LNG Outsourced Processing and Trading Business — Allocated more resources to build a new business model
In face of the complex and severe international environment and the severe impact of the continuous recurrence of the domestic epidemic, the state has efficiently coordinated the epidemic prevention and control and economic and social development, and focused on stabilising the macroeconomy. The domestic epidemic prevention and control situation is generally positive, production demand is gradually recovering, and the national economy is showing a good momentum. Guided by top-level policy designs such as the “14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Long-Range Objectives Through the Year 2035”, the “14th Five-Year Plan for Modern Energy System” and the “dual carbon” goals, the natural gas market has kept trending positive. In view of such market opportunities, the Group will continue to make the following investments:
Panzhuang Concession — Continues development efforts to lay a solid foundation
In the second half of 2022, upon the guaranteed of 61 wells drilled under the annual work plan, 7 wells will be added in the Panzhuang concession, the working capacity to a total of 68 wells drilled. The concession will continue to push forward drilling of the 24 wells remaining, while at the same time move on with procuring drainage equipment, operation of new wells, expansion and transformation of No. 1 station and the work of associated ground supporting facilities according to the adjusted annual work plan. The wells with drilling completed in the second half of 2022 will start to contribute output in 2023. At the same time, the Group will continue to press forward preparation work in relation to and helpful for laying a solid foundation for the development of thin coal seams in the future.
Mabi Concession — Maintains the pace of construction of production capacity, achieves annual tasks
In 2H2022, the Group will aim to achieve the annual drilling task of 176 wells in accordance with the work annual plan formulated at the beginning of the year for the Mabi concession. Meanwhile, the Group will continue to evaluate the integration of construction and production in the northern area of Mabi concession. The new wells drilled and fractured in 2022 will start to gradually contribute output in 1H2023, and certain surface construction works have been moved to 2023.
LNG Outsourced Processing and Trading Business — Focuses on increasing market share and reaping industrial synergies
Xinhe Investment will focus on increasing its market share and influence in the Central China market, building a more mature commercialization model and gradually establishing a sound digital management team. It will also fully mobilizing internal and external resources to speed up construction of the Group’s “full natural gas industry ecological chain”. Furthermore, it will ensure its business initiatives tie in better with upstream development businesses to reap the synergies resulted and to provide support for the Group to acquire new concessions and innovate cooperation project models. Taking into account the overall budget of the Company and LNG market situations, LNG trading volume is expected to reach approximately 20,000 tonnes in 2H2022.
Outlook
Under the guidance of the Group’s clear strategic planning, AAG will increase investment to develop its existing concessions and continue to increase production to expand its market share. In order to strengthen the construction of CBM transmission and distribution capacity and construction of an industrial ecological chain, it will continue to look for valuable investment targets beneficial the Group’s business development. The Group will also promote value-based cooperation with partners, enhance each other’s ability to cope with market changes, further optimize its costs, and maintain output and net profit growth, thereby lay a good foundation for high-quality and rapid development of the Group in the medium to long run, that it may generate higher returns for shareholders.
Press Contact
Jiayi Wu, Company Secretary's Assistant, +86 1592-859-9449, jiayi.wu@aagenergy.com