17th Aug 2015 07:09
LONDON (Alliance News) - Green Dragon Gas Ltd on Monday reported a small pretax loss in the first half of the year but said revenue and production both rose as it continues to benefit from strong gas pricing and a consistent ramp up through its LiFaBriC drilling programme.
The Chinese-focused gas company reported a pretax loss of USD1.5 million in the first half of 2015, substantially narrower than the USD69.3 million loss reported a year earlier, primarily because the company did not repeat a USD65.4 million charge taken in relation to its bonds in the first half of 2014.
Revenue rose to USD16.8 million from USD15.5 million, while cost of sales dropping to only USD4.9 million from USD10.1 million a year earlier.
Revenue was boosted by an increase in piped natural gas and compressed natural gas sales, alongside better compressed gas prices. Gross profit improved due to the increased sales at "stable prices", resulting in lower fixed costs spread over larger volumes.
Green Dragon said its gas pricing in China has been unaffected by the volatile market or the potential future Chinese yuan devaluation.
Capital expenditure in the period totalled USD19.4 million, a significant rise from the USD7.8 million spent a year earlier. Green Dragon said this was in line with its plan to focus on infrastructure investment and drilling to deliver increased production.
The company is currently undertaking a 30 LiFaBriC well drilling programme, 18 of which were drilled in the first half with the remaining wells to be completed in the second half.
LiFaBriC is a technique developed by AIM-listed Greka Drilling Ltd. It is an adaptation of the horizontal drilling methods traditionally used for drilling in coal seam reservoirs and is designed to provide a precise and high-quality completions' technique. It was designed specifically for Chinese geology.
That has given the company an exit rate of 10.15 billion cubic feet of gas per year at the end of the first half, which is on target to reach the ideal 12.00 billion cubic feet per year figure before the end of 2015, it said.
In July, Green Dragon said gross production in the first half of 2015 totalled 4.87 billion cubic feet of gas, up 18% from the 4.10 billion cubic feet produced a year earlier.
"We are pleased to announce another set of strong financial results from Green Dragon Gas, following the gradual ramp-up in our production and sales through the first six months of 2015. In addition, we have continued to benefit from a uniquely strong pricing position environment in the context of the on-going volatility in the sector, due to our strategic position in the high demand Chinese gas market," said Founder Randeep Grewal.
Green Dragon shares were up 1.0% to 295.00 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Green Dragon Gas