27th Apr 2016 07:45
LONDON (Alliance News) - Green Dragon Gas Ltd on Wednesday said it delivered its first-ever profit after tax in 2015 after reporting a rise in revenue and a fall in costs as the company continues ramping up production and developing its asset portfolio.
Green Dragon, which works with several Chinese companies in eight licence blocks to produce coal-bed methane gas in China, said its pretax loss in 2015 amounted to USD130,000 compared to the huge USD36.3 million loss booked in 2014.
The main reason for the significantly narrower loss in the year was the absence of a USD30.1 million one-time loss that was booked in 2014 from a change in fair value of its financial derivatives. However, higher revenue and lower costs also contributed.
Revenue in the year rose to USD37.7 million from USD35.6 million, pushing its gross profit up to USD22.2 million from USD14.7 million a year earlier.
Selling and distribution costs experienced a small fall year-on-year and overall administrative costs declined to USD5.5 million from USD7.0 million. However, those savings were offset by a rise in finance costs to USD15.9 million from USD12.1 million in 2014.
Although Green Dragon stayed in the red at the pretax level, an income tax credit allowed the company to report a USD82,000 profit after tax in 2015 compared to the USD35.8 million loss in 2014.
That move to a bottom-line profit suggests Green Dragon is on its way to delivering its first material bottom-line profit since inception after the company said back in February that 2016 will be the company's "best year ever".
Green Dragon Gas had the capacity to produce up to 12.12 billion cubic feet of gas per year at the end of 2015, exceeding its own target, and the company is expecting that capacity to increase to 16.00 billion cubic feet per annum by the end of 2016. If achieved, that would represent a 33% rise in capacity year-on-year.
In addition, Green Dragon's gas processing capacity increased 79% year-on-year in 2015 to 22.7 billion cubic feet of gas per annum after its partner, China National Offshore Oil Corp, completed two new processing facilities.
Importantly, the company's average gas sales price in 2015 remained flat year-on-year at USD10.0 per million cubic feet as it continued to ramp-up production capacity.
Green Dragon Gas said it is considering a farm-out, debt and equity financing options to develop assets and enhance trading liquidity moving forward.
"With production capacity growth of 33% and strengthened cooperative partnerships with CNPC, Petrochina and CNOOC, we are proud of the position we find ourselves in. As our focus moves to optimising production, revenue and profitability on GCZ and GSS [blocks] we move into a position where we can now consider how we best deliver tangible value to our shareholders whilst still retaining the financial resources necessary to develop all of Green Dragon Gas' blocks," said Founder and Chairman Randeep Grewal.
Cash at the end of 2015 stood at USD26.9 million, a significant fall from the USD80.0 million reported at the end of 2014.
Green Dragon shares were trading up 2.3% to 265.0 pence per share on Wednesday.
By Joshua Warner; [email protected]; @JoshAlliance
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