23rd Sep 2013 11:12
LONDON (Alliance News) - Green Dragon Gas Ltd Monday said it swung to a pretax profit in the first half of the year as it booked a USD28.3 million gain on the sale of gas pipelines, but it operating loss widened as it racked up litigation costs for its battle with ConocoPhillips China Inc over a cancelled farm-out agreement.
Pretax profit was USD11 million in the six months to June 30, compared with a loss of USD8.2 million last year, including the gain on the USD65 million gas pipeline sale. Its operating loss, meanwhile, widened to USD8.3 million compared with a USD5 million, as it booked USD6.9 million in litigation costs.
Green Dragon cancelled its farm-out agreement with ConocoPhillips China in November 2010 after alleging that ConocoPhillips had not made the required payments under the funding arrangements. ConocoPhillips then demanded the USD42.6 million back.
In July, an arbitration tribunal in Singapore ruled in ConocoPhillips' favour, awarding USD42.6 million plus fees and interest of about USD6.9 million to be paid by Green Dragon. Although Green Dragon is appealing the decision, it has set aside USD49.5 million in liabilities on its balance sheet.
"While the original decision was clearly disappointing, it has reduced the uncertainty around this contingent liability, again allowing the management team to refocus on driving the core business forward," the company said in a statement.
Green Dragon's revenues almost doubled in the first half to USD6.9 million, compared with USD3.5 million a year earlier, resulting in a higher gross profit. Its gas production increased and its piped natural gas sales increased between the first and second-quarters 2013.
Green Dragon Gas shares were Monday quoted at 303 pence, up 25 pence, or 9%.
By Samuel Agini; [email protected]; @samuelagini
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