Chinese CBM Explorer Sino Eyes Overseas Assets
China's oil and gas explorer Sino Oil and Gas Holdings is exploring investment opportunities in overseas upstream businesses, the company said on August 24 while announcing its half-year results.
The company has had two memorandums of understanding under its belt since 2014, one signed in June and the other in September of that year. The acquisition targets are oil and gas fields located in Alberta province, Canada. It is now conducting due diligence review on the resources and financial aspect of the target groups. The final agreement between the parties is expected before September 30, 2016.
On the financial side, the company has reported first half profit of HK$5.697mn (US$0.73bn), a drop of 59% compared with the same period last year. However, it said that a government subsidy of about HK$9.593mn on the sale of CBM for the year 2015 has been received and recorded as 'other revenue' during the period.
Sanjiao block (Credit: Sino Oil and Gas Holdings)
Sanjiao CBM Project
Although the company is engaged in crude oil exploration business and has a raw coal washing project, its main focus area is unconventional hydrocarbon exploration. The Sanjiao CBM project is company’s core business.
During the first of the year, the Sanjiao CBM project produced about 32.49mn m³ compared with 27.9mn m³ in the same period last year. Sales were lower at 26.52mn m³ against 27.38mn m³. The gas sale-to-production rate was about 81.6% for the period. The company expects sales to improve in the second half as it is negotiating a contract renewal with a customer.
In 2010, Sino Oil and Gas Holdings, through its subsidiary Orion Energy International, had entered into a production sharing contract (PSC) with China National Petroleum Corporation (CNPC), its partner in China, for exploration and production at a CBM field in the Sanjiao block, in two different provinces – Shanxi and Shaanxi.
The company is trying to diversify its business model and cooperation projects. In July, the company said it has agreed to work with Shanxi Guxian Lanhua Baoxin Coal Company Limited for development of CBM projects in latter’s coal mines. The two parties signed a non-legally binding strategic cooperation framework agreement in January this year. Based on preliminary analysis, Sino Oil and Gas Holdings will conduct technical plan design and assessment of the economic benefits in respect of the CBM development project in order to secure the production sharing contract of the block.
Lanhua Baoxin, as a member of the Group of Shanxi Lanhua Technology Venture, is in Beiping Town, Gu County of Linfen City, Shanxi province and owns the coal mine located at the heart of Qinshui coalfield, with a designed production capacity of 900,000 metric tons/yr. The mine has a high gas content, Sino Oil and Gas Holdings said in July.
Shardul Sharma