China-Focused CBM Producer Reports Higher 1H Profit
China-focused coalbed methane (CBM) producer AAG Energy said August 24 its net profit increased 223% year on year to yuan 205.7mn ($30mn) for the six-month period (1H2018) that ended June 30, 2018 thanks to higher realised prices.
During 1H2018, AAG’s gross gas production increased by 30% year on year to 381.2mn m3 (13.5bn ft3). Company’s production from Panzhuang concession was 331.3mn m3 (11.7bn ft3) and 49.9mn m3 (1.8bn ft3) from Mabi concession. Panzhuang and Mabi concessions are located in the Southwestern part of Qinshui Basin in Shanxi Province. Panzhuang concession is in partnership with China United Coalbed Methane Corporation (CUCBM) while Mabi CBM project is in partnership with PetroChina.
Panzhuang's average selling price increased from yuan 1.26/m3 in 1H2017 to yuan 1.53/m3 in 1H2018; Mabi's realised average selling price also went up from yuan 1.13/m3 to yuan 1.42/m3. “The combination of improved performance of existing production wells from operation efficiency, new wells drilled in Panzhuang during 2017 and 2018, and better well design, implementation and performance in Mabi led to increased production output in 1H2018,” AAG said.
In Panzhuang, AAG will look to complete the 2018 drilling plan of 49 single lateral horizontal (SLH) and 12 pad drill wells (PDW). The new wells to be drilled in 2H2018 will contribute to production from 2019, it said. AAG expects production in 2H2018 will be greater than production in 1H2018 subject to anticipated project execution and related government approval.
For Mabi, AAG has revised the 2018 capital expenditure plan from the original yuan 570mn down to yuan 170mn and will continue to focus on the preparation of scaled commercial development, including fine tuning the implementation plan, and continue drilling and completion in core development zone. In 2H2018, the company plans to drill 39 PDW wells and to perform 5 well completion works.