The Group currently operates Grassy Trails oil field in Utah, the US. Further in August 2007, the Group entered into a cooperation agreement for the exploration of Xun Yi oil field in Shaanxi Province, the PRC. In February 2008, the Group was commissioned to operate the E Tuo Ke Oil & Gas Field in Inner Mongolia. The Group has now assembled a diversified asset portfolio to provide both short- and long-term growth drivers.
Mr Terence Kong, Executive Director, Genesis Energy, noted: "2007 has been an exciting year. In September 2007, we disposed of the loss-making oil transportation business Xinjiang Xingmei, a move which also gave us a clean break against any potential liabilities arising from its bank loans. More importantly, we have made excellent progress in tapping investment opportunities in upstream oil businesses. In addition to the oil field in the US, our investment in the Shaanxi oil project marked our first move in the region, and being the operator of the E Tuo Ke oil field we are able to enjoy with low risk returns from a project of great potential."
In January 2007, the Group became the first listed Chinese company to acquire an oil and gas asset in the US. The 26-sq-km Grassy Trails oil field in Utah, the US, achieved its first delivery of crude oil in September 2007. In February 2008, the Group successfully completed the first horizontal drilling on Federal 12-13, which is expected to produce an additional 200 barrels per day. A recent independent technical report revealed that the proven reserve of crude oil on Grassy Trails has been revised up to about 1.36 million barrels. Currently, the Group is working on a second and third horizontal drilling.
In August 2007, the Group entered into a legally binding cooperation agreement with a PRC partner in relation to an oil exploration and exploitation project in Shaanxi Province, the PRC. The Xun Yi oil field covers a site area of 560 sq km. The Group will carry out exploration and exploitation works and is entitled to share 95% of profits generated from this project. According to a preliminary technical report, petroleum initially in place amounts to 510 million barrels. This project will spearhead the Group's oil exploration business in the PRC. It will also become the business model to drive the Group's further developments in the fuel-producing Shaanxi-Gansu-Ningxia area.
In February 2008, the Group was commissioned by another PRC partner to be the operator of E Tuo Ke oil field. The Group will provide related investigation, exploration and operating services for a number of prospects in E Tuo Ke. The owner will fund the operating costs of the exploration team and the Group will receive a 7% management fee based on the net sales revenue of E Tuo Ke, after deducting depreciation and certain direct expenses. The Group will commission a new geological study of the E Tuo Ke block in order to draw up a detailed drilling scheme. Taking reference from a previous technical report, the estimated total production of natural gas is upto 4,900 million cubic metres in five years. This collaboration will open up for the Group a new stream of management fee revenues, as well as a low-risk opportunity to enjoy returns from a project of great potential.
The 72%-owned natural gas pipeline network operation, Lejion Gas, entered into a short-term agreement last year to contract out the sale of piped natural gas to the local government. Lejion Gas has since then refocused its resources on the business of vehicle gas and LPG refilling stations. This arrangement has resulted in improved sales at refilling stations.
The cash flow and balance sheet of the Group remained resilient, with the successful fund raising exercise in the first quarter of 2007 further strengthening the Group's financial position to tap the upstream market at a time of rising Brent crude price. As at December 31, 2007, gearing based on total assets was reduced to 0% from 72.9% a year earlier.
Financial Highlights| Year ended December 31, | ||
| 2007 | 2006 | |
| RMB '000 | RMB '000 | |
| Turnover | 76,066 | 72,200 |
| Gross profit/(loss) | 1,905 | (4,635) |
| Loss attributable to equity holders of the Company | (7,936) | (85,187) |
| Basic (loss) per Share (HK cents) | (0.19) | (2.69) |
| Diluted (loss) per Share (HK cents) | (0.18) | (2.62) |
| As at December 31, 2007 | ||
| Gearing ratio | 0% | 65.5% |
| Current ratio | 2.50 | 0.19 |
About Genesis Energy Issued by : Through :
Genesis Energy Holdings Limited (702) is an energy company with focus on oil and gas exploitation and operations. The Group is committed to building a diversified portfolio of oil and gas assets and operations with an aim to developing into one of the leading independent oil and gas businesses in Greater China. The Group currently operates oil and gas fields in the US and PRC.
Genesis Energy Holdings Limited
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Jenny Lee or Angus Ho
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