Genesis Energy Chairman Mr. Terence Kong noted: “The first half of 2009 was still plagued by the impact of the financial tsunami. The severe plunge in crude oil prices and prevailing low prices during the period inevitably posed tremendous pressure on our oil and gas exploitation business, but despite such challenges, we are pleased to announce initial results from our active efforts to explore secured sources of new income. As such, the Group completed the acquisition of Liu Luo Yu Oil Field located in Ganquan County in Shaanxi Province (陜西省甘泉縣) in February 2009. With more than 80 oil wells, the prospect maintains a steady monthly output of approximately 1,000 tonnes of crude oil, providing the Group with immediate monetary contributions.”
Earlier this month, the Group acquired another oil and gas exploitation project located in Yanjiawan, Shaanxi Province, China (陜西省閻家灣), with a view to furthering its oil and gas business in the province. Total consideration amounted to RMB31.80 million. There are a total of 58 operating wells on this 12-sq-km oil field. The Group also holds the right to identify, design and drill all new wells in the area. It is expected that this oil field will deliver steady and satisfactory earnings for the Group.
In the United States, the Group operates Grassy Trails Oil Field located in Emery County and Carbon County, Utah. With five operating wells across an area of about 26 sq km, Grassy Trails has a revised proven reserve of about 1.8 million barrels. In June 2009, the Group signed a legally non-binding letter of intent with BayHill Capital Corporation (“BayHill”) (OTC Bulletin Board: BYHL) pursuant to which the Group entered into good faith negotiations for the disposal of its interests in Grassy Trails to BayHill in consideration of BayHill issuing its shares to the Group. This transaction will in essence broaden and diversify the Group’s oil and gas assets portfolio in the United States.
Through the establishment of a joint venture, the Group also operates the Squaw Canyon oil field located in the Four Corners Area of Colorado, New Mexico, Utah and Arizona. The oil field encompasses an area of approximately 6.5 sq km, with a proven reserve of approximately 700,000 barrels. As the oil field has proven historical record, the investment risk in this project is relatively low. The reworking of the existing wells has completed, and during the period, the two wells in this oil field operated smoothly to produce stable income.
Mr. Kong continued: “In order to further realign and enhance our business portfolio, we completed in July 2009 the disposal of the loss-making natural gas refilling station operation in Xinjiang. In view of the intensifying problem of global energy shortage, and the PRC government’s priority given to sustainable sources of energy, the Group is actively evaluating investment opportunities in renewable energy projects. During the period under review, the Group signed letters of intent with Jilin Provincial Government and four municipal governments in Henan Province, the PRC, respectively on possible investments in building and operating waste incineration projects for electricity generation, and was reviewing a possible biomass-to-energy project for electricity generation in Hubei Province, the PRC. We aim to further our business mix in the energy sector and to enhance our earnings base.”
“The impact of the global financial crisis on China’s economy, the growing demand of and attention to sustainable energy, as well as the competitive environment of the oil and gas industry, are the key factors that affect the future growth of the Group. The mainland government has implemented a series of counter measures, which have provided an excellent opportunity for the Group to acquire quality assets as a reasonable price. Management is confident that the Chinese economy will be among the first to rebound, and is optimistic about the long-term prospects of oil and gas sales. We expect our oil and gas exploitation business to further improve as crude oil prices gradually emerge from the bottom,” concluded Mr. Kong.
The Group maintains a solid balance sheet with a gearing ratio of 0% (2008: 0%) based on total assets, and a current ratio of 1.1 (2008: 2.1), placing the Group in a strong financial position to take advantage of new attractive investment opportunities that may arise.
Financial Highlights| Six months ended 30 June | ||
| 2009 | 2008 | |
| RMB '000 | RMB '000 | |
| Continuing operations | ||
| Turnover | 28,831 | 19,426 |
| Gross Profit | 9,501 | 5,284 |
| Profit/(Loss) from continuing operations | 277 | (4,174) |
| Discontinued operations | ||
| (Loss) from discontinued operations | - | (3,570) |
| Profit/(Loss) for the period | 277 | (7,744) |
| Earnings/(Loss) per share – Basic | HK0.0064 cent | HK(0.1833) cent |
About Genesis Energy Issued by : Through :
Genesis Energy Holdings Limited (HKEx: 702) is an energy company with a key focus on oil and gas, as well as renewable sources of energy. The Group is committed to building a diversified portfolio of energy assets and operations with the aim of developing into one of the leading independent players in energy sector in Greater China. The Group currently operates oil and gas fields in the US and the PRC.
Genesis Energy Holdings Limited
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