China: Fortune Oil Revenues Rise 10 Pct

Fortune Oil announced results for the six months ended 30 June 2013.

Financial highlights

• Revenues including share of jointly controlled entities increased by 10 per cent to £372.0 million (H1 2012: £338.8 million) with no revenues being accounted for from the Maoming single point mooring business (“SPM”) after expiration of the joint venture agreement in February 2013.
• Group profit from operations, excluding gains on disposal, decreased by 10 per cent to £12.8 million (H1 2012: £14.3 million) principally due to an inventory loss in the aviation refuelling business as a result of aviation fuel price movements and the exclusion of any potential profits from the SPM business after the joint venture agreement expired.
• Earnings per share was 0.32p (H1 2012: 0.55p). Earnings per share, excluding gains on disposal, was 0.32p (H1 2012: 0.31p).
• Net assets increased to £327.4 million as at 30 June 2013 (31 December 2012: £246.8 million) including a net gain of £74.6 million in fair value in respect of the Company’s China Gas Holdings Limited (“CGH”) shares.
• The Annual General Meeting on 19 June 2013 approved a dividend payment of 0.16p per share for 2012 which was paid on 15 August 2013.
• Proposed special interim dividend of 2.36p per share to be put to shareholders in a General Meeting.
• Loan from Fortune Dynasty Holdings Limited of US$12 million to the Group to cover working capital needs and certain material near-term capital expenditure as a result of the delay in completion of the sale to China Gas Holdings Limited of Fortune Gas Investment Holdings Limited.

Operational highlights

• Completed natural gas connections to a further 32,497 new customers (H1 2012: 31,031 new customers), bringing total number of customers to approximately 312,500.
• Total field production from the Fortune Liulin Gas (“FLG”) wells has exceeded 70,000 cubic metres per day with the most successful well to date producing 20,000 cubic metres per day, a rate which exceeds all previous wells drilled by FLG and is in line with projections.
• Bluesky performed well with an 11 per cent increase in sales volumes to 1.6 million tonnes (H1 2012: 1.4 million tonnes), driven by the continued increase in domestic air travel demand.
• Final stages of negotiations with Sinopec for replacement structure for Maoming SPM partnership, which is expected to include the development of a new pipeline and buoy, increasing the terminal’s capacity.
• West Zhuhai Products Terminal throughput volume was up by 22 per cent to 1.4 million tonnes (H1 2012 1.1 million tonnes) and profit contribution to the Group increased by 46 per cent due to increased utilisation of the terminal by Petrochina.

Mr Qian Benyuan, Chairman of Fortune Oil, commented: “Our natural gas business has continued to expand rapidly with demand in China for natural gas outstripping supply. Fortune Oil’s exciting development with China Gas Holdings Limited will further enhance our exposure to China’s rapidly expanding natural gas industry.”

“The oil business continues to make good progress. The Bluesky aviation fuel business is well positioned to participate in the anticipated continued growth in air travel in China. We expect demand for oil and oil based products in China to continue to remain strong and the Board is excited by the medium term growth prospects for our oil business”