Fortune Oil PLC (FTO) - Interim Management Statement
RNS Number : 4097R
Fortune Oil PLC
19 November 2012
19 November 2012
FORTUNE OIL PLC
("Fortune Oil" or the "Company")
Third Quarter 2012 Interim Management Statement
Fortune Oil announces its Interim Management Statement for the period 30 June
2012 to date. Unless stated otherwise financial disclosures relate to the
third quarter ended 30 September 2012.
· New natural gas supply connections increased by 89 per cent to 21,557 in
the third quarter (Q3 2011: 11,427).
· Liulin coal bed methane ("CBM") remains on track for first gas sales in
2013. Construction of the gas gathering system, nodal compression station and
the main export product trunk-line at the CBM Liulin block commenced with
construction scheduled for completion by mid 2013. Currently Fortune Oil's
best performing well in the field has achieved gas production in excess of
12,500m3/day and production rates are expected to improve as the wells are
· Licence obtained for the first liquefied natural gas ("LNG") dual fuel
ship which enables the ship to enter commercial operations on the Yangtze
River. This is the first approval of this type in China.
· Bluesky jet fuel sales volumes increased 16 per cent to 780,000 tonnes
year on year (Q3 2011: 671,700 tonnes) with total jet fuel sales of 2.19
million tonnes for the year to date, an increase of 16 per cent compared to
the same period in 2011.
· West Zhuhai Terminal's volume throughput increased 80 per cent to 623,000
tonnes compared to the same period in 2011 (346,000 tonnes). West Zhuhai
throughput volume up 9 per cent and Maoming SPM volume up 4 per cent,
respectively for the year to date compared to 2011.
· The feasibility study on the Hrazdan iron ore mine and processing plant
has been completed and the regulatory submissions are being finalised for the
Armenian approval agencies.
Natural Gas Operations
The growth of the natural gas business is still strong with new natural gas
supply connections increased by 89 per cent to 21,557 in the third quarter (Q3
2011: 11,427). Natural gas sales volumes were 112 million cubic meters in the
third quarter as a result of the disposal of a throughput pipeline as part of
the transactions to establish the Shijiazhuang joint venture.
The Company has made significant progress on the new natural gas projects
announced over the past 18 months and is on track to deliver its growth
· The main Petrochina natural gas pipeline to the city of Dashiqiao is
complete and gas supply commenced. The local gas distribution network has been
installed to key industrial customers in the local economic zone.
· Shenyang LNG bus refuelling joint venture company is operating with two
mobile refuelling stations for a fleet of twenty LNG buses. Negotiations are
progressing to supply LNG to buses on additional routes between Shenyang,
Liaoyang and Chaoyang.
· China United Shanxi CBM Company Limited has commissioned the wholesale
compressed natural gas ("CNG") station at the Liulin CBM block which will
collect, compress and dispatch gas from the Liulin gas gathering system.
· Fortune Oil has become a substantial shareholder, via a joint venture
(China Gas Group Ltd) in China Gas Holdings Ltd ("CGH"), the largest
independent natural gas company in China in terms of city network, serving gas
to over 150 cities. Fortune Oil is in discussions with its joint venture
partner to identify opportunities for cooperation between Fortune Oil and CGH
in the natural gas sector in China. As of November 16 2012 the joint venture
and its associates hold 836,550,000shares in CGH representing 18.4 per cent of
CGH total issued shares making the joint venture and its associates one of the
largest shareholders of CGH.
Yangtze River Vessel - LNG Ship refuelling
Fortune Oil has obtained the first approval of its type in China for its LNG
dual fuel ship following the successful completion of the river shipping
trials and submission of documentation to the Maritime Safety Administration.
The license obtained for the first ship is the key step to enable the
commercial deployment of LNG dual fuel ships. Fortune Oil is progressing the
engineering design for the first two LNG refuelling stations along the Yangtze
River which will enter operation in 2013 and 2014. Fortune Oil has received
regulatory approval for the LNG pier and LNG receiving terminal for the
Chongqing LNG refuelling station which is now under construction. The current
plan is to build seven LNG stations along the Yangtze River over the next few
Liulin CBM Operations
There continues to be significant progress made at the Liulin CBM block which
is on track for first gas sales in 2013. The project is now in the final
stages of appraisal with production testing in progress on various vertical
and multi-lateral wells drilled by Fortune Liulin Gas ("FLG") and China United
Coal Bed Methane Corporation ("CUCBM") and commercial gas flow rates have been
achieved. FLG is preparing the overall development plan and will seek relevant
government approvals to enable full scale development of the Liulin block
together with CUCBM starting in 2013.
· Production rates from the field have continued to improve as the wells
are dewatered. Currently the best performing well in the field drilled by FLG
has achieved gas production in excess of 12,000m3/day and the total field
production from FLG wells is currently approximately 28,000m3/day.
Additionally CUCBM has drilled an inseam well currently producing
15,000m3/day. As the wells are further dewatered gas flow rates are projected
to continue to improve.
· Construction of the field gas gathering system, the nodal compression
station and the main export product trunk-line commenced with construction
scheduled for completion by mid 2013.
· FLG has completed two more vertical wells and is currently dewatering
four horizontal wells. Under the production sharing contract extension FLG has
a ten well commitment under the 6^th exploration period.
Oil Sector Operations
Bluesky jet fuel sales in Q3 2012 were 780,000 tonnes, representing an
increase of 16 per cent over the same period in 2011 (Q3 2011 671,700 tonnes).
To date for 2012, Bluesky jet fuel sales volumes are 2.19 million tonnes,
representing an increase of 16 per cent over the same period in 2011,
underpinned by the continued strong demand for domestic air travel in China.
The Maoming SPM volume throughput in Q3 2012 was 2.3 million tonnes of crude
oil, representing a slight decrease of 0.3 per cent relative to the same
period in 2011. To date, Maoming SPM volume throughput was 7.9 million tonnes
of crude oil, representing an increase of 4 per cent relative to the same
period in 2011. Throughput is driven by demand from the Maoming refinery in
Guangdong which is driven primarily by downstream transportation fuel
consumption. The discussions with the Maoming SPM JV partner to extend the
joint venture contract continue to make good progress.
In Q3 2012, West Zhuhai Terminal's volume throughput increased 80 per cent to
623,000 tonnes compared to the same period in 2011 (346,000 tonnes). For the
nine months ended 30 September 2012, West Zhuhai Terminal's volume throughput
increased by 9 per cent to 1.76 million tonnes over the same period in 2011
(1.62 million tonnes).
Fortune Oil continues to make progress on the development of the Hrazdan and
Abovyan mines in Armenia:
· Sinosteel Engineering & Equipment Co Ltd along with Sinosteel Maashan
Institute of Mining Research have completed the feasibility study on the
Hrazdan iron ore mine including the preliminary flow sheet, pilot plant test
run and the initial process design. This information will be used as the basis
for the final investment decision on Hrazdan which is expected in Q1 2013.
· An Armenian drilling contractor is progressing additional hydrological
studies required to complete the Environmental Impact Assessment ("EIA") which
is part of the documentation needed to complete the submission for the final
approvals of the Hrazdan mine and processing plant. The EIA assesses all of
the potential environmental aspects of the mine and process plant development
to ensure that these operations will not adversely affect the environment.
· Fortune Oil is actively engaging and has had constructive dialogue with
the local environmental groups and non-government organisations to address
their concerns in relation to the mining development.
· Fortune Oil engaged SRK Consulting to progress the resource
certification for the Abovyan iron ore mine from Russian standards to
international standards (JORC, Australasia Joint Ore Reserves Committee) which
is expected to be completed in 2013.
Year to date the total quantity traded of base oils and petrochemicals was
93,000 tonnes compared to 117,000 tonnes for the same period in 2011, a
decrease of 21 per cent. This decline was a result of increased competition
reducing the range of profitable trading opportunities in the near term.
However, our trading business continues to extend its product offering to
specific oils and petrochemicals in China.
In order to expand our oil trading business, Fortune Oil has established two
domestic oil companies with wholesale permits and will start domestic oil
trading. Fortune Oil will cooperate with local oil companies and will rent
shore tankage in Qingdao, Shandong province in East China to import
petrochemicals and gasoline purchased from local refineries. This will enable
Fortune Oil to grow its petrochemical trading opportunities.
As at 19 November 2012, the Group had a cash balance of £ 77 million. As a
result of this, together with the continuous cash inflow from operations, the
Board of Fortune Oil envisages no difficulties in meeting both current loan
repayment obligations and the Company's investment commitments.
Overall business performance is in line with the Board's expectations. The
Board remains optimistic with regard to Fortune Oil's prospects in view of the
current economic backdrop, the Company's financial strength and market
For further details:
Fortune Oil PLC
Tee Kiam Poon , Chief Executive Tel: 00 852 2583 3125
Bill Mok, Chief Financial Officer Tel: 00 852 2583 3120
Pelham Bell Pottinger
Archie Berens / Emma Jane Edwards Tel: 020 7861 3112
Background on Fortune Oil
Fortune Oil is a leading independent energy company engaged in the investment
and operations of oil and natural gas supply projects in China. With over 19
years of operating history in China, Fortune Oil has acquired a unique
portfolio of high quality oil and natural gas projects across the country and
has formed a strong partnership with domestic and international market
leaders. Fortune Oil recently started an expansion outside China securing
resource projects. Fortune Oil is listed on the Main Market of the London
Stock Exchange with its operational headquarters in Hong Kong.
This information is provided by RNS
The company news service from the London Stock Exchange
IMSFFUSIUFESELF -0- Nov/19/2012 07:00 GMT
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