Green Dragon Gas's revenue decreased fell to US$12.1 million in the six months to the end of June (H1 2015: US$16.8 million) due to an approximate 20% fall in gas prices in and a 7% decline in the RMB/US dollar exchange rate period on period.
Cash from operations increased to US$7.7 million (H1 2015: cash used in operations US$0.8 million).
Other financial highlights:
- Cash from operations ahead of full year 2015 run rate of US$12.5 million
- Gross revenue per mcf including subsidy income of US$7.3/mcf (full year 2015: US$10.0/mcf)
- Net loss for the period of US$4.6 million (H1 2015: US$1.4 million)
- Investment in fixed assets of US$6.1 million (H1 2015: US$20.4 million)
- Net assets of US$677.2 million (December 2015: US$697.4 million)
Founder and chairman Randeep S. Grewal said: "We are pleased to announce our interim results for 2016. We have continued to focus on infrastructure on our GSS operated block where we have seen a continued increase in gas sales volumes.
"We have benefited from the clean energy policy set out by the Chinese Central Government that saw the cash subsidy paid for gas production increase in 2016 to US$1.31/mcf with additional local subsidies of US$0.44/mcf totalling $1.75/mcf, support that we expect to continue.
"This has partially compensated for the gas sales price reduction we have seen in China during the period. In accordance with our objectives, our focus has been on infrastructure rather than drilling in H1 2016.
"We have continued the diligent connection of wells to sales infrastructure and are pleased to now have 100 wells, including 56 LiFaBriC wells, connected and producing gas for sale. The system back pressure, which was at approximately 75kpa at year-end 2015, has been reduced to 25kpa at the half year 2016, resulting in increased gas sales volumes.
"The decrease in such back pressures will enable us to increase the sales to produced gas ratio within GSS block, a key Company objective for the year.
"Furthermore, the increase in wells connected and the progress made on infrastructure will form the basis for the continued growth in sales volumes and, importantly, will inform our approach to the completion and connection of future wells on GSS.
"GCZ production remains on track with expectations and the Overall Development Plan is expected to be filed with the NDRC shortly. We expect such ODP to be approved prior to year-end and will form the basis to further development in this commercial block in 2017.
"We are pleased to see GGZ exploration activities conclude and the block move into the development phase. The ODP for this block is expected to be concluded in 2017 following the reserve certification expected in Q1 2017.
"In light of the progress made on all the key objectives discussed during the Capital Market Day in April, the Company is considering a range of farmout, debt and equity options to pursue its development, discretionary capex and financing plans for 2017."
At 8:17am: (LON:GDG) Green Dragon Gas Ltd share price was +4p at 231.5p