China Securities Journal News - Geo-Jade Petroleum released its 2017 semi-annual report on the evening of August 25th, stating that the company achieved revenue of 1.36 billion RMB in the first half of 2017, representing a year-on-year increase of 143.15%. Notably, the Mateng and Koshan oilfield segments performed impressively, with a total net profit of 135 million RMB, up 177.07% year-on-year. Due to a significant increase in financial expenses, the company's total profit for the period decreased by 23 million RMB mainly due to increased exchange gains and losses as well as interest expenses.

 

Both of Oilfields and TransportationBusinesses Thriving, Contributing to High Revenue Growth

        In the first half of 2017, benefiting from continuous innovations in business models and extraction techniques, Geo-Jade Petroleum's core businesses maintained high growth. Both the Mateng and Koshan oilfields successfully completed the tasks set at the beginning of the year, achieving sales revenue of 763 million RMB, a year-on-year increase of 62.88%. Moreover, the average Brent oil price increased by 27.83% compared to the same period last year, ensuring stable growth in the company's oilfield extraction business.

        Furthermore, Geo-Jade Petroleum included the profits of Kazakhstan Oil & Gas Transportation Company in its consolidated scope for the first time. As the first step in Geo-Jade Petroleum's downstream business expansion, Kazakhstan Oil & Gas Transportation Company's operating revenue and profits both increased in the first half of the year, achieving revenue of 499 million RMB, accounting for 36.69% of the company's total revenue in the first half of the year. This further demonstrates the strategic significance of the company's efforts to improve the oil and gas industry chain. Geo-Jade Petroleum stated that it will seek more high-quality midstream and downstream assets with abundant cash flow and stable profits in the future.

 

Technological Innovation and Optimization Help Reduce Costs and Increase Production

        The advantages of advanced technology and processes are fully reflected in production. In the first half of 2017, production at the Mateng oilfield remained stable, while daily production at the Koshan oilfield recently surpassed the 1,000-ton mark. In total, 359,100 tons of crude oil were produced in the first half of the year, up 26.40% year-on-year; 363,000 tons of crude oil were sold, up 23.55% year-on-year.

        Meanwhile, the cost per barrel of oil continued to decline since 2016. According to the semi-annual report, the fully loaded cost per barrel of oil at the Mateng oilfield dropped to USD 30.16/barrel, while the Koshan oilfield was only USD 28.04/barrel, significantly lower than the international average extraction cost. With increasing production and decreasing costs continuing in parallel, the company's technical advantages are becoming more prominent, enduring the tests of fluctuating oil prices.

Simultaneous Development of Oil and Gas Officially Launched, with International Partners Joining Forces

        Sozak Gas Field, which has attracted market attention, has had a good start. In the first two quarters, the Sozak Gas Field mainly completed the drilling of three vertical wells and continued to advance the reservoir stimulation work for five wells. It also carried out preliminary work such as preparing technical requirements for bidding, engineering design, and production operation preparations for new well testing and drilling.

        In July of this year, Geo-Jade Petroleum announced the introduction of Schlumberger as a strategic partner to jointly develop the Sozak Gas Field. As a world-leading oil and gas technology service company, Schlumberger will mobilize top oil and gas technology professionals and managers from around the world to directly oversee the exploration and development of the Sozak project. Schlumberger's unique advanced technologies and special processes in the global oil and gas application field will optimize the development plan and production operation management of the Sozak Gas Field, accelerating the speed of realizing the value of the Sozak Gas Field.

        Additionally, Geo-Jade Petroleum announced that it plans to jointly initiate the establishment of a merger and acquisition fund with Huiyin Deqing, a subsidiary of Guangzhou Fund, and Sino-US Green Fund to acquire natural gas assets.

 

Bankers Oil Field Operates Smoothly and Reembarks After the Restructuring

       Regarding the reasons for the termination of the major asset restructuring plan for Bankers Field, which is of concern to the market and investors, the company has disclosed in its semi-annual report. Geo-Jade Petroleum stated that the application to terminate the review by the China Securities Regulatory Commission (CSRC) is to stabilize the company's subsequent development and protect the interests of all shareholders. The company will consult with relevant parties to adjust the restructuring plan. This termination will not affect the company's daily operations, and the company will reapply to the CSRC after the plan is adjusted. Meanwhile, based on its existing assets, Geo-Jade Petroleum will ensure stable development of the company's production and operation through measures such as scientifically optimizing production organization, strengthening internal management, and improving production efficiency.

       In response to the current situation where there are no domestic professionals managing and operating the assets of Bankers Field, Geo-Jade Petroleum has decided to negotiate and sign a cooperation agreement with Shanghai Longzhou Xinke or Hong Kong Junwei to provide consulting services for the oilfield assets of Bankers and its subsidiaries, in order to strengthen the technical and production management of Bankers Field and safeguard the interests of shareholders and the listed company.

 

Disposition of Non-Oil and Gas Assets, Optimizingthe Debt Structure to Enhance ROE

        Geo-Jade Petroleum is also actively taking action to optimize the company's debt structure. In August, when the stock price of Jiaozuo Wanfang was high, Geo-Jade Petroleum sold a total of 105 million shares of Jiaozuo Wanfang it held, with a total transfer price of 1.087 billion RMB. Geo-Jade Petroleum stated that this move was made based on the company's actual operating situation and funding needs. The transfer of Jiaozuo Wanfang shares fully protected the company's interests, will improve the company's liquidity situation, and will have a positive impact on the company's production and operation. Due to increased financial expenses resulting in a loss of profit attributable to the parent company during the period, the company will plan to sell non-core and available-for-sale financial assets held by the company at an appropriate time in the future to adjust the debt structure.