Chinese coal-bed methane producer Green Dragon Gas has been busy. It boosted annualised production by 27 per cent in 2011 to 1.68bn cubic feet (bcf), demerged its Greka Drilling unit, raised an additional $50m (£31.5m) in March 2011 through a share placing and will soon complete its first gas supply pipeline. Add that to the group's significant reserves and further share price upside looks likely.
As well as boosting output, Green Dragon has bolstered its reserves – helped by drilling 67 additional wells. Indeed, the group's 1P proven reserves rose 5 per cent to 43bcf, its probable 2P reserves grew 18 per cent to 307bcf and its possible 3P reserves increased 2 per cent to 2,513bcf. Moreover, with plans to spend $250m on developing reserves, the group remains on target to achieve a planned output of 18bcf from its Shizhuang South project by end-2013, at which point forecast cash flow should more than fund further growth. The midstream business, meanwhile – which is focused on developing distribution channels – saw wholesale gas sales up 47.4 per cent to 2.8bcf, and a new gas supply pipeline with a capacity of 2.6bcf is due for completion this summer. On the retail gas distribution side, sales rose 16 per cent to 12.2bcf.
| GREEN DRAGON GAS (GDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 878¢ | MARKET VALUE: | $1.2bn | |
| TOUCH: | 850-878¢ | 12-MONTH HIGH: | 1,400¢ | LOW: 550¢ |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 472¢ | NET CASH: | $8.8m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | nil | -9.00 | -9.30 | nil |
| 2008 | 24.6 | -23.2 | -22.5 | nil |
| 2009 | 46.9 | -28.8 | -27.6 | nil |
| 2010 | 49.7 | -10.4 | -7.90 | nil |
| 2011 | 75.2 | -25.2 | -20.0 | nil* |
| % change | +51 | - | - | - |
Ex-div:- Payment:- £1=$1.59 *Excludes dividend paid in specie, comprising three shares in Greka Drilling Ltd per ordinary share | ||||
