Green Dragon Gas (GDG) delivered on the production front through 2012, which is vital given its ambition to become a 'pure' upstream producer in China, but the headline figures failed to impress as mid/downstream sales of its coal-bed methane products remained broadly flat at 15.1bn cubic feet (bcf).
The good news is that GDG exited 2012 with an annualised production rate of 2.6 bcf - a 55 per cent increase year on year. The rate has subsequently risen to around 3 bcf, although output will need to accelerate if the group is to achieve its 2014 year-end target of 18 bcf. A total of 90 new wells were drilled during 2012, against 67 in the previous year. The increased drilling programme, which included 31 high-return LiFaBriC wells completed by sister company Greka Drilling (GDL), helped to drive proven (1P) reserves by nearly a quarter to 59 bcf.
Since the year-end GDG has repaid existing convertible note obligations through a $35m (£22.50m) bond issue, together with the sale of interests in two non-core distribution businesses - Beijing Huayou and Giant Power - for $65m.
Peel Hunt has lowered its risked valuation per share from 515p to 444p, including a core element of 251p a share.
| GREEN DRAGON GAS (GDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 200p | MARKET VALUE: | £273m | |
| TOUCH: | 196-205p | 12-MONTH HIGH: | 415p | LOW: 187p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 458¢ | NET DEBT: | 8% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 24.6 | -23.2 | -22.5 | nil |
| 2009 | 46.9 | -28.8 | -27.6 | nil |
| 2010 | 49.7 | -10.4 | -7.9 | nil |
| 2011 | 75.2 | -25.2 | -20.5 | nil* |
| 2012 | 74.1 | -18.5 | -15.1 | nil |
| % change | -2 | - | - | - |
£1 = $1.55 *Excludes dividend paid in specie, comprising three shares in Greka Drilling Ltd per ordinary share | ||||
