A $28.3m (£17.7m) investment gain realised on $65m-worth of non-core asset sales helped Green Dragon Gas (GDG) turn a healthy first-half profit. A 59 per cent increase in unconventional gas production in China to 1.34 billion cubic feet (Bcf) provided another welcome boost, and helped ease the burden of $6.9m in one-off litigation fees and $9.1m in finance costs.
The most important development this year actually came post period-end, however, when the Chinese government reissued Green Dragon with exploration and production licences for its coal bed methane assets. Concerns over the company's title to its prospective acreage had been dogging it for years, keeping a lid on the share price and full-out development drilling.
With title matters now out of the way - notwithstanding the long-standing $42.6m arbitration case with ConocoPhillips, of course - management can now focus on accelerating drilling activities and increasing production. This will require all their attention if the company is to meet ambitious internal targets to lift annual production to 18bcf by the end of 2014 (from 2.6bcf in 2012).
Prior to these results, broker Peel Hunt forecast full-year adjusted pre-tax losses of $10.9m (from $21.1m in 2012) and pre-tax profit of $10.4m in 2014.
GREEN DRAGON GAS (GDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 301p | MARKET VALUE: | £411m | |
| TOUCH: | 300-303p | 12-MONTH HIGH: | 315p | LOW: 187p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 466¢ | NET DEBT: | 3% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 3.50 | -8.24 | -6.20 | nil |
| 2013 | 6.93 | 11.1 | 8.20 | nil* |
| % change | +98 | - | - | - |
Ex-div: 25 Sep Payment: 30 Sep £1=$1.60 *Excludes dividend to be paid in specie, comprising three shares in Greka Engineering per ordinary share | ||||
