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IDG Energy Investment Announces FY2018 Interim Results

IDG Energy Investment Announces FY2018 Interim Results

Investment Income increased 13x YOY successfully set foot into LNG ISO container logistics business

 

  • Investment returns from LNGL and upstream shale oil and gas portfolio Stonehold, alongside strong performance of the domestic oilfield portfolio invested earlier, helped to drive stronger financial performance, with the Company recording HK$115 million EBITDA, compared with approximately HK$19.4 million EBITDA for the six months ended September 30, 2017 (“the same period last year"); investment income of approximately HK$79.054 million, compared with HK$5.782 million in the same period last year; and HK$74.842 million in profit, compared with a loss of HK$24.637 million during the same period last year. With a positive turnover, basic earnings per share were HK$1.230 cents, compared with a loss of HK$0.01 per share in the same period last year.

  • During the Period, the Company continued to explore new investment directions. In September 2018, through its wholly-owned subsidiary, the Company established a joint venture, JUSDA Energy, to set foot into LNG ISO container logistics services. Additionally, the Company through its subsidiaries completed an investment in LNGL amounted A$28.2 million (approximately HK$167 million); During the Period, it also invested additional US$1 million (approximately HK$7.8 million) to support the ongoing development of GNL Quebec.

  • The Company believes its investments in GNL Quebec, LNGL, and JUSDA Energy will provide strong financial returns for shareholders, as well as provide a strategic edge for capturing the opportunities arising from China’s rapidly growing needs for natural gas.


(November 27, 2018 - Hong Kong) IDG Energy Investment Limited (“IDG Energy Investment” or the “Company”, stock code: 00650.HK) is pleased to announce the unaudited interim results of the Company and its subsidiaries for the six months ended 30 September 2018 (the “Period”). During the Period, the Company made significant progress in its financial performance and business development.

 

Financial Highlights

The Company's investment income increased significantly to approximately HK$79.054 million, approximately 13 times that of its HK$5.782 million investment income during the same period last year. The increase was mainly attributable to returns from the Company’s newly invested LNGL project and Stonehold – a Company’s investment portfolio in upstream shale oil and gas asset in the U.S..

 

During the Period, EBITDA increased from HK$19.389 million to HK$115.1 million, a five-fold increase compared with the EBITDA from the same period last year. The increase was largely attributable to the recovery of crude oil prices since the second half of 2017, which led to an increase in the Company’s revenue from its domestic upstream oilfield portfolio. The increase in investment income from its LNGL project and Stonehold project also helped to drive the EBITDA growth. During the Period, the Company turned around the losses in profit and recorded a profit of HK$74.842 million, compared with a loss of HK$24.637 million in the same period last year. Basic earnings per share was HK$1.230 cents, compared with HK$0.01 loss in the same period last year.

 

Business Review

During the Period, the Company broadened its footprint and made further investments along the liquefied natural gas (“LNG”) value chain. It has successfully built up a more diversified and balanced investment portfolio through investments in energy assets at home and abroad.

 

LNGInvestment along LNG value chain

JOVO

The Company’s investment activities have been focusing on the natural gas markets in China and North America, as well as building a strategic LNG industrial chain. The Company began entering into the LNG industry in 2017 with a focus on domestic market. In September 2018, JOVO, an important LNG sector portfolio company invested by the Company, filed documents for its initial public offering (IPO) in China, which the Company believes will not only provide good returns for its shareholders, but also carry the investment of the Company to a new level.

 

GNL Quebec

GNL Quebec is a portfolio investment of the Company along the LNG value chain. The completion of the GNL Quebec Investment took place on 7 February 2018. Based on the project’s smooth progress, the Company through its subsidiary invested another US$1 million on 26 July 2018 to support further its ongoing development. Currently GNL Quebec, through its wholly-owned subsidiary, is developing Energie Saguenay LNG export terminal with a planned capacity of 11 mmtpa in Canada. The final investment decision (FID) of this project is expected to start in 2021.

 

LNGL

During the Period, the Company invested an amount of A$28.20 million in LNGL. LNGL is principally engaged in developing LNG export terminal projects in the U.S. and in Canada. As the second largest shareholder of LNGL, the Company holds 9.9% equity interests. The LNGL investment resulted in HK$52.467 million of investment income for the Company. LNGL’s U.S.-based Magnolia LNG project with designed capacity of 8 mmtpa is recognized as one of the most viable greenfield LNG projects there. LNGL has obtained all required U.S. Federal Energy Regulatory Commission (FERC) and U.S. Department of Energy (DOE) permits and approvals. The LNGL investment monies were primarily used to support downstream LNG offtake marketing efforts focusing on the Magnolia LNG project and to facilitate its FID.

 

JUSDA Energy

During the Period, the Company also set foot into LNG logistics services under the clear guidance of our investment strategy. On 25 September 2018, the Company entered an agreement for the formation of a joint venture company (“JUSDA Energy”) with JUSDA Supply Chain Management International CO., LTD. (準時達國際供應鏈管理有限公司), to become involved in LNG ISO container logistics services.

 

China's demand for natural gas is growing rapidly, and LNG ISO containers are expected to be an important new addition to the traditional LNG import model. JUSDA Energy, the sole logistics chain management platform designated under Foxconn Technology Group, has a wide container transportation network and strong bargaining power in the industry. These will help JUSDA Energy improve its LNG logistics services and reduce relevant costs. JUSDA Energy will also benefit from the Company’s extensive network of natural gas resources, which will provide customers access to LNG resources in North America and the Asia Pacific Region.

 

Investments in Upstream Oil and Gas Projects

Domestic Upstream Oilfield Portfolio

Due to operational improvements and recovering of oil prices, the Company made significant progress in its earlier investment in a domestic oilfield portfolio. During the Period, a total of 12 wells were completed. Compared to the same period last year, oil production volume increased by approximately 4.0% to approximately 191,653 barrels. Net oil sales volume increased by approximately 4.2% to approximately 151,227 barrels. And net revenue from sales of crude oil increased by approximately 61.9% to approximately HK$87.3 million.

 

U.S. Upstream Shale Oil and Gas Portfolio

The Company completed the investment in Stonehold in September 2017 to expand its global footprint in the upstream oil sector. During the Period, the interest income (which bears interest at the rate of 8% per annum) from the term loan granted to Stonehold was about US$6.8 million. The Company will also be entitled to 92.5% of disposal proceeds at the disposal of the asset. Stonehold holds certain world-class unconventional shale oil and gas assets in the Eagle Ford region of South Texas of U.S..

 

Outlook

Mr. LIU Zhihai, President of IDG Energy Investment, commented, “China eclipsed South Korea for the first time as the world's second largest natural gas importer. In the first half of 2018, China’s LNG imports growth rate reached 50%. At the same time, the Chinese government released new energy policies targeting urban air pollution, switching from coal to gas, and primary energy structural reform, which substantially pushed up the demand for natural gas. In such an environment, we believe that our latest investments in GNL Quebec, LNGL, and JUSDA Energy have helped us achieve the first step towards the buildout of our LNG import and export infrastructure, and will provide strong financial returns for shareholders and a strategic edge for capturing opportunities arising from China’s rapidly growing need for natural gas. We will continue to look for investment opportunities in other LNG projects worldwide, with a view to enhancing returns for the Company’s portfolio and overall investments.”

 

“We are of the view that the energy sector is the most viable industry for the Company to achieve sustainable, long-term growth. IDG Energy Investment seeks to leverage our expertise to build differentiated businesses in parts of the energy value chain where we see value. We will endeavor to offer unique investment opportunities for our shareholders, to explore new sectors of the energy industry with high-growth exposure, achieving superior returns through the top quality global energy assets portfolio.”