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IDG Energy Investment Announces FY2017 Annual Results With Turnaround to EBITDA of HK$101.7 million and net profit of HK$ 14.5 million

Highlights of the annual results for the year ended 31 March 2018 (FY2017):
  • The EBITDA of the Company and its subsidiaries turned positive to HK$101.7 million in FY2017 from a EBITDA loss for the year ended 31 March 2017 (FY2016: a loss of approximately HK$392.8 million) thanks to the revenue growth of its wholly-owned subsidiary and the investment income generated from the newly invested oil and gas assets;
  • The Company recorded the profit for the year of HK$14.5 million in FY2017 (FY2016: a loss of approximately HK$462.4 million), basic earnings per share is HK0.403 cents (FY2016: a loss of HK$0.33);
  • The Company generated a net revenue of HK$ 123.4 million via a wholly owned subsidiary, increased by 60.7%;
  • The Company also recorded an investment income of HK$ 74.4 million generated from the newly invested oil and gas assets;
  • In FY2017, the Company successfully introduced Foxconn, the world’s largest electronics manufacturing service provider, as the Company’s second largest shareholder. Currently, Foxconn holds 24.37% of the Company's equity interests.

(June 21, 2018 - Hong Kong) IDG Energy Investment Group Limited (“IDG Energy Investment” or the “Company”, stock code: 00650.HK) is pleased to announce the consolidated results for the year ended March 31 2018 (“FY2017”). The Company has made profound progresses in terms of financial results and operations during FY2017.



Financial Highlights


The EBITDA of the Company and its subsidiaries turned positive to HK$101.7 million in FY2017 from an EBITDA loss of HK$392.8 million for the year ended March 31 2017 (the “FY2016”). The turnaround from EBITDA loss to profit is primarily attributable to (i) the recovery of crude oil prices in FY2017, which led to an increase in revenue of a wholly-owned subsidiary of the Company; (ii) the investment return in upstream oil and gas assets, in the form of interest income from the term loan; and (iii) the absence in FY2017 of any one-off notional listing expenses and related transaction costs, which was a significant amount incurred in FY2016 as a result of the reverse takeover.

In FY2017, the Company basic earnings per share is HK0.403 cent, the board of directors does not recommend the payment of a final dividend.



Business Highlights


During FY2017, the Company has developed a more diversified and balanced portfolio through selective investments of the domestic and overseas high-quality energy assets. Such strategic investment portfolio does not only bring good financial return through the Company’s favorable positions in the rapidly growing natural gas market in China, but also provides considerable fixed income through stable interest income, as well as sufficient capital for potential investment projects.



Investment in LNG value chain


The Company is bullish on the opportunities arising from China’s increasing demand for imported nature gas and liquefied natural gas (“LNG”) from the North America market, which has abundant low-cost shale gas supply and actively expand its portfolio towards the entire LNG value chain. On 28 July 2017, the Company, through its subsidiary, completed the subscription of shares of Jiangxi Jovo Energy Company Limited* (江西九豐能源有限公司, “JOVO”), the first non-state-owned LNG receiving terminal operator in China, for the consideration of RMB100million (equivalent to approximately HK$115.2 million). JOVO commenced its business in 1990s and has become a leading provider of clean energy in China. On 30 November 2017, a subsidiary of the Company purchased interests in LNG Quebec Limited Partnership (“LNG Quebec Partnership”) at the price of US$3.15 million (equivalent to approximately HK$24.6 million). LNG Quebec Partnership owns one of the largest Canadian LNG export terminals under development with a maximum nameplate liquefaction capacity of up to 11 mtpa. On 13 June 2018, the Company completed the subscription of 9.9% shares of Liquefied Natural Gas Limited (“LNGL”) at a subscription price of AU$28.2 million (equivalent to approximately HK$166.8million). LNGL owns a planned 8 mtpa or greater LNG export terminal in the State of Louisiana, the United States (the “U.S.”).



Investment in shale oil and gas assets in the U.S.


On 14 August 2017, the Company and its subsidiary agreed to grant a term loan to Stonehold Energy Corporation (“Stonehold”) to finance the acquisition of certain shale oil and gas assets in the U.S. (“Target Assets”) and the subsequent operations of such assets by Stonehold Stonehold. On 26 September 2017, the initial payment of the term loan with an amount of US$165.0 million (approximately HK$1,291.1 million) was released to Stonehold. The acquisition of a shale oil block in Eagle Ford, the U.S., by Stonehold was consummated. As at 31 March 2018, the net 2P reserve of Target Assets was estimated to be 30.1 mmboe, increased by 24.1% as compared to the same date of the previous year. The investment in Stonehold provides the Company with stable and substantial interest at a rate of 8.0 % per annum. In addition, the Company believes that any increase in the reserve and valuation of the Target Assets may increase the expected returns for the Shareholders upon disposal of Target Assets by Stonehold in the future.



Significant progress made by the upstream crude oil assets in China


The upstream crude oil assets that the Company had previously invested in China had also achieved significant progress in FY2017. In FY2017, China’s Ministry of Land and Resources (MOLR) has approved application for a 15-year production permit covering the domestic crude oil blocks, providing a further long-term, stable and sustainable developing basis for it. During FY2017, oil production volume increased by about 24.3% to approximately 362,682 barrels, net sales volume of crude oil increased by approximately 22.3% to approximately 285,910 barrels, and net revenue from sales increased approximately 60.7% to approximately HK$ 123.4 million.

19 wells had completed drilling as planned. As at March 31 2018, the net 1P reserves was 9.8 MMstb, representing an increase of 19.5% as compared to the same date of the previous year and the net 2P reserves was 15.5MMstb, representing an increase of 27.0% as compared to the same date of the previous year.



Corporate Development Highlights


Completion of Foxconn Subscription of the Company’s Shares

The Company had also made substantial progress on financial activities in FY2017. On 13 December 2017, certain wholly-owned subsidiaries of Foxconn Technology Co., Ltd (“Foxconn”) subscribed 1,485,000,000 shares of the Company at a total subscription price of HK$1.485 billion. The transactions were completed on 22 January 2018. Foxconn’s subsidiaries collectively became the second largest shareholder of the Company with their aggregate shareholding in the Company reaching 24.37%. Considering the extensive energy end-user client base, Foxconn’s powerful global and North America business connection as well as the synergy and supports on energy logistics, the Foxconn Subscription can offer the Company with more business opportunities and enhance the borrowing power and fundraising ability in order to finance the investments of the Company with more favorable terms.





Mr. LIU Zhihai, President of IDG Energy Investment, said, “Last year, the consumption of natural gas in China has hit a high record with prices increased as well. We believe that the current shortage of natural gas is brought by the bottleneck for lacking natural gas infrastructure. Accordingly, the Company’s current investment strategy is to focus on grasping the great opportunities arising from China’s increasing demand for imported nature gas and LNG from the North America market. It actively expands its portfolio towards the entire LNG value chain. The Company’s current portfolio covers quality projects such as a China LNG receiving terminal and LNG export terminals in North America. The Company also has an extensive potential projects pipeline which covers the entire value chain of LNG export business between China and the North America and believes it is well-poised for the investment return brought by the rapid growth of the LNG industry.

The energy assets investment and management is a favorable option for the Company to achieve sustainable long-term growth and prosperity. Looking ahead, the Company will continue to capture investment opportunities globally by best leveraging its industry and business development expertise, establishing an investment platform, and adopting active investment strategy. We are confident in identifying high-return investment projects and endeavors to present a unique investment opportunity for its shareholders of the Company to gain exposure to a diversified, top quality global energy asset portfolio.”