Sino Gas & Energy - constructive discussions with potential JV Partner

Sino Gas & Energy - constructive discussions with potential JV Partner

Sino Gas & Energy Holdings (ASX:SEH) has held positive first talks with its future JV partner for the Ordos Basin, folloing MIE's decision to sell its 51% stake for US$220m. Management's initial assessment highlights a well-financed, strongly aligned potential new partner. This bodes well for the timely full field development of the Ordos Basin gas project in China.


  • Initial discussions held with China New Energy Mining Limited regarding their US$220 million acquisition of MIE's entire 51% interest in Joint Venture Company, SGE
  • Management's initial assessment highlights a well-financed, strongly aligned potential new partner
  • Sino Gas is looking forward to working with China New Energy Mining Limited to deliver the potential of our Ordos basin assets assuming successful completion of the transaction

Sino Gas & Energy Holdings Limited (ASX: SEH, "Sino Gas" or the "Company") is pleased to announce initial positive discussions have been held with China New Energy Mining Limited ("CNEML") following the announcement of their intended purchase of Asia Oil & Gas Ltd, which holds MIE Holdings Corporation’s ("MIE", HKSE Ticker 1555) entire 51% interest in the Joint Venture subsidiary, Sino Gas Energy Limited (the "Joint Venture" or "SGE"). For further details on the proposed transaction, refer to Sino Gas' and MIE's announcements on 27 April 2016.

Sino Gas has held extensive initial discussions with the senior management team of CNEML. Based on these discussions, as well as independent review, Sino Gas management have made the following key assessments:

  • CNEML has a very competent and experienced management team with strong technical and commercial backgrounds gained by working for both Chinese SOE’s and international Exploration and Production companies
  • Extensive technical, commercial and regulatory due diligence has been conducted by CNEML on the assets
  • CNEML has a clear vision of the significant potential of the Linxing and Sanjiaobei PSCs
  • CNEML has a thorough understanding of the work necessary to achieve this potential which is strongly aligned with Sino Gas' objectives of creating value through production growth and achieving Chinese Reserve Report and Overall Development Plan approvals for full-field development
  • CNEML has strong financial backing and access to capital to achieve the planned speed and scale of development and production ramp-up
  • CNEML have well established relationships in China with government, partners and customers  
  • Near term work plan priorities are consistent with Sino Gas, namely, ramping up production and working towards Overall Development Plan approval in 2017

Sino Gas and CNEML have discussed the key aspects of working together to deliver a seamless transition and ensure that the 2016 work program remains on-track. In anticipation of deal completion expected in mid-2016, a joint team has been formed to agree plans and priorities to optimise field operations and drive towards production ramp-up and full field development.

Under the existing shareholders’ agreement, affirmative votes by both parties are required to approve key operational and strategic decisions. It is currently anticipated that the existing SGE management team and staff will remain in-place, which will facilitate a smooth integration.

Additional information on China New Energy Mining Limited provided by CNEML
CNEML Key Management
Mr Tang Zhaokai, CEO - Former CNOOC Senior Engineer, including Planning Manager and Coordination Manager of the Y13-1 Natural Gas Project, Deputy General Manager of CNOOC’s Petrochemical department and CS Director and Chairman of the Sustainable Development Committee of the CNOOC and Shell Petrochemicals Company Ltd.

Mr Zhang Guilin, COO - Former CNPC and CITIC Group Geologist with 27 years of experience in the oil and gas industry with experience in both China and Kazakhstan.

Mrs Liu Hong, Chief Engineer - Former Sinopec and CNPC Engineer with over 30 years of international experience in the oil and gas industry.

Mr. He Zhiping, Chief Geologist - Former China Zhenhua Oil and UNIWE International Energy Service Company Geologist with 15 years of international experience in the oil and gas industry.

CNEML Corporate Strategy
CNEML is globally focused oil and gas exploration and development Company leveraging its strong funding capacity to grow the Company by acquisition, merger and reorganisation, while enhancing its core competitiveness and financial efficiency by accessing world class human resources and applying new global technologies and management innovations.

CNEML Growth Targets
CNEML has stated that it is targeting over the next 5-10 years that it plans to grow its resources base to 2.1 billion barrels of oil equivalent Original Oil in Place (OOIP), net reserves of 210 million barrels of oil equivalent and daily production of 60,000 barrels of oil equivalent per day through the implementation of its corporate strategy above. After 5 years, CNEML's target is to reach annual sales revenue of US$1 billion with US$200 million of annual profit.

Commenting on the initial assessment of CNEML as our new Joint Venture partner, Sino Gas Managing Director Mr Glenn Corrie said:

"In the short time we have had to meet and assess CNEML as our new potential partner, I have been impressed with their capabilities as a Company and their strong alignment with Sino Gas' view of the potential of our assets and the plan to realise this potential. Assuming the transaction is completed, I am confident that together with Mr Tang and his team at CNEML we are in a very strong position to leverage our respective strengths and unlock the significant value of our assets."

Commenting on the proposed acquisition of 51% of SGE and working with Sino Gas, CNEML CEO, Mr Tang Zhaokai said:

"SGE exhibits all the characteristics of an asset that is a strong fit with our strategic objectives being largescale, low cost with significant upside potential. In the short time I have known Sino Gas, I have been impressed by their deep international experience and understanding of the assets. I am confident that China New Energy Mining will bring strong and complementary skills to the existing Joint Venture and I look forward to partnering with them to realize the full value of SGE."

To view the full announcement click here. 

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