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United Energy posts 18.9 per cent rise in interim profit as output offsets lower oil prices

PUBLISHED : Friday, 07 August, 2015, 1:35pm
UPDATED : Friday, 07 August, 2015, 1:35pm

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United Energy Group, a Hong Kong-listed oil and gas firm controlled by mainland tycoon Zhang Hongwei, posted an 18.9 per cent year-on-year rise in net profit for the first-half of 2015 as higher output more than offset lower oil prices.

The company, whose biggest assets are oilfields in Pakistan which it bought from international energy major BP in 2011 for US$750 million, recorded a net profit of HK$751.73 million in the six months, up from HK$632.2 million in the first half of 2014, it said in a stock exchange filling on Friday.

Turnover increased 2.5 per cent to HK$2.73 billion thanks to a 48.9 per cent year-on-year jump in output in the Pakistan fields to 59,895 barrels of oil equivalent (boe) per day, offsetting a 30.5 per cent decline in average oil selling price to US$35.1 a barrel there.

Lifting costs – defined as operating cost excluding asset depreciation, amortisation, taxes and distribution costs – fell 25 per cent year-on-year to US$3.9 a boe in the Pakistan fields, while lifting costs in northern China fields fell 7.9 per cent to US$32.8 a boe.

Its oil recovery enhancement projects in northeast China saw first-half output fall 19.4 per cent year-on-year to 1,504 boe per day.

“The group expects the price of oil will remain low in 2015 ... however, the recent sharp fall in oil price may also provide another favourable opportunity for the group to re-activate its acquisition activities,” the company said.

In October 2012 it obtained a five-year US$5 billion credit facility from policy bank China Development Bank to support its potential acquisitions.

It has set a target to raise output by at least 30.4 per cent this year to between 63,800 boe and 67,000 boe per day compared to last year. This could see the firm achieve its goal set in 2012 to boost output above 60,000 boe a day by the end of 2017, two years earlier than planned, it said.

No interim dividend was proposed. Zhang owns around 71.7 per cent of United Energy, according to stock exchange data.

Its shares closed the Friday morning session flat at 93 HK cents. They have fallen 17.7 per cent in the past 12 months as oil prices halved in the period, compared to a 1 per cent gain in the Hang Seng Index.

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