Sino Gas - Welcomes CNEML as new Joint Venture Partner
Sino Gas & Energy Holdings (ASX:SEH) has announced that China New Energy Mining Limited (CNEML) has completed the acquisition of a 51% stake in Sino Gas & Energy (SGE) for US$220 million. Sino Gas management have met with CNEML on a number of occasions to ensure a smooth transition, discuss and agree key objectives for 2016 and obtain alignment on key strategic elements to deliver the full value of the Sanjiaobei and Linxing Production Sharing Contracts.
Sino Gas & Energy Holdings Limited (ASX: SEH, "Sino Gas" or the "Company") is pleased to welcome China New Energy Mining Limited ("CNEML") as our new Joint Venture partner following CNEML's successful completion of the acquisition of a 51% interest in the Joint Venture company Sino Gas Energy Limited (the "Joint Venture" or "SGE").
As announced on 27 April 2016, Sino Gas' previous Joint Venture Partner, MIE Holdings Corporation ("MIE", HKSE Ticker 1555) agreed to sell the entire issued share capital and loans of Asia Gas & Energy Limited, the holding company of MIE’s 51% interest in the Joint Venture, to CNEML for US$220 million in cash (plus a working capital adjustment). CNEML’s acquisition is now complete, as announced by MIE to the Hong Kong Stock Exchange yesterday, 20 July 2016. A copy of MIE's announcement is available on its website.
Sino Gas management have met with CNEML on a number of occasions to ensure a smooth transition, discuss and agree key objectives for 2016 and obtain alignment on key strategic elements to deliver the full value of the Sanjiaobei and Linxing Production Sharing Contracts. CNEML has confirmed its commitment to the short term objectives of increasing gross production from the Linxing and Sanjiaobei Central Gathering Stations to 25 Million standard cubic feet per day ("MMscf/d") and obtaining Chinese Reserve Report (“CRR”) approvals by the end of 2016. In addition, both companies have discussed the planning for full field development with a focus on Overall Development Plan (“ODP”) approvals and ramping up production.
With the acquisition now complete, Sino Gas believes this transaction provides third-party validation of the value of the assets. On an implied valuation basis, this transaction values Sino Gas' 49% stake in SGE at ~US$211 million (A$282 million) before working capital adjustments.
Commenting on CNEML's acquisition, Sino Gas Managing Director Mr Glenn Corrie said:
"Sino Gas is pleased to officially welcome CNEML as our new Joint Venture partner and view their acquisition as transformational, enabling us to deliver the significant underlying value of our assets. We continue to be impressed by CNEML's financial and commercial capabilities, local relationships and their strong commitment to maximising the value of the assets. We have made strong progress on obtaining alignment around key strategic objectives and are working together to deliver our objective of exiting 2016 with gross production of 25 MMscf/d and then subsequently ramp up production in future years. We look forward to a long and prosperous relationship with CNEML."