On behalf of the board of directors (the “Board”) of Sino Oil and Gas Holdings Limited (the “Company”, together with its subsidiaries, collectively the “Group”), I hereby present the annual results of the Group for the year ended 31 December 2018.
In 2018, China’s macro-economy grew steadily and green policies fueled the booming natural gas market. Natural gas consumption continued to surge across the country due to various government initiatives for environmental protection, including the coal-to-gas conversion in the residential, heat supply and industrial sectors. It is expected that China will push forward the control and treatment of atmospheric pollution and the demand for natural gas in key regions will maintain rapid growth until 2040, with new demand mostly from residential, industrial and power sectors. This demonstrates the great potential and promising outlook of China’s natural gas market. On the other hand, the Shanxi Government has attached great importance to the development of the coalbed methane industry. In particular, with the launch of “Transformation of Resources-based Cities”, “Gasification for Shanxi” and other key policies in recent years, the coalbed methane industry in Shanxi is strengthening its position, accelerating its growth significantly and expanding its business scale.
In light of the above macro-conditions, the Group is optimistic about the development of the PRC natural gas and coalbed methane market. During the year, our team forged ahead with the Sanjiao CBM Project and boosted the production volume, sales and price. In the future, it will carry on the cooperation with the PRC partner to formulate more efficient drilling plan for higher effectiveness, while leveraging the potential of the Sanjiao CBM Project to lay a solid foundation for development and profitability.
The management of the Group believes that a sound shareholder structure plays a crucial role in steady business development and is conducive for better corporate governance. During the year, a few strong shareholders were introduced to optimize the shareholder structure of the Company in a bid to maximize our corporate value.
Looking forward, driven by favorable macro-policies and the positive outlook for the natural gas market, the Sanjiao CBM Project will capitalize on its own potential strengths and become increasingly profitable. The Group will further advance the construction and development of the Sanjiao CBM Project in full swing, so as to enhance production capacity, maintain steady growth and provide solid backing for business expansion.
The year 2019, with no doubt, will be challenging. It is true that when the convertible notes become due in the second half of the year, the Group will be under financial pressure to a certain extent. Nonetheless, not only have we obtained financial support from our shareholders and directors, we have also formulated various corresponding plans that we are confident about easing such financial pressure in stages soon. The management of the Group will set its current primary goal to maintain a sound financial position and a healthy debt level. To this end, we will draw up a series of proactive and pragmatic measures and plans. Apart from fundraising activities, we will also implement prudent capital management and establish stringent financial policy, with the view of making progress in the shortest time possible.
On top of the above, we are seeking suitable opportunities in the oil and gas and energy sectors. Through different forms of investments, we explore the feasibility of business diversification and improve the business development mix to upgrade our operational resilience. The Group will proceed with the intensive development of principal businesses and pursue expansion with caution. By conducting active research on high-quality investment projects that offer growth potential and stable revenue, it will consolidate overall revenue growth to ensure long-term sustainability.
During the year, Mr. Wong Kwok Chuen Peter has resigned as an independent non-executive director since he would spend more time on his professional practice. Mr. He Lin Feng, being a non-executive director, will also be leaving at the end of this month due to his other business commitments. On behalf of the Board, I would like to thank both of them for their contribution to the Company during their tenure.
Lastly, I, on behalf of the Group, would like to express my heartfelt gratitude to our shareholders, business partners and investors for their trust and support over the years. I would also like to extend my deepest appreciation to all our staff members. The Group will strive to achieve steady development and bring fruitful returns to our shareholders as always.
Hong Kong, 29 March 2019