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Public company info - CHK Oil Limited , 00632.HK

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CHK Oil Limited, 00632.HK - Company Profile
Chairman Yu Jiyuan
Share Issued (share) 842,000,000
Par Currency Hong Kong Dollar
Par Value 0.2
Industry Petroleum & Gases
Corporate Profile Business Summary: The Group is principally engaged in (i) exploring, exploiting and sales of oil and natural gas (“Oil and gas sales”), and (ii) trading of oil-related products. Performance for the year: For the year ended 31 December 2020 (the “Year”), the Company and its subsidiaries (the “Group”) recorded a consolidated revenue of approximately HK$736,762,000 (2019: approximately HK$175,467,000) mainly contributed from the trading of oil, oil-related products and electronic products business. Basic and diluted earnings per share for the Year was HK$1.38 cents (2019 Restated: Basis and diluted loss per share was HK$70.00 cents). Basic and diluted earnings per share was based on the weighted average of approximately 630 million shares (2019 Restated: approximately 384 million shares) in issue for the Year. Gross profit for the Year amounted approximately HK$42,279,000 (2019: approximately HK$28,000), which was mainly contributed by the trading of oil and oil-related product in the Mainland China. The profit attributable to the owners of the Company for the Year was approximately HK$8,716,000. Business Review Trading Business Due to the spread of COVID-19 worldwide and the 2020 Russia-Saudi Arabia oil price war, the prices of oil have undergone significant fluctuations including its historical plunge of prices in early 2020 and the Brent oil price has dropped to US$21.44 on 20 April 2020. By the end of first quarter, the virus was brought under control in China and the business activities resumed back to normal domestically. With the recovery of Chinese economy, production cut by OPEC, and the rollout of the vaccine schemes in many countries, the oil price has steadily recovered since April 2020. Meanwhile, governments in many other countries still imposed strict containment measures including limiting business activities and travel restrictions, as the number of confirmed cases continued to rise in these countries. Under the circumstances, the Group quickly adapted the business into this new reality by continuing to expand its core trading business in China’s domestic market. In January 2020, the Group has completed the capital injection to its wholly owned subsidiary in Pearl Oriental (Daqing) Oil Limited as a trading platform of oil and oil-related products. Through actively exploring new trading channels, increasing trading volumes of the products and forming new business partnership, the relevant subsidiary was able to secure the downstream orders and achieved revenue of approximately HK$706,411,000 (2019: approximately HK48,136,000). Meanwhile, the Group has also expanded business in trading of electronic products in the second half of the Year. Utah Gas and Oil Field Due to the spread of COVID-19 across the globe, in particular the significant effects and shocks following the wide spread of the pandemic in the United States, the Group has adjusted, in a timely fashion, the development plans for the gas and oil field previously made in the year before. Specifically, after careful cost and benefit analysis, the Group has decided to postpone the task to further exploit the reserves tentatively until 2021. This is mainly because the continuance of the COVID-19 pandemic has made it most difficult for the Group to send internal staff to oversee the operation at the gas and oil field. The same applies to the external partners contracted by the Group, such as field exploitation workers as well as other personnel from service companies, who were faced with increasing difficulty to travel and operate at the gas and oil field. Despite these difficulties, the Group continued to improve the conditions of the field within the year, the Group managed to finish the workover operations on several wells that were of low productivity or out of service so as to restore the production at the gas and oil field. In the middle of 2020, the Group has finished repairing one of the wells. At present, the Group is reviewing workover operations on other wells and setting up schedules for repairment. As COVID-19 gets gradually contained across the world, the Group is expecting a steady increase in the volume of production in 2021. Prospects: Utah Gas and Oil Field In February 2021, the U.S. Energy Information Administration (EIA) estimated that the natural gas price would rise to around US$3.11/MCF by the third quarter of 2021 and continue to grow to approximately US$3.2/MCF in the remainder of 2021. EIA also predicted that the global crude oil prices would increase and average at around US$41.69 per barrel for 2020 and US$53.2 per barrel in 2021. Although the outbreak of COVID-19 presents further uncertainties to the market, given the decline in the natural gas production in the States and increasing demand for natural gas power generation and other factors, there is still a good chance that the prices of natural gas will continue to increase in 2021 as predicted. There is also a great chance that oil prices will stabilize in 2021 as expected. In order to improve profitability and financial stability, the Group has taken concrete actions at the Utah Gas and Oil Field, which includes stepping up the Group's efforts to regularly and timely inspect and repair drilling and storage equipment to sustain continuous operations and ensure smooth operations of existing businesses. Currently, the Group is continuing to carry out well workover operations on the basis of what has been accomplished last year and compiling health reports for each well. These measures can improve the conditions of the Group's gas and oil wells and help boost the volume of production. In addition, the Group is exploring the possibility of drilling new wells, and will make a decision after careful cost-benefit analysis and the Group may invite new investors or partners to share the costs of drilling. Trading & Service Business The outlook for the oil market in 2021 will still largely depend on how quickly the coronavirus can be contained worldwide. Given the market volatility with the outbreaks of coronavirus over the past year, it still remains difficult to assess the full economic impacts arising from the pandemic in 2021. In spite of the uncertainties and challenges ahead, the Group will continue to maintain and develop its existing business as well as explore new business opportunities in the following areas: providing oil field development and maintenance services to oil field owners including oil exploration, oil well constructions, oil field management, providing energy efficient equipment for the oil exploration; international trade on oil and oil-related products; seeking possible acquisitions on high quality assets and business closely related to existing business in order to achieve the optimization of the Group’s structure. In the long run, the Group will also consider possible investments on clean energy and renewable energy to reduce emission and achieve long-term sustainability.

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