We took a break from our recent North American focus during the latest edition of our CEO luncheon series. Glenn Corrie of Sino Gas & Energy (traded on the Australian stock exchange) kindly paid us a visit yesterday to discuss the company’s compelling unconventional gas play in China. The company went public in 2009 and along with a strategic partner plans to develop two blocks held under PSCs in the Ordos basin, China’s most productive natural gas basin at ~4Bcf/d. While its market cap is relatively small (~US$180mm), Sino’s asset base is expansive with 552Bcf 2P net reserves (~2Tcf gross) and a cost structure estimated to deliver wellhead capex + opex costs of ~US$1.20/mcf. That’s quite attractive relative to current local Chinese gas prices which trade in the US$7-8/mcf range. Corrie explained his vision for the company over the next several years which includes growing gross prod’n from YE’16e ~25mmcf/d to 400mmcf/d by 2020. He also provided interesting context on Chinese natural gas market dynamics, buoyed by positive demand tailwinds owing to the government’s push to double the natural gas share of the energy mix from current 5% to 10% by 2020.
Dave Pursell, Jeff Tillery, Maynard Holt, Glenn Corrie, Cameron Alguire
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