Enviro Energy executives celebrate their new position.
Hong Kong - Enviro Energy International last Friday transferred its listing from the growth enterprise market of the Hong Kong Stock Exchange to the main board, on a wave of growth in China's coal bed methane (CBM) sector.Enviro is a gas producer partnering with PetroChina in developing a (CBM) deposit in China's Xinjiang Uygur autonomous region. This latest move underscores the capital market's interests on this clean energy.
Chan Wing Him Kenny, Enviro's chairman and CEO, said at the listing ceremony that the company plans to raise up to $200 million next year for new projects.
Chan told the media that they plan to drill 36 wells in the first phase of the Liuhuanggou CBM project, in the next three years, at a cost of up to $30 million.
"Commercial production is expected to begin in early 2012," Chan said. "Three wells will complete the test drilling by the end of this year and start gas production on a pilot basis."
CBM refers to a seam of gas trapped hundreds of meters below the earth's surface in coal beds.
Twelve wells have been drilled in the shared-contract area of Liuhuanggou, immediately outside Urumqi, Xinjiang's capital.
The company has a target of around 900 wells in the Liuhuanggou coal bed seam.
Chan said he expects the increasing natural gas demand by Chinese to fuel Enviro Energy's growth, when considering China's 16.8-19.6 billion cu m of natural gas shortfall this year.
He expects Enviro Energy to begin generating a positive cash flow within two to three years of commercial production.
The company's CFO Adrian Chan estimates that Liuhuanggou's wells will each produce approximately 9,800 cu m a day after beginning commercial operations. .
CBM's China producers in China get tax breaks and price subsidies. The methane has a government subsidy of 0.2 yuan per cu m.
The methane will be sold locally and sent to the West-East natural gas pipeline that crosses the Liuhuanggou area.
The project is the first Production Sharing Contract for CBM between the China United Coal bed Methane Corp Ltd and a foreign company. The PetroChina Coal bed Methane Co Ltd, a subsidiary of the China National Petroleum Corp, handled the PSC.
Enviro's stock ended at HK$ 0.365 on the first day of listing on the Hong Kong Stock Exchange's mainboard, down 6.41 percent.
The company was listed on the GEM since 2003. It applied for the transfer to the main board this past October. The company said it believes the main board listing can improve its share trading and give it wider recognition among larger institutional and retail investors.
