Karen Teo of global energy and commodity price reporting agency Argus Media on Thursday (22 October) published a summary of Brightoil’s strategies to list in Shanghai following its shares being cancelled on the Hong Kong stock exchange on 20 October:
Struggling Chinese private-sector firm Brightoil is hoping to focus on its upstream operations and list in Shanghai after its Hong Kong shares were delisted this week.
The company’s shares had been suspended from trading since October 2017, pending the release of its results. It announced asset sale plans in 2018 in an attempt to “bolster its financial strength”.
Brightoil has since sold most of its assets, including its entire very large crude carrier (VLCC) fleet, to repay its outstanding debt. Chinese port operator Landbridge took over Brightoil’s top spot as China’s biggest VLCC fleet operator in August last year.
Brightoil is now preparing to dispose of its interests in a crude terminal and storage facilities at the developing trading hub of Zhoushan on China’s east coast. The company has signed an initial agreement to sell the assets to an unnamed state-owned Chinese firm under a debt restructuring scheme.
Construction of the Zhoushan assets is around 80% complete, and Brightoil may carry out the remaining work after the sale. The Zhoushan storage operations comprise 19.9mn bl of crude and storage facilities and a crude terminal that includes a 2mn bl VLCC berth at Ningbo-Zhoushan port on Waidiao island. Brightoil earlier obtained land rights to build more storage at Dalian in northeast China, but work has not yet begun and is unlikely to do so.
The company is likely to hold on to its upstream assets, which are harder to divest because of commitments through its production-sharing contracts.
Brightoil has stakes of 40.1% and 29.2% in blocks 04/36 and 05/36 respectively at the Caofeidian offshore oil project in the Bohai bay, in partnership with state-owned CNOOC. It also operates the Dina 1 and Tuzi gas fields in Xinjiang, holding 49% stakes with state-owned CN% owning the remainder. Production at the Caofeidian project averaged 47,000 b/d in January-June this year, while combined output at Dina 1 and Tuzi averaged 3.4mn mᶾ/d as of the end of June.
Brightoil now plans to apply for a new share listing in Shanghai after the restructuring programme is completed, potentially next year. It is unclear how it will be able to expand its asset base beyond its current upstream business, which it says has been profitable largely because of low production costs.
Brightoil received a lifeline from state-owned China Huarong Overseas Investment, a unit of China Huarong Asset Management, which stepped in to restructure some $362mn of its debt and provided $35mn in additional loans to repay existing debt and increase liquidity, the company said in July.
Photo credit and source: Argus Media
Published: 26 October, 2020
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