Fortune Oil, a company listed on the London Stock Exchange Main Market focusing on oil, natural gas and resource supply operations and investments in China, announced that it has contracted to acquire 51% of Liaoning Jingrun Natural Gas Limited (“LJNGL”) for an initial cash consideration of RMB10.55 million (£1 million).
LJNGL has been granted a 30 year concession to build and operate a spur pipeline supplying natural gas to serve the ceramics industrial park located in the county of Jianping, Liaoning Province. The Company expects the branch pipeline to be completed in 2012 and supply up to 200 million cubic meters of natural gas per annum (expected to reach full capacity in 2013). The Company has secured contracts for the supply of up to 200 million cubic meters of natural gas with China National Petroleum Corporation (“CNPC”). Additional funding required by LJNGL will be obtained via local banks or from Fortune Oil through shareholder loan(s).
The acquisition, which is subject to local authority registration and approval, expands the Company’s natural gas operations in Liaoning Province. Specifically, on 10 February 2011, the Company announced that it had entered into a joint venture agreement to supply LNG to up to 6,000 public transit buses in Liaoning Province exclusively using the LNG stations operated by Fortune Liaoning. LJNGL will be renamed Liaoning Jianping Fortune Gas Co. Ltd. following completion of the acquisition.
In addition to the initial consideration a further payment may be made by Fortune if over the five years following the completion of the acquisition it receives per annum dividends exceeding 20% of the initial payment. The payment will be the excess over the 20% subject to a maximum of RMB 7 million (£662,000).
Mr. Qian Benyuan, Chairman of Fortune Oil, commented:
“ We are delighted to add to our portfolio of natural gas businesses in Liaoning Province through this 51% acquisition of the spur pipeline to supply the ceramics industry. This is a long term concession that will secure customers with natural gas and reduce the use of more polluting energy sources. ”
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Source: Fortune Oil, March 28, 2011;