Yanchang Petroleum International Announces 2022 Interim Results

Sales Volume of Novus in Canada Soared by Nearly 60% Oil and By-product Trading Business in the PRC Affected by Lawsuits

Financial Highlights:

• Overall revenue amounted to approx. HK$9.34 billion (1H2021: approx. HK$10.21 billion)
• The upstream oil and gas production business in Canada, Novus�s sales volume of oil and gas amounted to 322,754 barrel of equivalent, which represented an increase of 59.4% yoy; contributed income of approx. 205 million (1H2021: approx. HK$75.3 million)
• Revenue of the oil and by-product trading business in the PRC amounted to approx. HK$9.13 billion (1H2021: approx. HK$10.13 billion)

HONG KONG SAR – Media OutReach – 26 August 2022 – Yanchang Petroleum International Limited (“Yanchang Petroleum International” or the “Company”, together with its subsidiaries, the “Group”; Stock code: 346.HK) today announced its unaudited consolidated interim results for the six months ended 30 June 2022 (“period under review”).

During the period under review, the Group’s overall revenue reached approximately HK$9.34 billion (1H2021: HK$10.21 billion). Benefitted from the higher commodity prices as well as increased production volume, Novus Energy Inc. (“Novus”) contributed an income of approximately HK$205 million (1H2021: approx. HK$75.3 million) during the period under review. Net income in the first half of the year was CAD8.13 million (approximately HK$49.4 million), nearly the double of the same period last year. In addition, the revenue of oil and by-products trading business in the PRC was HK$9.13 billion as compared to HK$10.13 billion from the corresponding period last year. Although Henan Yanchang Petroleum Sales Co Ltd (“Henan Yanchang”) performed well and remained profitable during the period under review, Yanchang Petroleum (Zhejiang FTZ) Ltd. (“Yanchang Zhejiang”) has been involved in a number of pending litigations, which offset the sales growth brought by Novus, resulting in a loss of approximately HK$35.8 million for the period under review. Stripping off the Yanchang Zhejiang operation which was suspended for certain months due to litigations during the period under review, the Group’s performance in other operations recorded considerable improvements.

Upstream Oil and Gas Production Business in Canada

In the first half of 2022, Novus engaged in the business of exploration, exploitation and production of crude oil and natural gas in Western Canada, with overall operation remaining stable. During the period under review, sales volume of oil and gas increased by 59.4% year-on-year to 322,754 barrel of equivalent, contributed a revenue of approximately HK$205 million, representing an increase of 172% year-on-year. The net revenue per barrel reaching a record high of CAD25.2 per barrel.

By making reference to market analysis, Novus reasonably adjusted its inventory and implemented development programmes. Through advanced planning and maintaining good relationships with service providers, Novus brought together its capital resources to purchase oil casing in advance which achieved cost savings. During the period under review, operating expenses in Novus’s well fields were CAD6.18 million, with average operating costs of CAD19.2 per barrel, representing a decrease of 15.5% year-on-year.

Downstream Oil and By-product Sales Business in the PRC

During the period under review, Henan Yanchang sold a total of 1.76 million tonnes of refined oil products cumulatively and achieved an operating revenue of RMB7.35 billion. In the first half of the year, Henan Yanchang leveraged its oil depot resources and established cooperation with Shaanxi Xing Hua and Sinofert Henan, respectively, adding new profit drivers. In addition, Henan Yanchang also entered into cooperation with a number of listed and premier companies such as Hunan Guochu for storage, and successfully became a supplier of refined oil products in the Hunan high-speed service region. In the first half of 2022, the cumulative sales volume of Henan Yanchang in the Hunan and Hubei markets amounted to 95,400 tonnes, with sales revenue of approximately RMB800 million. However, the processing business of Yanchang Zhejiang came to a halt due to litigations of its processing plant in the first half of the year, it is actively handling and striving to resolve the litigation issue currently.

Mr. Feng Yinguo, Chairman of Yanchang Petroleum International, concluded, “In the second half of 2022, the geopolitical crisis is anticipated to take a positive turn. The Organization of Petroleum Exporting Countries (OPEC) is expected to maintain its strategy of raising oil production, or even plans to adjust upward the production level. Given that the US interest rate hikes will put the global economic growth under pressure, the outlook for the international crude oil market will be gloomy. Yanchang Petroleum International will seize the opportunity in times of high oil prices to accelerate its growth in production in an efficient and effective manner and strengthen risk management. The Group will also adhere to the development strategy of ‘focusing on both production and trading, equal emphasis on oil and gas and new energy’, striving to become a first-class integrated green and low-carbon energy service provider.”

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About Yanchang Petroleum International Limited (Stock code: 346.HK)

Yanchang Petroleum International is principally engaged in the following activities (i) exploration, exploitation, and operation of oil and gas; and (ii) fuel oil trading and distribution. In its upstream operations, Yanchang Petroleum International possesses operating oilfields in Saskatchewan and Alberta, Canada, through its wholly owned subsidiary Novus Energy Inc., a Canadian enterprise. Novus engages in the business of acquiring, exploring for, developing and producing crude oil and natural gas. In its downstream operations, Yanchang Petroleum International is principally engaged in wholesale, retail, storage and transportation of oil products through its 70% owned subsidiary, Henan Yanchang Petroleum Sales Co., Limited, and which has been granted valid licenses for distribution and sales of oil products in China. The Group also established oil products trading companies in Zhoushan, Zhejiang and Shenzhen, China, respectively, for expanding its oil products trading business which become a new profit driver.

For details, please refer to http://www.yanchanginternational.com