Activities
Crude Oil Production Division
In October 2006,Magnus Group acquired 75% equity interest in Songyuan Yongda Oilfields Exploration and Technology Co.Ltd. (?Yongda?). Yongda is a PRC-based oil and gas company engaging in the development of oilfields and production of crude oil in Jilin Province in the People?s Republic of China (PRC). It was granted a 20 years exclusive right in 1999 by China National Petroleum Corporation (CNPC) to develop 17 sq km of oilfields located in the Jilin Province, China. This acquisition has made Magnus the first Singapore listed company to own producing oil concessions in China.
Yongda is involved in all facets of oilfields development and production of crude oil ? drilling of exploration, delineation and development wells, the construction of production facilities and the production and sale of crude oil exclusively to CNPC at an average market price as quoted in the Minas Crude Oil Price.
CNPC has certified that the oilfields contain proven reserves of approximately 43 million barrels of crude oil. Under the agreement with CNPC, Yongda shares 20% of its oil production volume with CNPC until August 2009 which doubles up to 40% thereafter till expiry of the concession in August 2019.
Prior to the acquisition ,the Oilfields now have 95 producing wells are currently producing an average of above approximately 300 barrels a day. Post acquisition, Yongda identified various well locations within the south eastern part of its concession contract area Section 46 and drilled 10 new wells in October 06 and 17 new wells in December 07. The oil flows for these 27 new wells wereconfirmed by Yongda?s geologists and engineers to be stable and the first 10 new wells have been consistently producing 120 barrels of oil per day while the second 17 new wells have been consistently producing 230 barrels of oil per day. Each new well is drilled to a depth of between 1200m to 1500m, with the estimated cost of drilling expected to be approximately S$280,000.00 per well.
Oil & Gas Equipment Supplies Division
After several years of continuing losses, the Group diversified away from its engineering and related businesses with the acquistion of a 54.35% controlling stake in MCEG. MCEG is an established oilfield supplier with a track record of more than 20 years of operating in the Asia-Pacific region. The acquisition has made an immediate contribution to the Group?s bottom line and opened doors into the upstream energy resource sector. Its first foray was made via a co-investment with Innmincka Petroleum Ltd for gas exploration in Southern Australia where their efforts have been rewarded with a discovery of an offshore field with 24 BCF of gas reserves.
Coal Mining Division
In June 2006, Magnus Group acquired 68.4% beneficial interest in PT Batubara Selaras Sapta (?PT Batubara?) which has executed in 1997 a Work Agreement for Coal Mining Enterprises with the Indonesian government to conduct coal mining operations in the Kuaro coal formation located in the Districts of Batusopang, Pasir Balengkong and Tanah Grogot, Pasir Regency, East Kalimantan province. It covers an area of approximately 68,360 hectares and has an inferred coal reserve of approximately 500 million tons.
The management is currently conducting a detailed mining plan for the Kuaro mine and production is expected to commence in July 2008. Monthly coal production is estimated at 40,000 tonnes and will be increased by 20,000 tonnes every year thereafter.
