Thank you, operator. Ladies and gentlemen, on behalf of China Oil and Gas Group, it is with pleasure for me to welcome you all to our 2022 Interim Results Conference Call. Today, our Executive Director, Ms. Ran Xu, will present the group's 2022 interim results, and our Chief Financial Officer, Ms. Yin Shan Law, will answer any question you may have after the presentation. Our presentation material for today has been uploaded to our official website at www.chinaoilgas.com.hk under Investor Relations and the Roadshow Presentations. Or you can also access it through the link attached in our announcement email from yesterday. We will first talk about the financial highlights and performance of the group, followed by the operating performance of our core business, natural gas distribution business, and then our upstream oil and gas production business in Canada. The presentation will take around 20 minutes, and we will have a Q&A session at the end. Thank you, Coyee. Hi, everyone. Thank you for joining China Oil and Gas Group Limited 2022 half year results conference call. Let's start with financial performance. Page three and four are summaries of the group's key performance for the first half of the year. During the period, the total turnover was HKD 8.18 billion, a year-on-year increase of 18%. This was mainly attributable to the increase of the group's natural gas sales volume and upstream oil prices. Natural gas sales rose 5% year-on-year to 2.551 billion cubic meters compared with 2.425 billion cubic meters in the same period last year. Profit for the period was HKD 885 million, representing a year-on-year increase of 33%. Profit attributable to the company owners was HKD 553 million, a year-on-year increase of 78%. Earnings per share rose 82% to 10.97 HK cents. On page five Excluding one-off items, profit attributable to company owners also increased by 39%. On pages six and seven the turnover is divided into four segments, namely, sales and distribution of natural gas and other related products, gas pipeline construction and connection, exploitation and production of crude oil and natural gas. Four, newly added last year, the production and sales of coal-derived clean energy and other related products were HKD 7.469 billion, HKD 299 million, HKD 412 million, and HKD 0 million, all in Hong Kong dollars. Up 25%, down 30%, and up 85% respectively. The coal-derived clean energy business was in the trial phase last year and suspended production in the first half of this year to prepare for normal operation in the future. In July 2022, it was officially put into operation again. The gross profit margin of the sales and distribution of natural gas and other related products was approximately the same as last year. The gross profit margin of gas pipeline construction and connection business segment remained at the same level of 41% as the previous year. The price of crude oil and natural gas rose due to the tight global supply and the gross profit margins of exploitation and production of crude oil and natural gas increased from 50% in the same period last year to 60% this year. On page eight, selling and distribution costs and administrative expenses decreased by 15% to only 3% of total revenue compared to the same period last year. On page nine, the group's EBITDA, as at June 30th, 2022, was HKD 1.618 billion, an increase of 30% year-on-year. On page 10, the group's total assets were HKD 22.73 billion, an increase of 0.4% from the end of 2021 of HKD 22.649 billion. The net assets were HKD 9.128 billion, an increase of 4% from the end of 2021. On December 30th, 2021, the company successfully signed an agreement with seven banks to enter the syndicated loan market for the first time. The main reason is that the interest rate is relatively low. With the current interest rate hikes, the syndicated loan interest rate is still less than 4%. On March 25th, 2022, the company drew a syndicated loan of $290 million to repay the part of the $320 million, 5.5% senior notes due in 2023. It directly saved the company approximately $5.4 million in interest expense at the current state per year. The group's net debt to assets ratio was 21%. Finance expenses, net of capitalization, were HKD 163 million. The weighted average cost of all the group's debts was 4%, about the same level as last year. For the first six months of 2022, the group's net cash generated from operating activities was HKD 990 million, compared with HKD 640 million for the same period last year, representing a year-on-year increase of 55%. Capital expenditure in the first half of the year was HKD 771 million, an increase of 5% year-on-year. The company remains in a state of net cash flow. In the first half of the year, the group's total sales and gas transmission volume increased by 12% year-on-year. Residential gas consumption increased by 3%. Industrial and commercial users gas consumption increased by 7%. Gas sales at gas stations increased by 2%. On page 14, the proportion of gas sales to various types of users is relatively stable, with industrial and commercial users accounting for 67%, residential users accounting for 25%, and gas station sales accounting for 8%. On the next page, the gas sales volume of the group in Shaanxi, Jiangxi, and Hubei recorded a significant increase of 500%, 12% and 12% respectively. Next page. The blended dollar margin was RMB 0.44 per cubic meter, a decrease of RMB 0.01 from 2021. On page 17, in the first half of the year, the group added roughly 95,000 residential users, a year-on-year increase of 12%, and accumulated 1.86 million residential users. There were 457 new industrial and commercial users, and the cumulative number of industrial and commercial users reached more than 16,000. On page 18, the group successfully obtained three new projects during the period, one in Hubei Province and two in Qinghai Province. Up to now, the group has 73 city gas concession rights in 16 provinces of the country and 63 LNG stations. On page 21, we can now move on to our upstream business in Canada. The upstream oil and gas production business achieved an average output of 5,570 barrels of oil equivalent per day for the period. The group achieved an average crude oil price of CAD 125.92 per barrel of oil equivalent, an increase of 74% from the previous year's Canadian dollar 72.28 per barrel of oil equivalent. Net operating netback rose 86% to CAD 55.07 per barrel of oil equivalent. Okay. Thank you very much, everyone. That's all for my presentation. Please feel free to raise any question. Thank you. Thank you. We will now poll for question. If you'd like to register for a question, please press star one on your telephone. Our first question come from Chad Lao from CITIC Securities. Hi. Seven month, eight month, our sales volume is still stable growth, not a big problem. Oh, okay. Thank you. Thank you, Yin Shan Law. Yeah, thank you. Thank you. Our next question come from Nan Nan from T. Rowe Price. Hi. Hi, can you hear me? Yes. Hello. Hi, Ran Xu. Hi Y in Shan Law. Thanks so much for the presentation. I just, you know, want to go through the liquidity position of the offshore company. I see there are, you know, over HKD 3 billion cash in interim results. Just wonder, you know, how much does that actually sit at offshore company? Your question is like how much cash is offshore and onshore, right? That's correct. We have about 80% cash onshore in PRC, and the remaining is in our Hong Kong headquarters. That's roughly HKD 600 million? 600, yes. Can you remind us, you know, how much dividend upstream usually you get from onshore OpCo? Usually it's around CNY 120 million, for sure. Then we have other companies, other subsidiaries that we are collecting their dividend this year too. Because like most of them are 100% owned subsidiary, and we haven't required them to pay us dividend before, but we will do it this year. We are actually registering for the Hong Kong residential identity, so we can save some tax in for the onshore dividend payout too. Yeah. If I look at, you know, majority of your debt actually sits at Holdco. Currently you have a single loan and you have two bonds, and that generates. Yeah. Can you just, if you don't mind, can you just walk me through the liquidity position? Like how much interest payments and overheads you need to pay at Holdco level? Other than the onshore dividend payout, we also have dividend from Canada. Actually we have an intercompany loan to Canada business, and we can always ask them to return our long-term loan from Canada. We have no problem on our cash flow. For the interest that we are paying out is actually the bonds and the syndicated loan. That's all. Could you remind us how much is intercompany loan to Canadian subsidiary? For the Canada subsidiary? Yeah. I remember it's around CAD 120 million. I can give you the exact number. And- Yeah. How much dividend do you receive from upstream business every year? CAD 12 million per year. Okay. Got it. Yeah, I guess, you know, just in January 2023 will be due, which is $100. At current stage, what is your plan to refi that? You know, we have cash on hand, and we also have a few syndicated banks that want to lend us money. We're still in the process of discussing, and we'll probably have more syndicated loans during the second half of 2022. We have dividend payout from our onshore company, our PRC company, and the Canadian company will lend us more dividends for the second half. We are good to go for the $100 million to repay on Q2, Q3, January. Okay. Got it. Yeah, just one more question regarding the offshore. Sorry, the onshore dividend upstream. Is that always capped at at HKD 120 million level or, you know, No, it's 50% of. Is it subject to withholding tax or? Really depends on which subsidiary is paying us. The CNY 120 million is from CCNG. They usually pay out around 50% of their profit per year, and it's around CNY 120 million RMB. In the history, actually, CCNG is only a subsidiary that pays the upstream dividends, so all other subsidiaries didn't pay at all? Yeah, because the other subsidiaries are our wholly owned subsidiaries. We didn't require them to pay us dividend. If we want them to pay us dividend, we have to register for our Hong Kong resident identity to minimize our tax payout. That's why we wanna do it all at once. The 5% difference. Okay. Got it. Yeah. Yeah, if we include those subsidiaries, this year, how much would that be paid on top of those on top of that HKD 120 million? Around CNY 100 million-CNY 200 million. Okay. Got it. Thanks very much. I have no more question. Thank you. Our next question come from Tan Wei Mei from Bank of Singapore. Thank you. Hi. The finance cost has increased. Why is it so, given that the total debt level and also the average cost of financing has not increased? That's one. Second, you mentioned that, there's significant growth in Shaanxi, Jiangxi and Hubei. Is there any particular reason? That's all. Thank you. I didn't get the second question. What's your second- I think the question is the gas volume. I think you mentioned that there's significant growth in Shaanxi, Jiangxi- Mm-hmm. Hubei. Yeah. Yeah, just want to know why. Yeah. Oh, okay. The first question, because interest rate increased, as you may know. Most of our loan, we have to pay a little bit more interest. That's the answer. The second one, Shaanxi, you can look back to our, the past few years. We have acquired and we have get more concession right in that province. I think we have more than six new concession rights for the past few years. That's why the sales volume growth a lot. Mainly attributed to increase of concession rights, right, in all the provinces that you mentioned? Yes. Okay. What's the average cost of financing? 4%. 4%. Okay. Thanks a lot. That's all. Thank you. Our next question come from Xiao Gao from Bank of America. Thank you. Thank you. Hi, Yin Shan Law. Hi, Ran Xu. Hi, Gloria. Thank you for the presentation. I have two questions. One is on the 2023 bonds. I remember that you have mentioned you might call back the 2023 bond earlier given the incremental syndicated loans and the cash on hand. Is it still the plan or you will wait on June next year to repay it at maturity? My second question is on the dollar margin trend. Your dollar margin is relatively stable while some of your competitors was down a lot. Can you share the reason and share your view on the dollar margin trend in the second half? Thank you. Okay. For two to three bond, yes, we can call. Call, we have to pay a premium, and that's why we are doing some calculation, see which one is more, can save more cost for the company. If I pay it like on the due day, I don't have to pay for the, premium, but I have to pay extra interest, right? We are doing some calculation, and we may call or may not call. We haven't decided yet. For dollar margin, because you can see our group, usually we have more sales, in Qinghai, and Qinghai is actually decreasing for the percentage of the sales of natural gas. You can see, we have like 500% increase in Shaanxi province for our sales volume. In Shaanxi, we are mostly not just using natural gas. We have coalbed methane, and the cost is a little bit different over there. Because we have long-term contract with PetroChina, we don't have to rely on the LNG for extra supply of natural gas. That's why our margin is like more stable than other company. Other company, they may not have the asset to like a long-term contract with PetroChina. They may need to get extra LNG. As you may know, LNG prices rise a lot in Q2 2021 and Q2 2022. We target that our dollar margin will be stable for the rest of the year. Thank you. Can I confirm that 100% of your natural gas is sourced from PetroChina, or there's- Of course not. some small portion from other third parties? Yes. Around 90%. I think almost 90% from PetroChina. We have natural gas from CNOOC and Sinopec, and we also have a little portion of LNG. Thank you. That's all from me. Thank you. Our next question come from, Mr. Timmy from HSBC. Thank you. Hi, Yin Shan Law. Just a quick question because as I think the company also take on a loans to acquire Shengli, right? Can you kind of share with us the amortization schedule on there and the size of it, and also that like, maybe like, it would be helpful if you can like, talk with us as like how's the synergy going after purchasing the controlling stake on Shengli? For the guarantee of the loan of Shengli is just because the original single largest shareholder, they did the same thing. The bank require when we change hands on the single largest shareholders, we have to do the same guarantee. That's all. For Shengli, you can look at their financial statement. They have performed very good during the first half of Q2 2022, so we don't really have to worry about that. Oh. It's quite- Oh, I actually was referring to the loans that, like, the company took on onshore to acquire their equity stake. Onshore to acquire? Yes. Yes, because they have a long-term bank loan. It's like a seven- No, not the loan, not the loans that like I mean like, maybe I ask it other way. Just like how did the company actually finance the acquisition? It's only like, I think it's only. How much is it? It's not actually expensive. We use our own cash. Okay. So for the- Like the company did not take on any loans to purchase their stock? No, we did afterwards. We did it because we have, we can find a very good contract with the bank. We can have like seven to eight years loan. We didn't do a loan for acquisition. We don't have to. Yes. That's why. That's kind of my question. It's like, so can you share with us like the amortization schedule of this loan that you take on later on and the size of it? I don't get your question. We just get it for our daily operation. What do you mean by amortization? Yeah. It's a repayment schedule then. I thought you just said that like you take on a. Seven years. Sorry, it's like, can you repeat it again? I'm sorry. We didn't even draw down the loan, but we signed a contract with the bank. If we want. Okay. to add the acquisition loan, it will be a seven-year loan, and it will be 4% on that. We haven't- Okay, sure. Okay? Okay, thank you. Thank you. Ladies and gentlemen, should you have any question, please press star one on your telephone. Our next question comes from Jocelyn from Moody's. Hi. Hi, everyone. Hi, Jenny. Thank you for the presentation. I wanted to check on the growth, sales growth volume for the year. Sorry if I missed it earlier. For the first half, there is a slowdown in growth. Maybe just your comment on that. What is the expectation, you know, for second half of this year and the overall expectation on the sales growth volume for the year? Okay. We have 5% sales volume growth in the first half of 2022, and it's just compared with China, the whole country. The growth rate is around the same. We expect the second half will be quite stable and with moderate growth. We expect we have high single-digit% for the overall in 2022. Okay. Thank you. I think I saw in the P&L there is this other income of about HKD 56 million, which is probably part of your EBITDA. What is the nature of this other income? One of our subsidiary sold a pipeline, and we have gained on the sales of fixed asset for around HKD 55 million. Right. Thank you. I saw in the, I think in first half there is a lower connection fee income as well as segment profit, yeah, for this segment. What is the reason behind this? Further to that, can you comment on the outlook for second half 2022? What is the expectation for the connected household? You have done 90,000, I think, in first half. Previously, you were guiding for 160,000 additional connection but stable fee. Maybe your comment on this. Thank you. Are you asking the construction income? Correct. Yeah. Okay. Construction income revenue decreased a little bit because the cost in China decreased. We maintain our margins for that part. For the connection of residential user, it will be around the same with the first half of 2022 in the second half. Sorry. Can you repeat that again? Sorry, I missed that. Repeat which part? The expectation for 2022. Oh, expectation. The second half contribution will be around the same as the first half. That will bring us to 180,000 per year, for the year? Yes. Does this mean that in terms of the average fee per household, is there a downward revision to this because of the- I couldn't hear you. Can Can you speak up a little bit? Sorry. Oh, sorry. Yes. I'm talking about the connection fee of the household. Is there a lower fee per household now in line with the lower connection? No. Actually, it's the C&I portion get lower. For residential, it's still around CNY 2,800 per household, around there. Yeah. Okay. I see. All right. Thank you. Okay. The next one is on the CapEx. For the CapEx that you have spent in first half 2022, HKD 770 million. What is the breakup of this between PRC CapEx and oil and gas CapEx? They are 80/20. 80% from PRC, 20% from Canada. Right. Okay. For the guidance, previous CapEx guidance was HKD 1.5 billion for the full year, of which HKD 1.2 billion is for PRC. Does this still stand? Yes. Still the same. Okay. Do you have any expectation in terms of inorganic CapEx at this point in time? What expectation? I couldn't hear you. Sorry. Whether or not you have any plans to, you know, purchase additional concession rights in organic- Oh. acquisition. No, we usually won't purchase new concession right. We usually just deal with the local government. Mm-hmm. Yes. Is there any plan to- You mean acquisition, right? We don't have any plan, any further acquisition. Yeah. With regards to the guarantee that you mentioned for Shandong Shengli earlier, can I know what is the total guarantees as of to date for this? What is the what? Sorry. Total guarantees. Total guarantees Total guarantees for Shandong Shengli. The one that you have. On this one. Provided guarantees. Yeah. Yeah. We show all of that in our announcement already. Sorry. Can you tell me the sum, the total of that guarantees as of to date? I didn't have the exact number. I think CNY 700 million. Okay. Thank you. Is there any expectation of this going to increase in future, the total guarantees that is being provided here? Well, it's hard to say because we have to ask the shareholders to approve every year. Okay. Is there any plan to increase stake in Shandong Shengli at the moment? Not for now. Okay. Thank you. I think that's all I have for now. Thank you. Thank you. Sorry, Jenny. One more question. You mentioned about the some procurement, which is mostly from the PetroChina, and there are certain proportion from LNG. What is the percentage of this? 4% maybe for total sales, total purchase volume. Okay. Right. Thank you. Thank you. Our next question comes from Oscar Chao from Vontobel. Hey, thanks so much for the call and for the helpful detail today. I just wanted to go back to the maybe something someone touched upon before, which is the syndicated loan which you raised in December 2021. Can you remind us when is that maturing, please? Three-year term bullet. Three-year time, Three years from now? Sorry, what's the maturity date, please? What? Sorry. You mean the. What are the maturity dates of the 290 syndicated loan? It would be 2025 March. 2025 March. Understood. Okay. Second question is on Shengli. When do we realize that we were obligated to guarantee the debt of Shengli? After they have to renew their loan. Okay. We were not aware of that when we made the acquisition last year. Yes. Okay. On Shengli, do we control the board of Shengli and all the key decision-making? Yes. If that's the case, is it therefore fair to assume that we implicitly guarantee all the debt of Shengli? Yes. It's fair to assume that all the debt of Shengli is sort of our obligation. Yes, if you look at the loan agreement. As I've said, Shengli is doing a very good job on their financial, and Yep. We will deal with the banks as well. Of course, each of the banks we have, we will deal with them and see if we can release the guarantee too, because it's not necessary. We don't have anything pledged to them. Yeah, we'll see. No. I Okay. I'm not referring just to the guarantee amount of HKD 1.1 billion. I'm referring to all the Shengli debt of HKD 2.2+ billion. Given that we control the board and all the key decision-making of Shengli, I'm asking, do we guarantee all of Shengli's debt? Up to now, we guarantee around CNY 1.1 billion. If we want to guarantee more, we need the approval from shareholders, and we didn't have any. Okay. Any intention to increase the amount for now. Okay. Understood. If I could ask another question. What is this currency translation loss in the other comprehensive income of HKD 400-something million? What does that refer to? Is that from Canada? No, from the closing rate of RMB. Oh, okay. RMB versus Hong Kong. Yes. Okay. Understood. Can I ask a question on Sino Director, please? What is the current loan outstanding as of 30th June 2022? Your question is how much is the loan? Yeah. How much is it as of first half 2022? I need to check. We haven't. I don't think we have increased the loan to them. It still remains the same amount. Do you know what it is? Pardon? Sorry, I'm confused. What's the amount? I'm just saying we haven't increased the loan, so it should be the same by the end of Q2 2021. Can you provide any simple metrics for how the core asset is doing under Sino Director? Has it generated profit in the first half of this year? Yes. They are generating profit, and they are giving us a schedule for repaying the loan. Okay. Can you provide some detail on that schedule, please? Hard to say. We are still dealing with them. We haven't have a formal agreement yet. Okay. Can you remind us is Sino Director in any way related to the chairman of our company? That was before. He sold out everything like 10 years ago. He's no longer associated with Sino Director? Sino Director, no. Okay. Understood. Sorry, I just wanna ask another question again on the cash balance. Just hypothetically, if we needed to upstream cash offshore from onshore to repay debt, can we. How easy is it to do that? Do we need to generate net profit onshore at CCNG or at our wholly owned subsidiaries in order to do that? Or can we simply just declare a dividend upstream to the offshore out of distributable reserves? Yes. They need to have a profit. If I understand correctly, you said earlier that CCNG's profit is HKD 240 million, therefore a dividend HKD 120 million, and the remaining wholly owned subsidiaries profit is HKD 100 and HKD 200. Therefore, is that sort of the dividend cap that we can send offshore hypothetically? No, that's the minimum they're giving us, 50% of their profit. The CCNG 120 is the minimum 50% of profit. Yes. They can pay us more. 100% will be the cap. The maximum will be 240 then for CCNG. Yes. Really the way to think about it is that the HKD 240 million maximum dividend from CCNG, and there's HKD 200 million other dividends from our other wholly owned subsidiaries. That's the amount, HKD 440 million, we can send offshore. Yes. Okay. That's helpful. Thank you so much. Welcome. Thank you. Our next question come from Jessica Pang from Manulife. Oh, hi, Jenny. I just have a follow-up question on Shengli's guarantee. Have you discussed with the banks how to release the guarantee? How do I? I mean, no longer need to provide guarantee. No. Well, we'll have to deal with the banks because there's more than, like, 10 banks that we're dealing with in Shengli. Oh, okay. Because Shengli is just an associate for us, and then we guarantee majority of debt, so it's a little bit risky for us. Do you have any limits in terms of amount of guarantee you will provide to them? Because if they expand, I think they probably need to borrow more. For the additional amount, will you continue to provide guarantee, or is there any limits you want to set for this kind of guarantee or their leverage? Well, we already have our limit. We have shareholders' approval for CNY 1.1 billion, and that's it for now. If we need to guarantee more, we need to go through the process. We have to issue a circular, and we need the shareholders to approve. We don't expect that we will increase our guarantee for now. Oh, okay. Thank you. Thank you. Our next question come from Steve Kwon from Northwestern Mutual Investment. Yeah. Hi. Thanks for the presentation. I just have a very quick question on the new syndicated loan which you might be looking to enter into. Can I just get a sense if you enter into that one, is it meant to, say, finance the maturity that is coming due in January of 2023? Yes. The use of proceeds will be mainly for that and not, say, for your CapEx expansion. Not for CapEx. The max loan you're probably going to get on that one is around HKD 100 million. Yes. Can I just get a sense, maybe just preliminary, like, what kind of cost are you looking at for that loan roughly? I have mentioned, it's around 4%. Okay, 4%. Okay, great. That's all the questions I have. Thank you. Thank you. Thank you. Ladies and gentlemen, should you have any questions, please press star one on your telephone. Ladies and gentlemen, that is star one to register for questions. Thank you. There seems to be no further questions at this point in time. Would you like to wrap up the call? Coyee? As we have no further questions for now, I would like to bring our meeting to an end. If you have any follow-up questions, please feel free to contact us at info@hk603.com or call us at 2200 2000. Thank you very much for joining us today, and our group appreciate your continued support. We wish you all a great day ahead. Thank you and goodbye. Thank you for your participation. This concludes your conference. Thank you. Thank you. Goodbye. Bye.