Fortune Oil pockets $4m on part-sale of Liulin business

Independent oil and natural gas supply company Fortune Oil earned $4m after Dart Energy increased its equity stake in Fortune's subsidiary Fortune Liulin Gas (FLG) by five percentage points.

Dart Energy, which has been involved with Liulin Gas since December 2009, exercised its option to increase its stake from 45% to 50%.

The cash generated from the move will be used to fund part of the ongoing work program on Liulin during 2012, the firm said.

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Fortune remains set to make its first gas sale in 2012 following "significant progress" at the Liulin operations in China.

Contractors have been selected to progress the construction of the Gas Gathering System. A Chinese design institute has been appointed jointly by FLG and China United Coal Bed Methane Corporation to prepare all the necessary documentation for submission of the overall development plan.

FLG has completed three more horizontal wells and good progress has been made in dewatering, with two more wells set to be completed in the first quarter of 2012.

The focus of the drilling program is initially to produce 100,000 cubic meters of gas per day (33 million cubic meters per annum) as part of a gas sale agreement.

Tee Kiam Poon, Chief Executive of Fortune Oil, said: "Our focus is to accelerate the development of Liulin to position the company as a significant developer of unconventional gas, in line with China's resource strategy.

"Liulin is our flagship project, offering the prospect of additional reserve certifications, first gas sales and potentially first ODP application and approval. This should pave the way for large scale development and commercial sales in 2012 and beyond and more importantly revenue generation for the company."

The share price rose 6.06% to 10.5p by 13:32.

NR