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MIE Holdings (MIE) $225mm IPO scheduled for Friday, May 7. Price range mid-point is $12.50 |
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SUMMARY
China-based oil/gas exploration, development & production company sharing production contracts with PetroChina (PTR), the largest oil company in China, |
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In early April, 2010 MIE signed several memorandum of understandings to expand production reserves |
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Valuation metrics |
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MIE is valued at 6.3x trailing 12 months EBITDA, almost the same as PTR |
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On other valuation metrics is valued at a premium to both PTR and Sinopec Shanghai SHI. Regarding the other two competitors listed in the SEC filing -- Ivanhoe Enrgy (IVAN) & Roc Oil ASX:ROC – financial metric comparisons are inclusive |
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Compare & Contrast |
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with cos listed in sec filing |
Mrkt |
Price / |
Price / |
Price / |
Price / |
Price / |
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annualized trl-12months |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
EBITDA |
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MIE Holdings (MIE) |
$755 |
4.4 |
47 |
2.6 |
2.7 |
6.3 |
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PetroChina (ADR) PTR |
$213,000 |
1.4 |
14 |
1.7 |
1.8 |
6.2 |
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Sinopec Shanghai (ADR) SHI |
$2,760 |
0.4 |
10 |
1.3 |
1.3 |
4.8 |
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Ivanhoe Enrgy (IVAN) |
$1,030 |
41.2 |
-32 |
5.0 |
8.9 |
-41.2 |
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Roc Oil ASX:ROC |
$314 |
1.5 |
-2.7 |
1.9 |
1.9 |
n/a |
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BUSINESS |
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. One of the largest independent upstream oil companies operating onshore in China as measured by net proved reserves |
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. Operates the Daan, Moliqing and Miao 3 oilfields in the Songliao Basin, China’s most prolific oil-producing basin,
. Under three separate production sharing contracts with PetroChina, the largest oil company in China. |
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DIVIDEND POLICY |
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MIE plans to pay annual dividends of 20% of annual distributable profit (normally ‘net profits’ as reported) attributable to equity holders , commencing with respect to the year ending December 31, 2010. |
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If MIE is deemed to be a PRC "resident enterprise" under the New EIT Law and Implementation Rules, then dividends on the ADSs may become subject to a 10% withholding tax |
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RECENT DEVELOPMENTS |
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On April 2, 2010, signed a memorandum of understanding with Songyuan Ningjiang District Oil Exploration Company, an oil development company based in Songyuan, Jilin Province of the PRC. Under this memorandum of understanding, MIE indicated an interest in acquiring the participating interest in a production sharing contract with PetroChina, covering four oil properties with a total area of 17.7 square kilometers in the Jilin oilfield. Agreed to a consideration of $12 per barrel based on the amount of reserves to be set forth in a reserve report satisfactory to MIE from an international reserve consultant. |
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On April 3, 2010, signed a memorandum of understanding with Qianyuan Oil & Gas Exploration Company, an oil and gas development company based in Songyuan, Jilin Province of the PRC. Under this memorandum of understanding, MIE indicated its interest in acquiring the participating interest in a production sharing contract with PetroChina, covering an area of 10.7 square kilometers in Jilin oilfield. Aagreed to a consideration of $12 per barrel based on the amount of reserves to be set forth in a reserve report satisfactory to MIE from an international reserve consultant. |
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COMPETITION |
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. MIE is the sole operator of the three oilfields at Daan, Moliqing and Miao 3 through contractual arrangements with PetroChina. Does not compete with other operators in the contract areas.
. Encounters competition when seeking to acquire new properties, secure additional production sharing contracts with state-owned oil and gas companies or hire trained personnel.
. May face competition from both existing players and new emerging players for the contractual right to cooperate with PetroChina and Sinopec, which are the only entities permitted to cooperate with foreign companies in onshore crude oil and natural gas exploration and production in the PRC, and for the development and production of oil resources in the PRC.
. Some of the competitors include ROC Oil, Central Asia Oil, Bright Oceans and Ivanhoe Energy.
. Also intend to acquire oil properties outside the PRC and may face competitors who are able to pay more for productive oil properties and exploratory prospects. |
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USE OF IPO PROCEEDS |
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Of $133mm from sale of 12mm ADSs, shareholders intend to sell 6mmADSs |
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. $40.0 million to drill new wells in existing oilfields;
. A portion of the remaining amount to expand operations by acquiring interests in other oilfields
. Balance of the proceeds for working capital and general corporate purposes. |
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MIE Holdings (MIE) |
MIE, C+, 6.5 |
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Post-IPO ADR eqiv: 60mm |
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Oil/gas |
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RMBmm |
$mm |
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Beijing, China |
2006 |
2007 |
2008 |
2009 |
2009 |
IPO Mkt |
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Revenue (RMBmm) |
723 |
1,222 |
1,972 |
1,167 |
$171 |
Cap (mm) |
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Depletion, Dep, Amort |
12% |
23% |
24% |
38% |
38% |
$755 |
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Operating cost & exp % |
56% |
42% |
40% |
21% |
21% |
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Profit (loss) |
241 |
309 |
611 |
111 |
$16 |
@$12.50 |
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Profit (loss) % of revenue |
33% |
25% |
31% |
9.5% |
9.4% |
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Adj EBITDA |
508 |
818 |
1,128 |
821 |
$120 |
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Adj EBITDA % of revenue |
70% |
67% |
57% |
70% |
70% |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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annualizing Dec qtr |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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MIE Holdings (MIE) |
$755 |
4.4 |
47 |
2.6 |
2.7 |
30% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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2 |
2 |
1.5 |
1 |
6.5 |
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