ASX strikes big with Sino Australia Oil listing

In a coup for Australia's leading securities exchange, the Chinese oil and gas recovery specialist, Sino Australia Oil & Gas Ltd announced Friday its intention to list on the Australian Securities Exchange (ASX) in December following the successful completion of its initial public offering (IPO).

The announcement of a Dec. 12 listing will certainly be welcomed by the ASX, Australia's primary securities exchange, which has turned around a difficult few months under the stewardship of former Treasury Secretary Ken Henry.

The ASX has notified the company that it has achieved the spread and capital raising requirements. According to a company spokesmen, the allotment of shares and distribution of Holding Statements will take place over the next week.

Having deferred the original initial public offering planned for August in Sydney, citing a period of market volatility across Asia, Sino Australia sought an extension from the ASX to give Asian fund managers more time to ruminate the value of buying shares.

The offer closed above the minimum subscription amount at 12.8 million Australian dollars.

At the offer price, the market capitalization will be just over 109 million Australian dollars on listing. The company will trade under the ASX code "SAO".

Sino is an established supplier and network member of the Daqing oil field service market, with the region home to a number of China's largest and oldest oil fields.

These fields are operated by some of the country's largest oil producers - China National Petroleum Corporation (CNPC), PetroChina and Sinopecall of which have contracts with Sino to use the patented EOR drilling technologies.

Sino Australia plans to sell stock in Australia to give local investors exposure to China's surging energy demand.

Sino Australia Director Wayne Johnson said in Sydney, the Board elected to close the Offer ahead of the supplementary prospectus schedule to ensure the Company listed on the ASX and completed what represents a critical milestone before the end of 2013.

The Company had planned to use the funds raised in the IPO to achieve its forecasts for this year's financial year-end, Dec. 31, 2013.

However, sources familiar with Sino Australia told Xinhua the Company was tracking to forecast at the half-year without these funds, with Sino Australia now firmly of the belief that it is well set for growth in 2014.

Johnson said the company was buoyed by the "excellent" support from investors in Australia and Asia and took it as a clear endorsement of Sino's solid business and sound commercial strategy.

"There was an opportunity to increase the final IPO amount by keeping the offer open for longer, however the Board thought it prudent to close now to ensure a timely ASX listing," He said.

"Sino is a well-established player in China's oil and gas industry, with its patented Enhanced Oil Recovery (EOR) technology recognized as a key component for improving the economics of existing mature oil and gas wells, " said Sino Chairman Shao Tianpeng in a statement via Mercury Consulting in Sydney.

"The company's position is further strengthened by its consistent track record of profitability and cash-flow generation, " said Shao.

Sino recently released exceptional half-year results for the six months to the end of June 2013, with net profit after tax surging 92 percent on the prior corresponding period to 6.9 million U.S. dollars, while sales revenue increased 91 percent to 16.2 million U.S. dollars.

Overseas expansion opportunities through licensing and technology deployment will also be investigated, with Australasia considered an initial target market.

Sino's listing comes as China's appetite for oil turns around, with demand climbing one percent in October compared to a year ago as refineries processed more crude oil. At the same time, the country also overtook the United States as the world's top net oil importer, with daily imports at 6.3 million barrels per day and expected to grow.

"Recently announced economic reforms by the Chinese government also strongly indicate the economy will continue to grow at a robust rate to the end of this decade, with some analysts forecasting the growth rate will be faster in 2014 than this calendar year," Shao said.

Combined with the multi-billion dollar investment from some of China's largest oil producers - to extend the life of ageing domestic oilfields to meet demand, Sino is well positioned to continue its substantial growth.