Gulf Resources Announces updates on its Sichuan Natural Gas Project
July 26 2016 - 8:00AM
Gulf Resources, Inc. (Nasdaq:GURE) ("Gulf Resources" or the
"Company"), a leading manufacturer of bromine, crude salt and
specialty chemical products in China, today announced the updates
on its Sichuan natural gas project.
We would like to bring our shareholders up to date on the
progress of our Sichuan Natural Gas project.
We are very pleased with the progress we have made in the past
quarter. We have:
- Signed the agreement to purchase the equipment needed for
drilling and converting the natural gas.
- Constructed the roads and related infrastructure needed to
begin operations in the remote and mountainous region of Daying
county.
The total capital expenditures in 2016 should be approximate $3
million. This total includes equipment, roads, and all other
related expenses.
We expect to begin production on the first well in October or
November.
Once production begins, we expect to have a phased development
process. For the beginning three to six months, we will produce at
trial production levels. After this period of time, we expect to
produce at maximum levels step by step. At the present time, based
on the studies we have completed, we estimate the well should be
able to produce at maximum levels for a minimum of 10 years.
Once we achieve maximum output, we will be in a position to
evaluate our plans for additional wells. Assuming the first well
produces to the levels we expect, we plan to drill 3-4 new wells in
2017. Based on the results of these wells, we could accelerate our
development in 2018.
The next group of wells should cost approximately $8 million a
well. If we significantly increase the number of wells drilled, the
cost per well may be reduced.
At this point in time, there is no way to know how long the
approval process will take. The company has the strong support of
the government of Daying County. The county government will work
with the company try to obtain whatever provincial approvals are
needed.
The first well in Sichuan is permitted for both natural gas and
bromine. The bromine concentrations in Sichuan are about 7x higher
than those in Shandong. There is every reason to believe that we
will be able to produce bromine in addition to the natural gas.
However, we will not begin to consider developing the bromine
reserves until after the natural gas is being produced at full
capacity.
Based on our current development plans, we should continue to be
free cash flow positive.
We will be reporting our second quarter in early August. We are
very pleased that our project in Sichuan is progressing as
planned.
About Gulf Resources, Inc.Gulf Resources, Inc.
operates through four wholly-owned subsidiaries, Shouguang City
Haoyuan Chemical Company Limited ("SCHC"), Shouguang Yuxin Chemical
Industry Co., Limited ("SYCI"), Shouguang City Rongyuan Chemical
Co, Limited (“SCRC”) and Daying County Haoyuan Chemical Company
Limited (“DCHC”). The company believes that it is one of the
largest producers of bromine in China. Elemental Bromine is used to
manufacture a wide variety of compounds utilized in industry and
agriculture. Through SYCI, the company manufactures chemical
products utilized in a variety of applications, including oil and
gas field explorations and papermaking chemical agents. SCRC is a
leading manufacturer of materials for human and animal antibiotics
in China and other parts of Asia. DCHC was established to further
explore and develop natural gas and brine resources (including
bromine and crude salt) in China. For more information, visit
www.gulfresourcesinc.com.
Forward-Looking Statements
Certain statements in this news release contain forward-looking
information about Gulf Resources and its subsidiaries business and
products within the meaning of Rule 175 under the Securities Act of
1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and
are subject to the safe harbor created by those rules. The actual
results may differ materially depending on a number of risk factors
including, but not limited to, the general economic and business
conditions in the PRC, future product development and production
capabilities, shipments to end customers, market acceptance of new
and existing products, additional competition from existing and new
competitors for bromine and other oilfield and power production
chemicals, changes in technology, the ability to make future
bromine asset purchases, and various other factors beyond its
control. All forward-looking statements are expressly qualified in
their entirety by this Cautionary Statement and the risks factors
detailed in the company's reports filed with the Securities and
Exchange Commission. Gulf Resources undertakes no duty to revise or
update any forward-looking statements to reflect events or
circumstances after the date of this release.
CONTACT:
Gulf Resources, Inc.
Web: http://www.gulfresourcesinc.com
Director of Investor Relations
Helen Xu (Haiyan Xu)
beishengrong@vip.163.com
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