Main Web Site : http://www.fortune-oil.com/

CBM Partner Web site : http://www.molopo.com.au

IC Write Up : 21st Apr 2006 IC Write Up

Last Major News : 18th Apr 2006 Coal Bed Methane Project

Prelims : 27th Apr 2006 Prelim Results Link

Latest Broker Forecasts : Oriel 7th April 2006 BUY

Prelim Results and Further Updates due around 25th to 27th April 06

ABOUT FORTUNE OIL

For over a decade Fortune Oil PLC has focused on investments and operations in oil & gas infrastructure projects in China and remains one of the few overseas companies operating oil terminals and supplying natural gas in China, all in partnership with the countrys largest oil & gas companies
Fortune Oil PLC is incorporated in England and Wales and is subject to UK Listing Rules and compliance regulations. The largest shareholders are First Level Holdings Limited, Vitol and major Chinese state-owned corporations.

NATURAL GAS :




China will be the world's largest growth market for natural gas as supplies of this clean and economically attractive fuel become more accessible. Fortune Oil's investments in natural gas are principally through Fu Hua, a joint venture with a PetroChina affiliate, which on-sells gas from the pipelines supplying Beijing. In north China Fortune Oil controls and operates distribution pipelines and city gas reticulation systems as well as facilities to produce and transport Compressed Natural Gas (CNG).
Fortune Oil is now one of the leading providers of CNG in Beijing, providing clean fuel for buses, households and factories. In October 2004 Fortune Oil also became the first overseas company to supply LNG (Liquefied Natural Gas) to users in China, delivering LNG by road to the ancient city of Qufu, the home of Chinese philosophy.

OIL TERMINALS :
Maoming SPM

Fortune Oil established the Maoming Single Point Mooring (SPM) in December 1994 to supply crude oil to Sinopecs Maoming refinery, the largest in southern China. The SPM now delivers 10% of Chinas crude oil imports. It allows VLCCs (Very Large Crude Carriers) of up to 280,000 tonnes to moor and deliver crude oil via a 15 km sub-sea pipeline. The SPM is owned and operated by a joint venture company, Maoming King Ming Petroleum Company Limited, and the other main shareholder is Sinopec Maoming Petrochemical Corporation.
The SPM buoy is commonly used throughout the world for loading and unloading liquids but the Maoming SPM remains the only buoy system in China used for importing crude oil. Fortune Oil believes that the SPM concept is a cost-effective solution for importing crude oil into China as many ports are shallow and will become more congested as demand increases. The only alternative to a buoy system in many ports is to dredge channels for large tankers. The SPM has provided significant cost savings to the Maoming refinery through its low operating costs and VLCC capability.

Products Terminals

The oil products market in China is in the process of deregulation and this will allow a larger role for foreign companies in the import and distribution of refined products. Fortune Oil remains one of the few foreign companies with interests in products terminals.
Fortune Oil and Vitol jointly developed the West Zhuhai Oil Products Terminal at the western entrance of the Pearl River Delta. These facilities came on stream in 1998 and comprise 240,000 cubic metres storage and jetties for receiving and distributing refined products. It is one of the few products terminals in south China able to handle 80,000 dwt ocean-going tankers. A controlling stake was sold to PetroChina which uses the terminal for supply of diesel to south China.
In addition Fortune Oil controls a LPG terminal and supply business (Fu Duo), which has 80,000 customers in Zhanjiang city, and owns storage facilities in Shantou. Prior to the restructuring of the China oil industry in the late 1990s, Fortune Oil was also a major participant in the gasoline retail market and in oil trading. We continue to operate two gasoline stations in Beijing but our trading activities are limited to low-risk domestic trading.

Blue Sky Aviation Oil

The South China Bluesky Aviation Oil Company owns and operates the refuelling infrastructure at 15 airports in south China. These include Wuhan, Guilin and the new Guangzhou Baiyun International Airport. Fortune Oil and BP each hold 24.5% of the joint venture and Beijing-based China Aviation Oil Supply Corporation (CAOSC) holds 51%. The consumption of jet fuel in China is rising significantly, particularly at Guangzhou because of pent-up demand in the Pearl River Delta.
The new Guangzhou airport was opened in August 2004. The construction cost was US$2.3 billion and it is almost four times the size of the old airport in downtown Guangzhou. The new airport is capable of handling 25 million passengers and 1 million tonnes of cargo per year and ranks number three for aviation fuel sales in mainland China.

Good news for FTO :



http://www.timesonline.co.uk/newspaper/0,,176-2103316,00.html

Pound may suffer as US rates rise above ours

This week American interest rates will be hiked to 4.75% more than UK base rate for the first time since the 1980s. By David Smith


SOMETHING unusual is about to happen in the international money markets that could have a big impact closer to home.
On Tuesday, under its new chairman, Ben Bernanke, Americas Federal Reserve will raise its key interest rate, the so-called Fed Funds rate, from 4.5% to 4.75%.


US interest rates have gone up a long way since 2004, when they stood at just 1%. And Tuesdays move, say analysts, will not mark the end of the story. Inflation worries in America will push the Fed Funds rate up to 5.5% by mid-year, predicts the investment bank Lehman Brothers.

In Britain, the significance of Tuesdays move is that it will signal the beginning of an unusual period, one in which US interest rates are higher than those in the UK. It happened very briefly five years ago, but before that you have to go back to the early 1980s for a period in which the US had higher rates for any length of time.

What could be the impact? Analysts at HSBC think it could push the pound, currently $1.75, down towards $1.50.

When US rates rise above UK rates for any period of time there is a strong tendency for sterling to weaken, said Mark Austin, HSBCs global head of foreign-exchange research.

And some more :

China raises petroleum ex-factory, benchmark retail prices - NDRC
BEIJING (AFX) - China has raised ex-refinery prices on gasoline by 300 yuan
per ton and diesel by 200 yuan beginning today, with benchmark retail prices of
gasoline and diesel increased by 250 and 150 yuan, respectively, the National
Development and Reform Commission (NDRC) said.
The commission, which oversees the country's industrial policy and sets
utility prices, said in a statement that the hike follows surging international
crude oil prices.
Crude oil prices remain at around 60 usd per barrel while refined oil
products have been sold at prices equivalent to about 43 usd per barrel since
July, the commission said.
Separately, retail prices of gasoline and diesel in Bejing were raised by
460 yuan and 340 yuan per ton, respectively, to reflect the higher cost of
refined oil products as the city apply stricter Euro III emissions standards.
Benchmark retail rates of refined oil products in China are controlled by
the government, but oil majors, such as Sinopec and PetroChina, can adjust the
selling price within an eight pct range.
Jet fuel prices have been increased accordingly, with the price of standard
aviation kerosene raised to 4,840 yuan per ton from 4,530, according the the
NDRC.
The commission added that the government will subsidize the country's
agriculture, fishery, forestry and public transportation sectors after the oil
price hike and that oil producers will be levied a windfall tax for their sales
of home-produced crude oil, with details to be released soon by the Ministry of
Finance.
(1 usd = 8.05 yuan)
derek.jiang@xinhuafinance.com
dj/tr

seems on a slight down trend

Moving sideways it is biffa, but the angle is coming close to finishing, so it must move up or down soon and out of the present trend.

hope so as i invested in this thinking that the return on this would be good being oil/china etc .........could of made alot more by getting a pin and sticking it in a list of oil companys prob !! some have soared and not always for good reason other than oil price rise ,where as fto has a good fundamental base etc ......dont normaly comment much as i have good patience but jeez this share is very boring :-)

Latest Broker Forecasts : Oriel 29th March 2006 BUY

2005 PTP 7m
2005 EPS 0.15

2006 PTP 11.6m
2006 EPS 0.25


On results this will put FTO on historic PER (2005) of times 34, a current year (2006) pr PER of times 20 and then a pr forward PER of ????.

With growth due to come more on line this year after recent events, and with a weakening pound sterling, then finally the ratings of FTO are becoming low enough to make it an attractive investment going forward for many other people, not just the hardcore few.

Latest Broker Forecasts : Oriel 7th April 2006 BUY

2005 PTP 7m
2005 EPS 0.15

2006 PTP 11.6m
2006 EPS 0.25

PP - Would be great if you could start a new thread for Oriel Resources. The graph doesnt look great but Rab have a substancial +17% stake in it, albeit teritorial risks of Kazakhstan. and it looks like production, of principally chrome and nickel,is not far off, and with Chinese market just down the road.

Regards
PB

PP - Sorry about this. You are refering to Oriel Securities and not Oriel Resources.

Cheers
PB

FTO up on news

Coal Bed Methane Development

RNS Number:5642B
Fortune Oil PLC
18 April 2006

FORTUNE OIL PLC
("Fortune Oil" or "the Company")

Liulin Coal Bed Methane.

The Company is pleased to announce a conditional agreement to take a 60%
interest in a company formed to develop coal bed methane ("CBM") gas reserves in
the Liulin block in Shanxi Province, China. The other 40% shareholding will be
held by Molopo Australia Limited ("Molopo"), an ASX-listed company with
significant experience in the development of CBM in Australia. In 1999 a
subsidiary of Molopo signed a Production Sharing Contract ("PSC") for
development of the Liulin block with CUCBM (China United Coal Bed Methane
Company), a PRC government entity responsible for all CBM PSCs. Subject to
approval by the Ministry of Commerce, the foreign contractor rights in this PSC
will be extended and transferred to the new company, Fortune Liulin Gas Company
Limited, registered in Hong Kong. The initial obligation of Fortune Oil is to
commit US$2.5 million for further field appraisal, to be financed from the
Company's cashflow.

CBM consists of natural gas that is trapped within coal seams. China has one of
the world's largest reserves of CBM and its development is being encouraged
because of resource limitations and the need to remove gas from coal reserves on
safety grounds. To date CUCBM has signed over 20 PSCs with foreign companies
but the industry is only just emerging and China's CBM output is small at 100
million cubic metres per year. The industry has now been spurred by the
development of local gas markets and supply infrastructure, particularly in
Shanxi Province which has the two largest CBM basins.

We believe that Fortune Oil is the only foreign company controlling pipelines
and reticulation networks for supply of natural gas in Shanxi Province. This
gas is sourced from the Shaanxi-Beijing trunk pipelines which pass through the
province and are operated by our partner in the Fu Hua natural gas business. As
CBM fields are developed the gas will be supplied initially to local markets by
truck as compressed natural gas (CNG) and ultimately to Beijing as pipeline gas.
Therefore, once the Liulin block has been commercially developed, we envisage
the gas being supplied to Fortune Oil-controlled gas distribution companies such
as the Tongzhou CNG station in Beijing. This will provide Fortune Oil with an
independent source of gas and increase reliability of supply for our downstream
businesses.

The Liulin block is one of the best geologically proven CBM blocks in China.
Analysis from coal holes and exploration wells has indicated an in-place gas
resource of approximately 0.8 trillion cubic feet ("TCF"). With a successful
appraisal programme, this resource may be converted to recoverable reserves in
the order of 400 billion cubic feet (12 billion cubic metres) in an area of
approximately 200 square kilometres. The gas recovered to date is over 95%
methane, located in three main coal seams at a depth of 400 to 700 metres. The
coal parameters such as permeability, gas content and seam thickness are
favourable for CBM drilling, as advised by our technical consultants, Advanced
Resources International, Inc of Virginia, USA.

A Molopo subsidiary, Lowell Petroleum NL ('Lowell"), started to explore the
Liulin block over 10 years ago and drilled 4 vertical exploration wells under
the PSC in 2000. Under the terms of the agreement with Molopo, approval will be
sought from PRC authorities for the PSC to be extended and the rights
transferred from Lowell to Fortune Liulin Gas Company Limited. Fortune Oil
would then commit US$2.5 million for further appraisal over the next year and be
entitled to a 60% shareholding in the company, with Molopo retaining a 40%
interest. This would involve further drilling, in particular using techniques
recently applied successfully in China and Australia. Should this appraisal
work prove successful, then we anticipate commercial development of the block
commencing after two years.

The agreements for extension and transfer of the PSC are now being approved by
CUCBM for submission to the Ministry of Commerce for final approval, which we
expect to receive by end of May.

Bruce McGowan, Executive Vice-Chairman of Fortune Oil, stated:

"This is our first step into the upstream gas business. We are very excited by
the long-term potential of China's vast CBM resources and the synergies with our
gas distribution business. Development of Coal Bed Methane reserves is very
important for China to provide clean fuels for the community. Molopo's
experience in CBM development in Australia and its knowledge of the Liulin block
provide an ideal partner for Fortune Oil in developing our CBM business - the
combination is very powerful. All upstream developments have risk and we cannot
expect immediate results but the Company is very well placed to take advantage
of China's CBM opportunities and the accelerating demand for gas."

An article in the FT.

Fortune turns to gas
By Rebecca Bream
Published: April 18 2006 03:00 | Last updated: April 18 2006 03:00

Fortune Oil, a Hong Kong-based group that manages and develops infrastructure in China, has invested in a project to exploit the methane trapped in coal fields, capitalising on interest in environmentally friendly forms of power generation.


London-listed Fortune will announce today that it has bought a 60 per cent stake in a new company, Fortune Liulin Gas Company, formed to develop coal-bed methane reserves in the coal-rich Shanxi province of China. Molopo, an Australian company, owns the remaining 40 per cent.

China's coal fields produce high levels of methane, and the industry has been blighted by accidents caused by gas explosions. The government is encouraging companies to tap the gas for safety reasons, and Fortune said this was becoming more commercially attractive with the development of local gas markets and infrastructure. The company already controls gas pipelines in Shanxi province and said the development of coal-bed methane reserves would help to supply its downstream business.

10% rise dont see that often with fto mind u had just bought a few more so cant complain

Does look good, this new CBM aspect could propel FTO back to historical high's. The field they have taken a stake in is proven !!

Here is a post from AFN :

VKX - 18 Apr'06 - 08:52 - 3910 of 3913 edit
Good morning all. Don't often post, so here goes.

Think this is fantastic news for FTO. Extract and supply gas to China - great stuff. They'll be manufacturing and selling gas fires & cookers next!

Okay, it's waiting final approval but I don't think they would have put out an RNS if they weren't virtually certain that this was a formality. Remember that FTO have many many years experience of working with the Chinese. Also pleased that their $2.5m commitment is to paid out of cashflow i.e. no fund raising required.

From memory, I'm sure someone recently informed me that 1 trillion cubic feet of gas is worth approx. $1 billion. Can anyone confirm this? 400 bcf is therefore worth $400m. At 60%, FTO get $240 million which, in real money, equates to approx. 135 million pounds. Dividing this by the 1,800m+ shares in issue gives you approx. 7p-8p on the share price.

So, regardless of what else FTO get upto, in 2-3 years time the SP should be well into double figures purely on this deal alone.

No wonder DB bought above 9p over a year ago.

Is DB the main shareholder?
What is their average price?

Is China a member of G8? If so CBM development should help it towards any commitment it has made on a global scale. Good all round publicity for Fortune. Now lets not forget there may also be government subsidies for this development which Fortune can also exploit/cost cut with!!

From UK-Analyst: April 18th 2006

An announcement regarding a coal bed methane project pushed shares in Fortune Oil 0.8p higher at 6.05p. The company said it had signed a deal to take a 60% interest in a company formed to develop coal bed methane gas reserves in the Liulin block in Shanxi Province, China. Fortune will make an initial commitment of 2.5 million dollars for field appraisal. The other 40% will be held by Molopo Australia Ltd, an Australian-listed company.

Todays CBM news might explain why Ching Li was happy to stick 297,347 into buying FTO shares at 6.75p last summer.



Director Shareholding RNS Number:8003N
Fortune Oil PLC 20 June 2005
FORTUNE OIL PLC
NOTIFICATION OF DIRECTOR'S DEALING

Fortune Oil PLC (the "Company") was notified today that on 15 June 2005, Ms
Ching Li, a director of the Company, purchased 4,405,150 ordinary shares of 1
pence each in the Company (representing 0.24% of the issued share capital) at a
price of 6.75 pence per share.

Ms Li now holds a total of 14,874,537 shares representing 0.81% of the issued
share capital of the Company.

Results due shortly-which should also keep investors interest here,
from FTO website:

Preliminary Results Announced end April 2006

http://www.fortune-oil.com/en_us/financial_calendar.htm


P.S. Last years Preliminary Results were announced: 28 April 2005.

DB paid 9p over a year ago