Meet the members

Pierce Li, CEO & President, AAG Energy Holdings Limited

August 2017

Pierce Li, very pleased to have you with us today. For those who are unaware of AAG Energy can you give us a brief overview of the company?

AAG is the leading independent CBM producer in China listed in HK stock exchange, with a special focus on the upstream development and value optimization of unconventional gas resources, in order to supply clean energy to the Chinese economy.

AAG Energy’s key operating assets, the Panzhuang and Mabi concessions, are located in the Southwestern part of the Qinshui Basin, which boasts the largest proved CBM geological reserves of any basin in China. AAG Energy’s Panzhuang concession in partnership with the China United Coalbed Methane Corporation Ltd., is the most commercially advanced Sino-foreign CBM asset in China and the first Sino-foreign CBM cooperative project to have entered full-scale commercial development and production. The Project has a designed annual production capacity of 500 million m3. AAG Energy’s Mabi CBM Project in partnership with PetroChina received preliminary ODP Phase I approval from NDRC in November 2013.  The designed production capacity of Mabi Phase I is 1 billion m3 per year. With the proven ability to commercialize CBM and a highly-respected management team, the Group has attracted support from leading international and Chinese investors including Warburg Pincus, Baring Private Equity Asia, Chinastone and Ping An.

There are many reasons for companies to be in China, what is your number one driver for investing in the country?

The huge demand for clean energy in order to improve the environment, as well as the long term growth potential of the Chinese economy.

What are the strategic priorities and growth targets for AAG Energy in the next 12-24 months?

Organic growth for existing operations with robust production uplift and cost control, and at the same time looking for new business opportunities on upstream oil & gas E&P.

Where do you see the greatest opportunity in the Chinese O&G market and how are you positioned to capture this opportunity?

Our greatest opportunity here is China’s strong long term demand for clean energy natural gas. As the world largest developing economy and energy consumer, China has significant energy demand potential in the long term, especially for clean energy like natural gas.  With an estimated gas penetration of 10% and 12%, natural gas demand in 2020 and 2030 is expected to be over 500 billion cubic meters. We are very confident that China will continue to lead world natural gas demand growth over the next decade.

AAG has been investing in the Chinese unconventional gas sector for over 20 years, and our experience on managing upstream E&P, technology innovation, regulatory approvals, mutual trust with our partners and customers, combined with our strong financial capability, puts us in an excellent position to capture the opportunity.

What do you foresee as the greatest challenge to your future growth?

The application of suitable technology for different geological conditions are our greatest challenges for future growth.

You have a proud reputation of working alongside Chinese companies and government (regional and provincial); what is the secret to successful guānxì in China?

Always adhering to the rules and regulations, and building mutual trust through mutual understanding.

These are tough market conditions given depressed oil prices and global reductions in capex and workforce, what measures and practices are you putting in place to adapt to this new (but not unknown) working environment?

1. Continued efforts on operational excellence, improving average well EUR, operation uplift and cost control.

2. We have confidence in China’s demand for clean energy/natural gas over the long term.

3. The depressed oil prices and global reductions will make some attractive upstream assets available with lower costs, which we believe is a good opportunity for M&A deals.

4. AAG is financially well positioned to monetize existing assets and look for new opportunities.

How would you describe AAG Energy in one sentence to a new investor?

AAG is the leading independent CBM producer in China, focusing on the development and value optimization of unconventional gas resources in order to supply clean energy to the nation and local community.

You join us here at our China Energy Assembly, what is your goal at this event and what take-away do you want attendees to go home with regarding AAG Energy?

I believe that the China Energy Assembly is a good platform to share best practices among oil & gas companies and their related parties.

We are here to share who we are, what we have been doing and achieved, as well as the future plans of AAG.

What is your proudest work-related achievement to date?

The 5-year effort it took to build a JV partnered with Chinese SOE from Greenfield

What was the wisest advice you received from a mentor?

There is no right or wrong decision, the consequences are what matter

What advice would you pass onto a recent graduate embarking on a career in O&G?

Know the basics first

How and where do you prefer to spend your spare time?

At home, spending time with my family

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