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On April 6th, 2016, in the reception hall of HPMM Beijing Office (Beijing Wanxin Energy Investment Co., Ltd.), Yao Guangwen, general manager of Liaoning Wolf Petroleum Equipment Co., Ltd., and Mongolia Renova Yiliqi Co., Ltd. Bao Jinsong, the chairman of the company, formally signed a contract for the "Mongolia Oilfield Block Ⅱ Turnkey Development Project". HPMM Chairman Wang Zhengquan, officials from the National Development and Reform Commission, Mongolian energy development officials, and HPMM personnel had all witnessed this historic moment. The official signing of the contract marked the successful operation of Liaoning Wolf International's Overseas Project again and HPMM has once again stepped out of the country and officially entered the Mongolian energy development market.

 

Mongolia is a country related to our country’s “One Belt and Road” policy. The country is still in the developing stage, with backward industrial and agricultural development and low resource development rate. Our country has supportive policies for infrastructure and energy investment in countries along the “One Belt and Road”. HPMM Group’s entry into Mongolia during this special historical period was a positive response and strong support to the country’s “One Belt and Road” economic policy. It not only expands the space for the Group’s own development, but also provides support for the country’s future energy security. It is an act that benefits the country and the people.

The area of Mongolian Block II is 27,400 square kilometers, and the total recoverable hydrocarbon reserves are about 200 million tons. As the general contractor of the exploration and development project, HPMM is responsible for all the operations required for the infrastructure construction, exploration, drilling, completion and production of the oilfield development. After the oil is produced, the cost oil and profit oil due to the contractor are preferred to reimburse our project cost. After the project cost is fully recovered, we will continue to enjoy the profit oil share until the completion of the oil well development. The exploration period of Mongolia block Ⅱ is 8 years, the mining period is 25 years, and it can be extended twice, each extension is 5 years, the total oil field development period is 43 years. Mongolia Yiliqi Company owns 100% of the Mongolian Block II production sharing contract. This time, Wolf International acquired 60% of Yiliqi Company's equity through the acquisition of its equity, becoming the controlling shareholder and acquiring the company then has the right to operate and manage it.

 

Based on the current price of Brent crude oil at US$30 per barrel, the value of 200 million tons of crude oil is US$44.1 billion (approximately 286.65 billion Yuan). However, as the most important energy source at present, the price of oil cannot remain low for a long time. Therefore, the value of oil stored in this oilfield block will be far greater than the estimated value. Once the exploration is successful, the development of such a large-scale oilfield block will greatly stimulate the demand for equipment manufacturing and workload within the group, which can largely solve the equipment and engineering technical services’ market issues in the next 20 to 30 years. According to calculations, the development of the II oilfield block will use 20-30 sets of ZJ50 drilling rigs, and 20 sets of vehicle-mounted drilling rigs and workover rigs. This will provide a strong impetus for the development and growth of the group. It will reduce production capacity and increase benefits , which has great strategic and economic significance.

This signing was the first time that the Group had won a large oil field block with an area of over 10,000 square kilometers and recoverable reserves of 100 million tons. It will surely accumulate experience and lay a solid foundation for the operation of such projects in the future. Successfully obtaining a project is not as simple as signing, stamping, and celebrating success on the contract. Behind the signing ceremony, many people did a lot of supportive work, which brought the two parties together at the signing ceremony. These tasks include: establishing a marketing network and networking between all parties involved in the operation to provide preconditions for discovering and grasping opportunities; evaluating and analyzing the economic value of the project to ensure that the project itself is profitable; connecting and interacting with the relevant parties of the project for information to ensure smooth project negotiation and implementation; study the relevant laws, regulations, and political operating environment of the country where the project is located to ensure that the project’s risks are within control; discuss the most advantageous ways of cooperation and try to work with partners and strive for the most favorable conditions of cooperation to ensure the safety of investment and the maximization of benefits. Not everything is going smoothly, also with turns and twists.

 

This project was first contacted by Wolf Company two years ago with the intermediary and partners. At the beginning of the negotiation, the project team of Wolf Company was in charge of the project and the intermediary, partners and the Mongolian government under the leadership of general manager Yao Guangwen. The representatives did a lot of communication and exchange work; coordinated the various branches and departments of the group to do a lot of analysis work on the project in terms of business, technology and legal affairs; received the supervisor of petroleum resources approval in Liaoning Petroleum Machinery Manufacturing Co., Ltd. During the period, the director of the Mongolian Petroleum Administration Bureau took guests to visit the production workshop and the simulated well site of the drilling rig, introduced the overview of the HPMM Group and discussed the cooperation with Mongolia in the oil field. The Director General’s performance on the cooperation with the HPMM Group showed great interest and promised to help us obtain the most favorable policy from the Mongolian government.

 

In the process of project negotiation, Mr. Yao organized Wolf’s project team, the Group’s Legal Department, Audit Department, and Financial Department to conduct a lot of research on the production sharing contract and Mongolia’s oil law; and conducted a lot of research on the economic policies of China and Mongolia. A comprehensive interpretation and communication with the legal, technical and engineering departments; and through the large amount of information and materials obtained in the process of research, interpretation and communication, as well as the mastery of international practices, due concessions were made on the terms of rights and obligations and other terms of cooperation. These tasks have laid a solid foundation for controlling and avoiding risks, and had won the best cooperation conditions for the group.

 

Any person, team, and company are constantly learning and summarizing to improve their ability and strength. Through the project negotiation and successful signing of Mongolia Block II, the Wolf team had summarized the following Article experience:

 

1. The business must be professionalized, proficient in the professional knowledge and industry practices of the business field engaged in, the business team must not only clearly understand the macro framework and prospects of the project, but also accurately grasp the specific details;

 

2. For any project, research should be done first, and then action should be taken. First look at the macro vision and micro details;

 

3. Build a team with rapid learning ability to ensure that they can quickly grasp the context of a new project;

 

4. Form a view of the pattern, learn to think about problems in a specific pattern, and understand the needs of the other side while knowing our requirements;

 

5. Improving the team’s collaboration ability includes not only doing a good job in the cooperation between the members of the team, but also doing a good job in the cooperation between the team and other teams and other departments;

 

6. Focus on the accumulation and summary of knowledge and experience, and improve the team’s problem-solving ability in the process of continuous accumulation and summary.

 

The Liaoning Wolf team of HPMM Group will maintain a good work style, continuously improve its working methods, and continuously improve its business level. It will be a pioneer in HPMM's global strategy and make due contributions to the expansion of HPMM's international business. HPMM will surely advance on the big stage of the international market and write a magnificent chapter for Chinese oil companies to go global!