SHOUGUANG, China, July 26, 2016 (GLOBE NEWSWIRE) -- 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.
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.
Source:Gulf Resources, Inc.