TORONTO, July 23, 2020 (GLOBE NEWSWIRE) -- CF Energy Corp. (TSX-V: CFY) (“CF Energy” or the “Company”, together with its subsidiaries, the “Group”), a leading new energy service provider in the People’s Republic of China (the “PRC”) would like to announce that the Sanya City Development and Reform Commission (“SYDRC”) has finalized the City’s natural gas utility pricing formula adjustment which will be the guideline for the Group to follow on its gas selling prices starting from August 1, 2020 (the “New Gas Selling Price”). SYDRC is the government natural gas price regulating body in Sanya City, and this pricing formula adjustment (the “Pricing Formula”) is part of the pricing control strategy of China’s National Development and Reform Commission (“NDRC”) for the whole of China. The NDRC had announced in 2017 the guiding principle that the difference between the natural gas selling price and the natural gas purchasing price and other qualified indirect costs for distribution should not exceed 5% initially, or 4% after a transition period of three years. The Development and Reform Commissions at the local level have gradually introduced specific regulations in line with such guiding principle. The natural gas market operators in the PRC have adjusted their strategies in the past years in anticipation of the specific pricing changes in their jurisdictions.
The Pricing Formula in determining the New Gas Selling Price is based on the following formula:
Gas Selling Price = Gas Purchasing Price + Gas Distribution Price
The New Gas Selling Price applicable to the Group in Sanya for the distribution of gas to our customers will negatively impact the Group’s gross profit from its Sanya natural gas distribution business segment. The SYDRC recognizes that gas purchasing prices may fluctuate on the supply side, so it allows the Group to make price adjustments for the distribution of gas to our commercial customers according to the average gas purchasing price of the Group on a bi-annual basis.
“The SYDRC’s decision is no surprise to us. The NDRC has introduced the gas price regulating guiding principles in China since late 2017, although adjustments have been slow to date. We have prepared for this by making an effort to control our gas business operating costs, frequently communicating with the SYDRC, and investing in our alternative new energy business to offset revenue growth limitation caused by potential regulated gas price adjustments like this”, CEO and Chair of the Board Ann Lin said, “We will continue to maintain our gas distribution business sound and safe, but will have more focus on our new energy projects, which will be our high growth business segments in the future.”
About CF Energy Corp. (Previously known as: Changfeng Energy Inc.)
CF Energy Corp. is a Canadian public company currently traded on the Toronto Venture Exchange (“TSX-V”) under the stock symbol “CFY”. It is an integrated energy provider and natural gas distribution company (or natural gas utility) in the PRC. CF Energy strives to combine leading clean energy technology with natural gas usage to provide sustainable energy to its customer base in the PRC. In 2009, CF Energy was recognized as being one of China’s the Top Ten Most Influential Brands in the Natural Gas Industry and in 2019, ranked amongst the 2019 TSX Venture 50 top performers on the TSXV for the 2018 year.
CONTACT INFORMATION
Corporate Investment Relations
investor.relations@changfengenergy.cn
Charles Wang
Executive Assistant to CEO & Chair of the Board
Zhaoyu.wang@changfengenergy.cn
Frederick Wong
Director of the Board
fred.wong@changfengenergy.cn
Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking statements and forward-looking information (collectively, “Forward-Looking Statements”). All statements, other than statements of historical fact, included or incorporated by reference in this document are Forward-Looking Statements, including statements regarding activities, events or developments that the Company expects or anticipates may occur in the future. These Forward-Looking Statements can be identified by the use of forward-looking words such as “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe” or “continue” or similar words or the negative thereof. No assurance can be given that the plans, intentions or expectations or assumptions upon which these Forward-Looking Statements are based will prove to be correct and such Forward-Looking Statements included in this news release should not be unduly relied upon. Forward-Looking Statements included in this news release include, but are not limited to statements regarding: the Pricing Formula adjustment as well as the impact on the gross profit of the Group’s its Sanya natural gas distribution business segment.
Although management believes that the expectations represented in such Forward-Looking Statements are reasonable, there can be no assurance that such expectations will prove to be correct. Such Forward-Looking Statements are not a guarantee of performance and involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such Forward-Looking Statements. These factors include, without limitation, no significant and continuing adverse changes in general economic conditions or conditions in the financial markets. Readers are cautioned that all Forward-Looking Statements involve risks and uncertainties, including those risks and uncertainties detailed in the Company’s filings with applicable Canadian securities regulatory authorities, copies of which are available at www.sedar.com. The Company urges readers to carefully consider those factors.
The Forward-Looking Statements included in this news release are made as of the date of this document and the Company disclaims any intention or obligation to update or revise any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. This news release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein and accordingly undue reliance should not be put on such.
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