Brightoil Petroleum Holdings Ltd., China's third-largest marine bunkering company, has achieved breath-taking revenue growth in the last three years and now holds a 25 percent market share in and around such strategic ports as Shanghai and Singapore.
How it achieved such quick success reflects a combination of being in the right place at the right time and making a well-timed acquisition.
In 2008 the company reported revenues hovering just above $5 million. By August of that year, Brightoil signed an agreement with China National Petroleum Corp., to help develop China's first 780 billion cubic feet shale natural gas play -- and the company's share price exploded to roughly HK$15 up from roughly HK$1.
"The acquisition (of the natural gas project) not only further enhances our market presence in the oil and gas development and production business, but it also marks a significant step forward in our drive to become a leading integrated energy company," Sit Kwong Lam, Chairman and CEO of Brightoil, said in announcing the joint venture.
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Money gushed in by the millions and by the end of 2009, annual revenue topped $700 million. By 2010, revenue jumped again, this time to $1.7 billion. By the end of 2011, the company posted more than $5 billion in revenue, bolstered by $4.6 billion in support funds from the China Development Bank, according to the company's earnings and director's reports.
The company's operating costs are unreported on its earnings reports and the company does not appear in Hong Kong Securities and Futures Commission or China's Securities Regulation Commission filings. The company is headquartered in Shenzhen, but registered in Bermuda.
So meteoric was Brightoil's revenue growth that by 2011, Sit had became the latest member of China's billionaire club with a personal fortune of $2.8 billion.
"I believe that the acquisition (of the gas project) will add a new dimension to the growth of our business and will create value to our shareholders," said Sit, who is also the chairman of two other companies, a member of China's National Committee of the Chinese People's Political Consultative Conference and a trustee of Nanjing University.
Despite its foray into the natural gas industry, Brightoil remains primarily a ship-to-ship supplier, and prioritizes oil and natural gas transportation as well as storage.
That is because China's demand for petroleum and petroleum-related service like marine bunkering and storage continues to expand dramatically.
"The steady increase in demand, China's sustained economic development (and) China's offshore oil market has become (a) relatively stable plate," the China Securities Journal said of Brightoil in a 2009 report. "Moreover, with the introduction of central government policy of expanding domestic demand, domestic consumption and infrastructure will drive China's economic growth, and stimulate the import trade and domestic transport further increasing the demand for marine fuel. Therefore, in the long run, [the] marine bunkering business still has a very good development momentum."
The company as of Jan. 11, became Singapore's second biggest bunker suplier, up from 34th in 2010, reported Seatrade-Asia.com.
Feeding off of its more than 100 percent back-to-back sales increases from 2008 through 2011, the company is constructing a 14 million-barrel oil storage facility and a terminal with up to 15 1,000- to 300,000-DWT class berths on Waidiao Island, Zhoushan City on the delta of the Yangtze River.
Phase two will bring that total up to 35 million barrels.
The company is also constructing a similar facility in Bohai Bay to the north of the country, which will have 75.4 million barrels of oil storage.
Yet the company seems poised on the edge of solvency as its debts hover dangerously close to the value of its assets. Growth also seems to be slowing down as well, and in the past several months, the company's stock price is on the rapid decline.
The company's gross profit margin fell by 5 percent between 2010 and 2011, and in that time the company's debt liabilities surged by 307 percent.
By press time, the company finished on a loss on the Hong Hong Stock Exchange. Its stock fell by one cent to HK$1.52.