Audited Reserves Update

RNS Number : 6654F

Green Dragon Gas Ltd

24 February 2015

 



24 February 2015

GREEN DRAGON GAS LTD

("Green Dragon" or the "Company")

Audited Reserves Update

Significant increase in Reserve value: 1P to US$ 1.5bn and 2P to US$ 4.3bn

Green Dragon Gas, the leading independent gas producer with operations in China, is pleased to announce an increase in its estimated reserves as at 31 December 2014, as provided by independent reserve engineers Netherland Sewell & Associates, Inc ("NSAI").

Highlights:      

·      Net 1P reserves increase 17% to 147.8 Bcf (2013: 126.2 Bcf); 1P NPV 10* increase 63% to US$1.46bn (2013: US$ 897.9m)

·      Net 2P reserves increase 12% to 426.8 Bcf (2013: 382.3 Bcf); 2P NPV 10 increase 53% to US$4.3bn (2013: US$ 2.8bn)

·      Net 3P reserves decrease 4% to 2,289.9 Bcf (2013: 2,381.5 Bcf); 3P NPV 10 increase 31% to US$21.18bn (2013: US$ 16.12bn)

·      9^thconsecutive upgrade in 1P and 2P Reserve volumes and valuations**

*Net present value of future revenues, at a discount rate of 10%

** Based on 9 consecutive Audited Reserve Updates released by Green Dragon Gas since 2006

Randeep S. Grewal, Chairman and Founder of Green Dragon Gas, commented:

"I am pleased to be able to announce the ninth consecutive reserve upgrade in as many years. In addition to a substantial increase in our 1P and 2P numbers, further confirming the tremendous potential of our assets, the company has also delivered a significant increase in the valuation of our reserves, with the 1P valuation up 63% and 2P, respectively, 53%. This reflects our unique position in the sector, benefitting from strong, stable gas pricing de-coupled from Brent, in what is one of the fastest growing gas markets in the world. Our strategy is to continue to build on this platform, increasing our reserves and growing our production through an active drilling programme, additional partner investment at our operations, and a 2015 focussed drive to connect wells to infrastructure."

Reserves Report Overview

Green Dragon Gas has total Original Gas In Place of 25.3Tcf on all blocks. The estimates and evaluation of the reserves and resources contained in this announcement were prepared by independent reserve engineers, NSAI.

The report includes all wells (1938) operated by Green Dragon, CNOOC and Petrochina across all blocks in which the Company has equity interests

Prices at year end were USD14.2/Mcf at the production block, inclusive of Government subsidies.

Reserves Report Summary

PSC (Block)	FY 2014 (Net Bcf)			April 2014 (Net Bcf)			FY 2013 (Net Bcf)
	1P	2P	3P	1P	2P	3P	1P	2P	3P
Shizhuang S (GSS)	148	400	1,344	125	351	1,383	126	353	1341
Fengcheng (GFC)		26.9	240		28.7	244		29.1	247
Shizhuang N (GSN)			706			791			794
Qinyuan (GQY) 1
Panxie East (GPX) 1
Baotian-Qingshan (GGZ) 1
TOTAL   2	148	427	2,290	125	379	2,418	126	382	2382

Summary of Reserves Valuation

PSC (Block) US$ mn	FY  2014  (Net Present Value 10%)			April 2014  (Net Present Value 10%)			FY 2013 (Net Present Value 10%)
	1P	2P	3P	1P	2P	3P	1P	2P	3P
Shizhuang S (GSS)	1,464	3,949	12,628	986	2,797	10,389	898	2524	8944
Fengcheng (GFC)		347	2,930		306	2,382		282	2152
Shizhuang N (GSN)			5,623			5,787			5028
Qinyuan (GQY) 1
Panxie East (GPX) 1
Baotian-Qingshan (GGZ)
TOTAL    2	1,464	4,296	21,181	986	3,102	18,558	898	2806	16,124

1.             There are no reserves for Qinyuan, Panxie East, or Baotian-Qingshan as of 31 December  2014

2.             Totals may not add due to rounding

The estimates in this announcement have been prepared in accordance with definitions and guidelines set forth in the 2007 Petroleum Resources Management System (PRMS) approved by the Society of Petroleum Engineers. The information in this announcement pertaining to Green Dragon's China reserves has been reviewed by Hassan Sindhu, the Company's Petroleum engineer with a Bachelor of Science degree from China University of Petroleum.

Ends

For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact:

Stephen Hill, VP Corporate Finance Green Dragon Gas	[phone]
David Simonson / Anca Spiridon Instinctif Partners - Investor Relations	[phone]
Tom Reid / Luke Spells Citigroup - Corporate Broker	[phone]
Sarah Wharry / Richard Redmayne Cantor Fitzgerald Europe - Corporate Broker	[phone]
Richard Crichton / Andy Crossley Peel Hunt -Corporate Broker	[phone]

About Green Dragon Gas

Green Dragon is an onshore China focused upstream (Exploration & Production) company, concentrating on its core asset value proposition over eight blocks, two of which are producing. The Company's blocks are located within six Production Sharing Contracts across four Provinces: Shanxi, Anhui, Jiangxi and Guizhou.

Definitions

1P	proved reserves
2P	proved plus probable reserves
3P	proved plus probable plus possible reserves
Bcf	billions of cubic feet
CBM	coal bed methane
NPV 10	net present value calculated using a 10% discount rate
Original Gas In Place	the total reserves contained in a reservoir. Only a proportion of the gas in place is recoverable (see definition of Reserves below)
PSC	production sharing contract
Reserves	reserves are those quantities of hydrocarbons anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions
Tcf	trillions of cubic feet

 

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