Drilling Update

Green Dragon Gas Ltd
03 March 2008


3 March 2007

                              GREEN DRAGON GAS LTD.
                       ('Green Dragon' or the 'Company')

           SUCCESSFUL 2007 DRILLING PROGRAM AND GAS SALE MARKET TESTS

Green Dragon Gas Ltd (AIM: GDG), the Chinese coal bed methane ('CBM') business,
today announces the conclusion of its 2007 drilling programme with 88 wells
having been successfully drilled across its five blocks. The wells have been
drilled by the Company in conjunction with its joint-venture partner, China
United Coal Bed Methane Corporation Limited ('CUCBM').

BLOCK        WELLS DRILLED    TOTAL     WELLS ON PRODUCTION/    TARGET WELLS
                 2007         WELLS          DE-WATERING         ONLINE 2Q08
                             TO DATE

SHIZHUANG S       79           120               24                  42

SHIZHUANG N        2             6                4                   4

QINYUAN            1             7                5                   5

FENGCHENG          5            15                8                  13

PANXIE EAST        1             6                0                   6

TOTAL WELLS       88           154               41                  70


The target coal seams were identical to those drilled in 2006 and the 2007
drilling programme further extended the pilot wells drilled last year in
essentially the same area within the blocks. Significantly, some wells in
Shizhuang South and Fengcheng were fracture stimulated and showed positive
results.

Shizhuang South is the Company's most advanced block with an operational power
plant and compressor station in place being the most significant infrastructure
required to initiate gas sales. The wells drilled in the last two years have
been open hole completions and the de-watering wells have begun to show
favourable results with increased gas volumes being produced.

In preparation for anticipated gas sales later this year from Shizhuang South,
the Company conducted marketing tests from its Zao Yuan hub during the fourth
quarter of 2007. Compressed gas, transported by truck, was sold to CNG stations
in Zhengzhou, Henan demonstrating the viability and feasibility of supplying
this lucrative market.

CUCBM has drilled wells on the Chengzhuang section of the Shizhuang Block under
a farm-out agreement and these are expected to be fracture stimulated this year,
concurrent with the related infrastructure being brought online.

The Overall Development Program ('ODP') for Shizhuang South continues to
progress. The Company and its partner, CUCBM, are concluding the required
Environmental Impact Study in accordance with the National Development and
Reform Commission ('NDRC') directives. The Company expects NDRC approval later
this year.

The Company's Chairman and CEO, Mr. Randeep S. Grewal, commented:

'2007 has been another record year for the Company's continued progress and
successful plan execution, with the drilling plan concluding with no surprises,
facilitated by our dedicated employees working closely with the contracted
vendors. Fracture simulations in Fengcheng proved to be viable and thus will be
incorporated into the standard programme for this block, while the other blocks
continue to show positive de-watering results without the need for such
stimulations. Harsh weather impeded the field personnel being able to progress
wells to production following completion of the drilling programme. However, we
expect most of the required infrastructure to be in place within the next
quarter and the de-watering to be initiated from these wells.'

'In accordance with our vertically integrated strategy, the Company undertook
test sales of compressed gas, delivering directly to CNG stations in the
lucrative Zhengzhou transportation market, via trucks, from our Zao Yuan hub.
The Company is now well placed to launch gas sales in the year ahead.'

'The Company intends to make 2008 another record growth year throughout the
Company's operations in Anhui, Beijing, Jiangxi, Henan and Shanxi regions. We
hope to be able to provide further updates on the 2008 drilling programme and
gas sales in due course.'

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

Randeep S. Grewal / Betty Cheung, Green Dragon Gas,                 [phone]

Tim Thompson / Nick Melson, Investor Relations, Buchanan,          [phone]

Dr Azhic Basirov / David Jones, Nomad & Broker, Smith &Williamson, [phone]



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