Execution of Further Supplementary Agreements

RNS Number : 6265S

Green Dragon Gas Ltd

04 October 2017

 

4th October 2017

GREEN DRAGON GAS LTD.

('Green Dragon' or the 'Company')

Green Dragon Executes Another Three Supplementary Agreements

Green Dragon Gas Ltd. (LSE: GDG), one of the largest independent companies involved in the production and sale of coal bed methane (CBM) gas in China, is pleased to announce its wholly owned subsidiary Greka Energy (International) B.V (Greka BV) has entered into three Supplementary Agreements with China United Coalbed Methane Corporation (CUCBM), a subsidiary of China National Offshore Oil Corporation (CNOOC), regarding three Production Sharing Contracts (PSC's) in China in the Shanxi, Anhui and Jiangxi regions.

These Supplementary Agreements confirms that exploration can commence across Fengcheng (GFC), Qinyuan (GQY) and Panxie East (GPX) Blocks. This complements the previous announcement released on 20^th September 2017, which highlighted a Memorandum of Understanding on five PSC's. Furthermore, it was announced that two of the Supplementary Agreements on GSS and GSN PSC's were concluded. These agreements together with GFC, GQY and GPX conclude all five Supplementary Agreements.

Both Greka BV and CUCBM's priority is to maximise the value within its exploration PSCs and these agreements ensures the priority objective is expedited. 

Highlights

·     The remaining three PSC's have been finalised

·     PSC exploration period extended to Q2 2019

·     Minimum work commitment for each PSC identified and confirmed

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

"These agreements conclude our five PSC's that have been in question over the past eight years, ensuring a committed close cooperation between CUCBM and Greka BV to unlock and monetise all our lucrative prolific gas Blocks. The detail within these Supplementary Agreements eliminates the ambiguity within the PSC's and provides a transparent and clear road map to conclude the exploration programme and progress to commerciality. 

"We are committed to working closely with our partner CUCBM and concluding material reserve progressions in all our prolific Blocks. Both parties have significant experience of the Chinese CBM commerciality potential. Pooling such knowledge is an optimum partnership with collective rewards.

"Another milestone on our path to monetisation has been concluded. We are committed to keeping the market informed and will provide an update on further progress in the near term."

Fengcheng Supplementary Agreement (GFC Block)

1.    Exploration period

The exploration period is extended to 14 April 2019

2.    Minimum work commitment

a)    Area (1227.7 km²): Greka BV is the operator with 60% participating interest and CUCBM 40%

i) Phase one: Until 9 May 2018

·    Five vertical wells, two pairs of horizontal wells, total footage of 10,200 metres and produce 2 wells

·    Total expenditure of US$7.07 million

ii) Phase two: 10 May 2018 to 14 April 2019

·    Drill one vertical well, one pair of horizontal wells, total footage of 3,600 metres and file reserve report for certification from nine wells   

·    Total expenditure of US$1.84 million

Qinyuan Supplementary Agreement (GQY Block)

1.   Exploration period

The exploration period is extended to 14 April 2019

2.   Minimum work commitment

a)    Area A (1694 km²): CUCBM is the operator with 90% participating interest and Greka BV 10%.

i)    Phase one: Until 8 September 2018

·    Perform 2D seismic work on 300 km, drill 14 vertical wells and (or) directional wells, footage of 17,000 metres, and produce five wells

·    Total expenditure of US$8.09 million

ii)    Phase two: 9 September 2018 to 14 April 2019

·     Drill three vertical wells and (or) directional wells, total footage of 3,900 metres, fracturing three wells and produce 19 wells

·     Total expenditure of US$2.54 million

b)    Area B (1694 km²): Greka BV is the operator with 60% participating interest and CUCBM 40%

i)    Phase one: Until 8 September 2018

·    Drill five vertical wells, four pairs of horizontal wells, total footage of 16,400 metres, and produce 10 wells

·    Total expenditure of US$9.12 million

ii)   Phase two: 9 September 2018 to 14 April 2019

·    Drill three vertical wells, one pair of horizontal wells, and total footage of 6,200 metres. File reserve report for certification with production from 15 wells

·    Total expenditure of US$2.54 million

Panxie East Supplementary Agreement (GPX Block)

1.   Exploration period

The exploration period is extended to 14 April 2019

2.   Minimum work commitment

a)   Area (590 km²): Greka BV is the operator with 60% participating interest and CUCBM 40%

i)    Phase one: Until 9 May 2018 

·    Drill two vertical wells and one pair of horizontal wells, total footage of 4,800 metres, and produce one well

·    Total expenditure of US$3.29 million

ii)   Phase two: 10 May 2018 to 14 April 2019

·    Drill 1 pair of horizontal wells with total footage of 2,600 metres. File reserve report for certification from production of four wells

·    Total expenditure of US$890,000

* Exchange rate used in conversion of RMB-USD is 6.50.

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

FTI Consulting

Edward Westropp / Kim Camilleri / Elizabeth Burnham / Ntobeko Chidavaenzi

Tel: [phone]

About Green Dragon Gas

Green Dragon Gas is a leading independent gas producer with operations in China and is listed on the main market of the London Stock Exchange (LSE: GDG). The Company has 559 Bcf of 2P reserves and 2,386 Bcf of 3P reserves across eight production blocks covering over 7,566 km² of license area in the Shanxi, Jiangxi, Anhui and Guizhou provinces. It holds six Production Sharing Agreements with strong, highly capitalised Chinese partners including CUCBM (CNOOC), CNPC and PetroChina, and has infrastructure in place to support multiple routes to monetise gas production.

 

END

 

 

AGRXXLLBDBFZFBL