Greka Shizhuang South Block Update

RNS Number : 5389M

Green Dragon Gas Ltd

31 July 2017

 

31 July 2017

GREEN DRAGON GAS LTD.

("Green Dragon" or the "Company")

Greka Shizhuang South Block Update

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 that the China National Development and Reform Commission (NDRC) has approved a Project Code for the Overall Development Plan (ODP) on the Greka Shizhuang South Zaoyuan portion of the Main Block (GSS), concluding that the ODP does not require an approval process and only needs to be registered.

The Company has a 60% participating interest in this block with its 40% partner, China United Coalbed Methane Corp (CUCBM), a wholly owned subsidiary of China National Offshore Oil Corporation (CNOOC).

GSS Zaoyuan ODP highlights

-      Total investment of US$190 million and covers an area of 50.7 km² of the total 388 km² GSS Block (US$114 million net to Green Dragon)  

-      Drilling of an additional 42 vertical wells and 47 LiFaBriC wells by 2020 for an investment of c.US$82 million (US$49.2 million net to Green Dragon)

-      On completion of the development, production capacity will be 14 Bcf per year, two Gas Gathering Stations, 265 vertical and 91 LiFaBriC wells

-      To date, 223 vertical wells and 44 LiFaBriC wells have been drilled on the relevant 50.7 km² area in the GSS Block

-      GSS and Chenghuang (GCZ) Blocks were both specifically mentioned within China's 13^th Five-Year Plan as being critical to domestic production requirements

On 18 April 2017, the Company announced the ODP approval from the Consultation Center of China National Petroleum Corporation (CNPC) for its GCZ Block. Under the GCZ ODP, an additional 147 wells by yearend 2018 to the current 114 wells are to be drilled. The anticipated production capacity is 6 Bcf per year with an additional c.US$25 million net investment from the Company and the same amount from partner CNPC.

Randeep S. Grewal, Founder and Chairman of Green Dragon Gas commented: "This is a significant announcement, which highlights the quality of our asset base. The GSS Zaoyuan Block was granted ODP Project Code, which rapidly shortens the timeframe to execution as only registration is now required. Following this decision, the Company now has two ODP registration approvals, one each in our GCZ and GSS commercial gas production blocks.  

"Both of these approvals shall provide an expedited process to large-scale commercial gas production. While these two ODPs provide for a production capacity of 20 Bcf on these two commercially producing gas production blocks, the expected long-term production processing capacity for these blocks is forecasted to be 65 Bcf per year for which infrastructure is being built.

"This announcement demonstrates that we are continuing to achieve our stated objectives for 2017 as published in the Company's trading update on the 27 April 2017, and that government policy remains steadfast in its continuing support for CBM development and production in China."  

About Greka Shizhuang South Block (GSS Block)

The GSS Block is located in the Qinshui Basin with an area of 388 km². Gas in this area is imbedded in coal formations at average depths ranging from 600 meters to 900 meters. There are two major laterally continuous coal seams present throughout the GSS Block, namely coal seams #3 and #15.

Green Dragon is the operator of the Block with working interest between Green Dragon (60%) and CNOOC (40%).

The Company's audited CPR by NSAI Reserve Report of 31 December 2016 shows GSS Block has original gas in place of 3.2 Tcf. The block has 165 Bcf in net 1P gas reserves, 457 Bcf in net 2P gas reserves and 1.3 Tcf in net 3P gas reserves with Net Present Values of US$1.2 billion in 1P, US$3.3 billion in 2P and US$9.3 billion in 3P.

Additionally, the Company's audited CPR by NSAI Reserve Report of 31 December 2016 shows GCZ Block has original gas in place of 275 Bcf. The block has 14 Bcf in net 1P gas reserves, 29 Bcf in net 2P gas reserves and 51 Bcf in net 3P gas reserves with Net Present Values of US$116 million in 1P, US$232 million in 2P and US$376 million in 3P.

* Exchange rate used in conversion of RMB-USD is 6.90.

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]

Peel Hunt

Richard Crichton / Ross Allister

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

 

 

UPDLIFEEDEILVID