Update & Adviser Appointment

Green Dragon Gas Ltd
29 November 2006


29 November 2006

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

       TWELVE RIGS DRILLING SUCCESSFULLY AND ADDITIONAL ADVISER APPOINTED

Green Dragon Gas Ltd (AIM:GDG), the Chinese coal bed methane business, today
announces the continued drilling successes of its coal bed methane ('CBM')
production wells with twelve rigs concurrently spread over its five blocks in
Central China. Ten wells have been successfully drilled through the targeted
coal seams so far and an additional twenty eight wells are expected to be
drilled in this phase.

Shizhuang South, Shanxi ('GSS') covers an area of 455 sqkm, 2,640 BCF of gas in
place of which 48.5 BCF is classified as P1 and 413.3 BCF is classified as P2
reserves. (Source: Scott Pickford Competent Person's Report - August 2006) It is
the most advanced of the Company's blocks and has produced 16,158,061 cubic
meters of gas to date from its pilot vertical wells, drilled several years ago.
Three drilling rigs are currently drilling vertical wells identified as GSS004,
GSS012 and GSS015 and an additional three wells will be drilled thereafter. Four
wells have been completed with the target coal seam No.3 successfully drilled in
each of the wells, confirming approximately 6m thickness in each. Newly
completed wells GSS001 and GSS002 were put on dewatering production and showed
casing pressure of 0.16 and 0.13 mpa, respectively, within days of being placed
on dewatering production. All wells in this drilling phase are being connected
to the Company's existing gas gathering system and the Zayoan compressor station
for gas sale during and after dewatering.

Under a farmout agreement signed by the Company with China United Coal Bed
Methane ('CUCBM') for a 67 sqkm section of the GSS block, the two pinnate
horizontal wells continue to successfully dewater and produce gas. Well DS01-1
was drilled into coal seam No. 3 for a total displacement of 5,506 metres and
has current gas production of over 7,500 cubic metres per day and water
production of 20 cubic metres per day. Well DS02-1 was drilled into coal seam
No. 15 for a total displacement of 1,198 metres into the coal seam and has water
production of 17 cubic metres per day as it is dewatering. Both wells are pilot
test wells for pinnate horizontal well cost efficiency and performance testing
and have a cumulative gas and water production of 1,360,732 cubic metres and
7,900 cubic metres, respectively.

Shizhuang North, Shanxi ('GSN') covers an area of 375 sq km, 2,660 BCF of gas in
place of which 648.2 BCF in P3 reserves is contiguous to GSS with similar
geological conditions. (Source: Scott Pickford Competent Person's Report -
August 2006). Of the planned five well pilot programme, well GSN001 has been
drilled successfully confirming target coal seam No. 3 of 4.6 metres. Two rigs
are currently being deployed to drill wells GSN003 and GSN004 concurrently, and
are expected to be deployed to drill an additional two wells thereafter.

Qinyuan, Shanxi ('GQY') covers an area of 3,665 sq km, 8,580 BCF of gas in place
is the largest block by acreage. (Source: Scott Pickford Competent Person's
Report - August 2006) Three rigs are currently drilling wells GQY008, GQY009 and
GQY010 concurrently while wells GQY001 and GQY006 have been drilled already. The
Company is currently drilling ten CBM production wells and has concluded its
engineering works on an additional twenty exploratory wells throughout the block
in accordance with its current plan. The Company expects to award drilling
contracts for the additional twenty exploratory well programme prior to year
end.

Fengcheng, Jianxi ('GFC') covers an area of 1,541 sq km, 1,566 BCF of gas in
place with 536 BCF in P2 reserves. (Source: Scott Pickford Competent Person's
Report - August 2006) Wells GFC002 and GFC003 have successfully drilled through
coal seam B4 while two rigs are currently being deployed to drill wells GFC004
and GFC008 concurrently. The Company is drilling eight wells in the current
drilling programme to complement the two wells drilled last year which will
consolidate into a central gathering system targeted for construction next year.

Panxie, Anhui ('GPX') covers an area of 584 sq km, 1,110 BCF of gas in place
(Source: Scott Pickford Competent Person's Report - August 2006). Two rigs are
concurrently being deployed to drill wells GPX002 and GPX005 while well GPX001
has been drilled successfully with the target coal seam No. 13 confirmed to be
just over 700 metres deep with a 3 metre thickness. The Company has engineered a
five well pilot to be completed by the current year end which will form the
basis of the drilling programme for 2007.

The Company further announces that the Board of Directors approved $6.50 a share
as the exercise price for its employee and directors share option scheme as
reserved for in the Company's admission document. The share option price is 8%
above the closing price on 27 November 2006 and 17% above the price on admission
to trading on AIM. The Company intends to adopt the share option scheme which
will require several years of a vesting period and provide these options to
directors and key employees.

The Company is also pleased to announce that it has appointed Fox-Davies Capital
Limited as a financial adviser and co-broker with immediate effect. Smith
Williamson Corporate Finance Limited continues as the Company's nominated
adviser, financial adviser and broker.

Company Chairman and CEO, Mr. Randeep S. Grewal, commented, 'The success of our
drilling programme to date confirms the capability and skill of our China based
management team. The team has successfully deployed and is managing twelve rigs
in five separate basins over a very short period of time demonstrating the
capacity to expand and grow to meet the Company's objectives.

'Guanxi, dedication and team work are key attributes to this success for which I
commend our employees working through the grueling Shanxi winter weather in an
effort to conclude the drilling program on schedule. Each of our wells drilled
have met or exceeded our expectations.

'Considerable productive progress has been made on the Company's strategic
business plan to be vertically integrated.'

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

Randeep S. Grewal
Chairman and Chief Executive
Betty Cheung
Green Dragon Gas Ltd.
[phone]

Tim Thompson / Nick Melson
Buchanan Communications
020 7466 5000

Dr Azhic Basirov/ David Jones
Smith & Williamson Corporate Finance Limited
020 7131 4000

Daniel Fox-Davies
Fox-Davies Capital Limited
020 7936 5200


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