Interim Results

Green Dragon Gas Ltd
29 September 2006

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

               Interim results for the period ended 30 June 2006

Green Dragon Gas Ltd (AIM:GDG), the Chinese coal bed methane business, today
announces its interim results for the period ended 30 June 2006.

Highlights:


   • Successful flotation onto AIM in August 2006, raising US$25.1 million in
    equity finance through a share placing with institutional shareholders-
    assuring financial resources required for exploration and production
    programme.


   • Portfolio consists of interests in 5 coal bed methane production sharing
    contracts ('PCSs'), covering a total of approximately 1.6 million acres in
    China.


   • Estimated gross Gas In Place of approximately 16.6 tcf*


   • Loss of £709,000 for the period to 30 June 2006, reflecting the
    pre-revenue exploration phase of the Company


   • Drilling contracts signed with Shandong Coal Geology Bureau ('SCGB') and
    Henan Yuzhong Geological Prospecting Engineering ('HYGP') to drill vertical
    wells in four of the Company's five blocks


   • Agreement executed with PetroChina Planning & Engineering Ltd ('CPPEI')
    to conclude the Company's Shizhuang South Block Overall Development Program
    ('ODP') and submit it to Beijing in Q4 2006.


   • Additional key technical and engineering personnel have been hired to
    strengthen the Company's ability to perform and grow.


* Scott Pickford Competent Persons Report

Commenting on the results, Randeep Grewal, Chairman of Green Dragon Gas, said:

'The past six months have been very significant in the development of the
Company. I am happy to say that we are now in the position where progress is
being achieved in all aspects of the business: we have an excellent portfolio of
interests; we are well funded following the equity placing to execute our growth
plan through next year; we secured contracts with drilling companies to carry
out pilot drilling as part of the exploration and production programme; and we 
have in the PetroChina subsidiary a partner with huge expertise and local
knowledge to help us conclude the Shizhuang South Block ODP. I look forward to
reporting on Green Dragon's continued progress, moving from development to the
production of gas in the months to come.'

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

Randeep Grewal
Chairman and Chief Executive, Green Dragon Gas Ltd.
[phone]

Tim Thompson/ Mark Edwards/ Nick Melson
Buchanan Communications
+ 44 (0)20 7466 5000

Dr Azhic Basirov/ David Jones
Smith & Williamson Corporate Finance Limited
[phone]


Chairman's Statement

These are exciting times for the Company and its shareholders. In just over a
month since the Company was admitted to trading on AIM ('Admission'), the
management has progressed operations, building on the foundation established
prior to Admission.

The Company signed contracts in September to drill pilot wells in all five
blocks. Drilling operations are underway in Qinyuan (Shangxi province) and
Fengcheng (Jiangxi province). Spud dates for Panxie, Shizhuang North and
Shizhuang South are expected to be announced shortly. Additionally, agreements
have been executed with Petrochina Planning & Engineering Institute ('CPPEI') to
provide their expertise and local knowledge in compiling the Company's Shizhuang
South Block Overall Development Programme ('ODP') targeted for delivery to the
relevant authorities by the end of this year.

The Company has hired additonal technical staff, including experienced drilling
engineers, to support the increase in activities. It is anticipated that further
recruitment will take place as the operations grow.

These interim financial results reflect the period from 28 March 2006 to 30 June
2006. This period is pre-Admission and the Company's focus was on the
acquisition of substantial gas resources in China. The acquisition of Greco Gas
Limited, now a wholly owned subsidiary of the Company, has been reflected in
compliance with International Financial Reporting Standards ('IFRS'). The assets
and liabilities acquired have been recorded at their fair value in compliance
with IFRS 3.

On 17 August 2006, Green Dragon shares were admitted to trading on AIM, a market
of the London Stock Exchange. The Company issued 4,513,413 ordinary shares,
raising US$25.1 million before issuance costs. Following the fundraising in
August, the Company is well funded to execute its growth plan through the next
year.

I look forward to reporting on Green Dragon's continued progress, moving from
development to the production of gas in the months to come.

Randeep S. Grewal
Chairman and Chief Executive
28 September 2006

Consolidated Income Statement                                        Unaudited
                                                                     Period to
                                                                       30 June
                                                                          2006
                                                                        US$000
Revenue                                                                      -
Cost of sales                                                                -
                                                                     ---------
Gross profit                                                                 -

Depreciation                                                                 -
Administration expenses                                                   (558)
                                                                     ---------
Total operating costs                                                     (558)
                                                                     ---------

Loss on ordinary activities before interest                               (558)

Borrowing costs                                                           (152)

Loss on ordinary activities before taxation                               (710)

Taxation                                                                     1

Loss on ordinary activities after taxation and net loss for the
period                                                                    (709)
                                                                     ---------
Loss per share
Basic and diluted (US$)                                          6    (0.00787)
                                                                     ---------

Consolidated Balance Sheet                                           Unaudited
                                                                       30 June
                                                                          2006
                                                                        US$000
Assets

Non-current assets
Gas exploration and appraisal assets                                   447,968
                                                                     ---------
Total non-current assets                                               447,968

Current assets
Amounts receivable                                             8           260
Cash at bank and in hand                                                   521
                                                                     ---------
                                                                           781

Creditors: amounts falling due within one year                            (759)
                                                                     ---------
                                                                     ---------
Net current assets                                                          22
                                                                     ---------
Total assets less current liabilities                                  447,990

Creditors: amounts falling due after more than one year        9       (31,206)
Provisions for liabilities and charges                                  (1,244)
                                                                     ---------
Net assets                                                             415,540
                                                                     ---------

Capital and reserves
Called up share capital                                                      9
Share Premium                                                          416,240
Retained losses                                                           (709)
                                                                     ---------
                                                                       415,540
                                                                     ---------

                                                                     Unaudited
Consolidated Cash Flow Statement                                     Period to
                                                                       30 June
                                                                          2006
                                                                        US$000
Net cash flow from operating activities
Loss before tax for the period                                            (709)
Adjustments for:
Borrowing costs                                                            152
Increase in receivables                                                     (9)
Increase in payables                                                       483
Increase in provision for liabilities and charges                            3
Foreign exchange (gain) /loss                                              (28)
                                                                     ---------
                                                                          (108)
Net cash flow from investing activities
Deferred exploration expenditure                                          (118)
Cash held in subsidiary companies at the date of acquisition               132
                                                                     ---------
                                                                            14
Net cash flow from financing activities
Proceeds from loan notes                                                   615
                                                                     ---------
                                                                           615

Net increase in cash and cash equivalents                                  521
Cash and cash equivalents at 28 March 2006                                   -
                                                                     ---------
Cash and cash equivalents at 30 June 2006                                  521
                                                                     ---------

Significant non-cash transactions are as follows:

Investing activities

Equity consideration for the acquisition of Grecogas Ltd: see Note 11


Statement of Changes in Equity for the Group

For the period ended 30 June 2006                                       US$000

Balance at 28 March 2006                                                     -
Shares issued in the period                                            416,249
Losses after tax for the period                                           (709)
                                                                     ---------
Balance at 30 June 2006                                                415,540
                                                                     ---------

Notes to the interim financial statements

1  Accounting policies

Basis of presentation

Green Dragon Gas Ltd (the 'Company') is a company incorporated in Cayman 
Islands. The group financial statements consolidate those of the Company and 
its subsidiaries (together referred to as the 'Group').These financial 
statements have been prepared under the historical cost convention and in 
accordance with applicable International Financial Reporting Standards. The 
principal accounting policies have been applied consistently in these financial 
statements.

Basis of consolidation

The consolidated financial information incorporates the results of the Company
and its subsidiary undertakings (being entities in which the Company had
significant control) using the principles of acquisition accounting. The results
of subsidiaries are included from the date of acquisition.

Business combinations

During the period the Company acquired Grecogas Ltd. Grecogas Ltd and Green
Dragon Gas Ltd are under common ownership and control before and after the
transaction and as a transaction under common control not within the scope of
IFRS 3 'Business Combinations'. However the Directors have voluntarily complied
with IFRS and treated this as an acquisition. As a result the shares issued and
the assets and liabilities acquired have been recorded at their fair value.'

2   Segmental analysis

The Group operates in one business segment, the exploration for and production
of gas. The Group has interests in one geographical segment being China.

3   Taxation on profit from ordinary activities

The amount is related to a tax refund received by Greka Energy International
B.V. in the Netherlands for the period.

4   Loss per share

Loss per ordinary share has been calculated using the weighted average number of
shares in issue during the period 28 March 2006 to 30 June 2006. The weighted
average number of equity shares in issue for the period is 90,000,000.

Due to the losses arising in the company during the period the diluted loss per
share is considered to be the same as the basic loss per share.

5   Gas exploration and appraisal assets
                                                                        US$000
Cost
Balance at 28 March 2006                                                     -
Acquisitions through business combinations                             447,850
Capitalized costs                                                          118
                                                                     ---------
Balance at 30 June 2006                                                447,968
                                                                     ---------
Amortisation
Balance at 28 March 2006                                                     -
Amortisation for the period                                                  -
                                                                     ---------
Balance at 30 June 2006                                                      -
                                                                     ---------
Net book value
At 30 June 2006                                                        447,968
                                                                     ---------
6   Amounts receivable
                                                                        US$000

Deposits                                                                    48
Other debtors                                                              212
                                                                     ---------
Balance at 30 June 2006                                                    260
                                                                     ---------

7   Creditors: amount falling due after more than one year
                                                                        US$000

Notes payable                                                           18,164
Amount payable                                                          13,042
                                                                     ---------
Balance at 30 June 2006                                                 31,206
                                                                     ---------


During the period, Mr Randeep Grewal, CEO and Chairman of the Group, provided
Grecogas Ltd with US$615,000 advances in the form of loan note to fund
exploration work and administration expenses. Mr Randeep Grewal also provided
advances to Grecogas Ltd prior to the acquisition of Grecogas Ltd. The following
table summarises the loan notes covering advances by Mr Randeep Grewal.

                              Repayment              Amount
Date of loan note    Date               HK$                 Interest Rate
1 January 2004       1 January 2010            57,385,000   Hibor + 3%
1 January 2005       1 January 2011            21,140,800   Hibor + 3%
1 January 2006       1 January 2012            49,173,600   Hibor + 3%
30 June 2006         1 July 2012               13,208,700   Hibor + 3%

The minimum interest charge on the loan notes is 4.5%; the loan notes are
denominated in Hong Kong Dollars.

The amount payable represents amount payable to CUCBM, who are a party to the
production sharing contracts, represents exploration costs incurred on the
properties. These amounts are only payables from revenue on production from the
Shizhuang South Property in China exclusively.

8   Share Capital
                                        Authorised         Allotted, called up
                                                             and fully paid
                                            Number        Number        US$000
Ordinary Shares of $0.0001 each        500,000,000    90,000,000             9
                                       -----------    ----------     ---------
                                       500,000,000    90,000,000             9
                                       -----------    ----------     ---------

The Company was incorporated on 28 March 2006 with 1 Ordinary Share of US$1
issued. On 8 April 2006, 8,999 Ordinary Shares were issued to acquire Alexi
Holdings Limited. On 6 June 2006, each Ordinary Share of US$1 was converted into
10,000 Ordinary Shares of US$0.0001 each.

9   Reconciliation of net cash flow to movement in net debt
                                                                        US$000

Net debt as at 28 March 2006                                                 -
Increase in cash in the period                                             521
Loan notes acquired through business combination                       (17,574)
Loan notes advance in the period                                          (615)
Non cash advance by CUCBM acquired through business combination        (13,042)
Foreign exchange gain                                                       25
                                                                     ---------
Net debt as at 30 June 2006                                            (30,685)
                                                                     ---------

10  Analysis of net debt
                                As at    Cash flow       Non cash        As at
                             28 March                   movements      30 June
                                 2006                                     2006
                               US$000       US$000         US$000       US$000

Cash in hand and at bank            -          521              -          521
Loan Notes                          -         (615)       (17,549)     (18,164)
Long Term Liabilities               -                     (13,042)     (13,042)
                            ---------      ---------    ---------      -------
Net debt                            -          (94)       (30,591)     (30,685)
                            ---------      ---------    ---------      -------

11  Acquisition of Subsidiaries

On 8 April 2006, Mr Randeep Grewal, being the sole shareholder of the Company
and of Alexi Holdings Limited, transferred 100% of issued shares in the capital
of Alexi Holdings Limited, the holding company of Grecogas Ltd, Greka Energy
International B.V and certain other companies, to the Company in consideration
for the allotment of 8,999 ordinary shares of US$1 each in the capital of the
Company. On 28 April 2006, Grecogas Ltd distributed 100% of the issued shares in
the capital of Greka Energy (HK) Ltd to Alexi Holdings Ltd. On 2 May 2006, Alexi
Holdings Ltd distributed 100% of the issued shares in the capital of Grecogas
Limited to the Company and on 3 May 2006 the Company distributed 100% of the
issued shares in the capital of Alexi Holdings Ltd to Mr Randeep Grewal.

The resulting Group share ownership following the above transactions is that: Mr
Randeep Grewal holds 100% of the issued shares in the Company which in turn
holds 100% of the issued shares in Grecogas Ltd which in turn owns 100% of the
issued shares in Greka Energy International B.V. The Company and Grecogas Ltd
are holding companies with no trading activities.

Grecogas Ltd and Green Dragon Gas Ltd are under common ownership and control
before and after the transaction and as a transaction under common control not
within the scope of IFRS 3 'Business Combinations'. However the Directors have
voluntarily complied with IFRS and treated this as an acquisition. As a result
the shares issued and the assets and liabilities acquired have been recorded at
their fair value.

The details of the fair value of identifiable assets and liabilities acquired
are as follow:
                                       Book Value      Fair Value   Fair Value
                                                      Adjustments
                                           US$000          US$000       US$000
Acquiree's net assets at the acquisition
date:
Gas exploration and appraisal assets       29,684         418,166      447,850
Trade and other receivables                   250               -          250
Cash and cash equivalents                     132               -          132
Interest loan notes and borrowings        (17,574)              -      (17,574)
Long term liabilities                     (13,042)              -      (13,042)
Other liabilities                          (1,367)              -       (1,367)
                                        ---------       ---------    ---------
Net identifiable assets and liabilities    (1,917)        418,166      416,249
                                        ---------       ---------    ---------

No identifiable goodwill has arisen in respect of this transaction. The surplus
of value of the consideration over the other separable net assets and
liabilities of the acquired group has been attributed to the gas exploration and
appraisal assets and represents the estimated recoverable gas reserves within
the Grecogas Ltd group as at the date of acquisition. There was no cash element
in the consideration.

12  Post balance sheet events

On 17 August 2006, the Company listed its shares on AIM, a market of the London
Stock Exchange, and 4,513,413 Ordinary shares were issued raising US$25.1
million before issuance costs.

13  Copies of the interim statement

Copies of the interim statement will be available from the office of the 
Company's nominated adviser and broker, Smith & Williamson Corporate Finance 
Limited, 25 Moorgate, London EC2R 6AY and from the Company's 
website: www.greendragongas.com.




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