Interim Results

Green Dragon Gas Ltd
26 September 2007

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

Interim Results for the six months ended 30 June 2007

Green Dragon Gas Ltd (AIM: GDG), the Chinese coal bed methane business, today
announces its unaudited interim results for the six months ended 30 June 2007.

Highlights:


* Record drilling plan of 80 wells launched to complement the 69 wells
  across five diversified blocks successfully drilled in 2006


* Raised US$50million from an institution through the issue of a zero coupon 
  convertible note, providing funding for 2007 capital expenditure and the
  acquisition of Kesi

* Launched downstream distribution business in Beijing through the acquisition 
  of 49% of Kesi for US$27.1 million in cash


* Industry specialist, Netherland Sewell & Associates ('NSAI'), issued a 
  Competent Persons Report ('CPR') confirming 18 TCF of gas in place across the
  Company's five blocks

* 3P reserves of US$4.6 billion dollars


* Net assets of US$438 million, including cash of US$65 million, and a loss 
  after tax of US$1.5 million

Commenting on the results, Randeep S. Grewal, Chairman and Chief Executive of
Green Dragon, stated:

'In the year following the Company's admission to AIM, it has experienced
significant growth. The Company received an injection of approximately US$75
million through capital raised on admission and over the year which has provided
a strong balance sheet. This has facilitated the acquisition of a downstream
business in Beijing and allowed the Company to commence an ambitious drilling
programme comprising 80 wells across all five blocks.

'This growth has been made possible by the Green Dragon's skilled personnel
whose existing expertise have been complemented by specific training in CBM,
focusing on the Company's specific blocks and coal seams. I look forward to
keeping you updated on the progress of Green Dragon as we look to conclude our
current projects and prepare for future growth.'

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] 

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

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



Chairman's Statement

Following the successful conclusion of the 2006 drilling plan, in May 2007 Green
Dragon concluded a US$50 million fundraising through a zero coupon convertible
note.

The strengthened balance sheet positioned the Company to conclude the
acquisition of a 49 per cent. interest in Kesi Hengrun (Beijing) Technology Co,
Ltd ('Kesi'), a strategic downstream distribution business. The acquisition
resulted in Green Dragon becoming one of the few foreign companies participating
in Beijing city gas distribution being supplied by the CNPC pipeline. This
acquisition was in accordance with the Company's strategy of being a 'vertically
integrated clean gas supplier in China'.

With the capital on hand, the Company launched an ambitious drilling programme
of 80 wells across all five blocks. The operational team attained commitments
from 12 drilling contractors to drill the wells using 25 rigs. Wells in
Shizhuang South were spudded on 26 July 2007 and in Fengcheng on 3 August 2007,
while Qinyuan and Shizhuang North are now scheduled to spud on 26 September and
Panxie on 30 September.

The Company's operations personnel have demonstrated their ability to
successfully manage the growth to date and the team is expanding to sustain
Green Dragon's anticipated growth. As well as increasing headcount, the
operations team held a CBM training seminar in Beijing to expand on their
skills, focusing on the Company's coal seams across the blocks. The training
also included a field trip to Australia to see other companies' successful CBM
operations.

A Competent Persons Report from industry specialist, Netherland Sewell &
Associates ('NSAI'), certified gas-in-place of 18 trillion cubic feet (509
billion cubic meters) in the Company's five blocks, with a 3P valuation of
US$4.6 billion for the 2 TCF net reserves. Resources of two of the five blocks,
Qinyuan and Panxie, were characterised as Prospective Resources and thus provide
incremental resource growth potential. The continued drilling programme this
year, coupled with the dewatering of the coal seams from the currently producing
wells, ought to provide a reserve progression across the blocks.

There has been a significant increase in companies participating in CBM projects
throughout China this year. It has become well established that the CBM is a
viable resource for the much needed energy to fuel China's continued growth. The
recent abundance of the new entrants validates Green Dragon's early entry in to
this potentially lucrative market. While many challenges have been addressed
over the years, more will arise as the industry evolves. I am pleased to lead a
team that has a demonstrated track record of sustaining the Company's growth,
steering it through such evolutions.

I look forward to providing shareholders with timely updates on the Company's
continued growth.

Randeep S. Grewal
Chairman and Chief Executive
26 September 2007


                                                       Unaudited       Unaudited
Condensed Consolidated Income Statement              6 months to       Period to
For the six months ended 30 June 2007                    30 June         30 June
                                                            2007            2006
                                                          US$000          US$000

Revenue                                                      -               -
Cost of sales                                                -               -
                                                       ---------       ---------
Gross profit                                                 -               -

Administrative expenses                                 (1,133)           (558)
Investment revenues                                        611               -
Finance costs                                           (1,050)           (152)
                                                       ---------       ---------
Loss before taxation                                    (1,572)           (710)
Taxation                                                    79               1
                                                       ---------       ---------
Net loss for the period                                 (1,493)           (709)
                                                       ---------       ---------

Loss per share Basic ($)                               (0.01521)       (0.00787)
                                                       ---------       ---------
Diluted($)                                                   N/A             N/A
                                                       ---------       ---------
Dividend per share                                           Nil             Nil
                                                       ---------       ---------

All amounts above relate to continued operations.

Condensed Consolidated Balance Sheet            Unaudited              Audited
30 June 2007                                           At                   At 
                                                  30 June          31 December      
                                                     2007                 2006
                                                   US$000               US$000
Assets
Non-current assets
Property, plant and equipment                         267                   83
Gas exploration and appraisal assets              595,878              592,365
Unlisted investment                                27,122                    -
Deferred tax assets                                   384                  296
                                                  -------             --------
Total non-current assets                          623,651              592,744
                                                  -------             --------
Current assets
Trade and other receivables                           489                1,686
Cash and cash equivalents                          65,021               19,031
                                                  -------             --------
Total current assets                               65,510               20,717
                                                  -------             --------
Total Assets                                      689,161              613,461
                                                  -------             --------
Liabilities
Current liabilities
Trade and other payables                           29,886                3,986
                                                  -------             --------
Total current liabilities                          29,886                3,986
                                                  -------             --------
Non-current liabilities
Convertible notes                                  46,739                    -
Loan notes due to shareholder                      20,296               19,875
Deferred tax liability                            139,225              139,225
Other financial liabilities                        14,149               13,779
                                                  -------             --------
Total non-current liabilities                     220,409              172,879
                                                  -------             --------
Total liabilities                                 250,295              176,865
                                                  -------             --------
NET ASSETS                                        438,866              436,596
                                                  -------             --------
Capital and reserves attributable 
to equity holders of the company
Share capital                                           9                    9
Share Premium                                     440,737              440,737
Convertible debt option reserve                     3,794                    -
Foreign exchange reserve                             (76)                 (45)
Accumulated losses                                (5,598)              (4,105)
                                                 --------             --------
TOTAL EQUITY                                      438,866              436,596
                                                 --------             --------

Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2007

                                       Foreign Convertible  
                   Share      Share   exchange Debt option  Accumulated
                 capital    premium    reserve     reserve       Losses   Total
                  US$000     US$000     US$000      US$000       US$000   US$000

Shares                 -          -          -           -            -        -
allotted on date of
incorporation

Shares issued
on purchase of
100% interest
in Alexi Holdings
Limited on 8           9    415,769                      -            -  415,778
April 2006

Loss for the
period                 -          -          -           -         (709)   (709)
                 -------    -------    -------     -------      -------  -------
Balance at 30
June 2006              9    415,769          -           -         (709) 415,069
                 -------    -------    -------     -------      -------  -------
Share
placement on
admission to
London AIM
Market                 -     25,094          -           -            -   25,094

Share issue
costs                  -       (126)         -           -            -    (126)

Foreign exchange on
translation
of foreign             -                   (45)          -            -     (45)
operations

Loss for the
period                 -          -          -           -       (3,396) (3,396)
                 -------    -------    -------     -------      -------  -------
Balance at             9    440,737        (45)          -       (4,105) 436,596
31 December 2007
                 -------    -------    -------     -------      -------  -------
Shares issued
pursuant to
agreements to
acquire 49%
equity interest in
Kesi Hengrun
(Beijing) Technology
Co, Ltd                  -   24,875          -           -            -   24,875

Issue of
$50,000,000
notes with
convertible
options on 1
June 2007              -          -          -       3,794            -    3,794

Shares
repurchased
and cancelled
on 29 June 2007        -    (24,875)         -           -            - (24,875)
Foreign exchange on
translation
of foreign             -          -        (31)          -            -     (31)
operations

Loss for the
period                 -          -          -           -       (1,493) (1,493)
                 -------    -------    -------     -------      -------  -------
Balance at 30
June 2007              9    440,737        (76)      3,794       (5,598) 438,866
                 -------   -------     -------     -------      -------  -------

                                                          Unaudited    Unaudited
Condensed Consolidated Cash Flow Statement                Period to    Period to
For the six months ended 30 June 2007                       30 June      30 June
                                                               2007         2006
                                                             US$000       US$000
Cash flow from operating activities
Loss for the period                                        (1,493)        (709)
Adjustments for:
Tax credit                                                    (79)          (1)
Finance costs                                               1,050          152
Finance income                                               (611)           -
                                                        ---------     --------
Operating loss before changes in working capital and
provisions                                                 (1,133)        (558)
Increase in receivables                                        (9)          (9)
Increase in payables                                           90          484
Increase in provision for liabilities and charges               3            3
                                                        ---------    ---------
Net cash generated by operating activities                 (1,049)         (80)
                                                        ---------    ---------
Investing activities
Payments for exploration activities                        (2,751)        (118)
Payments for Property, plant and equipment                   (181)           -
Cash held in subsidiary companies at the date of
acquisition                                                     -          132
Interest received                                             611            -
                                                        ---------    ---------
Net cash flow from investing activities                    (2,321)          14
                                                        ---------    ---------
Financing activities
Proceeds from loan notes                                        -          615
Proceeds from convertible notes                            50,000            -
                                                        ---------    ---------
Net cash flow from financing activities                    50,000          615
                                                        ---------    ---------

Increase in cash                                           46,630          549
Cash and cash equivalents at the beginning of the
period                                                     19,031            -
Effect of changes in foreign exchange                        (640)         (28)
                                                        ---------    ---------
Cash and cash equivalents at the end of the period         65,021          521
                                                        ---------    ---------

Notes to Condensed Interim Financial Statements

1  Accounting policies

Basis of presentation

The interim financial information has been prepared using policies based on
International Financial Reporting Standards (IFRS and IFRIC interpretations)
issued by the International Accounting Standards Board (ISAB). These accounts
have not been audited The financial information has been prepared using the
accounting policies as applied in the Group's statutory financial statements for
the year ended 31 December 2006.

The financial information for the period 1 January 2007 to 30 June 2007 is
unaudited. In the opinion of the Directors, the financial information for the
period fairly presents the financial position and results from operations and
cash flows for the period, and conforms with generally accepted accounting
principles consistently applied. The accounts incorporate comparative figures
for the interim period 28 March 2006 to 30 June 2006.

2  Loss per share

Loss per ordinary share has been calculated using the weighted average number of
shares in issue during the six month period to 30 June 2007 and from 28 March
2006 to 30 June 2006. The weighted average number of equity shares in issue for
the periods are 98,137,835 and 90,000,000 respectively.

The diluted loss per share for both periods ended was not presented as the
convertible notes outstanding would result in a decrease in loss per share.

3  Gas exploration and appraisal assets
                                               Unaudited               Audited
                                                      At                    At 
                                                 30 June           31 December       
                                                    2007                  2006
                                                  US$000                US$000
Cost
Brought forward/ On incorporation                592,365                     -
Acquisitions                                           -               587,075
Additions                                          2,751                  4950
Foreign exchange difference                          762                   340
                                                 -------               -------
                                                 595,878               592,365
                                                 -------               -------
Amortisation
Brought forward/ On incorporation                      -                     -
Amortisation for the period                            -                     -
                                                 -------               -------
                                                       -                     -
                                                 -------               -------
Net book value                                   595,878               592,365
                                                 -------               -------

4  Unlisted Investment

Unlisted investment of US$27,122,000 represents the Group's investment in 49% of
the equity interests of Kesi Hengrun (Beijing) Technology Co, Ltd. ('Kesi'). As
at 30 June 2007, directors and key management were yet to be appointed. As the
Group was not in the position to exercise significant influence on the
operations and financial strategy of Kesi, the investment was still carried at
cost, less impairment if any, and equity accounting was not yet applicable.


5  Trade and other payables
                                     Unaudited                         Audited
                                            At                              At 
                                       30 June                     31 December       
                                          2007                            2006
                                        US$000                          US$000

Trade payables                           3,908                           3,986
Other payables                          25,978                               -
                                       -------                          ------
                                        29,886                           3,986
                                       -------                          ------

Included in other payables balance as of 30 June 2007 was US$25,978,000 payable
for 3,685,167 shares repurchased and cancelled on 29 June 2007. The amount was
paid, subsequently, on 5 July 2007.

6  Convertible notes

On 1 June 2007, the Company issued convertible notes having a face value of
US$50,000,000 and a maturity date of 30 May 2009 ('Maturity Date'). The notes
bear interest at 0% per annum.

At any time on or after the Maturity Date, the total sum of 118% of the
outstanding principal amount of the convertible note shall become payable,
unless previously converted or redeemed in accordance with these conditions.

As the value of the convertible notes is dependent on assumptions and
information in deriving their Fair Value, the following factors have been taken
into consideration:

                                                              As at Issue Date
Share price of the Company                                            US$6.08
Expected volatility                                                       22%
Risk free rate                                                          4.92%
Borrowing rate/effective interest rate of the Company                     13%
Life of the convertible note                                          2 years
Expiration of the convertible note                                31 May 2009
Expected ordinary dividend yield                                          Nil

7         Copies of announcement

The Company's Interim Report and copies of this announcement will be available
on the Company's website at www.greendragongas.com and from the offices of the
Company's nominated adviser, Smith & Williamson Corporate Finance Limited, at 25
Moorgate, London, EC2R 6AY, United Kingdom.





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