Green Dragon Gas Drilled Additional 67 Wells In 2011 Vs 29

Date: January 17, 2012

Dow Jones Newsires

16 January 2012

LONDON (Dow Jones)–Green Dragon Gas Ltd (GDG.LN), an independent company involved in the production of CBM gas and the distribution and sale of wholesale gas in China, said Monday that it drilled an additional 67 wells in
2011 comapared with 29 in 2010, an increase of 131% year on year.

MAIN FACTS:

–     The company has made substantial progress towards monetization of its significant gas assets in China.

–     The acceleration in the number of wells drilled is a reflection of the company’s shift in focus from exploration wells to the roll out of production wells across the Shizhuang South (GSS) Block.

–     The increase in the rate of wells drilled is also in line with Green Dragon’s discretionary capex spend of $250 million aimed at significantly increasing gas production.

–     Fourth quarter production was 407.49 million cubic meters or MMcf (11,543,652 cubic meters) an increase of 126% year on year.

–     As at Dec. 31, 2011, the annualized exit rate of production increased again to 1.68 billion cubic feet of Bcf (47,489,420 cubic meters). The increase in production is in line with the drilling of additional production wells.

–     The company’s downstream business has entered into an agreement for the supply of compressed natural gas or CNG to a CNG gas refilling station capable of delivering 1,059 Mcf per day (30,000 cubic meters) for use by a fleet vehicle transportation business located in Wen Xian, Henan, China.

–     In Midstream, the company also continued to connect the spur pipeline linking the Huabei gas gathering station to the main West East trunk pipeline, which will enable gas sales to PetroChina Huabei to commence as planned in the second quarter of 2012.