Fortune Oil (LSE: FTO.L) focuses on oil, natural gas and resource supply operations and investments, primarily in China. Fortune Oil is listed on the Main Market of the London Stock Exchange..
Fortune Oil is pleased to announce material progress relating to its Liulin Coal Bed Methane ("CBM") business:
Total field production from the Fortune Liulin Gas ("FLG") horizontal wells now exceeds 14,000 cubic metres per day with the most successful well to-date (H3) now producing over 7,000 cubic metres per day, a rate which exceeds all previous wells drilled by FLG. These flow rates have been achieved with a bottom hole pressure ("BHP") of 2 megapascals (MPa) and gas flow rates are predicted to increase as the BHP is reduced further to a target of around 0.2 MPa.
In 2012 FLG has drilled two more horizontal wells and these will be dewatered and put in to production testing. All of these wells in aggregate are expected to provide sufficient production volumes to meet the requirements of the existing Gas Sales Agreement ("GSA") of 100,000 cubic metres per day. Pricing under this GSA, is RMB1.58 per cubic metre which equates to gross sales revenues of RMB 52.1 million (£5.01 million) per annum (£2.50 million net to FLG).
Initial gas sales from the Liulin field will be via a Compressed Natural Gas wholesale station which is currently under construction and expected to be ready for operations in the second half of 2012. FLG has also completed the engineering design of the gas gathering system and an Engineering, Procurement and Construction contract is in place to install the gas gathering system across the Liulin block. The construction of the gathering system and associated equipment is expected to take around six months, which will enable initial gas sales in early 2013.
The Overall Development Plan ("ODP") has been prepared for submission in 2012 and a. summary ODP has also been submitted to FLG's Chinese partner China United Coal Bed Methane Corporation. The ODP is the final approval procedure and marks the transition of the field from exploration to development and operation and is a key step towards the commercialisation of gas from Liulin.
Mr. Tee Kiam Poon, Chief Executive of Fortune Oil, commented:
"We are extremely pleased with the progress we have made in 2011 and 2012 at Liulin and are starting to see commercial gas flow from our horizontal wells. Our partnership with Dart Energy brings leading design and technical supervision to ensure the successful drilling of FLG's wells in Liulin. Our focus is to accelerate the development of Liulin to position the Company as a significant developer of unconventional gas, in line with China's resource strategy, and pave the way for commercial gas sales and revenue generation for the Company."
Background on Fortune Oil
Fortune Oil is a leading independent energy company engaged in the investment and operations of oil and natural gas supply projects in China. With over 18 years of operating history in China, Fortune Oil has acquired a unique portfolio of high quality oil and natural gas projects across the country and has formed a strong partnership with domestic and international market leaders. Fortune Oil recently started an expansion outside China securing resource projects. Fortune Oil is listed on the Main Market of the London Stock Exchange with its operational headquarters in Hong Kong.
For further details:
Fortune Oil PLC
Tee Kiam Poon
Tel: 00 852 2583 3125
Tel: 00 852 2583 3120
Pelham Bell Pottinger
Archie Berens / Zoe Sanders
Tel: 020 7861 3112
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