LONDON (Alliance News) - Green Dragon Gas Ltd on Thursday reported growth in gas sales during 2016, with output from the wells operated by the company rising at an even higher rate, and said it is considering a dual listing in China, where it operates.
Green Dragon Gas, which shares its Chairman Randeep Grewal with partner Greka Drilling Ltd, said gas sales rose by 5.6% in 2016 to 3.41 billion cubic feet from 3.23 billion cubic feet in 2015. Sales from wells operated by Green Dragon increased by more than one-third to 1.88 billion cubic feet from 1.41 billion cubic feet.
The gross production capacity across all licenses increased by 9% in 2016 to 11.22 billion cubic feet from 10.31 billion cubic feet, and gross production exited 2016 at a rate of 12.05 billion cubic feet per year, lower than the 2015 exit rate of 12.12 billion cubic feet.
Green Dragon said the fall in exit rate is the result of a change in measurement methodology by its partner concerning the gross production capacity and exit rate, in respect of its partner's operated well stock where flared gas is excluded from capacity statistics.
Green Dragon said the overall development plan for the Chengzhuang production block is "substantially complete", with submission expected in the first quarter of 2017.
More importantly, Green Dragon's Chengzhuang, Shizhuang South, Shizhuang North and Baotian-Qingshan blocks have been "specifically identified" by the central government of China as "priority coalbed methane projects" within the latest five-year plan.
"Not only is this explicit support invaluable as we move to overall development plan approval for Chengzhuang and Shizhuang South but it has also made possible renmimbi debt financing with Chinese financial institutions seeking opportunities aligned with longer term government policy," said Green Dragon.
"With this increased domestic interest, the board has decided to evaluate the merits of a dual listing to potentially access the Chinese financial markets where the prospects in Chinese coalbed methane energy investment have broader appeal and understanding," the company added.
Green Dragon said it does not expect to issue any new shares if it pursues the dual listing in the hope that will "narrow the discount to our asset value and deliver increased value to all shareholders."
"The results and conclusion of the board's evaluation of the dual listing will be presented to the shareholders concurrently with the publication of the annual results," said the company. A decision will be made before the end of the first half of 2017.
Looking to 2017, Green Dragon said its priorities in the first half are to attain approval for the overall field development plan concerning Chengzhuang, secure renmimbi-denominated debt for ongoing development, finalise the sale of its downstream operations, redeem its USD88 million Nordic bond and to execute agreements with its partner China National Offshore Oil Corp.
In the second half of 2017, attention will turn to launching a drill programme at Shizhuang South using Greka Drilling's LiFaBriC technology to boost sales volumes in 2018. An overall field development plan for Shizhuang South will also be submitted, whilst other development and exploration activity will be undertaken.
Initial gas sales from the Baotian-Qingshan block will also start in the second half following the recent and successful exploration campaign.
Notably, earlier this month, Greka Drilling said it completed its "limited contract for key client" Green Dragon Gas after completing only five wells for the company in 2016 compared to the 51 wells drilled for the company in 2015.
Greka said it expected to be awarded new contracts from Green Dragon in 2017, with only one secure workload secured from Green Dragon and its partners at present.
"With the ongoing support of the central government, increasing interest and access to capital domestically as well as increasing sales from our core assets, we are excited about 2017 and look forward to a year of growth," said Green Dragon.
Green Dragon shares were down 1.1% to 146.50 pence per share on Thursday morning. Greka Drilling shares were up 7.1% to 3.90 pence per share on Thursday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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