Last checked at 23 Feb 2016 07:00
23 February 2016
GREEN DRAGON GAS LTD.
("Green Dragon" or the "Company")
10th Year of Audited Reserves Growth
Green Dragon Gas Ltd. (LSE: GDG), one of the largest independent companies involved in the production and sale of CBM gas in China, is pleased to announce an increase in both its 1P and 2P estimated reserves as at 31 December 2015. The estimates of reserves have been provided by independent reserve engineers Netherland Sewell and Associates, Inc. ("NSAI").
Highlights:
· Net 1P reserves increase of 17% to 173 Bcf (2014: 148 Bcf)
· Net 2P reserves increase of 29% to 549 Bcf (2014: 427 Bcf)
· Net 3P reserves increase of 4% to 2,379 Bcf (2014: 2,290Bcf)
· Reserve migration includes first-time booking of 1P and 2P reserve volumes on GSN
· Tenth consecutive increase in 1P and 2P reserve volumes
· Growth to three commercial producing blocks in 1P (GCZ,GSS,GSN)
· 2P Finding and Development cost reduction of 38% to USD $0.40/Mcf (2014: USD $0.65/Mcf)
· Reduction in forecast capex of 32%, 20% and 12% for the potential development of 1P, 2P and 3P respectively
· NPV 10 decreases due to a 5% devaluation in RMB and reduced capital expenditure
Randeep S. Grewal, Chairman and Founder of Green Dragon Gas commented:
"I am pleased to announce the results of the 2015 reserves evaluation which represents the tenth consecutive increase in both 1P and 2P reserve volumes since coming to market in 2006. In that period the Company has shown consistent reserve growth and, importantly, the continued progression of reserves to the 1P and 2P categories. The consistency of reserves migration underscores the world class nature of the acreage held by Green Dragon and reflects the Company's continued operational excellence in terms of drilling performance.
"I am particularly pleased that the reported 1P progression for 2015 includes the migration of initial reserve volumes for Coal Seam 15 ("CS15") on both the GSS and GCZ blocks where, together with our partners, we have made significant investment in infrastructure in recent years. The migration to 1P on CS15 in these blocks represents a significant step forward in demonstrating the prospective potential of this coal seam. CS15 is present within our four Shanxi blocks, namely GCZ, GSS, GSN and GQY.
"In addition to the success on CS15, the notable pace of reserve migration on GSN - following the 2014 sale of a 10% interest to CNOOC in return for a USD $200 million carry - clearly demonstrates the value proposition across our acreage in China."
Reserves Report Overview
Green Dragon Gas has total Original Gas In Place of 25.6 Tcf across all its blocks. The estimates and evaluation of the reserves and resources contained in this announcement were prepared by independent reserve engineers, NSAI.
The report includes all 2,037 wells operated by Green Dragon, CNOOC and PetroChina across all blocks in which the Company has varying equity interests.
Prices at year end used in the reserves evaluation were USD $11.5/Mcf at the production block, inclusive of Government subsidies.
The decrease in NPV 10 value year-on-year primarily reflects the impact of currency conversion resulting from the devaluation of the RMB as compared to the USD in the period and reduced development capex forecasts. It should be noted that the devaluation in the RMB has no operational effect on the Company as the majority of costs are settled in-country in RMB.
PSC (Block) | 31 December 2015(Net, Bcf) | 31 December 2014(Net, Bcf) | ||||
1P | 2P | 3P | 1P | 2P | 3P | |
Chengzhuang (GCZ) | 15 | 31 | 52 | 16 | 29 | 45 |
Shizhuang South (GSS) | 153 | 473 | 1,379 | 132 | 371 | 1,299 |
Shizhuang North (GSN) | 5 | 18 | 721 | - | - | 706 |
Fengcheng (GFC) | - | 26 | 228 | 27 | 240 | |
Total* | 173 | 549 | 2,379 | 148 | 427 | 2,290 |
PSC (Block) | 31 December 2015(Net NPV 10, USD $ million) | 31 December 2014(Net NPV 10, USD $ million) | ||||
1P | 2P | 3P | 1P | 2P | 3P | |
Chengzhuang (GCZ) | 124 | 238 | 362 | 186 | 313 | 462 |
Shizhuang South (GSS) | 1,068 | 3,344 | 9,429 | 1,278 | 3,636 | 12,166 |
Shizhuang North (GSN) | 36 | 121 | 3,754 | - | - | 5,623 |
Fengcheng (GFC) | - | 319 | 2,666 | - | 347 | 2,930 |
Total* | 1,228 | 4,022 | 16,213 | 1,464 | 4,296 | 21,181 |
31 December 2015 | Contingent Gas ResourcesNet, 2C, Bcf | Un-risked prospective gas resourcesNet, best estimate, Bcf |
PSC (Block) | ||
Quinyuan (GQY) | 17 | 800 |
Fengcheng (GFC) | - | 137 |
Panxie East (GPX) | - | 16 |
Boatian-Quingshan (GGC) | - | 416 |
Total* | 17 | 1,369 |
*totals may not add due to rounding
The estimates in this announcement have been prepared in accordance with definitions and guidelines set forth in the 2007 Petroleum Resources Management System (PRMS) approved by the Society of Petroleum Engineers. The information in this announcement pertaining to Green Dragon's China reserves have been reviewed by Hassan Sindhu, the Company's petroleum engineer who holds a Bachelor of Science degree from the China University of Petroleum.
For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact:
Instinctif Partners
David Simonson / George Yeomans
Tel: +44 20 7457 2020
Citigroup
Tom Reid / Luke Spells
Tel: +44 20 7986 4000
Peel Hunt
Richard Crichton / Ross Allister
Tel: +44 20 7418 8900
About Green Dragon Gas
Green Dragon Gas is a leading independent gas producer with operations in China and is listed on the main market of the London Stock Exchange (LSE: GDG). The Company has 549 Bcf of 2P reserves and 2379Bcf of 3P reserves across eight production blocks covering over 7,566km² of licence area in the Shanxi, Jiangxi, Anhui and Guizhou provinces. It holds six Production Sharing Agreements with strong, highly capitalised Chinese partners including CUCBM (CNOOC), CNPC and PetroChina, and has infrastructure in place to support multiple routes to monetise gas production.
1P | proved reserves |
2P | proved plus probable reserves |
3P | proved plus probable plus possible reserves |
Bcf | billions of cubic feet |
CBM | coal bed methane |
NPV 10 | net present value calculated using a 10% discount rate |
Original Gas In Place | the total reserves contained in a reservoir. Only a proportion of the gas in place is recoverable (see definition of Reserves below) |
PSC | production sharing contract |
Reserves | reserves are those quantities of hydrocarbons anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions |
Tcf | trillions of cubic feet |
USD | United States Dollar |
RMB | Renminbi (official currency of the People's Republic of China) |
END