Last checked at 23 Jun 2008 16:15
For Immediate Release 23 June 2008
GREEN DRAGON GAS LTD.
("Green Dragon" or the "Company")
Acquisition of Giant Power International Investment Ltd
Green Dragon Gas Ltd. (AIM: GDG), the Chinese coal bed methane business, today announced that it has entered into a share purchase agreement with Sinoenergy Holding Limited, (SNEN.OB) through its wholly owned subsidiary, Greka SNU Ltd ("Greka"), to acquire 100% of Giant Power International Investment Ltd ("GPI") for US$10.68 million in cash. The GPI Board of Directors has unanimously approved the acquisition.
GPI directly controls 35% of the equity shares of Zhengzhou PetroChina Hengran Petro-Gas Company Limited (ZPH) and 26.2% of the equity shares of Anhui PetroChina Hengran Petro-Gas Company Limited (APH). ZPH also owns 69.7% of APH, providing GPI an additional 24.4% equity interest in APH thus giving Greka a consolidated equity interest of 50.6% in APH. The balance of the equity of ZPH and APH are held by China oil major PetroChina.
ZPH and APH own Compressed Natural Gas Mother Stations ("CNGMS") which distribute gas from the massive West-East gas pipeline and are strategically located in ZhengZhou, Henan and Wuhu, Anhui which have populations of 4.3 and 2.2 million respectively. Both locations are synergistic and strategically important to Green Dragon's CBM blocks, Shizhuang South and Panxie East respectively. The CNGMS purchase gas supply from the West-East Pipeline and have sales contracts for the entire allocation in place. All required licenses and approvals to operate as a legal going concern are in place.
Randeep Grewal, Chairman and CEO commented, "This very synergistic acquisition firmly establishes the Company's midstream business in Shanxi/Henan and Anhui provinces. The locations of these Compressed Natural Gas Mother Stations are strategically off the West-East pipeline and geographically adjacent to the Company's CBM blocks. Our equity interest alongside PetroChina will enable us to be a significant participant in the development of CNG's increasing utilization as a greener and cheaper alternative to gasoline for transportation. We expect favorable central and provincial government policies will continue to drive revenue growth for GPI independently."
"This acquisition conforms to our vertically integrated strategy and concurrently is accretive to earnings while establishing firmly the company in the midstream business", concluded Mr. Grewal.
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 +852 3710 0168
Tim Thompson / Nick Melson
Investor Relations, Buchanan +44 20 7466 5000
Dr Azhic Basirov / David Jones
Nomad & Broker, Smith &Williamson +44 20 7131 4000
Tim Redfern
Broker, Evolution Securities +44 20 70714300