G3 Exploration Regulatory News (G3E)

9 Jul 2007 10:38

Green Dragon Gas Ltd09 July 2007 9 July 2007 GREEN DRAGON GAS LTD. ("Green Dragon", "GDG" or the "Company") GDG HOLDS ANNUAL MEETING AND ANNOUNCES ACQUISITION CLOSING Green Dragon Gas Ltd. (AIM: GDG), today announces that it held its 2006 annualmeeting of the shareholders in London. At the meeting, the shareholders infavour of both resolutions, approving the 2006 annual results and appointing MrRandeep S. Grewal to another term on the Board. Following the meeting, GDG announced the closing of its acquisition (initiallyannounced in December 2006) of a 49% equity interest in Kesi Hengrun (Beijing)Technology Co. Ltd ("KHBT") for a total consideration of US$27,122,152 in cash.The 3,685,167 new ordinary shares in GDG originally issued pursuant to thisinvestment in KHBT have been repurchased and cancelled in lieu of the cashpayment. KHBT, a holding company, has as its only significant asset a 59% interest inBeijing Huayou United Gas Development Co Ltd ("BJHY"). The balance of 41% isowned by China Huayou Group Corporation, which is a wholly owned subsidiary ofChina National Petroleum Company ("CNPC"). The transaction had been previouslyapproved by the Chinese Ministry of Commerce ("MOFCOM") and the Administrationof Industry and Commerce ("AIC"). KHBT held a board meeting on 6 July 2007 in Beijing and appointed Mr RandeepS.Grewal as its chairman and legal representative, Ms Lin Guanqun as the vicechairman and general manager, Mr Mel Lone as its deputy general manager and MsJenny Chen Jie as its chief financial officer. Additionally, Mr Grewal and MsGuanqun were appointed to the Board of BJHY. Based in Beijing, Mr Lone isDirector of Operations and Ms Jenny Chen Jie is the Controller of Greka ChinaLtd, a GDG wholly owned subsidiary. KHBT, since incorporation, has been focused on developing a gas distributionnetwork through its interest in BJHY within the Beijing Development Area (BDA)in southeastern Beijing. BDA is a rapidly expanding planned industrial zonewithin the city limits strategically located on the Beijing-Tianjin expressway.BJHY presently owns 166 km of pipelines with an annual capacity of 4 billion m3that is strategically fed by CNPC proprietary citigas stations being supplied bythe West-East pipeline network. Its customers include a gas-fired power plant,industrial customers such as Mercedes Benz and nearly 8000 residential clients.Gas prices in Beijing in 2006 were between US$0.23-0.24/m3 and are currentlyUS$0.27/m3 this year representing a 15% increase over 2006. In the year ended 31 December 2006, BJHY made an EBITDA of US$2.5 million (2005:US$1.3 million) on sales of US$25.7 million (2005: US$7.6 million). Theserevenues were achieved from an estimated 2% utilisation of 3 billion m3 ofpipeline capacity; the capacity has now increased to 4 billion m3 and theutilisation level is expected to increase significantly over the coming years asthe BDA continues its growth and transition to gas as an energy source. As at 31December 2006, BJHY had net assets of US$5.3 million (2005: US$4.3 million) andKHBT had net assets of US$3.1 million (2005: US$2.4 million). Company Chairman and CEO, Mr. Randeep S. Grewal commented, "Our growth focusedbusiness plan continues to be executed successfully. Significant progress hasbeen accomplished in the upstream portion with the resource certification byNetherland Sewell and Associates while the KHBT transaction exponentiallyestablishes us in the downstream distribution business. "KHBT's 59% ownership in BJHY provides us with a controlling stake in asuccessful operating and profitable gas distribution business in Beijing, amarket of significant importance. BJHY is one of the two main gas distributorsin Beijing. A solid partner like CNPC and its vast gas distribution network,coupled with an assured supply to Beijing, provides a significant foundation forthe business's continued expansion. As the BDA continues its industrialexpansion, BJHY's installed capacity will automatically increase utilisation,providing for a sound profitable future. We look forward to working with BJHY infacilitating its growth into one of the main citigas distributors Beijing." For further information on the Company and its activities, please refer to thewebsite at www.greendragongas.com or contact: Randeep S. GrewalChairman and Chief ExecutiveBetty CheungGreen Dragon Gas Ltd.+852 37100168 Dr Azhic Basirov / David JonesSmith & Williamson Corporate Finance Limited+44 (0)20 7131 4000 Tim Thompson / Nick MelsonBuchanan Communications+44 (0)20 7466 5000 This information is provided by RNS The company news service from the London Stock Exchange