G3 Exploration Regulatory News (G3E)

12 July 2013

GREEN DRAGON GAS LTD

("Green Dragon" or the "Company")

Arbitration and Appeal

Green Dragon Gas Ltd. (AIM: GDG), one of the largest independent companies involved in the production of CBM gas in China announces that the arbitration tribunal on the ConocoPhillips China Inc ("COPC") matter has awarded US$42.6m plus fees and interest against the Company. This ruling requires the return of all the funds paid by COPC to the Company in the Farmout Agreement entered into in August 2009 and terminated in November 2010. The Company has included a contingent liability note in its accounts since 2010 relating to this arbitration. The arbitration was anchored around the issue of the Company's ability to enforce title in its three Shanxi production sharing contracts ("PSCs"). The Company has always considered that it has valid title and this was confirmed by the Central Government of China earlier this week and announced on the 10th of July 2013. The arbitral tribunal was informed of such an expected ruling but they decided to close the arbitration proceedings, and proceeded to deliver their award without considering this significant development.

Randeep Grewal, Founder and Chairman of Green Dragon Gas, commented:

"We are disappointed in this ruling. Our PSCs continue today as they were on issue: In full force and effect. We are evaluating the course of action with our advisors who have guided us through the arbitration over the last three years. Specifically, the tribunal panel was informed of a material conclusion as to title which appears not to have been taken into consideration. We consider this, among other matters, as a ground for a challenge against the award and are presently having our advisors review and to take all necessary steps for a potential filing to set aside the award."

For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact: