G3 Exploration Regulatory News (G3E)

8th November 2010

GREEN DRAGON GAS LTD

("Green Dragon Gas" or "the Company")

Corporate Update

Green Dragon Gas, one of the largest independent companies involved in the production of CBM gas and the distribution and sale of wholesale gas in China, is pleased to announce corporate decisions by the Board of Directors which are expected to further enhance shareholder value and provide additional information on the Company's future development.

The Company has decided to proceed with a main board listing on the Hong Kong Exchange in 2011. Following a period of deliberation and evaluation of main board listing options, the Board has concluded that Hong Kong provides the optimum market due to the nexus with the Company's China-focused operations and the greater institutional appreciation of the value of the Company's unconventional gas assets and understanding of the China country risk along with the success of other recent moves from AIM to the Hong Kong Main Board. This decision follows the appointment of CLSA to advise the Company on Asian capital markets strategies. The current AIM listing is expected to be maintained following such listing.

Further, the Company has asked five selected manufacturers to quote for the supply of a drilling fleet of 25 rigs, complementing the Company's existing drilling fleet of 7 rigs. The rigs are expected to start delivery in 2011 so as to facilitate an aggressive drilling program in Shizhuang South ("GSS"). The rigs will be relocated to other blocks or to third parties following the full development of GSS. Each of these rigs will be deployed to drill SIS wells and substantially increase the drilling capacity from the current two rigs that validated this commercial technique. The Company intends to make its selection of supplier prior to year end.

Additionally, the Company also announces that, it served a notice of default ("Termination Notice") in relation to the farm out agreement ("FOA") between its wholly-owned subsidiary Greka Energy (International) BV ("Greka") and ConocoPhillips China Inc. ("COP"). Each party to the FOA has confirmed that the FOA has been terminated. Greka is engaged in discussions with COP to resolve the specific terms of the termination. To date, COP has made payments totalling US$42.63 million, which has primarily been applied in the development of surface-to-inseam wells at the GSS PSC. The Company had recently moved its drilling operation from GSS to the Qinyuan Block ("GQY") where COP elected not to fund the work program leading to the delivery of the Termination Notice by Greka. Under the FOA, COP was entitled to acquire a 50 percent share of certain of the Company's gas assets once it had met its commitment to fund US$50 million and elected to farm in under the FOA. The failure to pay such amounts, together with the termination of the FOA, means that COP has forfeited its right to acquire a share of those assets and, as a result, the Company retains the full right, title and interest in the entire 2.1 TCF within the Shanxi PSC's (3P/NPV10 value of USD$8.35 billion, NSAI report as at December 31, 2009). The termination of the FOA removes the uncertainty associated with COP's option.

In the Company's view, the termination of the FOA will not have any impact on the technical development of the resource going forward. The Company's target for 2010 exit gas production of 1 Bcf and following the $250 million capex program increasing to 18 Bcf, remains as previously announced. GSS is in the manufacturing phase of its development and the known production profile, from each well drilled, is expected to be a major contributor towards the overall production target the Company has established.

Mr. Randeep S. Grewal, Chairman & CEO, commented:

"The appointment of CLSA to assist in evaluating strategies within the Asian capital markets has led the Company to conclude that Hong Kong is the logical home for a main board listing. Hong Kong is increasingly becoming a home for commodity and asset backed companies which have core operations in China or are linked to the Chinese consumer. There have been several recent examples of successful Chinese companies migrating from AIM to the Hong Kong main board and achieving increased investor recognition and material increases in valuations as a result. We intend to replicate such successes with a primary listing in Hong Kong, subject to the approval of the HK Listing Committee. The elimination of the Conoco option removes the ambiguity surrounding the Company's reserve ownership and will simplify the listing process.

Conoco contributed US$42.63 million, primarily towards the GSS work program, and this has principally been deployed in enhancing the value of our resources. The Company appreciates Conoco's contribution during the past fifteen months. However, I am pleased to confirm that our shareholders will now retain all right, title and interest in our unique PSCs.

The Company continues its exponential growth. We have now demonstrated the success of the optimum SIS technology and documented a repeated stable production profile. It's time to proceed with an aggressive drilling program to develop the entire block expeditiously which naturally requires significantly more rigs. I am confident that we will introduce the new rig fleet into our Technical Services division, expanding the company we launched successfully within six months of our decision to establish the business from scratch in late 2007.

These decisions position Green Dragon Gas to maintain its growth trajectory into 2011 and the years beyond while enhancing shareholder value with a unique and low carbon business plan, which is consistent with China's new five year economic plan on increasing domestic production and use of gas."

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