G3 Exploration Regulatory News (G3E)

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER FOR SALE OR AN INVITATION TO SUBSCRIBE FOR, OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR, GREKA DRILLING SHARES OR GREEN DRAGON SHARES IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION IS UNLAWFUL AND, SUBJECT TO CERTAIN EXCEPTIONS, IS NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA. THE GREKA DRILLING SHARES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (AS AMENDED) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES OR UNDER THE APPLICABLE SECURITIES LAWS OF CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED FOR SALE OR SUBSCRIPTION, OR SOLD OR SUBSCRIBED DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA OR TO OR BY ANY NATIONAL, RESIDENT OR CITIZEN OF SUCH COUNTRIES.

THE DISTRIBUTION OF THIS ANNOUNCEMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. ACCORDINGLY, NEITHER THIS ANNOUNCEMENT NOR ANY ADVERTISEMENT OR ANY OTHER OFFERING MATERIAL MAY BE DISTRIBUTED OR PUBLISHED IN ANY JURISDICTION EXCEPT IN COMPLIANCE WITH ANY APPLICABLE LAWS OR REGULATIONS. PERSONS OUTSIDE THE UNITED KINGDOM INTO WHOSE POSSESSION THIS ANNOUNCEMENT COMES SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH RESTRICTIONS. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF ANY SUCH JURISDICTIONS.

7 March 2011

GREEN DRAGON GAS LTD

("Green Dragon" or "the Company")

Demerger of Greka Drilling - Result of EGM

The Board of Green Dragon Gas Ltd. (AIM:GDG), 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 that, at the EGM held earlier today, shareholders approved the dividend distribution in specie of Greka Drilling Shares to Ordinary Shareholders.

The Demerger Dividend will be paid tomorrow to Ordinary Shareholders on the Green Dragon Register at the Record Time (5.00 p.m. today) on the basis of three Greka Drilling Shares for every one Ordinary Share held at the Record Time. The number of Ordinary Shares in issue at the Record Time was 132,748,586; accordingly, the Demerger Dividend will involve the distribution of 398,245,758 Greka Drilling Shares (representing 100% of Greka Drilling's issued ordinary shares) to Ordinary Shareholders. It is expected that dealings in Greka Drilling Shares on AIM will commence on 8 March 2011.

Randeep S. Grewal, CEO and Founder of Green Dragon, commented:

"I am delighted that the demerger dividend has been approved and look forward to the continuing growth of Green Dragon and Greka Drilling as separate entities with focused business development plans."

Certain capitalised terms in this announcement are as defined in the Green Dragon circular to shareholders dated 16 February 2011. For further information on Green Dragon, please refer to the website at www.greendragongas.com and for further information on Greka Drilling, please refer to the website at www.grekadrilling.com.

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