G3 Exploration Regulatory News (G3E)

28 June 2019

G3 EXPLORATION LTD.

("G3 Exploration", "G3E" or the "Company") 

Dividend in Specie

G3 Exploration Ltd. (LSE: G3E), an independent specialist in the exploration and development of coal bed methane gas ("CBM") with roots in China and a focus on international expansion, re-confirms details of a Dividend in Specie for its production assets.

Dividend in Specie

G3 Exploration shareholders on the register as of the effective date 29 March 2019 will receive a direct interest in Green Dragon Gas ("GDG"), the Company's 100% owned subsidiary which holds its producing assets. The allotment will be on a 1 to 1 ratio, whereby one new GDG share will be allotted to each G3E share held as at the Record date of 29 March 2019. The Dividend in Specie will represent 100% of the commercial producing assets and G3 Exploration will retain all its exploration and development assets.

The structure will enable qualifying G3E shareholders to potentially benefit from the free cash flow generated by the producing assets whether via a trade sale or an IPO and separate listing.

All G3E shareholders on 29 March 2019, the Effective Date, will shortly be notified of their allocation for such dividend issuance conditional upon approval of a public listing of GDG which is being pursued in Hong Kong.

Monetisation of Production Assets

As announced on 30 January, the Company engaged Citigroup and Credit Suisse to explore possible monetisation options for GDG prior to 30 June 2019. While such efforts continue, the Board has directed that the listing of GDG on the Hong Kong Stock Exchange be pursued concurrently.

The producing assets include the GCZ and GSS Blocks. GCZ has a 1P NPV10 of US$72 million and a 2P NPV10 of US$157 million as at the year-end 2018. The GCZ block has an approved Overall Development Plan in current execution with partner CNPC-PetroChina. The GSS block has a 1P NPV10 of US$ 580 million and a 2P NPV10 of US$1.6 billion as at the year-end 2018.

Randeep S. Grewal, Executive Chairman, commented:

"The Board and Management are committed to concluding the Dividend in Specie so as to facilitate the approved exploration and commercial production separation of the current Group. Our current processes, trade sale or IPO, are committed to re-pay the groups indebtedness as well as provide a mechanism for us to return the value created within the producing blocks to our shareholders.

"Upon completion, G3E should be well funded for its accelerated exploration and development programme which continues to be our core business and has been the foundation of the business for over twenty years."

For further information on the Company and its activities, please refer to the website at www.g3-ex.com or contact:

About G3 Exploration Ltd.

G3E is a leading independent gas producer with operations in China and is listed on the main market of the London Stock Exchange (LSE: G3E). The Company has 377 Bcf of 2P reserves and 2,044 BCF of 3P reserves across eight production blocks covering over 7,566km² of license area in the Shanxi, Jiangxi, Anhui and Guizhou provinces. It holds six Production Sharing Agreements with strong, highly capitalised Chinese partners including CNOOC, CNPC and PetroChina, and has infrastructure in place to support multiple routes to monetise gas production.

The company is committed to an exploration and appraisal focused business plan in coal bed methane development across three geographies concurrently. It has a well-established track record and has demonstrated perseverance in going the distance to monetise shareholder value through three basic principles:

· Focus on core intellectual aptitude in developing coal bed methane

· Develop assets in an environmentally and socially prudent manner

· Protect accreted shareholder value