G3 Exploration Regulatory News (G3E)

3 Mar 2008 16:50

Green Dragon Gas Ltd03 March 2008 3 March 2007 GREEN DRAGON GAS LTD. ("Green Dragon" or the "Company") SUCCESSFUL 2007 DRILLING PROGRAM AND GAS SALE MARKET TESTS Green Dragon Gas Ltd (AIM: GDG), the Chinese coal bed methane ("CBM") business,today announces the conclusion of its 2007 drilling programme with 88 wellshaving been successfully drilled across its five blocks. The wells have beendrilled by the Company in conjunction with its joint-venture partner, ChinaUnited Coal Bed Methane Corporation Limited ("CUCBM"). BLOCK WELLS DRILLED TOTAL WELLS ON PRODUCTION/ TARGET WELLS 2007 WELLS DE-WATERING ONLINE 2Q08 TO DATE SHIZHUANG S 79 120 24 42 SHIZHUANG N 2 6 4 4 QINYUAN 1 7 5 5 FENGCHENG 5 15 8 13 PANXIE EAST 1 6 0 6 TOTAL WELLS 88 154 41 70 The target coal seams were identical to those drilled in 2006 and the 2007drilling programme further extended the pilot wells drilled last year inessentially the same area within the blocks. Significantly, some wells inShizhuang South and Fengcheng were fracture stimulated and showed positiveresults. Shizhuang South is the Company's most advanced block with an operational powerplant and compressor station in place being the most significant infrastructurerequired to initiate gas sales. The wells drilled in the last two years havebeen open hole completions and the de-watering wells have begun to showfavourable results with increased gas volumes being produced. In preparation for anticipated gas sales later this year from Shizhuang South,the Company conducted marketing tests from its Zao Yuan hub during the fourthquarter of 2007. Compressed gas, transported by truck, was sold to CNG stationsin Zhengzhou, Henan demonstrating the viability and feasibility of supplyingthis lucrative market. CUCBM has drilled wells on the Chengzhuang section of the Shizhuang Block undera farm-out agreement and these are expected to be fracture stimulated this year,concurrent with the related infrastructure being brought online. The Overall Development Program ("ODP") for Shizhuang South continues toprogress. The Company and its partner, CUCBM, are concluding the requiredEnvironmental Impact Study in accordance with the National Development andReform Commission ("NDRC") directives. The Company expects NDRC approval laterthis year. The Company's Chairman and CEO, Mr. Randeep S. Grewal, commented: "2007 has been another record year for the Company's continued progress andsuccessful plan execution, with the drilling plan concluding with no surprises,facilitated by our dedicated employees working closely with the contractedvendors. Fracture simulations in Fengcheng proved to be viable and thus will beincorporated into the standard programme for this block, while the other blockscontinue to show positive de-watering results without the need for suchstimulations. Harsh weather impeded the field personnel being able to progresswells to production following completion of the drilling programme. However, weexpect most of the required infrastructure to be in place within the nextquarter and the de-watering to be initiated from these wells." "In accordance with our vertically integrated strategy, the Company undertooktest sales of compressed gas, delivering directly to CNG stations in thelucrative Zhengzhou transportation market, via trucks, from our Zao Yuan hub.The Company is now well placed to launch gas sales in the year ahead." "The Company intends to make 2008 another record growth year throughout theCompany's operations in Anhui, Beijing, Jiangxi, Henan and Shanxi regions. Wehope to be able to provide further updates on the 2008 drilling programme andgas sales in due course." For further information on the Company and its activities, please refer to thewebsite at www.greendragongas.com or contact: Randeep S. Grewal / Betty Cheung, Green Dragon Gas, +85237100168 Tim Thompson / Nick Melson, Investor Relations, Buchanan, +442074665000 Dr Azhic Basirov / David Jones, Nomad & Broker, Smith &Williamson, +442071314000 This information is provided by RNS The company news service from the London Stock Exchange