G3 Exploration Regulatory News (G3E)

28 Oct 2008 11:37



28 October 2008

GREEN DRAGON GAS LTD.

("Green Dragon" or the "Company")

VERTICAL AND HORIZONTAL WELLS SUCCESSFULLY DRILLED INHOUSE 

Green Dragon Gas Ltd (AIM: GDG), the Chinese vertically integrated gas business, today announces that its wholly owned subsidiary Greka Technical Services ("GTS") has completed its first vertical well and is drilling two additional vertical wells.

GTS was launched on 26 November 2007 and has since ordered and taken delivery of five new drilling rigs manufactured in the USA, hired 116 employees, held extensive training conducted by the rig manufacturer and spud its first three vertical wells GSS036, GSS035 and GSS044 on 15 September, 23 September and 24 October 2008,  respectively. 

GTS Rig#1 drilled well number GSS036 to 843 meters and completed it within 38 calendar days. The well targeted coal seam #3 which was found between 786 and 793 meters in depth, or 6.5 meters thick. 

GTS Rig#3 is drilling well number GSS035 and is currently at 610 meters, with a target depth of 790 meteres. GTS Rig #2 is drilling well number GSS044 and is currently at 55 meters with a target depth of 568 meters. 

Additionally, the GTS 50-50 joint venture with Mitchell Drilling has completed its third horizontal well. A total of 2,060 meters has been drilled in the #3 coal seam with two horizontal wells intercepting into GSS031, a vertical well. The well was completed in 78 days.

On the Shizhuang South Block (GSS), the Company is now operating 50 vertical wells and 3 horizontal wells within the operational Zaoyuan Compressor Facility. 6,000 KW of power is self-generated daily from the gas produced and sales have commenced with a daily truck supplying CNG retail stations in test marketing.

The Company's Chairman and CEO, Mr. Randeep S. Grewal, commented, "I had the pleasure of spuding GSS036 and personally drilling the first joints which validated our decision to acquire the latest technology  CBM rigs as I experienced the technological enhancement in the drilling operations. The rigs' versatility, flexibility, commonality and mobility are a few pertinent characteristics providing an ideal foundation to enable  GTS's successful launch of a 150 employee strong drilling service company within 10 months. It has now completed  the first well with an additional two on their way."

Mr. Grewal added "While the decision to launch GTS was made by the Board, the execution has been led by GTS's highly experienced and qualified General Manager and Chief Operating Officer Zhang Bao Zhuang and his handpicked management team which has demonstrated the company's potential in a very short period of time."

"The completion of this Dymaxion well concludes the third consecutive successful horizontal well drilled by our joint-venture with Mitchell Drilling in the GSS block confirming a wide application throughout this block. We expect this drilling success will have a material positive impact to the GSS block development in 2009. We expect each Dymaxion well to reduce the need to drill five vertical wells as we continue to expand our development and simultaneously reduce our surface acreage demands. The rig has been mobilised to another block to confirm that the technology also applies in that particular coal seam and depth. We will release the pertinent information as it becomes available." concluded Mr. Grewal.  

The information contained in this announcement has been reviewed by Peter Wei, Greka's Chief Geologist, PHD in Oil & Gas Exploration from Northwest University, China.

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