G3 Exploration Regulatory News (G3E)

29 Jan 2007 07:01

Green Dragon Gas Ltd29 January 2007 29 January 2007 GREEN DRAGON GAS LTD. ("Green Dragon" or the "Company") 2006 SUCCESSFUL DRILLING PROGRAM OVERVIEW Green Dragon Gas Ltd (AIM:GDG), the Chinese coal bed methane ("CBM") business,today provided an overview of the 2006 drilling programme which will beconcluded by the Chinese New Year in mid-February 2007. 47 wells were drilled inrecord time with all of the wells successfully drilling through the target coalseams in each of the Company's five blocks. The Company and its partner, CUCBM,had a total of 26 rigs working concurrently at the peak of the drillingoperations. The Company did not encounter any material surprises during thesepilot phases. The drilling programme by the Company and its farmout to CUCBM issummarized below: BLOCK WELLS DRILLED WELLS DRILLED COAL SEAM COAL SEAM COAL SEAM 2006 TOTAL DEPTH NUMBER THICKNESS----------- ------- ------- --------- -------- ---------SHIZHUANG S 26 41 550-600 m 3 6.5m---------- SHIZHUANG N 4 4 950 -1000 m 3 5m---------- QINYUAN 6 6 900-950 m 3,8,9,15,16 7m---------- FENGCHENG 6 8 750-800 m B4 3.5m---------- PANXIE EAST 5 7 600-700 m 13,16,17 6.5m---------- ------- ------- ---------- --------- ---------TOTAL WELLS 47 69 As the 2006 down-hole drilling programme concludes, the Company will focus itsefforts on completing the wells over the next quarter. Data accumulated duringthese drilling operations is being analysed and will further enhance the 2007drilling plan being concluded concurrently. The Company is designing the optimumextraction methodology of its gas resources (16 TCF as set out the CompetentPerson's Reoprt by Scott Pickford) to suit its long term strategic business plan. The Company's overall drilling programme is being approached from amanufacturing perspective, whereby the Company intends to convert knowledgebeing acquired from the 2006-2007 programmes into fine-tuning future drillingand completion techniques so as to make the gas supply predictable for decadesto come. Extensive CBM experience in the US, Canada and Australia has proventhat the probability of approaching CBM drilling as a predictable manufacturingcycle as long as the specific coal seam characteristics are analysed during thepilot programmes in the coal seams. The Overall Development Program ("ODP") for Green Dragon's most advanced block,Shizhuang South, is to be submitted to the pertinent authorities by the end ofthis quarter. This first ODP, being compiled by the Company, CUCBM and CPPEI (aPetroChina subsidiary), is the first ODP in China for CBM purposes. The ODPapproval will allow the Company's partners to obtain authorisation to pay fortheir 40% working interest of development expenses and furthermore confirm thecommerciality of the block. Company Chairman and CEO, Mr. Randeep S. Grewal, commented, "This has been a year of growth and success for the Company. Following almost aneight year long tenure taken up by planning, evaluating, studying and otherpertinent logistics, it is rewarding to be in the field executing the plansuccessfully. The Company's achievements in a short period, ramping up andoperating 14 rigs over five blocks is demonstrative of the viability and realityof our business plan. "We plan to conclude similar field evaluations during 2007 and are targeting2008 and beyond as our steady state drilling and gas supply era where weenvision a compounding of our supply chain. Conservative estimates by theInternational Energy Agency indicate 6% of China's exponentially growing energydemand being gas at 100 billion cubic meters a year by 2010. Green Dragon, theonly international energy company headquartered and managed in China, is ideallypoised and adequately resourced to be a key domestic supplier." Mr. Grewal added, "The Company's strategic objective is to be a verticallyintegrated gas supplier which encompasses a focus on drilling primarily verticalwells that provide long term consistent supply enabling a reliable distributionsystem. "We continue to demonstrate that the Company has the assets, hands on experienceand a strategic business plan being executed by a proven management team. Allthis is enhanced by a seasoned China experienced Board that has a clear visionon our growth." The Company will be a presenter at the UBS Greater China Conference in Shanghaion Tuesday, 30 January 2007. For further information on the Company and its activities, please refer to thewebsite at www.greendragongas.com or contact: Randeep S. Grewal Tim Thompson / Nick MelsonChairman & CEO Investor RelationsGreen Dragon Gas Buchanan Communications+85221668686 +44 20 7466 5000 Dr Azhic Basirov/ David Jones Daniel Fox-DaviesNominated Adviser & Broker BrokerSmith & Williamson Corporate Finance Ltd Fox-Davies Capital Ltd+44 20 7131 4000 +44 20 7936 5200 This information is provided by RNS The company news service from the London Stock Exchange