Last checked at 6 Dec 2017 07:00
6 December 2017
GREEN DRAGON GAS LTD
("Green Dragon Gas", "GDG" or the "Company")
Intention to list Producing Assets onto the HKEX and Notice of Annual General Meeting
Green Dragon Gas Ltd. (LSE: GDG), one of the largest independent companies involved in the production and sale of coal bed methane ("CBM") gas in China, announces a corporate update in relation to the IPO of a dividend in specie1 on the Hong Kong Stock Exchange ("HKEX"), the Notice of General Meeting for shareholders to approve the IPO, Name Change and the Notice of Annual General Meeting.
Proposed IPO of Dividend in Specie on the HKEX
GDG plans to list the Company's subsidiary, which shall include its producing assets, within the GSS Production Sharing Contracts (60% interest in GSS Block, and 47% interest in GCZ Block) ("YieldCo"), onto the Hong Kong Stock Exchange as a dividend in specie. GDG's remaining exploration and appraisal assets will continue to be listed on the London Stock Exchange ("LSE") under a new name and as an exploration and development focused company.
The proposed equity structure of the YieldCo will comprise of Green Dragon Gas, Green Dragon Gas shareholders and new Hong Kong listed shareholders. The specific equity between shareholders and the record date of such dividend shall be determined by the Board in due course. As a result of the YieldCo, GDG is expected to be debt free as capital raised from the Hong Kong listing is expected to settle all its existing debt obligations. Furthermore, additional equity raised in the Hong Kong listing will contribute to the continued development of the Company's remaining five exploration blocks, with the aim of continuing to develop the Company's large acreage position.
The producing blocks contain 114 wells across the GCZ Block and 1,339 wells across the GSS Block. Green Dragon Gas anticipates drilling an additional 56 LiFaBriC wells by the end of 2018 at GSS Main Block. Revenue is forecasted to materially increase, as 65% of the additional drilled wells come on stream in both Blocks as only 5142 of the 1453 wells are currently connected to gas sales infrastructure and selling gas. The recent finalisation of Supplementary Agreements with China United Coalbed Methane Corporation (CUCBM), a subsidiary of China National Offshore Oil Corporation (CNOOC), paves the pathway to future monetisation and commercialisation of the Company's lucrative asset base.
London listed Exploration and Development business
The remaining exploration and development assets within GDG will continue to list on the LSE's Main Market and will undergo a name change and rebranding to G3 Exploration Limited, effective 1st January 2018 to realign the business with its focus on exploration and development.
The London-listed Company is well positioned for success through its significant 25 year track record of exploration and drilling technology lead success, which is supported by Greka Drilling's proprietary LiFaBriC technology. The business will have foundation assets of the six exploration blocks held by GDG in China, including blocks GSN, GGZ, GFC, GPX, GQY (A), and GQY (B). The Company's mandate will be to grow the exploration acreage into other prospective geographies such as Africa, Australia India and the UK.
Director retirement
In accordance with the requirement in the Company's Articles of Association that the directors of the Company retire by rotation, Mr. Wayne Roberts retirement be noted, and subject to shareholder vote reappointed as a Non-Executive Director of the Company.
Notice of General and Annual General Meeting
Shareholder voting for the proposed Hong Kong listing will take place at the Company's upcoming Annual General Meeting, which will be held at 11:00 am on Wednesday, 20 December 2017 at FTI Consulting, 9th Floor, 200 Aldersgate Street, London EC1A 4HD.
The Annual Report of the Company for 31 December 2016 will be presented by the Chairman to the shareholders at the upcoming meeting.
Notice of Annual General Meeting and associated form of proxy have been posted to shareholders. Electronic copies of the 2016 Annual Report, Notice of Annual General Meeting and the proxy form are also available to download from the Company's website - www.greendragongas.com.
Randeep S. Grewal, Founder and Chairman of Green Dragon Gas, commented: "As Green Dragon Gas assets evolve from exploration and appraisal into a full cycle production, it is evident that the London market does not value this as highly as CBM production assets listed on the Shenzen and Hong Kong Exchanges. With this in mind the Board has taken the strategic decision to ring-fence our producing assets by way of a dividend in specie on the HKEX. This will simplify the equity proposition for GDG shareholders by ensuring transparency of cash flows from the producing blocks, as they become independently net cash flowing. Furthermore, it will allow shareholders to remain part of a focused exploration and appraisal company by way of the rebranded London listed entity.
"Green Dragon Gas together with the Board is confident that by forming a YieldCo for Green Dragon Gas' producing assets in Hong Kong, we expect to receive a favorable rerating, which should more accurately reflect the true value of our vast asset base. The Hong Kong YieldCo will offer shareholders stable and predictable cash generation in the world's second largest economy and will be dividend paying from its first day of listing. This is a material event in the history of GDG and will ensure value is properly attributed to our producing assets as well as allow the exploration and appraisal business to take advantage of the wealth of international opportunities."
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For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact:
FTI Consulting
Edward Westropp / Kim Camilleri / Elizabeth Burnham / Toby Chidavaenzi
Tel: +44 20 3727 1000
About Green Dragon Gas Ltd
Green Dragon Gas is a leading independent gas producer with operations in China and is listed on the main market of the London Stock Exchange (LSE: GDG). The Company has 559 Bcf of 2P reserves and 2,386 Bcf of 3P reserves across eight production blocks covering over 7,566 km² of license area in the Shanxi, Jiangxi, Anhui and Guizhou provinces. It holds six Production Sharing Agreements with strong, highly capitalised Chinese partners including CUCBM (CNOOC), CNPC and PetroChina, and has infrastructure in place to support multiple routes to monetise gas production.