G3 Exploration Regulatory News (G3E)

15 July 2013

GREEN DRAGON GAS LTD

("Green Dragon" or the "Company")

Operations Update: First Half Gas Production increases 59% Year on Year

Green Dragon Gas Ltd. (AIM:GDG), one of the largest independent companies involved in the production of CBM gas and the distribution and sale of wholesale gas in China, is pleased to announce an operations update. Green Dragon is committed to being a focused upstream (E&P) company, concentrating on its core asset value proposition over six blocks, one in production and five in exploration.

Operations Update

Upstream

·; Gas production in H1 2013 was 1.34 Bcf (37.8 million cubic meters), a 59.3% year on year increase.

·; Quarter on quarter growth of 8.3% achieved in Q2 2013 with production of 697MMcf (19.8 million cubic meters) compared with 644MMcf (18.3 million cubic meters) in Q1 2013.

·; In H1 2013, 3 LiFaBriC wells accepted at the Company's production block in Shizhuang South (GSS).

·; 4 LiFaBriC wells accepted at the Company's 5 exploration blocks.

·; The total number of LiFaBriC wells across all blocks now stands at 67, a 67.5% increase on a year earlier.

Greka Engineering & Technology ("GET")

·; GET has assumed the processing and transmission functions to and from its Integrated Production Facility (IPF), at the GSS production field and charging per cubic meter of gas delivered basis since 1 January 2013.

·; GET added 2km of gas gathering pipe in the first half bringing the total to 33.3km of well gas gathering pipelines installed at GSS.

·; GET added 14 external customers for its manufactured products and services in H1 2013, a 21% increase over the 2012 year end and now has 90 external customers.

Downstream

·; During Q2 2013, Greka Gas Distribution Ltd, the Company's wholly owned subsidiary, continued selling gas from the GSS production block:

o piped natural gas (PNG) from the IPF is sold to the West East Pipeline via the Company's self-built, owned and operated pipeline and

o CNG is sold via the Company's self-owned and operated fleet of CNG fuel tankers.

·; PNG sales commenced in October 2012. PNG sales were 218MMcf (6.18 million cubic meters) in Q2 2013, a 28.5% increase on the Q1 2013 (169 MMcf / 4.8 million cubic meters).

·; CNG station sales were 129 MMcf (3.676 million cubic meters) in Q2 2013, a 6.8% increase on Q1 2013 (121 MMcf / 3.441 million cubic meters) / a 70.8% increase over Q2 2012 (76 MMcf / 2.152 million cubic meters).

·; CNG station sales were 251MMcf (7.117 million cubic meters) in H1 2013, a 67% increase over H1 2012 (150 MMcf / 4.26 million cubic meters).

·; As at the end of Q2 2013 8 CNG stations had been constructed, with 6 in operation. The Company expects to construct another 3 stations by year end.

Randeep S. Grewal, Chairman and Founder of Green Dragon, commented:

"The streamlined E&P Green Dragon continued to make progress on many fronts. A focused action plan on resolving the title issues was successfully concluded in the Company's favour. Operationally, there was continued progress on the gas production and sales in GSS. Corporately, we are readying GET for its market debut. GET, our second dividend in specie since being listed on AIM, is expected to generate immediate additional value for shareholders that to date has been inherent within the business but hidden. The demerger strategy also incentivises each business unit to capitalize on its niche technology excellence and grow its respective customer base so as to expand off foundational customer GDG. The addition of 14 external customers at GET is a forerunner of what shareholders should expect in time. Finally, even though unacceptable, the conclusion of the COPC arbitration concludes any ambiguity to this contingent liability. While we intend to process an appeal, the maximum exposure is defined. With the distractions of the title and COPC arbitration concluded, the management can now focus on its core lucrative CBM production and sales business going forward. "

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