Last checked at 21 Oct 2008 09:18
21 October 2008
GREEN DRAGON GAS LTD.
("Green Dragon" or the "Company")
RESERVES INCREASE 29% TO US $5.87 BILLION
Green Dragon Gas Ltd (AIM: GDG), the Chinese vertically integrated gas business, today announces an update on its Coal Bed Methane ('CBM") resources within its six blocks as follows:
| BILLION CUBIC FEET | PRESENT VALUE US$ MILLIONS | ||||||
| TOTAL SIX BLOCKS | Dec-06 | Sep-08 | VAR | Dec-06 | Sep-08 | VAR | |
| GAS IN PLACE | 18,116 | 22,394 | 24% | ||||
| PROV (1P) | 16 | 24 | 48% | $53 | $89 | 68% | |
| PROV +PROB (2P) | 233 | 253 | 9% | $677 | $876 | 29% | |
| PROV +PROB +POSS (3P) | 1,906 | 2,157 | 13% | $4,562 | $5,865 | 29% | |
| CONTINGENT LOW (1C) | - | 19 | 100% | ||||
| CONTINGENT BEST (2C) | - | 41 | 100% | ||||
| CONTINGENT HIGH (3C) | - | 75 | 100% | ||||
| PROSPECTIVE - LOW | 211 | 571 | 171% | ||||
| PROSPECTIVE - BEST | 1,310 | 1,625 | 24% | ||||
| PROSPECTIVE - HIGH | 3,908 | 4,513 | 15% | ||||
The resources were evaluated by independent reserve engineers Netherland Sewell & Associates ("NSAI") as of September 30, 2008 and compared to their previous report as of December 2006. The estimates of reserves and resources in this report were prepared in accordance with definitions and guidelines set forth in the 2007 Petroleum Resources Management System approved by the Society of Petroleum Engineers. All resources estimates shown above are net to the Company's interest. In accordance with the standards, no cash flows are presented for the Contingent and Prospective categories. The present value figures shown above represent estimated future net revenues based on region-specific gas price parameters specified by the Company discounted at 10%.
In addition to the Company's Shizhuang South (GSS), Shizhuang North (GSN), Qinyuan (GQY), Fengcheng (GFC), and Panxie East (GPX) blocks, Guizhou (GGZ), which was acquired in the third quarter of 2008, is also included, with all of its resources, within the September 2008 Prospective Resource category.
Commenting on the resource update, Randeep S. Grewal, the Company's Chairman and Chief Executive stated, "The material increase in reserves is a validation of the continued expansion of the Company's upstream division and its successful drilling programs. Since the last Competent Persons Report done as of December 2006, 139 wells have been successfully drilled across the blocks, providing tangible data for NSAI to provide this update."
"This appraisal does not have the benefit of the successes demonstrated by the recent horizontal wells drilled using the Mitchell Dymaxion technology. Considering the wells were being put into production during the appraisal, we expect the year-end report to factor in the related benefits of the enhanced production in a shorter time period which ought to result in further reserve improvements."
"The upstream division objectives are to maintain a steady drilling program across all blocks while improving the drilling efficiency and productivity with the utilization of the latest technology drilling rigs within the Greka Technical Services subsidiary. We expect to exploit our large resource base with the benefit of equipment and drilling crew consistency which is the cornerstone of the Company's vertically integrated strategy" concluded Mr. Grewal.
The information in this announcement has been reviewed by Mr. Craig H. Adams, a Vice President of NSAI. He is a registered Professional Engineer in the State of Texas and is a member of the Society of Petroleum Engineers.
For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact:
| Randeep S. Grewal / Betty Cheung Green Dragon Gas | +852 3710 0168 |
| Dr Azhic Basirov / David Jones Nomad & Broker, Smith & Williamson | +44 20 7131 4000 |
| Tim Redfern Broker, Evolution Securities | +44 20 7071 4300 |
| Tim Thompson / Christian Goodbody Investor Relations, Buchanan | +44 20 7466 5000 |