TIDMGDG
RNS Number : 8438V
Green Dragon Gas Ltd
02 February 2017
2(nd) February 2017
GREEN DRAGON GAS LTD.
('Green Dragon' or the 'Company')
Operations Update and 2017 Outlook
And Evaluation of Dual Listing in China
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, is pleased to announce an operations update
for the year ended 31 December 2016.
Operational highlights
-- Total equity gas sales increased by 5.6% to 3.41 bcf (2015: 3.23 bcf)
-- Gas sales from GDG operated wells on GSS increased by 34% to 1.88 bcf (2015: 1.41 bcf)
-- GCZ ODP substantially complete - submission to the NDRC expected this quarter.
-- Renewed Central Government support - GCZ, GSS, GSN and GGZ
specifically identified by the Central Government as priority CBM
projects within the 13(th) Five Year Plan
-- GGZ exploration program successful
2017 Operational Outlook and Targets
-- First Half 2017
o Attain ODP approval for GCZ together with CNPC
o Secure RMB denominated debt for continued development
o Redeem Nordic $88m Bond
o Conclude sale of downstream operations
o Execute CNOOC Agreements
-- Second Half 2017
o Launch GSS LiFaBriC drilling programme to further increase
sales volumes in 2018
o Complete and file GSS ODP plan together with CNOOC
o Commence initial gas sales from the GGZ block in Guizhou
Province
o Conclude fourth development block in addition to GCZ, GSS,
GGZ
o Continue exploration on GQY, GFC, GPX
Evaluation of Dual Listing in China & Financing Update
-- The Board intends to evaluate the merits of a Dual Listing in
China, alongside London, to deliver enhanced shareholder value as
it pursues its growth plans
-- The Group is in discussions with a range of Chinese financial
institutions with regard to both re-financing its USD debt with RMB
debt and additional growth funding
-- The Board will come to a decision on the merits of a Dual Listing in the first half of 2017
Randeep S. Grewal, Chairman and Founder of Green Dragon,
commented:
"2016 has been a year of significant operational progress. In
addition, we take huge comfort from the 13(th) Five year plan,
issued by the Chinese Government late in 2016. As part of that
plan, the Central Government has specifically identified our joint
projects at GCZ, GSS, GSN and GGZ, where we partner with CNPC,
CNOOC and PetroChina respectively, as priority CBM projects.
Not only is this explicit support invaluable as we move to ODP
approval for GCZ and GSS but it has also made possible RMB debt
financing with Chinese financial institutions seeking opportunities
aligned with longer term government policy.
With this increased domestic interest, the Board has decided to
evaluate the merits of a Dual Listing to potentially access the
Chinese financial markets where the prospects in Chinese CBM energy
investment have broader appeal and understanding. While we do not
expect to issue any new shares, we hope this will help narrow the
discount to our asset value and deliver increased value to all
shareholders. The results and conclusion of the Board's evaluation
of the Dual Listing will be presented to the Shareholders
concurrently with the publication of the annual results.
Operationally, in 2016 we have made continued progress in
increasing gas sales on GSS through the enhancement, modification
and upgrade of our infrastructure. The compression enhancements
made to the gathering system infrastructure have borne fruit during
the year in terms of increased sales volumes from existing wells.
These enhancements and modifications, together with further
geologic analysis undertaken on GSS during 2016, will help to
ensure that future LiFaBriC wells are completed and connected
optimally to deliver gas for sale more rapidly.
With the ongoing support of the Central Government, increasing
interest and access to capital domestically as well as increasing
sales from our core assets, we are excited about 2017 and look
forward to a year of growth.."
Upstream
Production and infrastructure
-- Focus is maintained on infrastructure at GSS and recovering
increased volumes of gas for sale from existing wells
-- The compression project at GSS that commenced in 2016
continues with focus on rebalancing compression across the
gathering system through the redeployment of existing compressors
and the addition of new compressors
-- Following the successful screw compressor pilot test
undertaken in April 2016 a further 3 screw compressors have been
added to the system (total 4 screw compressors servicing 9 wells)
with additional screw compressors to be deployed in 2017
-- Of the 47 compressors available at GSS, a total of 46 have
been installed and are connected to the gathering system (including
the 4 screw compressors)
-- Successfully completed low cost re-drills of the lateral
portion of 2 LiFaBriC wells realising commercial gas sales levels
within90days
-- Installed more than 40 gas dehydration vessels with automated
liquid control valves to convert the existing gathering system to a
'dry-gas' system. This will reduce the level of water accumulation
in the system to guard against freezing and will deliver dry gas to
the IPF thereby improving the efficiency of IPF processing and the
quality of gas delivered to customers
-- Increase of 10 LiFaBriC wells connected to sales
infrastructure at GSS giving a total of 101 out of 126 GDG-operated
wells on line and producing gas for sale at year-end
-- Well count summary (all areas) at 31 December 2016 is as follows:
GSS GCZ GSN GPX GQY-A GQY-B GFC GGZ Total
----------------- ------ ---- ---- ---- ------ ------ ---- ---- ------
Well count:
Total wells* 1,588 114 201 12 7 52 30 33 2,037
Connected 681 114 - - - - - - 795
Wells producing
gas for
sale: 484 84 - - - - - - 568
Of which:
GDG** 101 - - - - - - - 101
CNOOC/CNPC 383 84 - - - - - - 467
----------------- ------ ---- ---- ---- ------ ------ ---- ---- ------
*LiFaBriC 80 - 3 2 - 6 2 - 93
**LiFaBriC 56 - - - - - - - 56
----------------- ------ ---- ---- ---- ------ ------ ---- ---- ------
-- Gross production capacity across all licence areas increased
by 9% to 11.22 bcf (2015: 10.31 bcf)
-- End of year gross production capacity exit rate of 12.05 bcf
per annum (2015: 12.12 bcf per annum)
-- The end-of-year gross production capacity exit rate
calculation and gross production capacity calculations have been
impacted by a change in measurement methodology by CNOOC in respect
of their operated well stock where flared gas is excluded from
capacity statistics.
Exploration
-- The GGZ block located in Guizhou province remains the focus
of exploration activity ahead of reserve certification submission
that is expected in 2017
-- Well performance testing continued through 2016 as part of
the reserve compilation process with 9 wells currently on
production (H1 2016: 2 wells)
-- Of the 9 wells on production 6 have reached commercial rates
of production fulfilling the per-well commercial production
requirement for reserve certification
The three further blocks - GFC, GPX and GQY - have been
re-evaluated and work-plans to conclude exploration established for
implementation in 2017
Downstream
-- Total equity gas sales increased by 5.6% to 3.41 bcf (2015:
3.23 bcf)with PNG representing 88% of the equity gas sales mix
(2015: 90%)
-- Sales at GSS increased by 34% year-on-year to 1.88 bcf (2015: 1.41 bcf)
-- Sales analysis by channel is as follows:
FY
1H 2015 2H 2015 1H 2016 2H 2016 2015 FY 2016
bcf bcf bcf bcf bcf bcf
------------------ -------- -------- -------- -------- ------ --------
GSS
PNG 0.55 0.52 0.67 0.80 1.07 1.47
CNG industrial 0.01 0.11 0.08 0.06 0.12 0.14
CNG retail 0.02 0.02 0.02 0.02 0.04 0.04
Power 0.08 0.09 0.12 0.12 0.17 0.24
-------- -------- -------- -------- ------ --------
Total GSS 0.66 0.75 0.89 0.99 1.41 1.88
GCZ - PNG 0.94 0.88 0.82 0.71 1.83 1.53
-------- -------- -------- -------- ------ --------
Total equity
gas* 1.60 1.63 1.71 1.70 3.23 3.41
======== ======== ======== ======== ====== ========
Retail - 3(rd)
party 0.26 0.21 0.18 0.14 0.47 0.32
-------- -------- -------- -------- ------ --------
Total gas sales* 1.87 1.84 1.89 1.84 3.71 3.73
------------------ ======== ======== ======== ======== ====== ========
Addition subject to rounding
*excludes CNOOC sales, subject to audit
Glossary of terms
GDG Green Dragon Gas
CNOOC China National Offshore Oil Company
CNPC China National Petroleum Corp.
GSS Shizhuang South (production block)
GCZ Chengzhuang (production block)
GGZ Boatian-Quingshan (exploration block))
PSC Production Sharing Contract
ODP Overall Development Plan
CRR Chinese Reserve Report
MLR Ministry of Land Resources
NDRC National Development and Reform Commission
PNG Pipeline Natural Gas
CNG Compressed Natural Gas
BCF Billion Cubic Feet
USD United States Dollar
RMB Chinese Renmimbi
GBP Great Britain Pounds
Equity gas Gas sourced from own production entitlement (excludes third party purchases)
-For further information on the Company and its activities,
please refer to the website at www.greendragongas.com or
contact:
Instinctif Partners
David Simonson / George Yeomans
Tel: +44 20 7457 2020
About Green Dragon Gas
Green Dragon Gas is a leading independent gas producer with
operations in China and is listed on the main market of the London
StockExchange (LSE: GDG). The Company has 549Bcf of 2P reserves and
2379Bcf of 3P reserves across eight production blocks covering
over7,566km(2) of licence area in the Shanxi, Jiangxi, Anhui and
Guizhou provinces. It holds six Production Sharing Agreements with
strong, highly capitalised Chinese partners including CUCBM (CNOOC,
0.833.HK), CNPC and PetroChina, and has infrastructure in place to
support multiple routes to monetise gas production.
This information is provided by RNS
The company news service from the London Stock Exchange
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