Green Dragon Gas (LSE:GDG), China's largest independent coal bed methane ("CBM") gas company, is pleased to announce that the Company's wholly owned subsidiary Zhengzhou Greka Gas Co. has signed a 10-year offtake agreement (the "Agreement") with Shanxi Guohua Energy Company Limited ("Shanxi Guohua"), a joint venture between Shanxi International Energy Group and Sinopec, for the sale of CBM gas from the Company's Shizhuang South and North blocks, in Shanxi Province. The Agreement is separate and in addition to the existing 20-year offtake agreement with PetroChina Huabei Oilfield Company Limited.
Key terms of the Agreement
Under the Agreement, the Company can sell gas from its GSS (Shizhuang South) and GSN (Shizhuang North) blocks to Shanxi Guohua's delivery point near the Guxian compression station, in Shanxi Province with pricing annually agreed and reviewed between the parties.
The table below references the maximum amounts that can be annually supplied; there are no minimums:
|
Year
|
Gas Supply Volume (Bcf)
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Gas Supply Volume (cubic meters)
|
|
2015
|
1.8-2.5 Bcf
|
50-70 million cubic meters
|
|
2017
|
3.5-12.4 Bcf
|
100-350 million cubic meters
|
|
2020
|
12.4-17.7 Bcf
|
350-500 million cubic meters
|
|
2025
|
17.7-24.7 Bcf
|
500-700 million cubic meters
|
The commencement of CBM gas supply is expected to occur between 31 December 2014 and 30 May 2015, and the Agreement will be valid until 31 December 2025.
Commenting on the announcement, Randeep S. Grewal, Chairman and CEO of Green Dragon Gas, commented:
"We are delighted to have successfully secured this long-term offtake agreement with such a significant partner. The Agreement not only secures a major revenue stream for the Company over the next decade, but also diversifies our options for monetising our gas. This contract is the second such agreement signed by the Company for PNG, the first being the Petrochina Huabei pipeline contract first announced on 5 July 2011, which already covers up to [6.45 Bcf] gas sales per annum.
"I look forward to successfully developing our partnership with Shanxi International Energy Group and Sinopec as Green Dragon continues with our strategy of building the leading upstream unconventional gas producer in China."
ENDS
For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact:
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Stephen Hill, VP Corporate Finance
Green Dragon Gas
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+852 3710 0108
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Sarah Wharry / Richard Redmayne
Cantor Fitzgerald Europe - Broker
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+44 20 7894 8896
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|
Richard Crichton / Andy Crossley
Peel Hunt - Broker
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+44 20 7418 8900
|
|
Tom Reid / Samit Parekh / Luke Spells
Citigroup - Broker
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+44 20 7986 4000
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|
David Simonson / Anca Spiridon / Harry Cameron
Instinctif Partners - Public Relations
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+44 20 7457 2020
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About Green Dragon Gas
Green Dragon is a focused upstream (Exploration & Production) company, concentrating on its core asset value proposition over eight blocks, two of which are producing. The enterprise's blocks are located within six Production Sharing Contracts across four Provinces: Shanxi, Anhui, Jiangxi and Guizhou.
About Sinopec
China Petrochemical Corporation (Sinopec Group) is a petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group is a state-owned company solely invested by the State, functioning as a state-authorized investment organization in which the state holds the controlling share. Headquartered in Beijing, Sinopec Group has a registered capital of RMB 182 billion (USD 30 billion).
About Shanxi International Energy Group
Shanxi International Energy Group (SIEG) is one of the twelve biggest state-owned enterprises in Shanxi Province, mainly engaging in the investment of energy projects, including electric power, coal, gas, new waste energy, sewage disposing, power, tourism and real estate. SIEG operates more than 30 subsidiaries, with total assets of RMB 30.3 billion (USD 5 billion).