TIDMG3E
RNS Number : 7576C
G3 Exploration Limited
03 October 2018
3RD October 2018
G3 Exploration LTD.
("G3E", "G3 Exploration" or the "Company")
Chengzhuang Block Overall Development Plan Approval
G3 Exploration Ltd. (LSE: G3E), an independent specialist in the
exploration and development of coal bed methane gas ("CBM") with
roots in China and a focus on international expansion, today is
pleased to announce that the China National Development and Reform
Commission (NDRC) has issued its final approval for the Overall
Development Plan (ODP) on the Chengzhuang Block (GCZ).
NDRC has approved the ODP, consistent with its policy to
accelerate CBM development in China, boost green energy supply, and
improve coal mine safety production and to reduce CO2 emissions.
This final NDRC approval facilitates the permits for the Company
and its partner to further develop the acreage.
The Company has a 47% participating interest in the GCZ Block
with its 53% partner, China National Petroleum Corporation
(CNPC).
GCZ ODP highlights
Ø The project is located in Shanxi Jincheng Qinshui county with
a contract area of 67 km(2) of which ODP covers an area of 33
km(2)
Ø The ODP area of 33 km(2) has 294 Bcf of gas in place with
estimates of recoverable proved reserves of 176 Bcf
Ø 114 wells have been drilled on the acreage of which 85 wells
are selling gas
Ø The development plan includes the drilling of an additional
147 production wells
Ø Acreage contains coal seam #3 & #15 gas bearing
reservoirs
Ø Gross production capacity from the ODP is estimated to be 180
million cubic meters per year (6.35 Bcf per year)
Ø The development cost for GCZ is expected to be c. US$55
million over the next two years starting from fourth quarter 2018.
Each party is expected to invest according to its participating
interest in the Block
Ø GCZ is a commercial gas producing block which has been
profitable since September 2015 and continues to be so
Ø The GCZ Block is jointly operated by CNPC and the Company
through a joint management team based in Jincheng, Shanxi
In addition to the above, NDRC approval has emphasised on
strengthening the health, safety and environment (HSE) management
systems to fulfill the objective of no accidents and zero pollution
to the environment. Regarding HSE, the Company has since inception,
along with its Chinese partners, been committed to working to the
highest standards of HSE in all of its operations. Our teams have
diligently been committed to safety at all times with zero lost
time incidents recorded year-on-year.
Randeep S. Grewal, Founder and Chairman of G3 Exploration:
"We are very pleased and honoured with the timely approval of
the GCZ ODP Plan as submitted by our Joint Operating Team with
CNPC. Such approval simplifies the continued expansion and
development of the commercially producing area within the
profitable block. As the teams have been preparing for such
approval, the development programme is expected to be launched
following the Golden Week holidays or mid-October 2018.
Both of our Green Dragon Gas commercially producing GCZ and GSS
Blocks are specifically mentioned within China's 13th Five-Year
Plan as being critical to domestic gas supply requirements. The
current GCZ ODP approval is a precursor to our expectation of an
expedited ODP approval for the GSS Zaoyuan ODP plan over 50km(2)
which itself will be the first of several ODP plans within the
388sqkm GSS gas block. The Government's focus on increasing
domestic gas supply is being demonstrated by its efficiency in
approving the proven core production gas fields for an expedited
clean energy supply."
About the Chengzhuang Block (GCZ Block)
The GCZ Block is located in the Qinshui Basin with an area of 67
km(2), approximately 20 km south of the Greka Shizhuang South Main
Block ("GSS Block"). Reservoir properties and geological settings
are similar to those found in the GSS Block. There are two major
laterally continuous shallow coal seams present throughout the GCZ
Block, namely, coal seam #3 and #15. CBM in this area is imbedded
in the coal formations at average depths, ranging from 300 m to 600
m. The Block has been in commercial production since 2010.
The Block is producing a stable cash flow, which is split in
proportion to working interests between GDG (47%) and CNPC (53% -
operator) since the completion of CNPC's cost recovery pool in
August 2015.
As per the NSAI Reserve Report of 31 December 2017, GCZ Block
has original gas in place of 275 Bcf. The Block has 14 Bcf in net
1P gas reserves, 31 Bcf in net 2P gas reserves and 56 Bcf in net 3P
gas reserves with future NPV 10 of US$72 million in 1P, US$154
million in 2P and US$288 million in 3P.
* Exchange rate used in conversion of RMB-USD is 6.80.
Glossary of terms
CNOOC China National Offshore Oil Company
CNPC China National Petroleum Corp
GSS Shizhuang South (production block)
GCZ Chengzhuang (production block)
ODP Overall Development Plan
BCF Billion Cubic Feet
USD United States Dollar
RMB Chinese Renmimbi
For further information on the Company and its activities,
please refer to the website at www.g3-ex.com or contact:
FTI Consulting
Ben Brewerton/ Genevieve Ryan
Tel: +44 20 3727 1000
About G3E
G3E is a leading independent gas producer with operations in
China and is listed on the main market of the London Stock Exchange
(LSE: G3E). The Company has 559Bcf of 2P reserves and 2,386Bcf of
3P reserves across eight production blocks covering over 7,566km(2)
of license area in the Shanxi, Jiangxi, Anhui and Guizhou
provinces. It holds six Production Sharing Agreements with strong,
highly capitalised Chinese partners including CNOOC, CNPC and
PetroChina, and has infrastructure in place to support multiple
routes to monetise gas production.
The Company is committed to an exploration and appraisal focused
business plan in coal bed methane development across three
geographies concurrently. It has a well-established track record
and demonstrated perseverance in going the distance to monetise
shareholder value through the below key basic principles:
-- Focus on core intellectual aptitude in developing coal bed
methane
-- Develop assets in an environmentally and socially prudent
manner
-- Protect accreted shareholder value
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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