2nd Apr 2014 08:22
LONDON (Alliance News) - Shares in Green Dragon Gas Ltd rose in trading on the AIM market Wednesday, after it said it had inked an agreement with China United Coalbed Methane Corp to extend their partnership on five production-sharing contracts in China.
China United is a subsidiary of oil major China National Offshore Oil Corporation.
China United has committed to invest a further USD100 million into Green Dragon for a further 10% working interest in the business. It will continue to co-operate with Green Dragon to share information across all the wells drilled on the production sharing contracts.
Additionally, the production sharing contract exploration terms have been extended for a further 2 years, and Green Dragon expects USD250 million in additional infrastructure investment from China United for its GSS block.
The company said this agreement secures it an interest and revenue share of around 1,600 wells drilled by China United.
"This agreement substantially de-risks the company's assets, paving the way for us to rapidly build on existing production and sales and to fully realise the market potential for our gas in China," said Green Dragon Founder and Chairman Randeep Grewal in a statement.
Green Dragon said that, given the extend of drilling already undertaken over the last two years that was not accounted for in previous reserve audits, it expects to see a "significant migration" of its reserves. Following the audit of its reserves, Green Dragon will focus on its 150 LiFaBriC well drilling programme at the GSS block.
Shares in Green Dragon were trading up 24% at 402.80 pence Wednesday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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