11th Aug 2014 10:48
LONDON (Alliance News) - Green Dragon Gas Ltd Monday said it has entered a cooperation agreement with China National Petroleum Corp which reaffirms its 47% stake in the Chengzhuang block, a 67 square kilometre area within the Shizhuang South production-sharing contract first entered into in January 2003, and secures future cashflows from the 104 wells drilled there.
Under the terms of the cooperation agreement, which ends on March 31, 2033, China National Petroleum Corp and China United Coalbed Methane Corp Ltd will transfer their rights and obligations under the production-sharing contract relating to the Chengzhuang block to Petrochina Co Ltd. The participating interests of the parties in the block with be PetroChina with 53% and Green Dragon with 47%. PetroChina will be the operator of the block.
According to Green Dragon Gas's statement, the parties have agreed that PetroChina will recover in full all unrecovered exploration costs, development costs, operating costs and deemed interest from the effective date of the production-sharing contract, which have been audited, before Green Dragon recovers its unrecovered exploration costs and receives its allocation under the production sharing contract. Gas production and sales from the block commenced on March 3, 2010.
PetroChina incurred CNY790 million of total costs, while the unrecovered balance stood at CNY173.0 million of exploration and development costs on the block for the same period, between the effective date of the Shizhuang South production sharing contract and the end of 2013.
The companies also agreed to seek to apply to the relevant ministry for approval not to prepare or submit an overall development plan with respect to the block. Instead, the parties intend to formulate expenditure and work programmes alongside operational progress.
"Under the terms of the cooperation agreement we look forward to a twenty-year partnership with PetroChina and CNPC within the GCZ Block," Randeep Grewal, Green Dragon's Chairman and founder, said in a statement.
"This agreement cements Green Dragon's ability to get its proportionate share of the cashflows from the GCZ Block following the return of the development investment which we expect to be in 2015," Grewal said.
"In conclusion, Green Dragon got carried on the entire development of the coal seam 3 while retaining the 47% direct equity interest. An outcome we are quite pleased with following several years of negotiations," Grewal added.
Green Dragon shares were Monday untraded at 495.00 pence.
By Samuel Agini; [email protected]; @samuelagini
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