G3 Exploration Ltd (LON:G3E) said it will push ahead with plans to spin-off its Chinese coal bed methane (CBM) business as it reported strong progress at its exploration and production assets.
The company announced in December that it will separate its main producing assets – blocks GSS and GCZ in the southern Qinshui Basin, Shanxi Province, China – into a new Hong Kong listed business to be called Green Dragon Gas (GDG).
The remaining development and exploration blocks, including GGZ, GSN, GQY A & B, GFC and GPX, will stay in G3E and remain listed in London.
G3E will also maintain a direct shareholding of up to 25% in Green Dragon following the split and initial public offering on the Hong Kong Stock Exchange.
In the group’s annual independent updated reserves report, the company said it had total net proved 1P reserves of 96.7 billion cubic feet of natural gas (bcf) valued at US$474mln.
Total net proved and probable 2P reserves stood at 377.1 Bcf valued at US$2.42bn while 3P reserves were 2044.4 bcf worth US$12.75bn.
China assets well-positioned, says chairman
"Our annual independent updated reserves report reinforces the potential of our quality and well positioned asset base in China,” said Randeep Grewal, chairman and founder.
Grewal added that the GGZ block in the Guizhou Province of China is “progressing well” towards development with first gas anticipated this year, as planned.
Last year the group successfully completed 12 coal bed methane gas production wells in multiple CBM gas reservoirs and has seen “continuous and stable” pilot commercial output from seven CBM wells.
It also finalised an initial pilot gas sales programme for current gas producing wells.
“Once in production, the GGZ Block will be the next asset to be ring-fenced for sale, farm-out or a dividend in specie, as per producing blocks, GSS and GCZ, which are presently planned to be included in the Hong Kong IPO of GDG,” he said.
"Our continued primary focus is to explore and develop our remaining exploration blocks and dis-risk the development profile across our vast acreage with our partners CNOOC, CUCBM, CNPC and PetroChina."