2016 was an auspicious year for China-focused coal bed methane producer Green Dragon Gas Ltd (LON:GDG).
Founder, chairman and chief executive officer Randeep Grewal talks Proactive Investors through the highlights of a year in which the company has started to reap the rewards of its hard work.
With the company’s maiden profit under its belt in 2015, Grewal said: “What we’re truly focused on is completing what we have started, so this is our year to … start monetising the returns that we’ve been working so hard to do over the last 20 years.”
Green Dragon had eight exploration blocks and two in production, and one of the targets at the start of the year was to move a third block from exploration into development, and this was achieved last month with the Guizhou block.
Asked whether the company is being affected by the rocky ride for commodities this year, Grewal replied: “The beautiful thing about working in China is, we’re not.”
The decline in the value of the Chinese currency in dollar terms has had a bit of an effect, “but when it comes to commodity prices, certainly we’ve seen a bit of a down-take in terms of energy prices in China, but the government’s been … very creative and constructive. They’ve doubled our subsidy and essentially offset that change in pricing.”
“Again, the benefit of working in China is that it provides us with stability, and we really enjoy that,” Grewal said.
Green Dragon has applied for approval of the Chinese Reserve Report for Guizhou from the Ministry of Land Resources, which is a precursor to approval of the overall development plan (ODP) and expected to come through in 2017.
“Our doors are wide open to invite a partner in, because we do see that as a farm-out block,” Grewal disclosed.
A “solid partner” who is interested in domestic gas production in China is the company’s preferred funding option for development of the block.
Grewal also talked about GSS 008, which has been in production since 2008, describing it as “the gift that keeps on giving”.
“I think it is a great example of the potential of the LiFaBric technology,” Grewal asserted. LiFaBric is the technology the company developed for tapping into unconventional gas sources in China.
“We’ve truly mastered producing gas, without a drop of chemical, without frakking, in highly faulted coals. GSS is the first of many LiFaBric wells.
“It is the beginning of a string of successes,” the Green Dragon founder promised.