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G3 Exploration Ltd: DEEP DIVE

G3E working on divestment of Green Dragon assets

China asset GGZ will be spun off in 2020 as a dividend in specie
OVERVIEW: G3E The Big Picture
G3E Ltd will look for new geographies


  • Spin-off the producing side of its Chinese coal bed methane (CBM) business should complete in June

  • Shareholders to receive cash or a share in Green Dragon Gas, the producing business

  • G3E will retain the remaining development and exploration blocks

  • These blocks include GGZ, GSN, GQY A & B, GFC and GPX

  • GGZ (Guizhou) will be spun off 2020 as another dividend in specie

  • G3E will develop businesses in China, UK and Southern Africa

  • G3E (LON:G3E) will remain listed in London while Green Dragon will be sold


What it owns

Estimated 25 Tcf gas in place currently, of which 2.5tcf will be divested with Green Dragon Gas (GDG)

Green Dragon owns a 47% stake in Block GCZ (Chengzhuang) in China with proven probable reserves (2P) of US$157mln and where its partner is PetroChina.

At Block GSS (Shizhuang South) proven reserves (1P) alone are worth an estimated US$580mln with Green Dragon owning 60% and CNOOC its partner.

Money from any sale will be used in the first instance to pay off US$270mln of debt owing to G3E, which will enable it to clear US$150mln of Nordic bonds and convertible loans.

The remaining US$120mln will fund G3's development of the Guizhou Block (GGZ – 60% owned by G3), which is scheduled to start production this year.


2018 results

The China-focused group reported US$28.6mln of revenue for the 12 months ended 31 December, up 11% from the US$25.7mln in 2017.

Cash inflows amounted to US$3.4mln.

Earnings (EBITDA) at the GDG business was marked at US$16.3mln, while the group’s net loss narrowed to US$9.1mln from US$24.6mln.

The company said that the GSS unit had gross sales of 3.39bn cubic feet, representing an 18% increase due to the performance of CNOOC operated wells, while the GCZ unit saw a 20% decline in sales at 2.27bn cubic feet.




Inflexion points

  • Plan is to spin off GGZ in 2020

  • GGZ/Guizhou, where G3E has a 60% stake, is scheduled to start production this year


Blue Sky

Potential proceeds from assets sales exceeds expectations

Development potential of other Chinese acreage can boost G3's value

At 39p, G3E is valued at £60mln



View full G3E profile View Profile

G3 Exploration Ltd Timeline

February 28 2019

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