TIDMG3E
RNS Number : 3003D
G3 Exploration Limited
30 January 2018
30(th) January 2018
G3 EXPLORATION LTD.
("G3 Exploration", "G3E" or the "Company")
2017 Operational Update and 2018 Outlook
G3 Exploration Ltd. (LSE: G3E), an independent specialist in the
exploration and development of coal bed methane gas (CBM) with
roots in China and a focus on international expansion, is pleased
to provide a trading update for the year ended 31 December 2017, as
well as an outlook for the year ahead.
Operational highlights
-- Total gross production for the full year 2017 was 10.09 Bcf,
a slight decrease in comparison to the same period in 2016 (11.23
Bcf). This is attributed to G3 Exploration's non-operated assets,
adjustments made in CNOOC's volume measurement methodology, as well
as a modest decline in production at the GCZ Block.
o The GSS Block, which is operated by the GE3 subsidiary, Green
Dragon Gas ("GDG"), saw a 10% increase in gross production to 4.47
Bcf for the year ended 2017, compared to 4.08 Bcf, during the same
period in 2016.
o The GSS Block, operated by CNOOC, reached total production of
2.63 Bcf in 2017, compared to 3.56 Bcf in 2016.
o Production at GCZ Block, operated by CNPC, was 2.99 Bcf in
2017 compared to 3.58 Bcf in 2016.
-- Total equity gas sales for the GSS operated wells and GCZ
CNPC operated wells for the full year of 2017 was 3.31 Bcf compared
to 3.41 Bcf during the same period in 2016.
o GSS equity sales, operated by Greka, increased to 1.94 Bcf
compared to 1.88 Bcf the prior year.
o GSS gross sales, operated by CNOOC, increased to 0.94 Bcf
compared to 0.69 Bcf the prior year.
o GCZ equity sales, operated by CNPC was 1.37 Bcf in 2017
compared to 1.53 Bcf in 2016.
-- Project Code approved for the Overall Development Plan (ODP)
from the NDRC on the Shizhuang South Zaoyuan portion of the Main
Block (GSS Block) and Chengzhuang Block (GCZ Block).
-- Concluded Supplementary Agreements with CNOOC, which confirms
that exploration can commence across Fengcheng (GFC), Qinyuan (GQY)
and Panxie East (GPX) Blocks.
-- Materially advanced exploration in Guizhou (GGZ Block) by
successfully drilling and completing 12 CBM production wells. G3
Explration has a 60% operating interest, while partner PetroChina
has a 40% interest in the block.
2018 operational outlook and targets
-- H1 2018:
o Monetisation of production assets GSS & GCZ through a Hong
Kong IPO.
o Issue dividend from the Hong Kong listing.
o Redeem Nordic & GIC Bond.
o Exploration drilling prioritised at Qinyuan (GQY), Fengcheng
(GFC) & Panxie (GPX) Blocks.
o Establish London headquarters and appoint a strategic
leadership team.
-- H2 2018:
o First gas expected at the GGZ Block in Guizhou Province.
o First gas expected at the Qinyaun (GQY) Block in Shanxi
Province.
o File ODP for the GGZ Block.
o Progress exploration at GFC & GPX Blocks and relinquish
non-prospective area
o Consider geographical expansion opportunities outside of
China.
Mr. Randeep S. Grewal, Executive Chairman, commented: "We spent
most of 2017 concluding seven years of title related matters, which
was successfully finalised at the end of the third quarter.
Subsequently our focus has been towards monetising our vast
acreage. During Q4 2017 we successfully drilled 12 more production
wells at our GGZ Block. Furthermore, the Board decision to launch
the Hong Kong listing of our commercially producing blocks, GSS and
GCZ, provides an optimum result on multiple fronts.
"The Hong Kong listing is envisioned to settle existing debt,
provide a dividend to our shareholders and an ideal segregation of
a dividend paying production asset portfolio from exploration asset
risks. The exploration assets, listed in London, will benefit from
the Hong Kong dividends, which will provide capital to fund the
continued exploration programmes and further asset distributions as
the blocks enter production.
"2018 if off to an exciting start and we expect it to continue
as we work to achieve the objectives set out, throughout the year,
in our operations, as well as continued value monetisation of our
existing assets. In March 2018, it will be 10 years since our first
LiFaBriC completed well, GSS008, commenced production, which has
produced 1.61 Bcf to-date, and continues to produce at a steady
rate. Continued production success is being replicated across our
asset portfolio. We anticipate two additional blocks to commence
production by yearend."
Producing assets (GSS & GCZ) as at year end 2017
-- GSS Block
o 130 operated wells are in production, of which 105 wells are
connected to sales infrastructure and selling gas.
o Of the 105 wells selling gas, 57 wells are LiFaBriC
completions.
o 46 compressors installed and are connected to the sales
gathering system.
o Successfully tested LiFaBriC re-drill of the lateral portion,
and realised commercial gas sales volumes within 90 days.
o 655 CNOOC operated wells currently in production, of which 324
wells are
connected to sales infrastructure and selling gas.
o 55 new wells brought on stream by CNOOC at year end 2017.
-- GCZ Block
o 102 CNPC operated wells currently in production, of which 85
wells are
connected to sales infrastructure and selling gas.
The gross production capacity comparison calculations were
impacted in 2017 by a change in CNOOC's measurement methodology in
respect of its operated well stock, where flared gas is excluded
from capacity statistics.
Exploration
-- The GGZ Block located in Guizhou Province remains the focus
of exploration activity. 12 CBM production wells were successfully
drilled in three major coal seams; namely Coal Seam 17, 19 and 29.
More than 10,000 metres were drilled for these 12 wells and the
fastest speed recorded of 431 metres per day of drilling was
completed by Greka Drilling Limited. In addition to the current
seven production wells on stream, the 12 newly drilled wells will
be stimulated and brought online in H2 2018, commencing initial gas
sales from the GGZ Block.
-- Regarding the three additional blocks - GFC, GPX and GQY,
geological dynamic models were updated, new wells were deployed,
geological field surveys were carried out, land leases were
acquired with civil work now ongoing to kick-off the 2018 work plan
for each block in H1 2018.
Well count summary at 31 Dec 2017 is as follows:
GSS GCZ GSN GPX GQY-A GQY-B GFC GGZ Total
----------------- ------ ---- ---- ---- ------ ------ ---- ---- ------
Well count:
Total wells* 1,339 114 201 12 12 47 30 45 1,800
Connected 490 102 - - - - - - 592
Wells producing
gas for
sale: 429 85 - - - - - - 514
Of which:
Greka** 105 - - - - - - - 105
CNOOC/CNPC 324 85 - - - - - - 409
----------------- ------ ---- ---- ---- ------ ------ ---- ---- ------
*LiFaBriC
Greka 80 - 3 2 - 7 2 3 97
**LiFaBriC
Greka 57 - - - - - - - 57
----------------- ------ ---- ---- ---- ------ ------ ---- ---- ------
Glossary of terms
G3E G3 Exploration
CNOOC China National Offshore Oil Company
CNPC China National Petroleum Corp
GSS Shizhuang South (production block)
GCZ Chengzhuang (production block)
GGZ Boatian-Quingshan (exploration block)
PSC Production Sharing Contract
ODP Overall Development Plan
BCF Billion Cubic Feet
USD United States Dollar
RMB Chinese Renmimbi
For further information on the Company and its activities,
please refer to the website at www.g3-ex.com or contact:
FTI Consulting
Edward Westropp / Kim Camilleri / Elizabeth Burnham / Toby
Chidavaenzi
Tel: +44 20 3727 1000
About G3 Exploration Ltd.
An independent specialist in the exploration and development of
coal bed methane gas (CBM); G3 Exploration has accumulated a unique
wealth of experience through its significant 25 year track record
of technology-led exploration and drilling success in CBM, across
different geographies.
G3 Exploration's intention is to leverage its expertise,
monetise its current 7112km(2) acreage position in mainland China
and widen its asset portfolio into other prospective geographies
across Africa, Europe and Asia, utilising its proprietary knowledge
and experience in exploiting CBM resources. Furthermore, G3
Exploration has interests in Green Dragon Gas, which comprises of
two producing assets with an acreage of 455km(2) in Shanxi
province, China
G3 Exploration is listed on the main market of the London Stock
Exchange (LSE: G3E).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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