Green Dragon Gas
Green Dragon is the parent company of Greka China, and is exclusively focused in gas industry in China. Green Dragon operates within China under its subsidiary Greka China Green Dragon is a gas supplier based in China with a focus on the production, development, production, distribution and sales of natural gas from coal seams, commonly known as coal bed methane or CBM.
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Green Dragon Gas to take Sinoenergy stake to expand Chinese CBM upstream business
Green Dragon Gas (LON:GDG) has agreed to acquire an equity interest in Sinoenergy, moving towards its goal of building a significant coalbed methane (CBM) upstream business in China.
Sinoenergy is one of the few main manufacturers of compressed natural gas (CNG) trailers within China, the group said in a statement.
Its acquisition will help Green Dragon gain incremental access to the midstream and downstream sales infrastructure within niche geographical locations in China, facilitating the distribution of its potentially very significant and developing upstream CBM gas production.
Green Dragon will make an initial investment of approximately US$35 million for a minimum equity interest of 33.3%, and possibly up to 59.3% in the operating business.
The precise equity interest will be concluded upon the completion of the ongoing corporate re-organization and related approvals, which are expected prior to December.
The transaction is expected to be completed before year-end.
Green Dragon said that the deal will significantly expand its CNG retail technology division as well as allow it to capture the highest margin business within the gas value chain.
Sinoenergy has an annual production capacity of 300 CNG trailers. Each trailer sells for approximately US$150,000. Its downstream assets include 13 CNG retail locations.
The acquisition will also help Green Dragon achieve its goal of increasing the number of its CNG fuelling locations to over 100 with a capacity of 18 billion cubic feet (Bcf) by the end of 2012.
In addition to that, the midstream wholesale distribution business expands Green Dragon Gas's existing potential gas swap locations from two to five and also adds Sinopec (NYSE:SNP) as a partner, alongside Petrochina (NYSE:PTR).
Petrochina and Sinopec are the key operators of the gas transmission pipeline infrastructure in proximity to the company's GSS production block.
Green Dragon aims to build a significant China CBM upstream business with a substantial gas distribution network in China superimposed by proprietary technology.
"This acquisition provides all these ingredients synergistically.
"Through the transaction, Green Dragon Gas's technology division will become a 'one stop shop' in China for CNG distribution equipment; with capacity to manufacture CNG related equipment in upstream Gas Production monitoring systems, car conversion kits, electric control devices for automobiles and fleet transport, CNG transport manufacturing, natural gas flow monitoring systems and CNG dispensers for refuelling stations," said chairman and chief executive of Green Dragon Gas Randeep Grewal.
The deal was funded from existing cash resources, which got a massive injection after a recent US$50 million fundraising through a bond issue.
Sinoenergy has been operating in China since 2004, and it is expected to have annual revenues of USD 50 million for this year with a gross margin of approximately 25%. Its total assets are worth US$209.8 million.
Other Green Dragon Gas news
- Green Dragon’s Grewal speaks at prestigious Chinese conference
2011-08-31 - Green Dragon Gas chairman Grewal appointed to provincial gov't board in China
2011-08-03 - Green Dragon Gas says Chinese CBM contracts remain in ‘full force and effect’
2011-03-12 - Enter the Dragons: China's coal bed methane specialist prepares to do the splits
2011-02-16 - Green Dragon Gas to move ahead with Hong Kong IPO
2010-11-09
