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 move ahead with Hong Kong IPO
Green Dragon Gas has decided to proceed with a main board listing on the Hong Kong Exchange in 2011 and has requested a quote for the supply of a drilling fleet of 25 rigs, complementing its existing drilling fleet of 7 rigs.
The group believes that Hong Kong provides the optimum market due to the connection with its China-focused operations and the greater institutional appreciation of the value of the company's unconventional gas assets and understanding of the China country risk along with the success of other recent moves from AIM to the Hong Kong Main Board.
The group is involved in the production of coal bed methane (CBM) gas and the distribution and sale of wholesale gas in China. This listing decision follows the appointment of CLSA to advise on Green Dragon's Asian capital markets strategies. The current AIM listing is expected to be maintained following such listing.
Green Dragon has asked five selected manufacturers to quote for the supply of a drilling fleet of 25 rigs, with deliveries expected to start in 2011 so as to facilitate an aggressive drilling program in Shizhuang South (GSS).
The rigs will be relocated to other blocks or to third parties following the full development of GSS. Each of these rigs will be deployed to drill SIS (Surface to in-seam) wells and substantially increase the drilling capacity from the current two rigs that validated this commercial technique. Green Dragon plans to select the supplier before the end of 2010.
The company also announced the termination of the farm out agreement (FOA) between its wholly-owned subsidiary Greka Energy (International) BV and ConocoPhillips (NYSE: COP) unit ConocoPhillips China Inc regarding Green Dragon's coal-bed methane interests in China. The deal was originally announced in August 2009.
Each party to the FOA has confirmed that the FOA has been terminated. Greka is engaged in discussions with ConocoPhillips China to resolve the specific terms of the termination.
To date, ConocoPhillips China has made payments totalling US$42.63 million, which has primarily been applied in the development of surface-to-inseam wells at the GSS PSC.
Green Dragon had recently moved its drilling operation from GSS to the Qinyuan Block (GQY) where ConocoPhillips China elected not to fund the work program leading to the delivery of the termination notice by Greka.
Under the FOA, ConocoPhillips China was entitled to acquire a 50 percent share of certain Green Dragon gas assets once it had met its commitment to fund US$50 million and elected to farm in under the FOA.
The failure to pay such amounts, together with the termination of the FOA, means that ConocoPhillips China has forfeited its right to acquire a share of those assets and, as a result, Green Dragon retains the full right, title and interest in the entire 2.1 trillion cubic feet within the Shanxi PSC. The termination of the FOA removes the uncertainty associated with ConocoPhillips China's option.
Chairman and chief executive Randeep S. Grewal said: "Hong Kong is increasingly becoming a home for commodity and asset backed companies which have core operations in China or are linked to the Chinese consumer. There have been several recent examples of successful Chinese companies migrating from AIM to the Hong Kong main board and achieving increased investor recognition and material increases in valuations as a result. We intend to replicate such successes with a primary listing in Hong Kong."
"The elimination of the Conoco option removes the ambiguity surrounding the company's reserve ownership and will simplify the listing process," he added.
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 take Sinoenergy stake to expand Chinese CBM upstream business
2010-10-08
