TIDMG3E
RNS Number : 0647R
G3 Exploration Limited
26 February 2019
26 February 2019
G3 EXPLORATION LTD.
("G3 Exploration", "G3E" or the "Company")
Dividend in Specie Declaration and Asset Sale Update
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, confirms
details of a Dividend in Specie for the production assets and
provides an update on the sale process for those assets.
Dividend in Specie
G3 Exploration shareholders on the register as of the effective
date 29 March 2019 will receive a direct interest in Green Dragon
Gas ("GDG"), the Company's 100% owned subsidiary which holds its
producing assets. The Dividend in Specie will represent 100% of the
commercial producing assets and G3 Exploration will retain all its
exploration and development assets.
The structure will enable qualifying G3E shareholders to
potentially benefit from the free cash flow generated by the
producing assets whether via a trade sale or an IPO and separate
listing.
All G3E shareholders on the effective date shall receive a GDG
share deposited into their crest account holding the G3E shares.
Such GDG dividend shall be deposited on or before 28 June, 2019.
The dividend on deposit day could be either in the form of cash or
shares in GDG, depending on whether any of the producing assets
have been monetized by that date.
Monetization of Production Assets
As announced on 30 January, the Company has engaged Citigroup
and Credit Suisse to explore possible monetization options for GDG.
Through discussions with various parties over recent months it
became clear to management that trade sales may provide a better
monetization event for shareholders than an IPO and as a result,
the Board directed that this option be assessed prior to proceeding
with the planned listing of GDG on the Hong Kong Stock
Exchange.
As such, sales processes for the producing assets are underway
with discussions for the sale of Block GCZ with bids expected from
a number of interested parties in March. GCZ has a 1P NPV10 of $72
million and a 2P NPV10 of US$157 million as of yearend 2018. The
block has an approved Overall Development Plan in current execution
with partner CNPC-PetroChina which is expected to deliver gas sales
of 6.35 bcf per year upon completion in 2020.
A separate sales process is also underway for the larger Block
GSS which has a 1P NPV10 of US$ 580 million and a 2P NPV10 of
US$1.6 billion as of yearend 2018.
In the event that the sales processes do not result in the exit
of both producing assets, an IPO on the Hong Kong Stock Exchange
for those assets will be commissioned.
Use of Proceeds
The flow of funds from any GDG asset sales will first pay down
the c.US$270m debt owed to G3E and thereafter to the shareholders
via the Dividend in Specie. G3E shall in turn first use c.US$150m
of those receipts to settle its outstanding debt, including to its
Nordic Bond holders and Convertible Bond holders.
The c.US$120m of excess funds, less expenses, will be used by
G3E to fund working capital and an accelerated exploration and
development programme, with a priority on Guizhou Block (GGZ) which
should enter production during 2019.
Randeep Grewal, Executive Chairman, commented:
"The approval of the Dividend in Specie, our third since 2006,
is a landmark moment for G3 Exploration which will allow us to
complete the planned separation of the producing assets from our
exploration and development assets. Crucially, it provides a
mechanism for us to return the value created within the producing
blocks - where over US$1.3 billion has been invested by us with our
partners - to our shareholders.
The sales process for the two producing blocks is being managed
by Citigroup and Credit Suisse.
As well as potentially returning cash to shareholders, the exits
will provide the means to paydown G3E's debt and fund an
accelerated exploration and development programme which continues
to be our core business and has been the foundation of the business
for over twenty years."
The Company has an updated corporate presentation on its website
and management will be hosting an investor conference call at
9.30am (UK) on Thursday 28 March 2019.
Please see the dial-in details below:
United Kingdom: +44 203 059 5868
Hong Kong +852 3008 1745
When dialing in, please state the title of the call: "G3
Exploration -- Investor Conference Call."
For further information on the Company and its activities,
please refer to the website at www.g3-ex.com or contact:
FTI Consulting
Ben Brewerton / Genevieve Ryan / Tom Pigott
Tel: +44 20 3727 1000
Email: g3e@fticonsulting.com
About G3 Exploration Ltd.
G3E is a leading independent gas producer with operations in
China and is listed on the main market of the London Stock Exchange
(LSE: G3E). The Company has 377 Bcf of 2P reserves and 2,044 BCF of
3P reserves across eight production blocks covering over 7,566km(2)
of license area in the Shanxi, Jiangxi, Anhui and Guizhou
provinces. It holds six Production Sharing Agreements with strong,
highly capitalised Chinese partners including CNOOC, CNPC and
PetroChina, and has infrastructure in place to support multiple
routes to monetise gas production.
The company is committed to an exploration and appraisal focused
business plan in coal bed methane development across three
geographies concurrently. It has a well-established track record
and has demonstrated perseverance in going the distance to monetise
shareholder value through three basic principles:
-- Focus on core intellectual aptitude in developing coal bed methane
-- Develop assets in an environmentally and socially prudent manner
-- Protect accreted shareholder value
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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