TIDMG3E
RNS Number : 3237R
G3 Exploration Limited
28 February 2019
28 February 2019
G3 EXPLORATION LTD.
("G3 Exploration", "G3E" or the "Company")
Annual Reserve Report
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 announce its reserves estimates as at 31 December 2018.
GDG G3E
(Blocks GSS and GCZ) (Blocks GGZ, GSN,GQY A & B,GFC,GPX)
----------------------- --------------------------------------
Bcf NPV10 US$M Bcf NPV10 US$M
--------- ------------ ------------------- -----------------
1P 129.1 653.1 5.1 28.6
--------- ------------ ------------------- -----------------
2P 338.4 1,652.7 70.7 815.7
--------- ------------ ------------------- -----------------
3P 1,083.3 4,941.9 1,002.3 7,648.5
--------- ------------ ------------------- -----------------
2C - - 667.8 -
--------- ------------ ------------------- -----------------
BPR - - 1,328.5 -
--------- ------------ ------------------- -----------------
GIIP 3,453.0 - 23,666.8 -
--------- ------------ ------------------- -----------------
No of No of Wells
Wells
--------- ------------ ------------------- -----------------
Wells drilled 1,442 349
--------- ------------ ------------------- -----------------
Source: Company estimates as of yearend 2018. Average gas price
US$8.98/Mcf for producing blocks.
USD/RMB FX Ratio of 6.8.
Note: Net gas reserves and NPV estimates are based on company's
participating interest in the blocks.
Note: 5% escalation applied per year to future operating costs,
capital costs and sales prices.
Highlights:
-- Total net proved 1P (P90) of 134 Bcf valued at US$ 682M (2017: 98 Bcf)
-- Total net proved + probable (P50) 2P of 409 Bcf valued at US$ 2.5B (2017: 377 Bcf)
-- Total net proved + probable + possible (P10) 3P of 2.1 Tcf
valued at US$12.59B (2017: 2.0 Tcf)
-- Best net contingent (2C) resources of 668 Bcf and Best net prospective resources of 1329 Bcf
-- Average wellhead gas price (inclusive of subsidy) of US$8.98/Mcf (RMB 2.16/m(3) )
The reserves estimates have been prepared by the company's team
of engineers on eight coal bed methane exploration and development
blocks namely GSS, GCZ, GSN, GQY-A, GQY-B, GGZ, GFC and GPX.
Randeep S. Grewal, Executive Chairman and Founder commented:
"Our large asset base is well accounted for in the released
annual reserves report which continues to reinforce the potential
of our quality and well positioned asset base in China.
In addition to the US$1.3 billion invested into the two
commercially producing GDG gas blocks in partnership with our
partners CNOOC and PetroChina, we have a further US$275 million
invested into our large exploration portfolio. In accordance with
our business plan, we expect to divest our producing blocks and
continue to focus on the appraisal of our large exploration
acreage.
Our twenty-two years of consistent dedication to developing CBM
in China continues to be strongly supported by Government
commitment to this vast domestic clean energy resource. We continue
our commitment to working closely with our partners CNOOC, CNPC and
PetroChina to conclude our focus on developing the remaining
exploration blocks and de-risk the development profile across our
vast acreage."
G3 Exploration Ltd; Exploration & Development Assets
Reserve volumes reported as at 31 December 2018 specifically
includes Guizhou block (GGZ), Shizhuang North block (GSN) and
Qinyuan block (GQY A&B) where the exploration team has made
significant progress towards the exploration and development of CBM
across the regions. The estimation of reserves and resources
reflects the following achievements during 2018:
-- Guizhou block (GGZ) exploration program concluded the Chinese reserve report successfully.
-- 12 wells placed online in Shizhuang North block (GSN).
-- 400 sq km of 2D Seismic added with an additional 14 wells
drilled in Qinyuan block (GQY A&B) for a total of 69 wells
drilled.
-- Exploration portfolio of 23.7 TCF of Gas in Place discovered.
Guizhou Province is located in southern China and currently
sources the majority of its gas needs by pipeline from other
provinces. As such, prices in Guizhou attract a transportation
premium to encourage the delivery of gas to the province. It is
expected that gas sourced and produced directly in Guizhou will
also benefit from this premium as it is a factor in determining
city-gate end user pricing, making these assets even more
desirable.
Proved reserves estimates Net Net Investment PV10
(US$M) (US$M)
------------------------------ --------------- --------
(Bcf)
------------------------------ -------- --------------- --------
Total
-------------------------------------------------------------------
Proved 1P (P90) 5.1 2.7 28.6
-------- --------------- --------
Proved + probable 2P (P50) 70.7 85.5 815.7
-------- --------------- --------
Proved + probable + possible
3P (P10) 1,002.3 498.2 7,648.5
-------- --------------- --------
GGZ Block
-------------------------------------------------------------------
Proved 1P (P90) 0.5 2.7 6.0
-------- --------------- --------
Proved + probable 2P (P50) 28.8 32.1 404.4
-------- --------------- --------
Proved + probable + possible
3P (P10) 100.9 117.5 1,412.4
-------- --------------- --------
GFC Block
-------------------------------------------------------------------
Proved 1P (P90) - - -
-------- --------------- --------
Proved + probable 2P (P50) 25.0 53.4 326.2
-------- --------------- --------
Proved + probable + possible
3P (P10) 229.2 380.7 3,015.4
-------- --------------- --------
GSN Block
-------------------------------------------------------------------
Proved 1P (P90) 4.6 - 22.7
-------- --------------- --------
Proved + probable 2P (P50) 16.9 - 85.1
-------- --------------- --------
Proved + probable + possible
3P (P10) 672.3 - 3,220.7
-------- --------------- --------
Best Resources Estimates Contingent Prospective
--------------------------
Net 2C Net BPR
(Bcf) (Bcf)
-------------------------- ----------- ------------
Total 667.8 1328.5
----------- ------------
GGZ Block 635.8 367.6
----------- ------------
GFC Block - 209.1
----------- ------------
GQY Block 32.1 736.3
----------- ------------
GSN Block - -
----------- ------------
GPX Block - 15.4
----------- ------------
Green Dragon Gas Ltd; Production Assets
GSS Block and GCZ Block are located in the southern Qinshui
Basin, Shanxi Province, China, which is one of the two areas in
China where the initial gas in place (GIIP) estimates are over
3,450 Bcf. GDG holds 47% and 60% of the participating interests in
the GCZ Block and GSS Block, respectively.
The 2018 reserve report includes all 1,442 wells operated by
GDG, CNOOC and PetroChina across these blocks in which the company
has varying equity interests.
Average wellhead price used in the reserves evaluation for year
2018 was US$ 8.98/Mcf (5% escalation thereafter) at the production
blocks, which is inclusive of Government subsidies.
Proved Reserves Estimates Net Net Investment PV10
(US$M) (US$M)
------------------------------ --------------- --------
(Bcf)
------------------------------ -------- --------------- --------
Total
-------------------------------------------------------------------
Proved 1P (P90) 129.1 48.9 653.1
-------- --------------- --------
Proved + probable 2P (P50) 338.4 141.2 1,652.7
-------- --------------- --------
Proved + probable + possible
3P (P10) 1,083.3 630.4 4,941.9
-------- --------------- --------
GSS Block
-------------------------------------------------------------------
Proved 1P (P90) 114.4 40.8 580.9
-------- --------------- --------
Proved + probable 2P (P50) 303.5 119.4 1,495.4
-------- --------------- --------
Proved + probable + possible
3P (P10) 1,023.2 588.9 4,686.5
-------- --------------- --------
GCZ Block
-------------------------------------------------------------------
Proved 1P (P90) 14.7 8.1 72.1
-------- --------------- --------
Proved + probable 2P (P50) 34.9 21.8 157.3
-------- --------------- --------
Proved + probable + possible
3P (P10) 60.0 41.4 255.4
-------- --------------- --------
The company estimates in this announcement have been prepared in
accordance with definitions and guidelines set forth in the 2007
Petroleum Resources Management System (PRMS) approved by the
Society of Petroleum Engineers. The information in this
announcement pertaining to the Company reserves have been reviewed
by Hassan Sindhu, the Company's Director of Resources Management,
who holds a Petroleum Engineering degree from the China University
of Petroleum.
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
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 409 Bcf of 2P reserves and 2,085 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
Glossary of terms:
1P Proved reserves
2P Proved plus probable reserves
3P Proved plus probable plus possible reserves
Bcf Billions of cubic feet
BPR Best prospective resources
CBM Coal bed methane
PV 10 Net present value calculated using a 10% discount
rate
ODP Overall Development Plan
OGIIP Overall Gas Initially In Place
Original Gas The total reserves contained in a reservoir.
In Place Only a proportion of the gas in place is recoverable
(see definition of Reserves below)
PSC Production Sharing Contract
Reserves Reserves are those quantities of hydrocarbons
anticipated to be commercially recoverable by
application of development projects to known
accumulations from a given date forward under
defined conditions
Tcf Trillions of cubic feet
USD United States Dollar
RMB Renminbi (official currency of the People's Republic
of China)
-END-
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END
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