Green Dragon Gas Ups China Gas Resources

China focused coal bed methane player, Green Dragon Gas has announced an increase in its estimated reserve values as at 31 December 2013, as provided by independent reserve engineers Netherland, Sewell & Associates, Inc (NSAI).

According to the company net 1P reserves increased 113% to 126 Bcf, net 2P reserves was up 22% to 382 Bcf while net 3P reserves decreased by 5% to 2,382 Bcf.

Total original gas in place of 25.2 Tcf on six blocks has been reported.

According to Greed Dragon, the increase in audited reserve numbers incorporates the 1300 wells approximately drilled by the company's partners across the acreage.

“Drilled wells not in commercial gas production as of 2013 year-end, were not included by NSAI in their 1P and 2P categories. As the wells de-water and commence commercial gas production, the related reserves will migrate into the 1P and 2P category respectively. As announced in October 2013, the Company estimates its total reserves (including such wells) to be 300 Bcf in 1P and 600 Bcf in 2P which it expects to be realised as the required infrastructure is built over the next fifteen months,” the company said.

As announced last month, the company's partner CUCBM expects to spend up to $250m in completing this objective.

"The company is going through a transformational growth trajectory and this reserve audit values the paradigm shift at a static point, 31 December, 2013. With an equity interest in over 1800 wells which are in varying stages of commerciality, the reserve migration towards 1P will continue. The material transactions with CNOOC, CUCBM, PetroChina, CNPC and resulting beneficial economic benefits to Green Dragon from over $1 billion of deployed capex have been included by the independent reserve engineers when concluding the net present values in this audit of the forecasted revenues,” Randeep S. Grewal, Chairman and Founder of Green Dragon Gas, commented.