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Green Dragon Gas inks MOU to confirm participating interests in Chengzhuang block

Last updated: 17:26 12 Dec 2013 AEDT, First published: 18:26 12 Dec 2013 AEDT

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Green Dragon Gas (LON:GDG) reported progress in better understanding the repercussions of third party drilling on its licences.

It has inked a memorandum of understanding (MOU) with PetroChina to confirm its participating interests in the Chengzhuang block (GCZ), which is  part of the Shizhuang South production sharing contract (GSS).

This follows news in October that Green Dragon's  Chinese state-owned partners drilled as many as 1,500 wells on five of its six licences without it knowing.

PetroChina will now provide all information to complete an audit so as to conclude and accept the capital expenditures incurred to develop the block, the gas production, gas sales and related revenues.

PetroChina will continue to be the operator of the GCZ block and Green Dragon will continue to operate GSS.

Green Dragon's founder and chairman Randeep S. Grewal said on Thursday: "We are pleased to be in continued cooperation with PetroChina and look forward to partnering with them as they operate the GCZ block. 

"Following the upcoming audit, we will be able to confirm the amount of expected receivable from prior year gas sales as well as the related capital spent for the block's development. 

"We now look forward to progressing this MOU to a successful conclusion for our shareholders early in 2014."

The drilling by third parties has boosted the firm's net proven (1P) reserves by 400% from 59 billion cubic feet (Bcf) to 300 Bcf, it reported at the end of October.

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