China’s leading
independent gas
producer
October 2014
Disclaimer
This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares of Green Dragon Gas Ltd. (the
“Company”) in any jurisdiction. The Company’s shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) and
may not be offered or sold within the United States absent registration under the Securities Act or an exemption from registration.
The information contained in this presentation is given in good faith but no representation or warranty is made in relation to the accuracy or completeness of the
information, or any oral information provided in connection therewith, or the data it generates and no responsibility, obligation or liability is or will be accepted by
the Company or its affiliates or advisors or by any of their respective officers, employees or agents in relation to it.
This presentation contains certain forward looking statements with respect to the financial condition, results, operations and businesses of the Company. The
statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and
forecasts.
Past performance is no guide to future performance and persons needing advice should consult an independent financial advisor.
This presentation and the information contained in it are confidential and should not be distributed, published or reproduced, in whole or in part, or disclosed by
recipients directly or indirectly to any other person.
2
Investment highlights
Largest China
CBM
independent
Proven
extraction
methodology
Step change in
cash
generation
•
Largest Chinese independent
•
Favourable Production Sharing Contracts: today’s Chinese gas economics on yesterday’s favourable terms
•
Hand-picked locations in China’s strong growth gas market
•
Proprietary technology - LiFaBriC
•
Technology in manufacturing phase
•
Based on geo-steered horizontal drilling that suits China’s geology
•
Predictable stable output per well with enhanced returns
•
Delivers enhanced stable production with little decline
•
Implementing a 150-well drilling programme to the end of 2015 to ramp-up production to 18Bcf
•
Committed investment from partners to accelerate production and generate strong cash flow
•
Ongoing migration of reserves to 1P: 111% increase in 2014
3
Leading China CBM Independent
Large reserves base
•
•
•
•
Largest publicly listed CBM reserves base in China: 1P:125Bcf; 2P: 380Bcf; 3P: 2,418Bcf
Verified by 7 consecutive CPRs
Six inland Production Sharing Contracts covering 7,566 km²
Ongoing migration to 1P reserves: 111% increase in 2014
£730m 380Bcf
Market Cap.
2P Reserves
150
6
New debt funded
LiFaBriC wells
(2015)
PSC’s over
7,566km²
Integrated operations and strong partners
•
•
•
Strong, highly capitalised Chinese partners : CUCBM (CNOOC) (CNOOC), CNPC and
PetroChina
Proven PSC titles: protected by Netherlands-PRC Bilateral Investment Treaty
Equity participation in more than 1,800 wells
Proven Extraction Methodology
•
Mature, de-risked LiFaBriC drilling, specifically adapted to China’s geology
Centrally located among China’s gas consumers
• Multiple routes to monetise gas: GDG-owned refuelling stations, industrial customers, multiple
gas pipelines, sales via electricity
Experienced leadership and strong corporate profile
•
•
Highly experienced management team with a track record in Coal Bed Methane
High quality shareholder base: includes GIC, Aberdeen, Fidelity, Platinum Asset
Management, Chandler Corp
Market cap as of Oct 27, 2014
4
Upstream Asset Portfolio: 6 PSCs over 8 Blocks
GSS
GCZ
GDG interest: 60%
Partner: CUCBM (CNOOC)
Operator: GDG
1P/2P/3P: 124.5/350.5/1,382.9 bcf
LiFaBriC/vertical wells: 62/171
Partner activity: 1,243 wells
GDG interest: 47%
Partner: PetroChina
Operator: PetroChina
1P/2P/3P: 9.2 /14 /52 bcf
LiFaBriC/vertical wells: 0/0
Partner activity: 104 wells
P
Production
D
Development / Pilot stage
EA
GSN
GQY (A)
GDG interest: 50%
Partner: CUCBM (CNOOC)
Operator: CUCBM (CNOOC)
1P/2P/3P: N/A / N/A / 791.4 Bcf
LiFaBriC/vertical wells: 2/11
Partner activity: 117 wells
GDG interest: 10%
Partner: CUCBM (CNOOC)
Operator: CUCBM (CNOOC)
1P/2P/3P: N/A
LiFaBriC/vertical wells: N/A / 8
Partner activity: 9, 18 coal holes
Both included under Shizhuang South PSC
Exploration & Appraisal
Q inyuan PSC
EA (GQ Y PSC)
3,665km 2
Heilongjiang
Jilin
Inner Mongolia
Liaoning
GQY (B)
GDG interest: 60%
Partner: CUCBM (CNOOC)
Operator: GDG
2C: 22.8Bcf
LiFaBriC/vertical wells: 8/39
Partner activity: 10 wells
GDG interest: 49%
Partner: CUCBM (CNOOC)
Operator: GDG
1P/2P/3P: N/A / 28.7 / 244 Bcf
LiFaBriC/vertical wells: 2/26
Partner activity: N/A
Hebei
GGZ
GDG interest: 60%
Partner: CUCBM (CNOOC)
Operator: GDG
1P/2P/3P: N/A
LiFaBriC wells/ vertical wells: N/A/12
Partner activity: 14 coal holes
GDG interest: 60%
Partner: PetroChina
Operator: GDG
Best Prospective: 439 Bcf
LiFaBriC wells/vertical wells : 4/26
Partner activity: 30 coal holes
Reserves by Netherland, Sewell & Associates, Inc as of April 30, 2014
P
Shizhuang South
PSC (GSS PSC)
388km 2
P
Chengzhuang
Block (GCZ
Block) 67km 2
Tianjin
Shandong
Shanxi
Qinghai
Gansu
Jiangsu
H enan
Shaanxi
Tibet
Hubei
Sichuan
EA
Capital of province
Anhui
EA
Panxie East PSC
(GPX PSC)
584km 2
D
Fengcheng PSC
(GFC PSC)
1,541km 2
Jiangxi
Fujian
Guizhou
Guangxi
Shanghai
Zhejiang
Chongqing
Hunan
BaotianQ ingshan
PSC (GGZ
PSC) 947km 2
Yunnan
GPX
Shizhuang
N orth PSC
(GSN PSC)
375km 2
Beijing
Xinjiang
Ningxia
GFC
EA
Guangdong
Hong Kong
Existing main gas pipelines
Group CBM blocks
CNG mother stations
5
Reserves Breakdown – NSAI 30 April 2014
1P
GSS Main Block
Net: 115Bcf
PV10: $894m
Net: 125 Bcf
PV10: US$898m
GCZ
Net: 9.2Bcf
PV10: $91m
GSS
Net: 125
PV10:
US$898m
2P
GSS Main Block
Net: 336Bcf
PV10: $2,666m
GCZ
Net: 14Bcf
PV10: $130m
3P
GSS Main Block
Net: 1,331Bcf
PV10: $10,004m
GSS
Net: 1,383
PV10:
US$10,389m
GCZ
Net: 52Bcf
PV10: $384m
Contingent
Prospective
GSS
Net: 351
PV10:
US$2,797m
Net: 379.2 Bcf
PV10: US$3,102.3m
GFC
Net: 29
PV10:
US$306m
GSN
Net: 794
PV10:
US$5,787m
Net: 2,418 Bcf
PV10: US$18,558m
GFC
Net: 244
PV10:
US$2,382m
Net 1C: 8 Bcf
Net 2C: 23 Bcf
Net 3C: 36 Bcf
GQY
Net 1C: 8
Net 2C: 23
Net 3C: 36
GQY
Low Est: 439
Best Est: 1,008
High Est : 1,951
Source: Netherland, Sewell & Associates, Inc as of April 30, 2014
GFC
Low Est: 66
Best Est: 144
High Est: 500
GPX
Low Est: Best Est: 16
High Est: 410
GGZ
Low Est: 24
Best Est: 439
High Est: 974
Low: 528 Bcf
Best: 1,607 Bcf
High: 3,837 Bcf
6
GSS Evolution to Commerciality
20,000
LiFaBriC
(Lined Faulted Brittle Coals)
800
18,000
GSS Production (MMCF)
Cooperation
Phase
3P PV10
16,000
700
2P PV10
PV10 (US$) NSAI Audit
MLHD (multilateral
horizontal drilling)
12,000
Production
Phase
500
10,000
SRHD (short radius
horizontal drilling)
400
8,000
300
Gross Production (MMCF)
600
14,000
Eureka
6,000
200
Vertical
4,000
R&D Phase
100
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2,000
2000
2001
2002
Source: Company data as of June 30, 2014
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
2014
7
Reserve Progression
1P Progression
1P(Bcf)
2P Progression
NPV(US$m)
2P(Bcf)
3P Progression
NPV(US$m)
3P(Bcf)
NPV(US$m)
18558
3102
986
16124
2806
898
12613
1801
12676
12333
1818
9351
1527
1255
324
928
250 263
121
53
16
27
677
168
33
126 125
41
43
59
3342
382 379
233 258 261 273 307 313
Source: Netherland, Sewell & Associates, Inc as of April 30, 2014
1906 2161 2333
-8-
2600 2513 2508 2382 2418
Strong Reserve Development and Significant Resource Base
Continued migration of 3P to 2P to 1P
Reserves and Resources Evolution
• Large 3P reserve base
500
Proved
• Significant growth in 1P/2P reserves
400
• Continued appraisal drilling, well testing and
infrastructure enhancement
34
Bcf
300
250
1P
2P
3P
124.5
350.5
1,382.9
-
791.4
-
28.7
244
124.5
379.2
2,418.3
Contingent Resources (Bcf)
1C
2C
3C
Qinyuan PSC (GQY PSC)
7.7
22.8
36.1
Total
7.7
22.8
36.1
Total
291
296
33
35
405
401.4
23
22.8
256
254.7
126
124.5
2013
2014
348
35
303
30
223
200
264
-
Fengcheng PSC (GFC PSC)
341
350
− Driving migration to 1P/2P reserves to be driven by continued
appraisal drilling and well testing as well as the enhancement of
related infrastructure in the area
Shizhuang South PSC (GSS
PSC)1
Shizhuang North PSC (GSN PSC)
Contingent
450
− Coal seam #15 at GSS and nearby GSN to provide significant growth in
1P/2P reserves over the next 3-5 years
Reserves (Bcf)
Probable
150
231
228
254
232
217
100
Reserves + Resources (Bcf)
132.2
402
2454.4
50
0
33
41
43
16
26
2006
2008
2009
2010
2011
59
2012
Certified by Netherland, Sewell & Associates, Inc. as of 30 April 2014
Source: Netherland, Sewell & Associates, Inc. as of 30 April 2014
9
Our strategy: focus on cash flow from production
blocks
Focus on production and cash-flow from the GSS block:
- Implement a low-risk, low-cost production drilling programme: 150 new LiFaBriC wells
by end 2015
- Low-cost (US$1.5m/well) targeting of proven reserves in shallow and familiar coals
- Ongoing migration of 3P reserves to 1P/2P through continued drilling and
enhancement of off-take infrastructure
- Committed infrastructure spending by CUCBM (CNOOC) to further enhance gross production
Further development of sales channels to increase average
sales price
- Expand distribution capacity of high margin CNG refuelling stations
- Grow sales to industrial customers
- Leverage on additional pipeline capacity from PetroChina, CUCBM (CNOOC) and
Sinopec
Appraisal and development at other blocks
- Significant upside: 10% working interest in GSN sold to CUCBM (CNOOC) for $200m
carried interest
- Bringing partners to co-develop other exploration blocks using benchmarked value
- Ongoing appraisal and de-risking of the blocks through minimum commitments
(US$12mpa)
- Considering alternatives to accelerate the development and monetization of gas
10
China
A strong growth gas market, built on supportive
policy
Government Backing Domestic Supply Growth
China’s 12th Five Year Plan includes higher gas
production targets:
•
Cutting carbon intensity/unit of GDP to 40-45% of 2005 levels by 2020
•
Increasing gas in the primary energy mix from 4% (2010) to 8% (2015) and
10% (2020)
•
CBM production of 30 Bcm (1.1 Tcf), of which 16 Bcm (585 Bcf) from surface
extraction with a circa 100% utilization rate
•
Discovering 1 Tcm (35.3 Tcf) of additional proven reserves
•
2015 target annual production: 10.4 Bcm (~367.3 Bcf) from Qinshui Basin, and
5 Bcm (~176.6 Bcf) from Rim Ordos Basin
China’s Primary Energy Share (2010A – 2015F)
2010A
2015F
Strong incentives from the government to promote
domestic gas production:
• CBM sales based on market pricing (unregulated)
•
•
Central government subsidy proposed to double from RMB 0.20/m3
(US$0.9/Mcf) to RMB 0.40/m3 (US$1.8/mcf)
Beneficial tax treatments to include: value-added tax refunds, import tariff
waiver, accelerated depreciation, resource tax exemptions
Reserves (Bcf)
2010A
2015F
Volume
2.9 Bcf/day
9.2 Bcf/day
Weighted Avg. City Gate Price:
US$7.3/Mcf
US$9.0/Mcf
US$21.2 Bn*
US$82.8 Bn*
Natural gas market
•
Priority treatment of CBM for pipeline and power station access
Source: CEIC, NDRC, IEA
* Size of market as defined by average city gate prices, not market prices
12
China - Solid Fundamentals for Gas Demand Growth
Population
(million people)
1,361
India
1,243
U.S.A.
316
Brazil
(energy consumption per person – toe)
Growth rate (%)
China
198
China
7.5%
India
U.S.A.
U.S.A.
1.9%
Japan
Brazil
1.8%
China
143
Japan
1.4%
Brazil
Japan
127
Russia
1.3%
India
500
1,000
1,500
0.0%
2.0%
4.0%
6.0%
8.0%
(gas consumption per person - toe)
7.27
Russia
5.4%
Russia
-
Gas consumption per person
Energy consumption per person
2014E GDP growth rate
1.94
1.37
0.46
4.00
2.18
Japan
3.73
2.00
2.60
U.S.A.
4.81
-
Russia
6.00
8.00
0.82
Brazil
0.14
China
0.10
India
0.04
-
1.00
2.00
3.00
Supportive Chinese market dynamics
• Largest population in the world
• One of the highest GDP growth rates (2013: 7.7%; projected 7% p.a. to 2020)
• Currently very low energy consumption per capita – projected to increase with a rising middle class
• Extremely low proportion of gas in the energy mix – expected to grow to 10% by 2020E with strong support from the government
Source: BP Statistical Review, June 2013; IMF World Economic Outlook Database, April 2014
13
Rapid Demand Growth Will Create a Supply Gap
Demand 2020 outlook:
Overwhelmingly positive fundamentals drive gas demand
Supply 2020 outlook:
China may need to import 80Bcm of LNG by 2020
400
By 2020 residential
customers and
industrial players will
more than double their
gas demand
300
Domestic supply/
demand gap will keep
growing till 2020 if
production will not be
incentivised
300
Billion Cubic Meters
200
100
200
100
Industry
Power Generation
Transportation (NGV, EV)
Others
China GDP growth to 2020 is forecast to be 7% pa, with a 14% yearly
gas consumption increase
• Urban gas penetration to increase from 42% to 65% by 2020, driving
8% CAGR in residential gas
•
Commercial consumption: estimated at 55% of residential
consumption in 2020 (13% in 2009)
•
Transportation demand for gas, including vehicles using CNG and
LNG, forecast to grow at a CAGR of 21% 2103-2023
Source: CEIC, Wood Mackenzie, Bernstein Research
Domestic Production
Pipeline Imports
2020E
2019E
2018E
2017E
2016E
2015E
2014E
2013A
2012A
2011A
2010A
2009A
2008A
2005A
2020E
2019E
2018E
2017E
2016E
2015E
2014E
2013E
2012A
2011A
2010A
2009A
2008A
Residential
2007A
0
0
2006A
Billion Cubic Meters
China – Russia deal only delivering
gas volumes after 2020
400
China Gas Demand
…but domestic supply may not be able to keep pace with demand
•
National pricing reform is underway to encourage upstream
production
•
By 2020, domestic conventional and tight gas will account for 39%
of China’s supply options
•
The difference will be made up by LNG, coal to gas projects, CBM,
shale gas and pipeline imports
14
Extraction methodology
Mature, proven LiFaBriC drilling at manufacturing
stage
LiFaBriC: The key to our technical advantage
Developed for China’s geology
• Geology of faulted anthracite coal formations
• Traditional drilling methods are not adaptable (unlike
Australia or the US)
• GDG «crackd the code» with LiFaBriC
•
•
•
•
•
Adaptation of horizontal drilling methods used for coal seams
Perfected to allow measurement and logging while drilling
Involves advance directional drilling / geo-steering techniques
Able to drill through multiple faults with a single well
Aims to maximise subsurface in-seam exposure
Vertical
RB
Fault
Inseam
LiFaBric Production – GS008
Advantages
•
•
•
•
•
Greater subsurface in-seam exposure increases drainage area
and increases permeability over time
Increase in peak rates and stable production rate, with a slower
decline and longer well life
Very attractive economics
U-shaped structure allows ease of workovers and flushing
Environmentally friendly: no expensive and hazardous fraccing
processes or chemicals; small surface footprint ensures less
intrusive for existing land owners
Methane
The LiFaBriC (Lined Faulted Brittle Coals)
technology
“LiFaBriC” Process
SIS Technology
CUM Gas: 756 MMcf
Production Time: 2,293
days
Avg. Daily Production:
330 Mcf/d
Truly
Unconventional
16
LiFaBriC: The key to our technical advantage
Typical CBM Play (Vertical)
SRHD Technology
LiFaBriC
MLH Technology
Typical CBM Play
RB
Fault
Methane
Vertical
Inseam
Frac
Source: Company data as of 30 June, 2014
17
LiFaBriC wells
Low capex, long well-life…
Performance of the first LiFaBriC (spud in 2008)
•
~US$1.5 million per well
•
Connection and ramp-up to plateau rate in 6-7 months
•
Producing life of 15-20 years
Gas Production
Water Production
Casing Pressure
… attractive returns2:
•
More than 70% IRR
•
Payback within 18 months
•
NPV10/ Well: ~US$13m
•
Ultimate (commercial) recovery: 2.6 Bcf
FZ-008: Vertical Well Impacted by LiFaBriC
Water Production
Gas Production
Possible positive impact on nearby
vertical wells
•
Initial evidence indicates that in certain instances
LiFaBriC wells have positively impacted production from
nearby vertical wells
Year
Avg daily production (Mcf/d)
Yearly production (MMcf)
IRR
#1
160.5
58.6
-53%
#2
291.9
106.5
23%
Notes:
(1) Annualized since the well is currently in it seventh year
(2) Rebased as if drilled on the same day
(3) Assuming simple average of CNG station price, industrial price and PNG price
(4) IRR calculated using CNG retail prices realized inclusive of subsidies
Source: Company data as of 30 June, 2014
#3
247.7
90.4
46%
#4
423.3
154.5
65%
#5
397.8
145.2
71%
#6
428.9
156.5
76%
#71.
431.2
157.4
78%
Cumulative
329.8
756.2
18
Focus on production and cash flows
Imminent step change in production and cash generation
Debt funded drilling programme to ramp-Up
Production
Planned Location of New LiFaBriCs at the GSS Block
Extensive drilling programme to ramp-up
production
• 150 new LiFaBriC wells planned at the GSS Block by the end-2015
• Low-risk wells targeting existing reserves in shallow and familiar
coals
• Low-cost : approxUS$1.5 million per well
Contracts in place for drilling, gas gathering,
processing and delivery
• Master drilling services agreement in place with Greka Drilling
• Required rigs allocated for the 150 well programme (first 40 firmedup)
• 10 LiFaBriCs contracted earlier this year are already drilling
• Evergreen contract in place with Greka Engineering for EPCM
services, gas gathering, processing and delivery into the various
downstream channels
20
A step change in cash generation
Debt funded drilling
programme to ramp
up production
Cash flows from
PetroChina GCZ
partnership
Substantially
increased cash
flows
Development of
CUCBM (CNOOC)
legacy wells
21
Sales: multiple channels
1. Refuelling stations
•
GNG trucked within 300km
•
Eight owned CNG refuelling stations (~2.8 MMcf/d or ~1 Bcf/year)
•
Most lucrative: US$17.6/Mcf H1 avg. price: (6% year on year increase)
•
Route for 37% of H1 2014 GSS sales
•
Upcoming capacity increase to 7.8 MMcf/d ~2.8 Bcf/year: doubling capacity at eight existing stations
and adding three larger stations
2. Industrial users in the region
•
CNG/PNG
•
High demand from nearby factories (ceramic, textiles, packaging, etc.)
•
Second most lucrative channel : US$8.4/Mcf H1 2014 avg. price
•
Route for 4% of H1 2014 GSS sales
•
Industrial customers to continue conversion to gas power due to government restrictions on carbon
emissions
3. Piped into regional /national gas pipelines
•
PNG
•
Remaining gas is piped into West-East Pipeline I: 20 year GSA with CNPC
•
Lower, but still very favourable pricing: US$7.96/Mcf H1 2014 avg. price:
•
Route for 59% of H1 2014 GSS sales
•
Further capacity, optionality and competitive pricing going forward : existing CUCBM (CNOOC)
pipeline being improvement), new Sinopec pipeline under construction
22
Financial information
Strong balance sheet and a disciplined approach to leverage
EBITDA Impact of the LiFaBriCs drilling programme
US$43m
Downstream &
The next 150
LiFabriC wells…
US$23m
Midstream EBITDA
EBITDA
Marketing
US$96m
EBITDA
• Assumes EBITDA margin of 20%
• Sales price of US$16.5/Mcf at CNG
stations
• Assumes EBITDA margin of
15%
In Upstream
EBITDA
• Assumes EBITDA margin of
70%
… will take EBITDA to US$162m
24
Strong Balance Sheet and Sizeable Net Asset Base
GDG financial position
(USD ‘000)
June 2014
December 2013
December 2012
1,018.7
983.0
942.6
Convertible notes
46.5
33.4
79.7
Bonds
32.8
30.4
• Previous capital expenditures financed
primarily via equity and convertible
instruments
Total Financial Debt
79.3
63.8
79.7
Cash at bank1
60.0
34.6
40.0
• US$350 million in equity invested in the
assets since inception
Net Debt
19.3
29.1
39.7
Equity (Book Value)
613.0
646.8
660.1
Debt to Equity
8%
6%
8%
Debt to Capital
7%
6%
8%
613.7
646.0
720.0
Low leverage and strong net
asset base
• Strong balance sheet and a disciplined
approach to leverage
Total Assets
Net Asset
Total GSS Unrecovered Investment Pool: USD 174m(2)
Notes:
(1) Includes USD 8m in restricted cash in 1H 2014
(2) As of December 31, 2013
25
GDG: Fundamentals in Place for Growth and Cash Flow
Centrally
located in
China
Rigs and
EPC in
place
Proven
in-house
extraction
method
Well
defined
reserves
and known
resources
Ramp up on
production
Strong
partners
and offtakes
26
Listing on the Main Market of the LSE
REFLECTS OUR DEVEOPMENT INTO
A MATURE, SUCCESSFUL GAS
INCREASED LIQUIDITY AND PROFILE
PRODUCER
AN OPPORTUNITY TO CREATE
A MILESTONE IN OUR ONGOING
FURTHER SHAREHOLDER VALUE
GROWTH STRATEGY
27
Appendix
Reputable and Proven Board of Directors
Randeep S. Grewal | Founder, Chairman & CEO
• Founded Greka Group in 1997 and also acts as Chairman & CEO of several of the Group’s subsidiaries and affiliated companies
• Extensive experience in oil & gas and has also been involved in various JVs, acquisitions, mergers and reorganisations globally
• BSc Mechanical Engineering, Northrup University
David Turnbull | Non-executive Director
• Executive Chairman of Pacific Basin Shipping Limited
• Held senior leadership roles in MNCs such as Swire Group and Cathay Pacific
• MA Economics, Cambridge University
Wayne Roberts | Non-executive Director
• Chartered Chemical Engineer with over 25 years’ experience in the oil & gas industry
• Served with BG Group as Senior Vice President for AMEA, President of BG Southeast Asia & China and Chairman of BG Asia Pacific
• MBA, INSEAD
Gong Da Bing | Non-executive Director
• Over 27 years of international business experience
• Held various senior leadership positions with private international trading firms and was business negotiator for the Beijing Foreign
Trade Bureau
• Masters, Comparative Law, University of Illinois
Stewart M. John OBE , FREng | Non-executive Director
• Over 50 years of aviation industry experience, mostly from British Airways and Cathay Pacific
• Held non-executive director positions with Rolls-Royce Commercial Aero Engines, British Aerospace Aviation Services and others
• Chartered Engineer, Fellow of Royal Academy of Engineering
29
Experienced Senior Management Team
Alfred Yan| CFO
• Over 22 years of experience in accounting, auditing and corporate finance
• Previously CFO at China People Gas Holdings and held various positions at Deloitte Touche Tohmatsu, KPMG and BDO
• Fellow member of the HK Institute of Certified Public Accountants and associate member of Chartered Institute of Management
Accountants
Mahmood (Mel) Lone | COO
• General Manager and Chief Representative of Greka in China since 2001
• Actively involved in CBM development at Greka and held various positions in the Group
• BA Economics and History, University of Punjab
Zhang Hai Tao | GM, Gas Distribution
• Over 14 years of management experience in natural gas industrials
• Graduate from Anyang University in Marketing Development
• Business Administration from the University of Beijing
Stephen Hill | VP, Corporate Finance
• Over 31 years of Asia experience with extensive fundraising credentials for corporate clients
• Previously Head of Asian Sales at Bear Stearns, Nomura and ING Barings and held several equity sales roles at Jardine Fleming
• BSc Economics, Leicester University and Advanced Management Program, Wharton University
Jack Su | General Counsel
• Responsible for all legal and compliance matters of the Group
• Most recently Head of Energy Practice in Asia for Mayer Brown JSM
• B.S., Indiana University; J.D., Washington University St. Louis
30
History and Corporate Milestones
Landmark
Government Ruling
Demerger of Greka
Drilling
Technological
Breakthrough
First Gas
•
•
•
•
Gas production
commences at
GSS
Acquisition of four
additional licenses
MWD (Measurement
While Drilling) and
LWD (Logging While
Drilling) facilitate
LiFaBriC development
•
•
Move to the
Main Board of
the LSE
Chinese Gov’t rules in
favor of Green Dragon
on validity of PSC
8th March demerger of
Greka Drilling
Addition of 2 CNG
stations in Pindingshan
Upgrade of
Infrastructure Production
Facilities to support 28
new wells of gas
production
2014
2013
Production Ramp-up
2012
2011
First License
•
•
•
•
Commenced
operations on the
ground
Signing of four
other licenses
including
Shizhuang South
LiFaBriC
Launch 150 LiFaBriC
drilling program
• Landmark agreements
lead to shareholder
participation in over
1,800 wells
2006
Public
Floating on AIM
2003
•
•
•
2000-2002
•
Demerger of Greka
Engineering and
Technology
2009
2008
GDG commences
Chinese operations
First PSC signed on
the GFC block
Binding Agreements
with CNOOC and
PetroChina
2010
•
The Company listed
on the Alternative
Investment Market
(“AIM”) in London on
August 17, 2006
“Lined Faulted
Brittle Coal”
improved drainage
factor
•
30th Sept demerger
of Greka
Engineering
Zhengzhou Greka
Gas Co Ltd entered
into a 20-year
agreement with
PetroChina Huabei
Oilfield
1997 -1999
31
Group Corporate Structure
Five of the six PSCs held through Greka
Energy (International) B.V. incorporated in
the Netherlands
Listed Parent and Issuer
Group Companies
Green Dragon Gas Ltd
(Cayman)
PSC Holding Companies
PSCs
100%
• Netherlands holding company provides protection
as per the Bilateral Investment Treaty between the
Netherlands and PRC
Greka Gas China Ltd.
(Cayman)
Greka Exploration
and Production Ltd.
(Cayman)
Greka Energy
(International) B.V.
(Netherlands)
6 PSCs
5 PSCs
(6 blocks)1
Greka Transport Ltd.
(BVI)
(FKA Lanhai)
Great Buy
Investments Limited
(BVI)
Greka Shanxi Ltd.
(BVI)
Greka LNG Ltd.
(BVI)
Greka Gas
Distribution Limited
(BVI)
Greka Guizhou E&P
Ltd (BVI)
Zhenghzhou
Greka Gas Co Ltd
(PRC)
GGZ PSC
PingDingShang
Greka Gas Co Ltd
(PRC)
Notes:
(1) 5 PSCs are: Shizhuang South PSC (containing the GSS Block and the GCZ Block), GSN PSC, GFC PSC, GQY PSC and GPX PSC
32
Summary of PSCs Held
Location Contract Area
(km²)
Partners (*Operator)
(Interest%)
Status
Net Reserves
/ Contingent
Resources (Bcf)
Net Prospective
Resources (Bcf)
PSC Expiry4
* GDG (60)1
CUCBM (CNOOC)
(40)2,3
Production
Development
Appraisal /Exploration
Production
336.4
(2P)
-
2033
14.1
(2P)
-
2033
GSS PSC – GSS Block
Shanxi
Province
388
GSS PSC – GCZ Block
Shanxi
Province
67
GSN PSC
Shanxi
Province
375
GDG (50)
* CUCBM (CNOOC)
(50)
Pending Development
Appraisal /Exploration
794.0
(3P)
-
2033
GFC PSC
Jiangxi
Province
1,541
* GDG (49)
CUCBM (CNOOC) (51)
Pending Development
Appraisal /Exploration
28.7
(2P)
143.6
(Best Est.)
2029
GQY PSC – Area A
Shanxi
Province
1,694
GDG (10)
* CUCBM (CNOOC)
(90)
GQY PSC – Area B
GDG (47)
* PetroChina (53)
2033
Pending Development
Appraisal /Exploration
22.8
(2C)
1,008.3
(Best Est.)
Shanxi
Province
1,694
2033
GPX PSC
Anhui
Province
584
* GDG (60)
CUCBM (CNOOC) (40)
Appraisal /Exploration
-
16.3
(Best Est.)
2033
GGZ PSC
Guizhou
Province
947
* Greka Guizhou (60)
CNPC (40)
Appraisal /Exploration
-
439.1
(Best Est.)
2035
* GDG (60)
CUCBM (CNOOC) (40)
Notes:
(1) Pursuant to the Shizhuang South PSC, GDG has the option to increase its participating interest to 70%
(2) Pursuant to the Framework Agreement, CUCBM (CNOOC) is operator for the Legacy Wells and related infrastructure in Areas 3 and 5
(3) GDG and CUCBM (CNOOC) will act as operators of their respective wells drilled prior to July 8th, 2013 in Area 5
(4) Pursuant to the Framework Agreement, it was agreed that the GQY, GSN, GPX and GFC PSCs would be extended by two years , this is subject to the extensions being formalised
33
Framework and Cooperation Agreement – Salient
Terms1
Salient terms of the Framework Agreement with CUCBM (CNOOC) (CNOOC) with respect to GSS
Block
• GDG will continue to be the operator of GSS PSC (except CUCBM (CNOOC) Legacy Wells and related infrastructure in Area 3 and 5 –
CUCBM (CNOOC) will operate)
• GDG to operate the entire coal seam #15, which lies ~ 150m below coal seam #3
• GDG and CUCBM (CNOOC) will each be entitled to cost recovery at a preferential rate (90%) from wells they operate (including historical
costs)
• Profit gas to be split between the two partners in proportion to working interest (after the aforementioned preferential recovery to operator)
• GDG equity participation in the entire block increases from 60% to 70% following a payment of US$13 million (as provided by the PSC) which
will be paid from cost recovery on GDG operated wells in Area 4 (expected to be completed in 2015)
• CUCBM (CNOOC) is expected to invest an additional US$250 million (GDG est.) to complete gathering systems and off-take infrastructure for
Legacy Wells
• GDG has the option to deliver gas directly into CUCBM (CNOOC) infrastructure
Salient terms of the Cooperation Agreement with CNPC/PetroChina with respect to GCZ Block
• PetroChina to continue as operator of GCZ Block with 53% working interest, and receive preferential cost recovery on its existing cost pool
• GDG to retain 47% working interest be entitled to a proportionate share of profit gas after paying for its capex share
• After PetroChina capex is paid, costs to be paid by PetroChina and GDG in proportion to their respective participating interests
• The parties have agreed that they will seek to apply to the relevant ministry for approval not to prepare or submit an ODP
• At the request of GDG, CNPC has the obligation to assist in relation to, inter alia, obtaining various licenses, permits and governmental
approvals
• The Cooperation Agreement expires on 31 March 2033
Notes:
(1) More details are provided in the Offering Memorandum
34