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Sino Gas & Energy Identifies Gas Pay in Onshore Linxing West CBM PSC

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Australia's Sino Gas & Energy has successfully identified 227 feet (69.3 meters) of gas pay intervals at the TB-11 well, on the Linxing West coal bed methane (CBM) Production Sharing Contract (PSC) in the onshore Ordos Basin.

Commenting on TB-11's results, the company's Managing Director and CEO Robert Bearden said in a statement Monday that the findings "provides further confidence in the area's resources, not only for boosting gas flow capacity ahead of pilot programs, but also for Sino Gas & Energy's planned Chinese Reserve Report (CRR) submission."

Production casing is, at present, being installed on TB-11 – which was drilled to a total depth of 6,952 feet (2,119 meters) in 24 days – with flow testing of the well scheduled in 2013, as part of a hydraulic fracturing program that will target both existing and recently completed wells.

Sino Gas & Energy is also simultaneously conducting site preparations for the drilling of the nearby TB-12 well; the company expects to start drilling before the end of December.

On the Sanjiaobei PSC, the company has almost completed drilling the first two CBM wells of its six-well drilling program, with SJB-6 and SJB-4 approaching total depth. Sino Gas & Energy plans to start a hydraulic fracturing program on the Sanjiaobei block in 1Q 2013.

Meanwhile, Sino Gas & Energy's eight-well program on the Linxing East PSC is nearing completion, with the fifth and sixth wells of the program approaching total depth, and the final two wells starting drilling operations.

The company is progressing with an extensive exploration and appraisal programs in 2013, as it is aiming to submit its first CRR – for Lixing East – in 3Q 2013.

Preparing a CRR is the first step in a two-step regulatory process to develop domestic CBM assets into producing fields. After receiving CRR approval from China's National Energy Administration, foreign operators can then move on to prepare an Overall Development Plan (ODP) for their blocks. A foreign operator can only move into the production phase after receiving the green light on its ODP.

"We expect to hire an additional five to ten field workers next year, in line with our expansion plans," Bearden said.

Bearden added that the company is currently searching for local Chinese workers, with related field experience.

SGE is the foreign operator of two PSCs: Linxing and Sanjiaobei. The Linxing segment – which contains the Linxing East and Linxing West blocks – covers an area of 724 square miles (1,874 square kilometers) and is owned by SGE (64.75%), China United Coal Bed Methane (30%) and CBM Energy (5.25%). The Sanjiaobei block occupies an area of 434 square miles (1,124 square kilometers) and is owned by SGE (49%) and China National Petroleum Corporation (51%).

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