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Sino Gas & Energy Updates on Operations at its Assets in China

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Australia-listed Sino Gas & Energy Holdings Limited, an energy company focused on developing unconventional gas assets in China, provided an update on it monthly operations ending July 31.

Operational Update

  • 32 well program - a further 6 wells completed drilling, 20 wells drilled so far in 2013
  • 24 well testing program - testing on 10 wells in progress
  • First CRR (Chinese Reserve Reporting) submission on Linxing (East) planned for August
  • First horizontal well for Sino Gas scheduled to spud in August

The drilling program continues to move at a rapid pace, with six wells completed drilling and an additional three wells spud. Wells TB-14 and LXDG-02 are scheduled to be spud in August, which follows completion of drilling at TB-13 and LXDG-01 that identified resource potential in underexplored areas. Furthermore, initial mud and wireline logging of completed wells at SJB8, SJB11, SJB14 and SJB24 (located both inside and outside of the seismic grid) discovered an average pay of 57.8 feet (17.6 meters) per well in multiple payzones. In addition, exploration wells SJB31 and SJB33 discovered coal seams in the south east corner of the block. The Operations team remains confident that the 32 well drilling program will be completed this year, despite extensive rain in the region during early 3Q restricting the mobility of some rigs.

Good progress continues to be made in the testing program. The deepest payzones have been tested first, as per standard industry practice, and while the deeper zones are usually less prolific than the upper zones, the results have been very encouraging. To date six preliminary results have been received from single payzone tests in six wells. The results have ranged from approximately 0.1 to 0.66 million standard cubic feet a day (MMscf/d), at an average of 0.24 MMscf/d. This is greater than expected from the deeper payzones. Future testing will focus on the middle and upper payzones, which past tests have demonstrated to be more prolific than the deeper payzones. As measured by wireline logs throughout the field, each well contains multiple, stacked payzones and in the future it is planned for the majority of the wells to be flowed from two or more payzones. The Operations team will continue to test multiple payzones over the coming months to provide a complete reservoir characterisation of overall well productivity.

Electric wire line logs have confirmed the continuity of the geology exhibited across the explored acreage. The testing program has been extensive across both the geological formations and the acreage.

The updated reserve and resource assessment is underway, with the interpretation of the 767 milles (1,235 kilometers) of extended seismic lines recently acquired and the drilling data from 20 new wells being provided to RISC, the Company’s third party reserve assessor. The assessment is currently expected to provide an upgrade in both reserves and resources, as the key focus of the work programs in 2013 have been on step-out seismic, drilling on previously underexplored acreage, and planning for full field development.

The first horizontal well is scheduled to be spud in August, which will also be included in the first round of wells to be connected into the pilot program on Linxing (West). Horizontal wells are commonly utilized across the Ordos basin to drive increased production and capital efficiency.

PSC WORK PROGRAM UPDATE

Linxing (West) - Sino Gas 31.7 percent


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