China-focused coal-bed methane specialist Green Dragon Gas reported Thursday that it has entered into a memorandum of understanding with PetroChina regarding the company's interests in the Chengzhaung block – part of the Shizhuang South Production Sharing Contract.
The MOU requires PetroChina to provide information for Green Dragon to complete an audit that will enable it to conclude and accept the capital expenditure needed to develop the block, as well as gas production, gas sales and related revenues. Commercial gas sales from the block began in March 2010.
The two companies have agreed to conclude the audits and the related definitive agreements on payments during the first quarter of 2014. PetroChina will continue to be the operator of the Chengzhaung block while Green Dragon will continue to operate the Shizhuang South block.
Green Dragon Chairman Randeep Grewal commented in a company statement:
"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."
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