Field Operations Underway at Sino Gas & Energy's PSCs in Ordos Basin

China-focused Sino Gas & Energy Holdings Limited (Sino Gas, the Company) disclosed Monday that field operations for 2014 are well underway on its Production Sharing Contracts (PSCs) in the Ordos Basin, China.

Around 177 miles (285 kilometers) of seismic acquisition completed in January is being interpreted by third-party contractors and is expected to be completed in 2Q 2014. This seismic completes the grid required for the first round of Chinese Reserve Report (CRR) submissions across both PSCs.

A total of eight rigs have been mobilized and commenced drilling towards total depth. The wells are part of a 14 well exploration program designed to obtain drilling data required for the first round CRR submissions, which are expected to be completed in the second half of the calendar year. Up to 59 wells are planned to be drilled in 2014, the majority of which are expected to be tied into the pilot pipeline production program.

Testing teams arrived onsite in March and commenced frac testing in early April. Currently almost 40 layers are expected to be tested as a part of the exploration program designed to complete the requirements for CRR submission. Sino Gas’ first horizontal well is planned to be tested in May to allow fraccing equipment to be fine-tuned initially on vertical wells after being held in storage during the winter break in operations.

Engineering for the surface gathering facilities is progressing on the first central gathering station, with additional equipment expected to be delivered early 2Q to complete the facility while the third-party pipeline spur is approaching completion. Long lead items for a second central gathering station have been ordered and are expected to be delivered in 2Q ahead of pilot pipeline gas sales scheduled in the second half of 2014. A shorter revised route has been chosen for the third-party pipeline spur, which runs in a more direct northerly direction from the central gathering station to the provincial pipeline. Following additional design and surveying work, land lease negotiations and construction is expected to commence late in 2Q and take approximately 3 months. Internal pipelines to add additional capacity to the Compressed Natural Gas (CNG) pilot program have been delivered and construction is expected to commence early 2Q once land lease negotiations have been completed.

Commenting on the commencement of field operation for 2014, Sino Gas’ Managing Director and CEO, Robert Bearden said he was pleased after a successful 2013 work program delivered significant reserves and resources maturation that the field operations had commenced with the aim of completing first round CRR submission across both PSCs and the commencement of pilot pipeline production in 2014.

Corporate Update

In recognition of the company’s move into the ASX300, Sino Gas continues to re-weight its Board with the recruitment of a new non-executive director.


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