Sino Gas & Energy Begins Linxing PSC Well Testing

Sino Gas & Energy Holdings Limited, an Australian company developing unconventional gas assets within the Ordos Basin, Shanxi Province China, has confirmed the commencement of its 2011 well testing program on the Linxing Production Sharing Contract (PSC).

Following a competitive tendering process, Sino Gas has now signed the 2011 testing contract for the Linxing PSC with CCDC Changqing (CCDC), a subsidiary of PetroChina. Sino Gas used CCDC extensively in its 2010 well testing campaign.

Sino Gas Managing Director, Stephen Lyons, said he was very pleased with the appointment of CCDC, which highlights our continued cooperation with established Chinese service companies.

"CCDC are a full service downhole company that performed safely and very effectively for Sino Gas in 2010 delivering 7 successful tests. They also had extensive input into the test program designs and this will continue during 2011.

The testing contract is initially for 2011 but can be extended with additional tests being added as required," said Mr Lyons.

Testing equipment will now be prepared and mobilized to the TB09 Gas Discovery Well for a test scheduled around the end of May 2011.

Prospective zone in TB09 to be stimulated

The TB09 Gas Discovery Well was drilled to TD late in Q4, 2010 with electronic wireline logging confirming the presence of gas in multiple zones.

The test to be carried out will be on one of the upper zones that exhibited promising log and core testing results and is expected to generate commercial gas flows that will be converted to CNG for transport and sale in the Company's Pilot.

As with Sino Gas's previous well tests, the TB09 test will initially involve a perforation of the zone followed by a flow test to measure gas flow and formation pressure data. Following the flow test it is intended that the zone will be hydraulically fracture stimulated to increase gas flow.

Assuming a successful test on TB09, the well will form part of the Company's Pilot development that is expected to include multiple wells during 2011 with gas sales increasing significantly as this program proceeds.

Other activities, including those on the Sanjiaobei PSC, will be confirmed as they are approved and scheduled.