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

Processing and interpretation of the 363.5 miles (585 kilometers) of seismic lines acquired on Sanjiaobei during the second quarter was fast-tracked and has been delivered to RISC for inclusion in the updated 3Q reserves and resources assessment. Seismic acquired on the eastern portion of the block will be used in conjunction with recent exploration drilling to further define the previously underexplored potential.

Drilling

Substantial drilling activity continued on Sanjiaobei during July, with five wells completed drilling and an additional three spud. Initial mud and wireline logging of completed wells at SJB8, SJB11, SJB14 and SJB24 (located within and outisde of the seismic grid) discovered an average of feet 54.7 feet (17.6 meters) of total pay per well across multiple payzones. In addition, exploration wells SJB31 and SJB33 discovered coal seams to the south east of the corner block.

Testing

Up to month end, the first nine wells of the testing program had been fracced and an additional three perforated awaiting frac testing to commence. Following initial fraccing, frac fluid extraction and shut-in procedures were performed with the aim of achieving stable flow rates for Chinese Reserve Reporting and reservoirs information purposes. Multiple zones in each well are planned to be tested to determine well productivity.


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