Sino G&E Raises Gas Production at Sanjiaobei PSC in China's Ordos Basin

Sino Gas & Energy Holdings Limited (Sino Gas, the Company) announced Tuesday that field operations are well underway and the second compressor at the Sanjiaobei central gathering station in the Sanjiaobei Production Sharing Contract (PSC) in the Ordos Basin in China's Shaanxi Province has been brought online, increasing capacity from approximately 4 to 8 million standard cubic feet per day (MMscf/d). Current production has increased to approximately 6 MMscf/d with 13 wells online from the pool of 16 wells currently connected. New wells which have been brought online to fill the additional capacity are currently choked back and will gradually be opened up as flow rates stabilize. The average uptime production for the first quarter was 4.2 MMscf/d, with 94 percent uptime recorded.

Field operations are well underway with four wells currently drilling and a further two rigs preparing to commence operations shortly. Six wells are currently undergoing testing operations, which includes development and appraisal wells on Linxing (West) and deep exploration wells on Linxing (East).

As previously announced, Sino Gas and MIE Holdings Corporation have approved a c.$90 million capital budget (gross) designed to bring the second central gathering station online mid-year, increasing the total installed capacity of both facilities to 25 MMscf/d. A further 21 development wells are planned to be drilled with the aim of ramping up the production facilities to full capacity by year end. In addition, there is budget allocation for continued seismic acquisition and exploration drilling to further define the reservoir as well as additional horizontal wells to support the optimization of the full field development plan.

Commenting on the announcement, Sino Gas Managing Director, Glenn Corrie said: “We are continuing to build on the strong foundation we set in 2014. Our focus in 2015 is sharply on delivering aggressive production growth, securing the relevant Chinese regulatory approvals and preparing for the next phase of capacity build-out.

Doubling of our Sanjiaobei capacity is another key step in ramping up total production output towards ~25 MMscf/d by the end of the year. The next milestone will be bringing on the larger Linxing central gathering station around mid-year and operations here are proceeding according to plan.

With continued strong well performance, aggressive production growth at very competitive costs in a robust gas price environment de-coupled from the oil markets, we are confident that we are well positioned to deliver strong shareholder returns from our assets.”


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