AAG Energy Achieves Production Milestones at China's CBM Concessions

AAG Energy Holdings Ltd. (AAG Energy), an independent coal bed methane (CBM) producer, reported Tuesday that it has achieved new production milestones at the Panzhuang and Mabi concessions in China's Shanxi Province.

Production from Panzhuang, the first local-foreign joint venture to have received an Overall Development Plan (ODP) from China's National Development and Reform Commission (NDRC) and the most developed CBM concesson, has exceeded 52.97 million cubic feet per day (MMcf/d) or 1.5 million cubic meters per day (MMcf/m). It is also the first concession to have reached designed production capacity for CBM commercialization.

AAG Energy will increase CBM production at Panzhuang to cope with the current market environment, while reducing capital expenditures (CAPEX). The current CAPEX per well at Panzhuang is down by 29 percent and 13.9 percent compared to 2014 and 2015, respectively, while dilling speed has improved by 34 percent year-on-year.

Over at the Mabi CBM concession, the gross gas flow rate from the pilot wells has exceeded 3.53 MMcf/d (100,000 cubic meters per day), up more than 300 percent over the average daily production in January 2016.The rise in production was supported by a significantly improved individual well performance and was achieved across the entire geographic area, with positive results in some areas that had previously underperformed AAG Energy’s expectations.

Like Panzhuang, the CAPEX per well at Mabi CBM has declined by 16.3 percent and13.9 percent compared to 2014 and 2015, respectively.

The Mabi concession, covering 346.8 square miles (898.2 square kilometers), is larger than the Panzhuang concession. AAG together with partner China National Petroleum Corp. (CNPC) has submitted and received all Mabi ODP associated supporting approvals required by the NDRC as pre-conditions for the 35.3 MMcf (1 billion cubic meters) ODP. The firm and CNPC are preparing to submit the Mabi ODP to NDRC.

“I am very excited about these two encouraging news. This continued ramp-up in production should enable Panzhuang to soon exceed its ODP-designed annual commercial capacity of 17.66 MMcf (500 MMcm), marking yet another significant milestone as well as demonstratingits leading role in China’s CBM development. We have also achieved remarkable progress at Mabi, a direct result of our relentless testing and application of innovative CBM development technologies and operational best practices for the past several years. The performance improvement in the pilot area reinforces our confidence that we are on the right track to commercialize Mabi’s CBM resources,” Carl Lakey, Co-CEO and COO of AAG Energy, said in the press release.


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