Green Dragon Gas - Edison Investment Research · Low Est: 345 Best Est: 951 High Est : 1,947 GFC Low Est: 53 Best Est ... or otherwise acquire or dispose of any shares of Green Dragon

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Green Dragon Gas

www.greendragongas.com

LSE: GDG.LN

June 2017

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Green Dragon Gas

at a Glance

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Large reserves base • Largest publicly listed CBM reserves base in China: 1P: 184 bcf; 2P: 559 bcf;

3P: 2,386 bcf*

• Six Inland Production Sharing Contracts covering 1,869,599 acres (7,566 km² )

• Ongoing migration to 1P reserves: 17% increase at year-end 2016

Integrated operations and strong partners • Strong, highly capitalised Chinese partners: CUCBM (CNOOC), CNPC and

PetroChina

• Proven PSC titles: Protected by Netherlands-PRC Bilateral Investment Treaty

• Equity participation in over 2,037 wells

• Release of non-core downstream operational assets, concluding the evolution

of GDG into a pure upstream business

Experienced leadership and strong corporate profile

• Highly experienced operational management team with a track record in Coal

Bed Methane

• High quality shareholder base: includes Aberdeen, Clermont Group, Fidelity,

Platinum Asset Management, GIC

8 Blocks

$4.3bn 2P Reserves

2,037 Drilled Wells

1.9m Acres

* YE 2016

GDG: Leading Independent China CBM Producer

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Blocks’ summary Geographic location

GSS

GDG Interest: 60%1

Partner: CUCBM (CNOOC)

Operator: GDG

1P/2P/3P: 166/457/1,330 bcf2

LiFaBriC/Vertical Wells: 80/120

Total: 1,588 wells3

GCZ

GDG Interest: 47%

Partner: PetroChina

Operator: PetroChina

1P/2P/3P: 14 /29/ 52 bcf2


Total: 114 wells3

GSN

GDG Interest: 50%


Operator: CUCBM (CNOOC)

1P/2P/3P: 5/18/686 bcf2


Total: 201 wells3

GQY (B)

GDG Interest: 60%


Operator: GDG

2C: 18 bcf2


Total: 52 wells3

GFC

GDG Interest: 49%


Operator: GDG

1P/2P/3P: NA/24/212 bcf2


Total: 30 wells3

GPX

GDG Interest: 60%


Operator: GDG

Best Prospective: 17 bcf2


Total: 12 wells3

GGZ

GDG Interest: 60%

Partner: PetroChina

Operator: GDG

1P/2P/3P: N/A / 30 / 106


Total: 33 wells3

Capital of Province

Group Coalbed Methane Blocks

CNG Mother Stations

Existing Main Gas Pipelines

P

D

EA

Production

Development/Pilot Stage

Exploration and Appraisal

Xinjiang

Tibet

Qinghai

Gansu

Ningxia

Sichuan

Yunnan Guangxi Guangdong

Hong Kong

Fujian

Zhejiang

Shanghai

Jiangsu

Shandong

Tianjin

Beijing

Liaoning

Inner Mongolia

Jilin

Heilongjiang

Hainan

Chongqing

Hubei

Shaanxi

Hunan

Henan

Guizhou

Anhui

Shanxi

Jiangxi

Baotian-

Qingshan

Block (GGZ)

947km2

Qinyuan

Block (GQY

A&B)

3,665km2

Shizhuang

North Block

(GSN)

375km2

Shizhuang

South Block

(GSS)

388km2

Chengzhuang

Block (GCZ)

67km2

Panxie East

Block (GPX)

584km2

Fengcheng

Block (GFC)

1,541km2

P

P

EA EA

EA

D

D

GQY (A)

GDG Interest: 10%


Operator: CUCBM (CNOOC)

1P/2P/3P: NA


Total: 7 wells3

Notes:

1. Can be increased to 70% on option exercise.

2. NSAI estimates as of 31st December 2016

3. Includes non-operated wells as of Q1 2017

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Upstream Asset Portfolio – 6 PSCs Over 8 Blocks

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1P

GSS

Net: 457

PV10:

US$3,282m

GFC

Net: 24

PV10:

US$312m

GSS

Net: 1,330

PV10:

US$9,320m

GSN

Net: 686

PV10:

US$4,221m

GFC

Net: 212

PV10:

US$2,582m

GQY

Net 1C: 6

Net 2C: 18

Net 3C: 31

GQY

Low Est: 345

Best Est: 951

High Est : 1,947

GFC

Low Est: 53

Best Est: 116

High Est: 409

GPX

Low Est: -

Best Est: 17

High Est: 443

GGZ

Low Est: 531

Best Est: 599

High Est: 678

2P

3P

Contingent

Prospective

Net: 184 Bcf

PV10: US$1,323m

Capex: USD116m

Net: 558 Bcf

PV10: US$4,325m

Capex: USD352m

Net: 2,386 Bcf

PV10: US$17,805m

Capex: USD1,415m

Net 1C: 771 Bcf

Net 2C: 937 Bcf

Net 3C: 1,436 Bcf

Capex (2C): USD747.9m

Low: 930 Bcf

Best: 1,684 Bcf

High: 3,478 Bcf

Capex (Best): USD6,686m

GCZ

Net: 14 Bcf

PV10:

$116m

GCZ

Net: 29 Bcf

PV10:

$233m

GCZ

Net: 52 Bcf

PV10: $376m

GSN

Net: 5

PV10:

US$37m

GSS

Net: 165

PV10:

US$1,170m

GSN

Net: 18

PV10:

US$124m

GGZ

Net: 30

PV10:

US$373m

GGZ

Net: 106

PV10:

US$1,306m

GSS

Net 1C: 11

Net 2C: 38

Net 3C: 135

GSN

Net 1C: 1

Net 2C: 3

Net 3C: 153

GFC

Net 1C: -

Net 2C: 5

Net 3C: 58

GCZ

Net 1C: 1

Net 2C: 3

Net 3C: 9

GGZ

Net 1C: 752

Net 2C: 871

Net 3C: 1050

Source: NSAI estimates as of December 31, 2016 -5-

Reserves and Resources Breakdown

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Commitment to the environment

• Zero use of harmful chemicals

• Own gas to generate power for operations

• Clean water as a by-product of production for irrigation or

consumption

• Use of biodegradable drilling mud

• No recorded environmental incidents

Commitment to the community

• Drilling of water wells for local villages

• Maintenance of local infrastructure

Commitment to our people

• Zero lost time incidents in 2016

• In-depth HSE policy and continuous training

• Future leader programme to develop and nurture key

talents

• Ongoing commitment to safety

Corporate Social Responsibility

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Chinese Gas Market

Demand and Supply

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In the News

• Shuttering of the Huangneng

Beijing Thermal Power Plant Q1

2017.

• According to Xinhua News - Beijing

has become the country’s first city

to have all its power plants fuelled

by natural gas, an objective laid out

in 2013 in the capital’s five-year

clean air action plan.

• The Huangneng plant is the 4th

plant to be closed and replaced by

gas thermal power centres

between 2013 – 2017. As a result

there has been a reduction of

almost 10 million tons in coal

emissions annually.

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China’s Primary Energy Share (2014 – 2020)

2014 2020

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China’s 13th Five Year Plan highlights:

• Significant support from Chinese Government for CBM and specifically GDG blocks. GDG blocks GCZ,

GSS, GSN and GGZ have been identified by the Chinese Central Government as priority CBM projects

within the 13th Five Year Plan

• Increase investment in CBM development, adding 420 BCM by 2020 to national proved reserves

• Increase production to 24 BCM in 2020, an increase of 33% from 2015

• Cleaner Energy: Low carbon energy producing assets aligned with government’s agenda of moving

towards a low carbon economy

Strong incentives from the government to promote domestic gas production:

• Elements of CBM sales based on market pricing (unregulated)

• Beneficial tax treatments which include, value-added tax refunds, import tariff waiver, accelerated

depreciation and resource tax exemptionsPriority treatment of CBM for pipeline and power station access

Source: CEIC, NDRC, IEA, Energy Development Strategy Action Plan (2014-2020), BP Statistical Review June 2016

Chinese Central Government Support for CBM

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DRAFT Demand and Supply in China

GDG is the only independent company of its size operating in China

China is the worlds largest energy consumer and the fastest growing

natural gas market in the world

GDG: Large acreage, with substantial gas reserves, located inland and

well positioned to serve the main manufacturing and population centres

GDG’s drilling and completion techniques tailored to manage brittle coal

and faulted geology of China - LiFaBriC

In April 2017, gas consumption was 22% higher than the same month in

2016 - National Development and Reform Commission

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4

5

6

7

8

9

10

11

12

13

USD/MMBtu

Shanghai Changchun, Jilin

Beijing Wuhan, Hubei

Chengdu, Sichuan Hohhot, Inner Mongolia

Urumqi, Xinjiang

Citi-gate Gas Prices Outlook to 20301 (by Hub) Geographic location of Green Dragon Licenses

Capital of Province

Group Coalbed Methane Blocks

Existing Main Gas Pipelines

Xinjiang

Sichuan

Hong Kong

Shanghai

Beijing

Hohhot

Hubei

Shaanxi Henan

Guizhou

Shanxi

Jiangxi

Green Dragon

avg. realized

price

DRAFT

Source: (1) IHS Energy, China's Energy Statistical Yearbooks, updated August 2016.

Update on Chinese Gas Pricing

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The Year Ahead

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2017 – A Year of Monetisation

• Refinance USD debt with RMB debt and focus on early redemption of the Nordic Bond

• Conclude evolution to pure upstream business with release of downstream operations

• Progress Hong Kong listing alongside London to deliver shareholder value

• Execute CNOOC Supplementary Agreements and submit the GSS ODP

• Launch GSS LiFaBriC drilling programme to further increase sales volumes

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Bringing value forward for shareholders

Our Vision to 2020

Where we are now

• Largest independent CBM acreage and reserves in China

• De-risked c.27 Tcf of gas resources

• Most lucrative gas margins globally

• Stable Government and policy support

• Developed technology with proven results

Value realisation

• Secure asset appropriate financing and shareholder liquidity

• Upstream focused

• Bring forward block development and subsequent cash generation for

shareholder value

• Technical and commercial proof of

concept established

• Partners have explored for and

developed CBM on similar fields

• Production infrastructure is non-

complex using proven technology

Minimal exploration risk

• Government seeking to increase

Natural Gas to over 10% of energy

mix by 2020 (c.4% at present)

• Fastest growing natural gas market in

the world

• Government subsidies for CBM sales

increased by 50% in 13th five-year

plan

Government support to expand

CBM production

• Strong, highly capitalised and

institutionally supported Chinese

partners

• CNOOC, CNPC and

PetroChina

• Substantial reserves base in a central

location close to consumers

• $12m cash generated from

operations in FY15, a sustained year-

on-year increase

• GCZ now providing consistent cash

flow following cost recovery by CNPC

• Unique licensing position – Proven

PSC titles, protected by the

Netherlands-PRC Bilateral

Investment Treaty

High predictability of cash flows

• Exploration of farm-out opportunities

to accelerate development and cash

flows

• Operational improvements

• Standardised well completion

technology

• Pipeline compression

• Introduction of screw

compressor

• SCADA deployment

High potential for further asset

optimisation

• 678 wells producing gas out of a total

of 2,037 across all licence areas

• Operational focus on the ramp-up of

production

• Strategic plan to finance continued

roll-out of drilling programme

Minimal exploration risk

Existing production

Integrated operations and strong

partners

Key Highlights

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Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares of Green

Dragon Gas Ltd. (the “Company”) in any jurisdiction. The Company’s shares have not been and will not be registered under the US

Securities Act of 1933 (the “Securities Act”) and may not be offered or sold within the United States absent registration under the

Securities Act or an exemption from registration.

The information contained in this presentation is given in good faith but no representation or warranty is made in relation to the accuracy or

completeness of the information, or any oral information provided in connection therewith, or the data it generates and no responsibility,

obligation or liability is or will be accepted by the Company or its affiliates or advisors or by any of their respective officers, employees or

agents in relation to it.

This presentation contains certain forward looking statements with respect to the financial condition, results, operations and businesses of

the Company. The statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that

will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those

expressed or implied by these forward looking statements and forecasts.

Past performance is no guide to future performance and persons needing advice should consult an independent financial advisor.

This presentation and the information contained in it are confidential and should not be distributed, published or reproduced, in whole or in

part, or disclosed by recipients directly or indirectly to any other person.

Documents

Green Dragon Gas - Edison Investment Research · Low Est: 345 Best Est: 951 High Est : 1,947 GFC Low Est: 53 Best Est ... or otherwise acquire or dispose of any shares of Green Dragon