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G3 Exploration Ltd

G3 Exploration targets first gas in Guizhou block for 2019

For 2018, G3 said gross sales volumes for its Shizhuang South block were 3.4 BCF, 17% higher than the year before

Gas gauges
G3's Green Dragon arm had also received approval to drill 147 new wells

G3 Exploration Ltd (LON:G3E) said it is targeting first gas at its Guizhou block in 2019 as it issued an operations update for 2018 and outlooks for the new year.

The China-focused coal bed methane gas (CBM) explorer said that during 2018 it had submitted a reserve report for the Guizhou block while the development potential of the Jiangxi and Anhui exploration blocks had been re-assessed with “high exploration acreage” identified.

WATCH: G3 Exploration receives final approval to develop Chengzhuang Block (GCZ)

12 wells had also been placed online at the Shizhuang North block while 400 square kilometres of 2D Seismic had been added with an additional 14 wells drilled at the Qinyuan block, taking the total number of wells drilled to 69 wells.

G3 added that it had invested a total of US$240mln across six exploration blocks with 349 drilled well and 660 sq km of seismic data while also discovering 23.5 trillion cubic feet of gas in place.

For its production and development activities under the name Green Dragon Gas (GDG), the company said its year-end exit production rates were;

○ Chenghuang (GCZ) Block - 2.05bn cubic feet (BCF)
○ Shizhuang South (GSS) Block Operated - 4.17 BCF
○ Shizhuang South (GSS) Block Joint Operated - 2.61 BCF

Year-end exit sales rates were 1.95 BCF for Chenghuang, 2.19 BCF for the operated Shizhuang South block, and 2.25 BCF for the joint operated Shizhuang South block.

The GSS gross sales volumes were 3.4 BCF, a 17% increase on 2017.

GDG had also received approval from the Chinese National Development and Reform Commission (NDRC) to drill 147 wells with invested capital of US$55mln targeting annual peak production of 6.35 BCF.

The plan is due to begin in the first quarter of 2019 and complete by the end of 2020.

Joint-operated infrastructure construction at the GSS block was also ahead of schedule with 950 of the 1328 wells connected to sales infrastructure.

Looking to 2019, G3 said its exploration arm was targeting first gas at the Guizhou block as well as to certify the reserve report and file a development plan.

The company was also targeting the receipt of a dividend from GDG as well as expanding into additional geographies.

For Green Dragon specifically, G3 said it was aiming to increase gas sales to monetise invested capital, as well as drilling infill wells to compound sale volumes and begin drilling the 147 approved wells.

Randeep S. Grewal, executive chairman of G3, said following the drilling of the new wells at the GCZ block production was expected to increase 165% to 6.35 BCF per year.

Grewal added that of the 1328 wells drilled to date, 1028 were connected to the newly built pipeline infrastructure with 460 contributing to gas sales.

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