G3 Exploration PLC (LON:G3E) is examining a US$250mln reserve-based loan (RBL) as an option to refinance its balance sheet.
The China-focused gas group says this became an option recently following field development approval and an experienced bank has been appointed to move an RBL loan forward.
A US$250mln loan would enable G3 to pay off its inter-company debt and carry out the spin-off of production subsidiary Green Dragon Gas through a dividend in specie.
That would leave an exploration arm, where G3E has invested approximately US$270mln on its portfolio which it estimates has a 2P/mean value of over US$816mln.
“We are eager to focus on this portfolio and systematically migrate this portfolio into commercial production and thereafter farm-outs or sales,” said Randeep Grewal, chairman.
“Each of these transactions should provide shareholders with a dividend. Our current portfolio in China provides a solid five-year backlog of projects.
“The most advanced of these, the Guizhou exploration block (GGZ), is expected to commence test gas sales before the end of this year.”
Revenues for the half-year to June were US$11mln (US$13.7mln) with a net loss of US$7mln (US$6.3mln).