Results centre

Green Dragon Gas presented its 2015 Annual Results and Vision for 2020 at its Capital Markets Day on Wednesday 27th April 2016. To watch a recording please follow this link and sign up:



  • Revenue of US $37.7 million, a 6% increase year on year (2014: US $35.5 million)
  • Cash generated from operating activities in the year to 31 December 2015 of US $12.4 million (2014: US $0.8 million), a near 18-fold increase
  • Full cost recovery on GCZ, receiving regular gross sales proceeds from September 2015 onwards and providing additional cash to the business
  • Cash of US $26.9 million at 31 December 2015 (2014: US $80.0 million)



  • End of year gross annual production capacity of 12.12 bcf per annum, exceeding 2015 target
  • Net increase in 1P reserves of 17% to 173 bcf (2014: 148 bcf), NPV10 USD 1.2 billion
  • Net increase in 2P reserves of 29% to 549 bcf (2014: 427 bcf), NPV10 USD 4.0 billion
  • Annual processing capacity at GSS increased by 79% to 22.7 bcf per annum following the completion of a further two processing facilities by our partner, CNOOC
  • First LifaBric well drilled in Coal Seam 15 and successfully completed
  • 2,037 wells across all licences with 1,097 on line and 678 wells producing gas
  • On GSS, 94 Green Dragon operated wells are connected to sales infrastructure at 31 December 2015 with a further 87 wells similarly connected on the GCZ block


  • Net gas sales of 3.7 bcf consistent with prior year (2014: 3.6 bcf)

  • PNG sales stable year on year at 2.9 bcf

  • Increase in gas sales from GSS equity gas of 26% to 1.41 bcf in 2015 (2014: 1.12 bcf)

  • Weighted average sales price achieved of $10/mcf (2014: $10/mcf)


  • Strategic focus on the upstream business - reviewing options to rationalise downstream operations

  • Considering farmout, debt and equity financing options to develop assets and enhance trading liquidity

  • 2016 year-end annual gross production capacity target of 16 bcf per annum, a 33% increase versus 2015

  • Continued focus on production volume, existing drilled well connections and gas sales

  • CNOOC to further progress infrastructure build out on GSS toward ultimate 53 bcf annual sales processing capacity

Randeep S. Grewal, Founder and Chairman of Green Dragon Gas, commented:

"The Group has succeeded in its transition from an explorer and CBM technology developer into a commercial gas producing, profitable company, delivering our maiden profit in 2015. I am particularly pleased in our operational performance with increases seen in production and processing capacity whilst simultaneously growing our 1P reserves base.

 "In 2015, the Company made key recruitments to add skill-sets and bandwidth to the team to support the next phase of Green Dragon's growth. With the impetus this created in mind, we would also like to thank our tirelessly committed workforce that has been fundamental in executing our ambitious business plan.

 "With production capacity growth of 33% and strengthened cooperative partnerships with CNPC, Petrochina and CNOOC, we are proud of the position we find ourselves in. As our focus moves to optimising production, revenue and profitability on GCZ and GSS we move into a position where we can now consider how we best deliver tangible value to our shareholders whilst still retaining the financial resources necessary to develop all of GDG's blocks."

Green Dragon Gas' management team will be presenting the 2015 Annual Results and the Company's Vision for 2020 today at 10:15am at the Connaught Hotel, Carlos Place, Mayfair, London, W1K 2AL. To watch the presentation live, please register for the webcast by following this link:

mmcf: millions of cubic feet
Bcf: billions of cubic feet

Chairman's Statement

In 2015 we have continued to build on the solid foundations laid down since we entered China over  20 years ago, foundations that were reinforced following the Framework and Cooperation agreements signed with our partners, CNPC and CNOOC, in 2014. We have delivered a consistent operational performance focused on realising investments already made. This, in turn, has translated to a stable financial performance and has provided the platform for growth in our business. This year marks our pivotal year of firmly moving from pure exploration and development into production and sales.

We have an exceptional portfolio of assets that we have continually developed and de-risked since the inception of our operations in China. Our industry continues to enjoy support of the Chinese Government that we are grateful for and that provides the bedrock to underpin the continued growth of the Group. The Chinese Government's commitments embedded in our Production Sharing Contracts since 1999, continue to be honored seventeen years later demonstrating the benefits of a stable governing body through several leadership changes.

The energy sector has faced a challenging year globally, characterised by uncertainty and volatility in commodity prices. Against this backdrop the CBM industry in China has benefitted from consistent Government policy and price stability that has enabled us to deliver a solid performance both operationally and financially. In a year where headlines were dominated by the fall out of the oil price and its impact on forward investment internationally, Green Dragon has continued to judiciously deploy capital in production and gas sales infrastructure to deliver value for shareholders.

China is not wholly immune to the global commodity markets. In late 2015 we saw pricing pressure in the downstream sector where city-gate prices for non-residential gas were adjusted in to encourage gas consumption as the price of substitute fuels fell following a significant decrease in world oil prices. The reduction in the regulated price for non-residential gas is rightly aimed at increasing the use of gas in China as a cleaner alternative to both coal and fuel oil. While reduced end-user pricing will support gas demand in the medium term it could potentially bring a degree of pressure on upstream pricing. Reflecting this and reaffirming its commitment to the CBM industry in China, the Chinese Government recently confirmed its support for CBM in China and announced a 50% increase in subsidy rates for upstream CBM producers as part of the 13th Five Year Plan - a move that was followed by provincial governments with similar increases to local subsidy. Furthermore, CBM continues to be the only energy source under free market principles.

Given the strong margins historically for CBM in China and the increased Chinese Government support through subsidy, we expect margins to remain robust for CBM production even if medium term price pressure comes to bear. The net margins within the natural gas sector are certainly the best globally in China CBM and we are uniquely structured to avail this opportunity.

Operational performance in 2015

We saw our exit-rate production capacity increase by 36% to 12.12 bcf per annum providing the basis for future gas sales as infrastructure is built out particularly on the GSS block. During the year our partner, CNOOC, completed and commissioned two further gathering stations bringing processing capacity in GSS to 22.7 bcf per annum as part of the programme to increase the total processing capacity in the block to 53.4 bcf per annum in the next 18-24 months.

We continued our own focus on infrastructure in GSS through the connection of existing drilled wells to production infrastructure and the optimisation of the gathering system by strategically adding compression to wellheads and gathering circuits. In the GDG operated areas of GSS this has yielded a 26% increase in the sales to production ratio as compared to year end 2014.

Significantly, we also saw success in our inaugural well drilled into Coal Seam 15 that was completed successfully and is now exhibiting casing pressure consistent with gas production. The successful completion of our first well in this seam is a significant step forward in de-risking and proving the potential of Coal Seam 15 and one that was matched by CNPC, our partner in GCZ.

Continued de-risking of our assets

2015 was marked by our tenth consecutive increase in both 1P and 2P reserves with net 1P reserves increasing by 17% to 173 bcf and net 2P reserves up 29% to 549 bcf. Importantly, 2015 saw the initial booking of 1P and 2P reserve volumes on GSN, reflecting the delivery by CNOOC on its investment commitment made as part of the framework agreement entered in 2014.

Our exploration focus in 2015 has largely been on the GGZ block in Guizhou province where we drilled and successfully completed six exploration wells during the year. Two of the six wells are currently producing gas and three are showing casing pressure consistent with gas desorption.

The positive results of these wells are particularly encouraging as we move toward certified reserves in 2016 as the first step toward developing an Overall Development Programme for this block. The investment in GGZ demonstrates our commitment to continually de-risk our significant acreage position and to provide line of sight to a credible pipeline of development opportunity. The decade we spent developing technology and knowledge of the Chinese coal seams accelerates the timeline to commerciality for all the remaining blocks in exploration, our activities in GGZ is such a demonstration.

Liquidity and capital resources

The Group closed the year with $26.9 million of cash on hand. Cash from operations increased significantly in the year to $12.4 million reflecting the continued strong sales performance from GSS and the commencement of cash receipt on GCZ. Our partner on GCZ, CNPC, reached cost recovery in September 2015 since which time we have been regularly receiving our 47% share of GCZ gross sales proceeds and separately settling cash calls for our share of costs, yielding net cash monthly. We expect our cash performance in 2016 will be enhanced as we continue to receive cash proceeds from GCZ and GSS profitable gas sales.


We have made a number of key management appointments in 2015 and into 2016. We have strengthened our operational and finance teams to support the business as it continues to grow in the coming years. Enhancing our management team not only provides important bandwidth to our organisation at a time of production growth but has also brought additional skill sets on managing commercial operations rather than purely development. We succeeded in the timely organisation of this management transition to support the growth trajectory.

In 2015 we also continued to focus on our future leaders programme aimed at developing and nurturing key talent within the Group to build a sustainable management team, providing personal and professional development opportunities to our young leaders and give a clear path to succession planning within our business.

In addition to professional development, I am particularly proud that the focus of our future leaders programme has extended to community based projects with our future leaders team devoting time to a school for orphans giving English lessons to students and organising a range of group activities for the children. As an international Company operating in China, we have a consistent long track record of working closely with our communities and enhancing them.

I wish to thank all of our tireless employees that continue to achieve higher accomplishments through a passionate commitment to working hard in delivering on the Group's business plan. 

Looking forward

I am genuinely excited for what the future holds for Green Dragon with the excellent team we have assembled. From the exploration and production teams in the field, to our gas stations through to the administrative support teams and management, we continue to strengthen in key areas with a focus on developing our people and Group organisation.

The Group has succeeded in its transition from an explorer and CBM technology developer into a commercial gas producing, profitable company. Green Dragon has succeeded in de-risking a 25 Tcf gas resource across 7,600 km2 over the last fifteen years and can now focus on ways to expand our production profile and generate incremental cash. The emerging market challenges have been well over-come.

With the assets successfully de-risked, and cooperative partnerships with CNPC, Petrochina and CNOOC, we are poised to provide our shareholders returns on their long committed investments and support. The transition from an explorer and CBM technology developer into a commercial gas producing profitable company was particularly successful. The bandwidth and skill was added to the organisation timely for the next phase of Green Dragon's growth.

We have continually de-risked our asset based through hard work and the application of deep CBM knowledge and experience. Our growth trajectory has been steady and consistent and I believe we are truly poised to deliver the full potential from our world class asset portfolio.

Our maiden profit in 2015 initialises the trajectory of rewards we have worked so hard to achieve.

I look forward to continuing to report on our well managed and disciplined growth in future years.

Randeep S. Grewal
Founder & Chairman