1 / 25

2018 Operational Results

A Coal Bed Methane Exploration Leader. 2018 Operational Results. January 2019. Disclaimer.

elin
Download Presentation

2018 Operational Results

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. A Coal Bed Methane Exploration Leader 2018 Operational Results January 2019

  2. Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares of G3 Exploration 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.

  3. Table of contents Overview Operational highlights 2019 outlook Appendix

  4. Summary • Two producing assets selling gas at high margins, including government subsidies which highlights their support for increased production • Large acreage, with substantial gas reserves, located inland and well positioned to serve the main manufacturing and population centres of the world’s largest energy consumer • Attractive PSCs, protected by Holland-PRC bilateral treaty, providing gas, mainly to large SOEs on long-term GSAs, at prices insulated from internationalmarkets High margin gas production in China • Drilling and completion techniques tailored to deal with the brittle coal and faulted geology of China - LiFaBriC • Gas production to increase significantly with further development drilling and by implementing well-completion upgrades and production optimisation of existing well stock • Sales ramp up supported by enhanced well-to-market infrastructure and increased processing capacity Well established operations positioned for growth Strengthened corporate and operational management • Highly experienced operational team with strong industry track record • Strong corporate management team with solid energy sector expertise • High quality shareholder base including Aberdeen, Clermont, Fidelity, GDGH, GIC and Platinum Asset Management

  5. Overview– 2018 OperationalAchievements Exploration–G3E Production–GDG Source: Company 1. IPF: Integrated Production Facility (Gas Mother Stations in GSS and GCZ block)

  6. AssetsinCommercialChineseCBMBasins Blocks’ summary Geographic location • GCZ • Greka Interest: 47% • Partner: PetroChina • Operator: PetroChina • Total Wells: 114 wells2 Green Dragon Gas • GSS • Greka Interest: 60%1 • Partner: CNOOC • Operator: Greka • Total: Wells 1,328 wells2 EA Qinyuan Block (GQY A&B) 3,665km2 Heilongjiang Jilin D Inner Mongolia Shizhuang North Block (GSN) 375km2 Liaoning • GSN • Greka Interest: 50% • Partner: CNOOC • Operator: CNOOC • Total Wells: 192 wells2 • GQY (A) • Greka Interest: 10% • Partner: CNOOC • Operator: CNOOC • Total Wells: 32 wells2 Beijing Xinjiang Tianjin P Shizhuang South Block (GSS) 388km2 G3 Exploration Ningxia Shandong Shanxi Qinghai Jiangsu Gansu Henan P Chengzhuang Block (GCZ) 67km2 Shaanxi Tibet Shanghai Anhui Hubei Zhejiang Chongqing Sichuan • GQY (B) • Greka Interest: 60% • Partner: CNOOC • Operator: Greka • Total Wells: 37 wells2 • GFC • Greka Interest: 49% • Partner: CNOOC • Operator: Greka • Total Wells: 31 wells2 EA Panxie East Block (GPX) 584km2 Jiangxi Hunan Baotian-Qingshan Block (GGZ) 947km2 Fujian Guizhou Guangdong Guangxi Yunnan D Fengcheng Block (GFC) 1,541km2 Hong Kong P Production Hainan Group Coalbed Methane Blocks Capital of Province EA D Development/Pilot Stage • GPX • Greka Interest: 60% • Partner: CNOOC • Operator: Greka • Total Wells: 12 wells2 • GGZ • Greka Interest: 60% • Partner: PetroChina • Operator: Greka • Total Wells: 45wells2 EA Exploration and Appraisal Notes: Can be increased to 70% on option exercise Includes non-operated wells

  7. G3E–Six Exploration blocks - 2P US$879 million 1P Net: 5Bcf PV10: US$34m Capex: USD3m GSN Net: 4.5 PV10: US$25m GGZ Net: 1 PV10: US$9m 2P GSN Net: 16 PV10: US$89m GGZ Net: 30 PV10: US$427m GFC Net: 24 PV10: US$363m Net: 70 Bcf PV10: US$879m Capex: USD56m 3P GGZ Net: 104 PV10: US$1,464m GSN Net: 601 PV10: US$2,929m GFC Net: 215 PV10: US$3,133m Net: 920 Bcf PV10: US$7,526m Capex: USD574m Contingent GGZ Net 1C: 662 Net 2C: 737 Net 3C: 825 GSN Net 1C: 1 Net 2C: 3 Net 3C: 187 GFC Net 1C: - Net 2C: 5 Net 3C: 57 GQY Net 1C: 4 Net 2C: 17 Net 3C: 30 Net 1C: 667 Bcf Net 2C: 762 Bcf Net 3C: 1,099 Bcf Prospective GGZ Low Est: 440 Best Est: 494 High Est: 556 GPX Low Est: - Best Est: 17 High Est: 442 GQY Low Est: 194 Best Est: 817 High Est : 1,880 GFC Low Est: 98 Best Est: 214 High Est: 731 Low: 732 Bcf Best: 1,543 Bcf High: 3,611 Bcf G3E net 2P reserves of 70 bcf with PV10 value of US$879 million Source: NSAI estimates as of year end 2017

  8. GDG–Two Production blocks - 2P US$1.5 billion 1P Net: 92 Bcf PV10: US$441m Capex: USD52m GCZ Net: 14 Bcf PV10: US$72m GSS Net: 78 PV10: US$369m 2P GSS Net: 276 PV10: US$1,385m GCZ Net: 31 Bcf PV10: US$155m Net: 307 Bcf PV10: US$1,539m Capex: USD156m GSS Net: 1,068 PV10: US$4,935m 3P GCZ Net: 56 Bcf PV10: US$288m Net: 1,125 Bcf PV10: US$5,223m Capex: USD765m GDG net 2P reserves of 307 bcf with PV10 value of US$1.5 billion Source: NSAI estimates as of year end 2017

  9. Table of contents Overview Operational highlights 2019 outlook Appendix

  10. GuizhouBlockMoving TowardsFirstGas 8 wells realized commercial gas rates First Sales in 2019 De-risked 7 major coal seams NSAI 3P reserves $ 1,464 million Source: NSAI estimates as of yearend 2017

  11. GDG–ProducingAssetsLocatedinProlificQinshuiBasin Source: NSAI estimates as of yearend 2017 * Can be increased to 70% on option exercise

  12. GDG–1442WellsDrilled,93% of CNOOC Online Wells Connected to Sales Channels Total Wells • GSS Greka • Gas sales increment from existing wells • Application of continuous compression at wellheads • 51 compressors available, 47 installed to the sales gathering system • One mother station operational • GSS CNOOC • Infrastructure construction and pipeline connections ahead of schedule • Two mother stations operational • 80% of drilled wells are online • 93% of online wells are connected to sales channels • CNPC • 10 wellhead compressors running to reduce wellhead pressures • Targeting coal seam 15 to increase sales volumes from existing wells • ODP implementation in progress 1,442 1,128 200 114 CNOOC Operated GDG Operated CNPC Operated Online Pending completion Online Pending completion Online Pending completion 898 230 130 70 89 25 Infrastructure Connected Infrastructure Connected Infrastructure Connected 838 60 112 18 89 5 Dewatering and will be connected to sales infrastructure Dewatering and will be connected to sales infrastructure Dewatering and will be connected to sales infrastructure Sales Wells Sales Wells Sales Wells 354 106 84 Source: Company data as of 31st December 2018

  13. GDG–GasSalesTrackRecord Monthly Sales Volumes Source: Company data as of 31st December 2018

  14. GDG– GCZ ODP approved; drilling operations to kickoff near Chinese new year Well sites civil work Well sites civil work Production wells workover HSE inspection HSE inspection Production site Source: Company

  15. Focus on infrastructure built and connections of existing well stock to sales channels • Three mother stations (IPF) operational, one in test run • 112 Greka wells connected to sales channels • 838 CNOOC wells connected to sales channels • Total of seven IPFs to be operational by yearend 2019 • Infrastructure construction progress is monitored through quarterly arranged JMC Wells need infrastructure connections Test run IPF In construction IPF Online IPF Source: Company data as of 31st December 2018 IPF: 3 online, 1 test run, 3 in construction

  16. GSS Block – Field Operations • GSS GDG Well • GSS Greka IPF • GSS Greka Compressor • GSS GDG Wellhead Source: Company

  17. GDG–InfrastructureBuild:LastMilestone • GCZ IPF - 1 • GSS IPF - 2 Operational Operational • GSS IPF - 3 • GSS IPF - 4 Operational Operational Source: Company

  18. GDG– InfrastructureBuilt:LastMilestone • GSS IPF - 5 • GSS IPF - 6 Satellite image Land lease acquired, civil work in progress IPF completed, under test run • GSS IPF - 8 • GSS IPF - 7 Satellite image Land lease acquired, civil work in progress Satellite image Land lease in progress Source: Company

  19. Table of contents Overview Operational highlights 2019 outlook Appendix

  20. 2019 Outlook Exploration–G3E • Repay two bonds from debt and equity issuance in Green Dragon Gas • Conclude evolution to exploration and development business • Finalise Dividend in Specie for producing assets • First gas in Guizhou block • Expand into an additional geography • Infrastructure focus to monetize invested capital • Implement GCZ ODP • Expedite mother stations construction and continue sale increment from CNOOC wells • Conclude infill drilling program in current developed area • Attain approval for GSS Zaoyuan ODP Production– GDG Source: Company

  21. Table of contents Overview Operational highlights 2019 outlook Appendix

  22. History and Corporate Milestones Landmark Government Ruling First License FTSE 250 Public Floating on AIM LiFaBriC Foundation for Success Strengthening cooperation with Chinese Partners GCZ ODP Approved Continuous compression at GSS along with CNOOC infrastructure built The Company listed on the Alternative Investment Market in London on August 17, 2006. Lined Faulted Brittle Coal Improved drainage factor Greka commences Chinese operations First PSC signed on the GFC block Chinese Government rules in favor of Green Dragon on validity of PSC • 1997-1999 2000 - 2002 2003 2006 2008 2009 2012 2013 2014 2015 2018 Technological Breakthrough Greka Engineering and Technology Dividend Binding Agreements with CNOOC and PetroChina Acquisition of four additional licenses Greka Drilling Dividend First Gas 8th March demerger of Greka Drilling Addition of 2 CNG stations in Pindingshan Upgrade of Infrastructure Production Facilities 30th Sept demerger of Greka Engineering Zhengzhou Greka Gas Co Ltd entered into a 20-year agreement with PetroChina Huabei Oilfield MWD (Measurement While Drilling) and LWD (Logging While Drilling) facilitate LiFaBriC development Signed an agreement with Conoco Philips Landmark agreements lead to shareholder participation in 1,791 wells Gas production commences at GSS Commenced operations on the ground Signing of four other licenses including Shizhuang South Source: Company

  23. Impact of 13th Five Year Plan on G3 Exploration • Government Objectives • Increase CBM consumption to 10% of energy mix by 2020 • 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 • Decrease colliery gas incidents by 15% by 2020 • Benefits to G3 Exploration • Blocks named priority CBM Blocks/“The Key Projects” • Increased investment certainty - support actions with special funds for CBM projects • Continued support in increased subsidy expected • Relaxed VAT rules on imported CBM equipments Source: NEA

  24. Supportive Pricing and Regulatory Environment The process of market and series of 2010-15 price reforms, combined with increasing demand for gas, have substantially increased average realised gas prices received by gas producers in China post 2015 China City Gate Gas Prices1 ($/Mcf) China Gas Prices and Market Structure • Conventional gas prices have historically been tightly regulated by the NDRC, which set a base price for different onshore fields and pipelines based on types of end users supplied • In recent years, the NDRC has undertaken a number of reforms to raise the legacy base price of natural gas in order to encourage its greater production and general adaptation • Unconventional gas prices (including CBM) are unregulated2 and are driven by demand and supply trends in the respective regional markets with reference to prevailing natural gas prices • Each province sets prices for natural gas within its territory based on the NDRC guidance • The retail CNG pricing follows the city-gate pricing levels set by the Central Government GSS and GCZ Blocks Contract Pricing (2018) • GDG’s prices are under long-term GSAs with Greka Integrated Production Ltd. and CNPC for GSS and GCZ blocks, respectively, and include subsidies issued by the MOFC3 and the Shanxi provincial government Inclusive of VAT • Sources: • IHS Energy, China's Energy Statistical Yearbooks, updated August 2016. • Except when combined with conventional domestic or imported pipeline gas after pipeline transport. • Ministry of Commerce, People’s Republic of China.

  25. Strong China Gas Fundamentals Growing energy demand and heightened interest for clean energy sources are driving the growth in China’s natural gas industry Gas Share of China’s Total Primary Energy Mix The Energy Strategy Targets 2x 2018 2030 Gas share of the primary energy mix • The Energy Strategy will encourage the removal and/or reduction of non-market obstacles to the growth of Gas’ share in China’s energy mix, and consequently will further enhance demand for Gas to 2030 • Gas share of China’s 2018 total energy mix has grown consistently since 2005 (from 2.4% to 8.0%)1 Gas Demand Factors Gas Supply Factors Urbanisation Growth in manufacturing Industries Coal-to-Gas switch Conventional production Unconventional production (CBM, CMM, Coal-to-Gas) Gas-to-Power switch Electricity for electric vehicles Steam assisted gravity drainage Net pipeline imports LNG import LNG & CNG powered vehicles Small loads LNG market development Gas market liberalisation • Lack of both domestic supplies and the infrastructure to move bulk supplies of gas cheaply into and within China. • China experienced acute gas shortage in the winter of 2018 when demand for domestic and household gas led to supplies being withheld from industrial users • Sources: • China’s National Bureau of Statistics.

More Related