Green Dragon Gas May / June 2017 www.g .green endragon ongas.com - - PowerPoint PPT Presentation

May / June 2017

www.g .green endragon

• ngas.com

.com LSE: GDG.L .LN

Green Dragon Gas

• 2-

Discl claimer aimer

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,

• bligation 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-

Large reserves base

• Largest publicly listed CBM reserves base in China: 1P: 184 bcf; 2P: 559 bcf; 3P: 2,386 bcf*
• Reserves independently verified by 11 consecutive CPRs
• 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

Centrally located among China’s gas consumers

• Multiple routes to monetise gas: GDG-owned refuelling stations, industrial customers, multiple gas

pipelines, sales via electricity

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, GIC,

Management

8

Blocks cks

$4.3bn 3bn

2P Reser erves es

2,037

Drilled ed Wells

1. 1.9m

Ac Acres es

* YE 2016

Leading China CBM Independent

• 4-
• 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 centers 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 international markets

High margin gas production in China Well established

• perations

positioned for growth Strengthened corporate and

• perational

management

• Drilling and completion techniques tailored to deal with the brittle coal and faulted geology
• f 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

• Highly experienced operational team with strong track record within Coal Bed Methane
• Corporate management team strengthened with solid energy sector expertise
• High quality shareholder base including Aberdeen, Clermont, Fidelity, GIC and Platinum

Asset Management

DRAFT

Investment Highlights

• 5-

Energy consumption per person

(million people) Growth rate (%) (energy consumption per person – toe) (gas consumption per person - toe)

Supportive Chinese market dynamics

• Largest population in the world
• One of the highest GDP growth rates (2015: 7%; projected 6.5% p.a. to 2020)
• Currently very low energy consumption per capita – projected to increase with a rising middle class
• Extremely low proportion of gas in the energy mix – expected to grow to 10% by 2020E with strong support from the government

Population 2015A GDP growth rate

Source: BP Statistical Review, June 2015; IMF World Economic Outlook Database, April 2016

Gas s consumption per person 0.5 1.5 2.2 2.9 3.6 4.7 7.2

• 5.0

10.0

India Brazil China U.K Japan Russia USA

0.04 0.11 0.17 0.80 0.94 2.12 2.59

• 2.00

4.00

India China Brazil Japan U.K U.S.A Russia

• 3.8%
• 3.7%

0.5% 2.2% 2.4% 6.9% 7.3%

• 5.0%

0.0% 5.0% 10.0%

Brazil Russia Japan UK USA China India

65 127 146 204 322 1,293 1,375

• 500

1,000 1,500

U.K Japan Russia Brazil U.S.A India China

China - Solid Fundamentals for Gas

• 5-

• 6-

China’s 13th Five Year Plan Highlights:

• 13th Five Year Plan issued in March 2016 continues theme of gas and clean fuels
• Increase CBM consumption to 13% 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
• “Energy Revolution" with clean, safe resources and exploring deposits of natural,

shale and coal bed gas

• Clean production to be promoted and green and low carbon industry systems set

up

• Green finance to be promoted and Green Development Fund established

Strong incentives from the government to promote domestic gas production:

• Elements of CBM sales based on market pricing (unregulated)
• Beneficial tax treatments to include: value-added tax refunds, import tariff waiver,

accelerated depreciation, resource tax exemptions

• Priority treatment of CBM for pipeline and power station access

Benefits to Green Dragon Gas

• GSS, GCZ, GSN, GGZ named priority CBM Blocks / “The Key Projects”
• Increased investment certainty / Support Actions; special funds for CBM projects
• Continued support in increased subsidy expected
• Relaxed VAT rules on imported CBM equipment's

China’s Primary Energy Share (2014A – 2020F)

2014A

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

2020F

Impact of 13th Five Year Plan – Chinese Central Government Support for CBM

• 7-

Blocks’ summary Geog

• graphic

hic location tion

GSS  GDG Interest: 60%1  Partner: CUCBM (CNOOC)  Operat ator: GDG  1P/2P/3P: 166/457/1,330 bcf2  LiFaBr aBriC/ C/Vertical al Wells: 80/120  Total al: 1,588 wells3 GCZ  GDG Interest: 47%  Partner: PetroChina  Operat ator: PetroChina  1P/2P/3P: 14 /29/ 52 bcf2  LiFaBr aBriC/ C/Vertical al Wells: 3/111  Total: 114 wells3 GSN GSN  GDG Interest: 50%  Partner: CUCBM (CNOOC)  Operat ator: CUCBM (CNOOC)  1P/2P/3P: 5/18/686 bcf2  LiFaBr aBriC/ C/Vertical al Wells: 3/10  Total al: 201 wells3 GQY (B)  GDG Interest: 60%  Partner: CUCBM (CNOOC)  Operator: GDG  2C: 18 bcf2  LiFaBriC/Vertical Wells: 6/31  Total: 52 wells3 GFC  GDG Interest: 49%  Partner: CUCBM (CNOOC)  Operat ator: GDG  1P/2P/3P: NA/24/212 bcf2  LiFaBr aBriC/ C/Vertical al Wells: 2/24  Total al: 30 wells3 GPX  GDG Interest: 60%  Partner: CUCBM (CNOOC)  Operat ator: GDG  Best Prospective: ve: 17 bcf2  LiFaBr aBriC/ C/Vertical al Wells: 2/8  Total al: 12 wells3 GGZ  GDG Interest: 60%  Partner: PetroChina  Operat ator: GDG  1P/2P/3P: N/A / 30 / 106  LiFaBr aBriC/ C/Vertical al Wells: 3/30  Total al: 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%  Partner: CUCBM (CNOOC)  Operat ator: CUCBM (CNOOC)  1P/2P/3P: NA  LiFaBr aBriC/ C/Vertical al Wells: 0/3  Total al: 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 1Q17

• 7-

Upstream Asset Portfolio – 6 PSCs Over 8 Blocks

• 8-

Strong g histo tori rical al reserve rves growth th

• 11th consecutive reserve report from

independent reserve auditors “NSAI”

• Total OGIIP of 3.4 Tcf at Shizhuang

South Main Block and Chengzhuang Block

• Two major coal seams i.e. CS#3 &

CS#15 categorized in proved reserves as per SEC-PRMS and Chinese MLR standards

Conti tinued incre rement t to proved reserve rves

• Net 1P reserves of 179.2 BCf

(NPV@10%: 1,286.1 MM$)

• Net 2P reserves of 486.4 BCF

(NPV@10%: 3,514.9 MM$)

• Net 3P reserves of 1,381.8 Bcf

(NPV@10%: 9,696.2 MM$)

Incre rement t in producti tion via connecti tion of new wells at lower r costs ts

• Connection of new wells to production

infrastructure to prove commercial reserves

• Lower operating cost as greater

volumes are expected to be recovered due to well and completion enhancements

Source: NSAI Reserve Report as of YE16

NPV

Reserves Progression

• 8-

147.8 167.8 179.2 1,463.5 1,191.8 1,286.1 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 8,000 8,500 9,000 9,500 10,000 50 100 150 200 2014 2015 2016 1P (Bcf) NPV (MM$) 399.9 504.4 486.4 3,948.5 3,582.6 3,514.9 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 8,000 8,500 9,000 9,500 10,000 50 100 150 200 250 300 350 400 450 500 2014 2015 2016 2P (Bcf) NPV (MM$) 1,344.2 1,430.4 1,381.8 12,627.6 9,790.6 9,696.2 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 2014 2015 2016 3P (Bcf) NPV (MM$)

Net Gas Reserves (BCF) - 1P 2014 2015 2016 Shizhuang South - Main Block 132.2 153.0 165.5 Shizhuang South - GCZ Block 15.6 14.8 13.7 Total 147.8 167.8 179.2 Net Gas Reserves (BCF) - 2P 2014 2015 2016 Shizhuang South - Main Block 371.4 473.1 456.9 Shizhuang South - GCZ Block 28.5 31.3 29.4 Total 399.9 504.4 486.4 Net Gas Reserves (BCF) - 3P 2014 2015 2016 Shizhuang South - Main Block 1,298.9 1,378.9 1,330.4 Shizhuang South - GCZ Block 45.3 51.5 51.5 Total 1,344.2 1,430.4 1,381.8 Future Net Revenue (MM$) - 1P 2014 2015 2016 Shizhuang South - Main Block 1,277.1 1,067.8 1,169.7 Shizhuang South - GCZ Block 186.4 124.0 116.4 Total 1,463.5 1,191.8 1,286.1 Future Net Revenue (MM$) - 2P 2014 2015 2016 Shizhuang South - Main Block 3,635.4 3,344.2 3,282.3 Shizhuang South - GCZ Block 313.1 238.4 232.6 Total 3,948.5 3,582.6 3,514.9 Future Net Revenue (MM$) - 3P 2014 2015 2016 Shizhuang South - Main Block 12,165.5 9,428.8 9,319.8 Shizhuang South - GCZ Block 462.1 361.7 376.4 Total 12,627.6 9,790.6 9,696.2

Proved (1P) Proved + Probab able (2P) Proved + Probab able + Possible (3P)

• 9-

GSS Block wells status overview 1

200 GDG Operated Wells

• 130 online (76 LiFaBriCs), 70 pending completion

and infrastructure

• 105 of 130 online wells connected to sales

infrastructure

• 99 of 105 online connected wells are having gas

sales

• the other 31 wells are currently dewatering and will

be connected to sales infrastructure shortly

1,388 CNOOC Operated Wells

• 830 online (1 LiFaBriC), 558 pending completion

and infrastructure

• 576 of 830 online wells connected to sales

infrastructure

• 400 of 576 online connected wells are having gas

sales

• the other 430 wells are currently dewatering and will

be connected to sales infrastructure shortly

• GET supplying electric power to CUCBM Legacy

wells for constant running instead diesel

Total wells: all blocks Total wells: GSS CNOOC Operated Online /Pending completion Infrastructure connected/not connected Sales wells 2,037 1,388 558 576 400 254 25 70 105 99 GDG Operated 1,588 200 830 130

Notes: 1. Well counts as of 1Q17

DRAFT

GSS Block – Wells Status Overview

• 9-

• 10-

25 50 75 100 125 150 175 200

2008/12 2009/3 2009/6 2009/9 2009/12 2010/3 2010/6 2010/9 2010/12 2011/3 2011/6 2011/9 2011/12 2012/3 2012/6 2012/9 2012/12 2013/3 2013/6 2013/9 2013/12 2014/3 2014/6 2014/9 2014/12 2015/3 2015/6 2015/9 2015/12 2016/3 2016/6 2016/9 2016/12 2017/3

Monthly Gas Sales (MMcf) Period

Gas Sales – GSS Main Block

772% 141% 129% 55% 109%

• 6%

26% 33% YOY Growth Notes: 1. Gross gas sales from GSS Block, GDG wells only 2. Company data as of 1Q17

• 11-
• Annual processing capacity of 22.81 bcf
• Shizhuang and Shizhuang #1 Stns complete on time
• CNOOC constructed pipe network >90% complete
• Ongoing tie-in wells to infrastructure

CNOOC Trunk Line (Existing) CNOOC Branch lines (Existing) CNOOC Branch lines (Construction) GDG Trunk line Greka IPF station CNOOC Gathering Stations Gathering Stations expected in 2017 Existing Gathering Stations

Station bcf Status Greka IPF 6.5 Online Guixian station 3.6 Online Shizhuang station 1.4 Online Shizhuang south #1 11.2 Online Online ne & operating ng - subtot

• tal

22.7 Shizhuang south #2 10.4 Ongoing Shizhuang south #3 10.1 Ongoing Shizhuang south #4 10.2 Ongoing Total 53.4

GSS What next? – Expanding and Optimising Infrastructure

• 12-

Chengzhuang Block (GCZ Block) Location

Province (Area km²) Shanxi Province (67 km²) Partners (*Operator) GDG (47%) * PetroChina (53%) Governing PSC Shizhuang South PSC (GSS PSC) Net 2P 29 bcf1 Gas Content CS #3 / #15 600 / 659 cf/ton Depth CS #3 / CS #15 326 / 400m

• Avg. Thickness CS #3 / #15

6 / 4m PSC Executed / Expiry Aug 2003 / Aug 2033

Notes: 1. NSAI estimates as of 31 December 2016

DRAFT

Chengzhuang Block (GCZ Block) – 2017 ODP

 Green Dragon Gas, listed on the London stock exchange with the ticker of GDG, is the largest company involved in the production of coal bed methane gas and its distribution and sale in China  GCZ location: covers an area of 67 km2 in the south eastern part of the Qinshui basin, in the Shanxi Province  GCZ operator: CNPC  GCZ ownership: Green Dragon Gas 47%, CNPC 53%  GCZ Status: one of Green Dragon Gas’s key areas of production and focus, part of the Shizhuang South PSC − GCZ ODP substantially complete ‐ submission to the NDRC expected in the first quarter 2017 − Attain ODP approval for GCZ together with CNPC in first half 2017  Total wells connected: 114; wells producing gas for sale: 84 (as of 31 Dec 2016)  Green Dragon Gas’s 47% of GCZ – PNG sales volume in 2016: 1.53 Bcf  GCZ reported reserves and resources: (as of 31 Dec 2016): − 1P Net reserves and resources: 14 Bcf / PV10: $116m − 2P Net reserves and resources: 29 Bcf / PV10: $233m − 3P Net reserves and resources: 52 Bcf / PV10: $376m

• 12-

• 13-

Funding and Liquidity

Funding and Liquidity

• Clear focus on asset-appropriate financing including

reserve based lending, divestiture, farmouts, equity / convertibles

Delivering value to shareholders as assets mature

• Ring-fenced cash flows from individual assets after

corporate costs, debt & capex requirements met

• Progression and visibility of shareholder return on

asset by asset basis

A strategic review of downstream

• Simplifying our business model to monetise

downstream assets for reinvestment in upstream development

Farmout opportunities

• Bringing forward value of exploration and development

assets

• Acceleration of returns / satisfying capital requirements
• Proof of concept in place, R&D dollars already spent

• 14-

2016 – A Year of Stabilisation

Operational and Financial: Significant operational progress across key production blocks and exploration success

• 11th consecutive increase in both 1P and 2P reserve volumes
• Total OGIIP increase of 6% to 27.1 Tcf (2015: 25.6 Tcf)
• Total net gas sales increased by 5.6% to 3.41 bcf (2015: 3.23 bcf)
• Overall Development Plan for Chengzhuang Block (GCZ) approved by China National Petroleum Company (CNPC) and

Joint Management Committee

• The recurring upstream business generated net profit of US$ 16.5 million (2015: net profit of US$ 18.6 million) at a constant
• margin. Gas sales increases offset the government pricing reduction.
• Cash generated from operating activities during the year to 31 December 2016 of US$ 8.5 million (2015: US$ 12.4 million)

Strategic: Significant support from Chinese government for CBM and specifically GDG blocks and record reserve base

• GDG blocks GCZ, GSS, GSN and GGZ specifically identified by the Chinese Central Government as priority CBM projects

within the 13th Five Year Plan, announced in Q1 2017

• CNOOC audit successfully concluded with a focus on the supplementary agreements which are expected to be finalised in

the second quarter of 2017

• 15-

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 sale of downstream operations
• Progress Hong Kong listing alongside London to deliver shareholder value
• Look to grow production in 2017 to drive cashflow generation
• Execute CNOOC Supplementary Agreements
• GSS ODP submitted
• Launch GSS LiFaBriC drilling programme to further increase sales volumes

• 16-

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

• 17-

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

• 17-

• 18-
• Further investment in 2017 unlocks significant additional

NPV 10 value

• Capex for NPV 10 case is modest at US$114.5m
• Moderate additional investment transforms the business

– moving to self-sustaining from operations

• Potential in multiple blocks
• 86% of 2P reserves from 5% of land bank – significant

2P growth potential

Annual Audited Reserve ve values s (bcf) f) 2P Reserve ves Dist stribution (%)

GDG has consistently provided reserves growth year-on-year through investment

Long Term m Value Creation

100 200 300 400 500 600 2016 2015 2014 2013 2012 P2 P1

Track Record of Delivering Value Through Investment

• 19-

Appendix

• 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
• perations in FY15, a sustained year-
• n-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

• ptimisation
• 678 wells producing gas out of a total
• f 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

• 20-

• 21-

First st License se First st Gas Gas production commences at GSS GDG commences Chinese operations First PSC signed on the GFC block Acquisi sition of four additional license ses Commenced

• perations on the

ground Signing of four other licenses including Shizhuang South Public c Floating g on

• n

AIM The Company listed

• n the Alternative

Investment Market in London on August 17, 2006. Technologi gica cal Breakthrough gh MWD (Measurement While Drilling) and LWD (Logging While Drilling) facilitate LiFaBriC development LiFaBriC C Lined Faulted Brittle Coal Improved drainage factor Greka a Drilling Dividend 8th March demerger of Greka Drilling Addition of 2 CNG stations in Pindingshan Upgrade of Infrastructure Production Facilities to support 28 new wells of gas production Landmar ark Government Ruling Chinese Government rules in favor of Green Dragon on validity of PSC Greka Engi gineering g and Technology Dividend 30th Sept demerger

• f Greka Engineering

Zhengzhou Greka Gas Co Ltd entered into a 20-year agreement with PetroChina Huabei Oilfield Binding g Agreements with CNOOC C and PetroCh China Landmark agreements lead to shareholder participation in over 1,800 wells FTSE 250 Foundation for Success ss 1st CS#15 migration to 1P Strengthening cooperation with Chinese Partners Incremental 20Bcf of gathering capacity online 12Bcf of production capacity

1997- 1999 2000 - 2002 2008 2009 2003 2006 2012 2013 2014 2015 2017

• 21-

History and Corporate Milestones

• 22-

1P 1P

GSS Net: 457 PV10: US$3,282m GFC 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 GGZ Low Est: 531 Best Est: 599 High Est: 678

2P 2P 3P 3P Conting tingen ent Prosp spec ectiv tive

Net: 184 Bcf PV10: US$1,323m Cape pex: USD116m Net: 558 Bcf PV10: US$4,325m Cape pex: USD352m Net: 2,386 Bcf PV10: US$17,805m Cape pex: USD1,415m Net 1C: 771 Bcf Net 2C: 937 Bcf Net 3C: 1,436 Bcf Cape pex (2C) C): USD747.9m Low: 930 Bcf Best: 1,684 Bcf High gh: 3,478 Bcf Cape pex (Best st): 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 GGZ Net: 30 PV10: US$373m

GGZ 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 GGZ Net 1C: 752 Net 2C: 871 Net 3C: 1050

Source: NSAI estimates as of December 31, 2016

• 22-

Reserves and Resources Breakdown

• 23-

Notes: 1. Pursuant to the Shizhuang South PSC, GDG has the option to increase its participating interest to 70% 2. Pursuant to the Framework Agreement, CUCBM is operator for the Legacy Wells and related infrastructure in Areas 3 and 5; GDG and CUCBM will act as operators of their respective wells drilled prior to 31 July, 2013 in Area 5; GDG to be operator of all future wells drilled in GSS 3. NSAI estimates as of 31 December 2016

Shizhuang South Block (GSS Block) location

Province (Area km²) Shanxi Province (388 km²) Partners (*Operator) * GDG (60%) 1 CUCBM (40%) 2 Governing PSC Shizhuang South PSC (GSS PSC) Net 2P 457 bcf3 Gas Content CS #3 / #15 530 / 565 cf/tonne Overburden CS #3 / CS #15 743 / 837m

• Avg. Thickness CS #3 / #15

6 / 4m PSC Executed / Expiry Jan 2003 / Jan 2033

Key producing asset of the Group, located favourably close to gas markets and infrastructure

• Located in the prolific Qinshui Basin; CBM found in two shallow,

laterally continuous coal seams (#3 and #15) that run throughout the block

• Nearby access to major regional and national gas distribution

pipelines (most of the GSS production is sold into national pipelines controlled by SOEs)

• Commercial gas production began in Oct 2008
• Significant exploration, appraisal, testing done by GDG and CUCBM

(CNOOC) de-risking the block

DRAFT

Shizhuang South Block (GSS Block) – Overview

• 23-

• 24-

Increasing production and improving infrastructure

• Production and gas sales have been growing
• Gas sales from GDG operated wells on GSS increased by

34% to 1.88 bcf in 2016 (2015: 1.41 bcf)

• An increase in sales from GDG GGS Wells as a result of

new wells, improved performance from remedial work on

• lder wells, and infrastructure enhancements
• Processing capacity on the field of up to 22.7 bcf per year +

improved pipeline network on site

• Majority of the gas sold into PetroChina and CNOOC-
• perated national pipelines to market

Looking forward

• Up to 50 new LiFaBriCs to be drilled per year over 2017-2021
• Required rigs and capacity available from Greka Drilling
• CNOOC continuing to bring well stock on line, accelerating

cost recovery

• Well production to improve as a result of pressure
• ptimisation
• Renewed Central Government support ‐ Shanxi Blocks i.e.

GCZ, GSS, and GSN specifically identified by the Central Government as priority CBM projects within the 13th Five Year Plan

Gathering Station location (actual/planned) Block Area: 388km2 22 km2 22 km2

DRAFT

GSS Block – Expanding Production and Infrastructure

• 24-

• 25-

Gas Volume – GCZ Block

Notes: 1. Gross gas production from GCZ Block, 2. Source; Company data 1,828 3,842 4,509 4,443 4,159 4,087 3,584 3,011 3,234 4,981 5,725

1,000 2,000 3,000 4,000 5,000 6,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Annual Gas Production (MMcf) Period

Historical ODP

Peak Production in year 2020 with 5.7 Bcf of annual gas volume Historical peak

• 26-

Gathering System – GCZ Block

Planning and Designing of Gas Gathering System & Transportation

An Example : GCZ Area Gathering System

• 20 km of pipelines
• 2 Booster Compressors
• 3 IPF – Integrated Production facility

(Fan1, Fan9, Fan10)

• Gas Processing Capacity:
• Fan1: 700,000 m3/d
• Fan9: 650,000 m3/d
• Fan10: 500,000 m3/d

Fan 9 Fan 1 Fan 10 Chengzhuang Block GCZ Block online wells area GCZ Block pipeline network