Green Dragon Gas May / June 2017 www.g .green endragon ongas.com .com LSE: GDG.L .LN
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, 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. -2-
Leading China CBM Independent Large reserves base $4.3bn 3bn 8 • 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 ) 2P Reser erves es cks Blocks • 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 2,037 1.9m 1. Highly experienced operational management team with a track record in Coal Bed Methane • Drilled ed Wells Ac Acres es • High quality shareholder base: includes Aberdeen, Clermont Group, Fidelity, Platinum Asset, GIC, Management * YE 2016 -3-
DRAFT Investment Highlights • Two producing assets selling gas at high margins, including government subsidies which highlights their support for increased production High margin gas • Large acreage, with substantial gas reserves, located inland and well positioned to serve production in the main manufacturing and population centers of the world ’ s largest energy consumer China • Attractive PSCs, protected by Holland-PRC bilateral treaty, providing gas, mainly to large SOEs on long-term GSAs, at prices insulated from international markets • Drilling and completion techniques tailored to deal with the brittle coal and faulted geology of China -LiFaBriC Well established operations • Gas production to increase significantly with further development drilling and by positioned for implementing well-completion upgrades and production optimisation of existing well stock growth • 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 Strengthened • Corporate management team strengthened with solid energy sector expertise corporate and operational • High quality shareholder base including Aberdeen, Clermont, Fidelity, GIC and Platinum management Asset Management -4-
China - Solid Fundamentals for Gas Energy consumption per person Gas s consumption per person Population 2015A GDP growth rate (million people) Growth rate (%) (energy consumption per person – toe) (gas consumption per person - toe) India 7.3% China 1,375 Russia 2.59 7.2 USA China 6.9% India 1,293 U.S.A 2.12 Russia 4.7 USA 2.4% U.S.A 322 0.94 U.K Japan 3.6 2.2% UK Brazil 204 Japan 0.80 2.9 U.K 0.5% Japan 0.17 Russia 146 Brazil China 2.2 -3.7% Russia China 0.11 Japan 127 Brazil 1.5 65 Brazil 0.5 India 0.04 U.K -3.8% India - 2.00 4.00 -5.0% 0.0% 5.0% 10.0% - 5.0 10.0 - 500 1,000 1,500 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 Source: BP Statistical Review, June 2015; IMF World Economic Outlook Database, April 2016 -5- -5-
Impact of 13th Five Year Plan – Chinese Central Government Support for CBM China’s 13 th Five Year Plan Highlights: China’s Primary Energy Share (2014A – 2020F) • 13 th 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, 2014A 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, 2020F 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 Source: CEIC, NDRC, IEA, Energy Development Strategy Action Plan (2014-2020), BP Statistical Review June 2016 -6-
Upstream Asset Portfolio – 6 PSCs Over 8 Blocks Blocks’ summary Geog ographic hic location tion GCZ GSS GDG Interest: 47% GDG Interest: 60% 1 EA Partner: PetroChina Partner: CUCBM (CNOOC) Qinyuan Operat ator: PetroChina Block (GQY Operat ator: GDG Heilongjiang A&B) 1P/2P/3P: 14 /29/ 52 bcf 2 1P/2P/3P: 166/457/1,330 bcf 2 3,665km 2 LiFaBr aBriC/ C/Vertical al Wells: 3/111 LiFaBr aBriC/ C/Vertical al Wells: 80/120 Jilin Total: 114 wells 3 Total al: 1,588 wells 3 Inner Mongolia D Shizhuang North Block Liaoning GSN GSN GQY (A) (GSN) Beijing GDG Interest: 50% GDG Interest: 10% Xinjiang 375km 2 Tianjin Partner: CUCBM (CNOOC) Partner: CUCBM (CNOOC) P Operat Operat Shizhuang ator: CUCBM (CNOOC) ator: CUCBM (CNOOC) Ningxia Shandong South Block 1P/2P/3P: 5/18/686 bcf 2 1P/2P/3P: NA (GSS) Shanxi Qinghai LiFaBr LiFaBr aBriC/ C/Vertical al Wells: 3/10 aBriC/ C/Vertical al Wells: 0/3 388km 2 Gansu Jiangsu Total Total al: 201 wells 3 al: 7 wells 3 Henan P Shaanxi Tibet Chengzhuang Shanghai Hubei Anhui Block (GCZ) GFC GQY (B) 67km 2 Zhejiang Chongqing GDG Interest: 60% GDG Interest: 49% Sichuan Partner: CUCBM (CNOOC) Partner: CUCBM (CNOOC) Jiangxi Hunan EA EA Panxie East Operator: GDG Operat ator: GDG Baotian- Fujian Block (GPX) Guizhou 2C: 18 bcf 2 1P/2P/3P: NA/24/212 bcf 2 Qingshan 584km 2 Guangdong Block (GGZ) Guangxi LiFaBriC/Vertical Wells: 6/31 LiFaBr aBriC/ C/Vertical al Wells: 2/24 Yunnan 947km 2 Total: 52 wells 3 Total al: 30 wells 3 Hong Kong D Fengcheng Block (GFC) GPX GGZ 1,541km 2 Hainan GDG Interest: 60% GDG Interest: 60% Capital of Province Partner: CUCBM (CNOOC) Partner: PetroChina P Production Operat ator: GDG Operat ator: GDG Group Coalbed Methane Blocks D Development/Pilot Stage Best Prospective: ve: 17 bcf 2 1P/2P/3P: N/A / 30 / 106 CNG Mother Stations LiFaBr aBriC/ C/Vertical al Wells: 2/8 LiFaBr aBriC/ C/Vertical al Wells: 3/30 EA Exploration and Appraisal Existing Main Gas Pipelines Total al: 12 wells 3 Total al: 33 wells 3 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- -7-
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