Overview

RISC conducted an independent Reserves and Resources assessment of the Company’s natural gas assets relating to the Linxing and Sanjiaobei Production Sharing Contracts in Shanxi Province, People’s Republic of China (announced 10 March 2016). The Reserves and Resources have been determined to Society of Petroleum Engineers (SPE) Petroleum Resource Management System (PRMS) standards using probabilistic and deterministic estimation methods.

 

Results from the 20 wells drilled in 2015 (114 cumulative wells) and the interpretation of 570km of seismic lines (cumulative 2,790km) were reviewed for the updated Reserves and Resources assessment as at 31 December 2015, as well as the results from the pilot testing through the first central gathering stations on the Sanjiaobei and Linxing PSCs.

 

Key Results

  • 22% increase in gross 2P Reserves to 1,962 Bcf, with Sino Gas’ share 552 Bcf
  • First Reserves booked on Linxing (East) of 103 Bcf gross (Sino Gas’ share 32 bcf) with additional Contingent and Prospective Resources
  • 2C Contingent Resources up 11% and P50 Prospective Resources up 15%
  • Net EMV decreased approximately 16% to US$2.6 billion due to 27% decrease in gas price
  • Sino Gas’ Net Present Value of 2P Reserves approximately US$1.3 billion

 

A copy of the Reserves Presentation can be found here and a recording of the conference call hosted by Sino Gas to discuss the Reserves update can be found here.

 

Sino Gas’ Attributable Net Reserves & Resources as at 31 December 2015

Sino Gas’
Attributable Net
Reserves & Resources
1P
RESERVES (Bcf)
2P
RESERVES
(Bcf)
3P
RESERVES
(Bcf)
2C
CONTINGENT
RESOURCES
(Bcf)
P50
PROSPECTIVE RESOURCES
(Bcf)
EMV10
($USm)
31 December 2015 362 552 751 814 733 $2,569
31 December 2014 350 448 557 739 649 $3,076
TOTAL CHANGE +23% (2P Reserves) +10% +13% -16%
Gross Project 31 December 2015 1,250 1,962 2,723 2,831 2,954 N/A

Prospective resources are the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) related to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

 

Sino Gas’ Attributable Net Developed Producing Reserves

Sino Gas’ Attributable Net Developed Producing Reserves 1P
RESERVES (Bcf)
2P
RESERVES
(Bcf)
3P
RESERVES
(Bcf)
Developed Producing Reserves 10 16 22
Undeveloped Reserves 352 536 729
Total 362 552 751

Sino Gas’ share of the project’s success case Net Present Value (NPV) and risk weighted EMV:

SINO GAS’
ATTRIBUTABLE
ECONOMIC VALUE
NPV10
($USm)
EMV10
($USm)
Reserves $1,284 $1,285
Contingent Resources $763 $689
Prospective Resources $1,022 $595
TOTAL   $2,569

EMV is the probability weighted net present value (NPV), including the range of project NPVs and the risk of the project not progressing. Project NPV10 is based on a mid-case wellhead gas price of US$7.16/Mscf escalated at 3.75% per year and average lifting costs (opex+capex) inclusive of inflation of 2.5% per year of ~US$1.20/Mscf for mid-case Reserves, Contingent & Prospective Resources.

 

Resources Statement

The statements of resources on this website have been independently determined to Society of Petroleum Engineers (SPE) Petroleum Resource Management Systems (PRMS) standards by internationally recognised oil and gas consultants RISC (announced 10 March 2016) using probabilistic and deterministic estimation methods. These statements were not prepared to comply with the China Petroleum Reserves Office (PRO-2005) standards or the U.S. Securities and Exchange Commission regulations and have not been verified by SGE’s PSC partners CNPC and CUCBM. All resource figures quoted are unrisked mid-case unless otherwise noted. Sino Gas’ attributable net Reserves & Resources assumes PSC partner back-in upon ODP approval (i.e. CUCBM take their entitlement of 30% interest in Linxing PSC and CNPC take their entitlement to 51% in the Sanjiaobei PSC), CBM Energy’s option to acquire an interest of 5.25% in the Linxing PSC (by paying 7.5% of back costs) is exercised, and CNEML fulfill funding obligations under the strategic partnership agreement. Reserves & Resources are net of 4% in-field fuel for field compression and field operations. Reference point is defined to be at the field gate. No material changes have occurred in the assumptions and subsequent work program exploration and appraisal results have been in line with expectations.

 

Information on the Resources on this website is based on an independent evaluation conducted by RISC Operations Pty Ltd (RISC), a leading independent petroleum advisory firm. The evaluation was carried out by RISC under the supervision of Mr Peter Stephenson, RISC Partner, in accordance with the SPEPRMS guidelines. Mr Stephenson has a M.Eng in Petroleum Engineering and 30 years of experience in the oil and gas industry. Mr. Stephenson is a member of the SPE and MIChemE and is a qualified petroleum reserves and resources evaluator (QPPRE) as defined by ASX listing rules. Mr Stephenson consents to the form and context in which the estimated reserves and resources and the supporting information are presented. RISC is independent with respect to Sino Gas in accordance with the Valmin Code, ASX listing rules and ASIC requirements.

 

Certain statements included on this website constitute forward looking information. This information is based upon a number of estimates and assumptions made on a reasonable basis by the Company in light of its experience, current conditions and expectations of future developments, as well as other factors that the Company believes are appropriate in the circumstances. While these estimates and assumptions are considered reasonable, they are inherently subject to business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company’s actual results to differ materially from those expressed or implied in any forward-looking information provided by the Company, or on behalf of, the Company. Such factors include, among other things, risks relating to additional funding requirements, gas prices, exploration, acquisition, development and operating risks, competition, production risks, regulatory restrictions, including environmental regulation and liability and potential title disputes. Forward-looking information is no guarantee of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking information due to the inherent uncertainty therein. Forward-looking information is made as at the date of publication and the Company disclaims any intent or obligation to update publicly such forward-looking information, whether as a result of new information, future events or results or otherwise.

 

Resource Data