Overview

RISC Advisory Pty Ltd (“RISC”), an internationally certified independent petroleum advisory, evaluation and valuation group, has completed an assessment of the Reserves and Resources for Sino Gas’ PSCs in the Ordos Basin, China as at 31 December 2017 (announced 29 March 2018 and available in the 2017 Annual Report).

After a detailed review of all testing and production data, RISC has certified that the total project Proved plus Probable Reserves (“2P”) and 2C Resources remain at 2.1 Trillion cubic feet (“Tcf”) and 3.2 Tcf, respectively. Twenty-eight wells were drilled during the year, of which twenty-six were pilot production wells within the discovered area. As a result, gross project Reserves and Resources estimates are substantially unchanged from 2016 except for adjustments for 2017 gas sales. Two exploration wells were drilled and production testing of these wells is scheduled during 2018, the results of which will be incorporated into future Reserves and Resources updates.  

Sino Gas’ net attributable Reserves and Resources at 31 December 2017 remained unchanged aside from principally gas sales related adjustments during the year, with 1P and 2P Reserves at 384 Billion cubic feet (“Bcf”) and 578 Bcf, respectively, and 2C Resources at 899 Bcf.

Details of Sino Gas’ Reserves & Resources Assessment

RISC has completed its independent Reserves and Resources assessment to Society of Petroleum Engineers (“SPE”) Petroleum Resource Management System (“PRMS”) standards using probabilistic and deterministic estimation methods.

Sino Gas’ Attributable Net Reserves & Resources as at 31 December 2017

Sino Gas’
Attributable Net
Reserves & Resources
1P
RESERVES 1 (Bcf)
2P
RESERVES 1
(Bcf) 
3P
RESERVES 1
(Bcf)
2C
CONTINGENT
RESOURCES 1
(Bcf)
P50
PROSPECTIVE RESOURCES 2
(Bcf)
31 December 2017 384 578 776 899 821
31 December 2016 385 579 778 899 821
100% Total Project Reserves and Resources
31 December 2017 1,371 2,136 2,945 3,171 3,499

Sino Gas’ Attributable Net Developed Producing Reserves

Sino Gas’ Attributable Net Developed Producing Reserves 1P
RESERVES 1 (Bcf)
2P
RESERVES 1
(Bcf)
3P
RESERVES 1
(Bcf)
Developed Producing Reserves 22 35 48
Undeveloped Reserves 362 543 728
Total 384 578 776

Note 1: RISC has separately assessed the Reserves and Resources for each of the PSCs by probabilistic methods and added the resultant estimates arithmetically. RISC and Sino caution that the aggregate 1P estimate may be conservative and the aggregate 3P estimates may be optimistic as a result of the portfolio effects of arithmetic addition.

Note 2: 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.

For the purposes of determining SGE’s Reserves and Resources, RISC assumes the Linxing Option has been exercised resulting in SGE having a 64.75% interest in the Linxing PSC. SGE’s interest in the Sanjiaobei PSC is 49%. Sino Gas owns 49% of the issued capital of SGE and CNEML owns the remaining 51%. SGE has a 100% working interest during the exploration phase of the PSCs. The impact of the Linxing Option has not been included in Sino Gas Reserves and Resources.

Reconciliation of Sino Gas’ Attributable Net Reserves and Resources

1P
RESERVES (Bcf)
2P
RESERVES
(Bcf) 
3P
RESERVES
(Bcf)
2C
CONTINGENT
RESOURCES
(Bcf)
31 December 2016 385 579 778 899
Revisions* 2 2 1
Production (3) (3) (3)
Acquisitions / Divestment 1,371 2,136 2,945 3,171
31 December 2017 384 578 776 899

* Due to higher entitlement to pilot gas sales prior to PSC partner back-in. 

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 recognized oil and gas consultants RISC Advisory Pty Ltd (“RISC”). 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. Reserves are based on a mid-case gas price of US$6.98/Mscf inflated at 2.5% per year and average lifting costs (opex+capex) inclusive of inflation of 2.5% per year of ~US$1.20/Mscf for 2P Reserves. 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 but not Sino Gas’ potential exercise of its Linxing Option to acquire an interest of 7.5% in the Linxing PSC from SGE (by paying 7.5% of back costs). 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.

Information on the Resources in this release is based on an independent evaluation conducted by 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 SPE-PRMS guidelines. 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 in this announcement.

RISC is an independent advisory firm that evaluates resources and projects in the oil and gas industry. RISC offers the highest level of technical, commercial and strategic advice to clients around the world. RISC services include the preparation of independent reports for listed companies in accordance with regulatory requirements. 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.