SGE has been selling gas produced in the pilot program since 1 December 2014.
In 2017, gross pilot production averaged approximately 17 MMscf/d in 2017, almost tripling the 2016 average rate of 6 MMscf/d. Fourth quarter production averaged a record 21 MMscf/d and the 2017 exit rate was 25 MMscf/d, at installed nameplate capacity.
Gross average production in Q1 2018 ramped up to ~25 MMscf/d for the first quarter of 2018, with a record average rate of ~26 MMscf/d in March. Strong individual well performance and very high facility uptimes (~100%) contributed to production rates above nameplate capacity, enabling SGE to meet strong demand through existing gas contracts.
Gas Sales Agreements (“GSAs”)
The Linxing and Sanjiaobei PSCs benefit from multiple nearby gas pipelines and offtake routes which provide optionality for direct market access.
Gas sales in 2017 averaged US$6.5/Mscf as SGE concluded several long-term gas contracts with multiple off-takers. In December 2017, SGE in conjunction with PCCBM agreed to extend the Sanjiaobei GSA by one year to December 2018 for all gas produced from the PSC (see announcement)
In 2018, two contracts with existing buyers have been renewed to 31 March 2019 (refer to announcements of 29 March 2018 and 6 June 2018 – including links) at an average price of RMB1.61 per cubic metre (~US$7.12/Mscf as of 5 June 2018, assuming an RMB/US$ exchange rate of US$6.4; with April – October 2018 prices of 1.5 RMB/m3 (US$6.64/Mscf), November 2018 – March 2019 prices of 1.764 RMB/m3 (US$7.80/Mscf).