Linxing EastThe Linxing East area of the Linxing PSC covers 1,301km2. The Linxing East area has an established shallow gas play on the eastern portion of the block as well as deeper exploration potential on the western portion. Sino Gas’ first Chinese Reserve Report was submitted on the coalbed methane resource on the eastern portion of the block in August 2013 and received approval from the Ministry of Land and Resources (MOLAR) under a year later in June 2014.

SEH holds a 31.7% net interest in Linxing through its shareholding in SGE. SGE (SEH 49%, CNEML 51%) holds a 64.75% interest in Linxing PSC. CUCBM, a subsidiary of CNOOC, holds the right to back in for 30% interest on ODP approval and CBM Energy holds a right to back in for 5.25% interest by paying 7.5% of back costs. The Linxing PSC exploration period was extended in August 2013 to August 2016 with no relinquishment of acreage or change to PSC allocation structure.

For the year ending 2013, RISC assigned a discovered area of 265km2 for the shallow resources on the eastern portion of the Linxing (East), and a prospective area of 334km2 for the deeper resources on the western portion.

Ten shallow CBM wells had been drilled on the north-eastern portion of the PSC by the end of 2013. Dewatering commenced on six wells and gas to surface has been achieved on five of the wells. Sufficient data was gathered from the six shallow wells to enable Chinese Reserve Report (CRR) submission at the end of August 2013, with approval being received in June 2014. The PSC operator is now compiling data necessary for submission of the Overall Development Plan (ODP).

A number of additional exploration wells have been drilled on the western portion of the PSC to further define the deeper resource potential seen on existing seismic. Logs from these wells indicate the wells are gas bearing, with additional testing to be conducted to confirm mobile and economic gas rates. The potential for further exploration is being determined from the analysis of drilling results and previous seismic analysis.