Sino Gas & Energy Reaches Sanjiaobei Pilot Gas Sales Allocation Agreement

Sino Gas & Energy has reached an agreement with PetroChina CBM (PCCBM) on the allocation of future pilot gas sales proceeds sourced from the Sanjiaobei PSC.

This agreement applies only to production volumes from the Sanjiaobei PSC and does not affect the pilot gas production from the Linxing PSC processed through the Sanjiaobei Central Gathering Station.

Sino Gas & Energy (SGE) is joint venture between Sino Gas & Energy Holdings Limited and China New Energy Mining Limited (CNEML). SGE has a 64.75 percent and 49 percent interest in the Linxing and Sanjiaobei PSCs with China United Coal Bed Methane Corp. and China National Petroleum Corp, respectively.

Under the terms of the key principles agreed, gas sold from the Sanjiaobei PSC during the pilot production phase, up until Overall Development Plan (ODP) approval, is to be allocated in accordance with the PSC terms up to a production threshold of 3 billion cubic feet. However, there are no restrictions on the ramp-up of Sanjiaobei production during the pilot phase and if cumulative production from the Sanjiaobei PSC prior to ODP approval is greater than this threshold, the gas volumes in excess of the threshold will be allocated 30 percent to SGE and 70 percent to PCCBM.

Sino Gas & Energy Holdings Limited expects gross gas sales revenue of about $2 million equivalent to be received by SGE (approximately $1 million net to Sino Gas) in the third quarter of 2016.