Sino Oil and Gas Holdings issues 312mn new incentive shares to Sanjiao Block

The move progresses as total reserves of Sanjiao Block CBM project exceed original estimates.

Oil and gas company Sino Oil and Gas Holdings Limited (“Sino Oil and Gas Holdings”) on Tuesday announces that the Company shall allot and issue 312,000,000 new incentive shares to the vendor of the Sanjiao Block coalbed methane (CBM) project which the Group acquired pursuant to an acquisition agreement entered into on July 16, 2010. The acquisition was completed on November 15, 2010.

Pursuant to the acquisition agreement, if the target group produces within one year of completion a competent person’s report issued by a competent person (as defined in the Listing Rules) endures that the aggregate of the proved reserves, probable reserves plus possible reserves of the CBM field attributable to the target group under the production sharing contract shows a 15% increase over the aggregate of such reserves in the competent person’s report included in the circular (in respect of the acquisition) to reach an amount not less than 663.8 bcf., (or in other words, such aggregate reserves of the entire Sanjiao Block under the production sharing contract being not less than 1,014 bcf.), then the consideration for the acquisition will be increased by HK$156 million, to be satisfied by the issue and allotment of 312,000,000 new incentive shares at the issue price of HK$0.5 per incentive share within one month after the production of such report.

On November 14, 2011, the target group produced to the Company a competent person’s report issued by a competent person showing the proved reserves, probable reserves plus possible reserves of the CBM field attributable to target group under the production sharing contract as of 31 October 2011 to be 669.5 bcf, according to a Sino Oila and Gas Holdings report.

Sino Oil and Gas Holdings Executive Director and Chief Executive Officer Mr. King Hap Lee said: “The competent person’s report validates our investment into the Sanjiao Block CBM project. We are confident of the promising prospects of this CBM field, which is an important component of our oil and gas asset portfolio based primarily in Erdos Basin.”