Green Dragon mulls dual listing

09 February 2017, Week 05 Issue 629

China-focused CBM producer Green Dragon Gas has said it is considering a dual listing in China as part of its growth strategy for this year.

The company, which is already listed in London, noted in a report last week that four of its CBM blocks had been designated as “priority” projects in the Chinese government’s latest Five Year Plan.

These include the Chengzhuang, Shizhuang South and Shizhuang North blocks in Shanxi Province as well as the Baotian-Qinghsan block in Guizhou Province.

Beijing’s support should speed up the approval process for Green Dragon’s development plans at Chengzhuang and Shizhuang, the company said. It will also make it easier for Green Dragon to tap yuan-denominated debt financing from Chinese lenders.

“With this increased domestic interest, the board has decided to evaluate the merits of a dual listing to potentially access the Chinese financial markets where the prospects in Chinese coal-bed methane [CBM] energy investment have broader appeal and understanding,” Green Dragon said.

The producer added that if it pursued this course of action, it did not expect to issue any new shares. It noted, though, that it the dual listing would hopefully “narrow the discount to our asset value and deliver increased value to all shareholders”.

Green Dragon is set to decide on the option before the middle of the year, after it has been presented to shareholders.

The company went on to say that a development plan for the Chengzhuang block was “substantially complete”, with submission expected in the first quarter of 2017.

Green Dragon hopes to secure approval for the scheme in the first six months of the year. It also wants to obtain yuan-denominated debt financing to fund continued development work before mid-2017, as well as wrap up the sale of its downstream business and redeem a US$88 million Nordic bond.

In the second half of 2017, Green Dragon hopes to launch drilling at Shizhuang South with a view to expanding sales in the following year. It also wants to submit a development plan for Shizhuang South.

“With the ongoing support of the central government, increasing interest and access to capital domestically as well as increasing core assets, we are excited about 2017 and look forward to a year of growth,” Green Dragon said.

Last year the company saw its sales climb by 5.6% to 97 mcm, while its production capacity rose by 9% to 318 mcm. Future production will be buoyed by the launch of operations at Green Dragon’s Baotian-Qingshan block, which is slated for later this year.

Edited by

Andrew Kemp

Editor

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