(EnergyAsia, June 29 2012, Friday) — Hong Kong-listed upstream firm MIE Holdings Corporation said it has agreed to acquire a 51% stake in Sino Gas & Energy Limited (SGE) as part of a strategic partnership with its Australia-listed parent firm, Sino Gas & Energy Holdings Limited, which is undertaking exploration work in China’s Shanxi province.
MIE said it will acquire US$10 million of SGE shares and invest another US$90 million to develop the Sanjiaobei and Linxing production sharing contracts (PSCs) in Shanxi over the next few years.
SGE, which will become a MIE subsidiary, is focused on exploring unconventional gas reserves in China through the two PSCs in eastern Ordos Basin.
MIE said the transaction will combine its financial strength, on-ground operational capability and experience in the Chinese oil and gas industry with Sino Gas’s gas projects and technical expertise.
The Sanjiaobei and Linxing blocks, which together could hold as much as 3.7 trillion cubic feet of natural gas, are located in the resource-rich Ordos Basin near the Changqing oil field, China’s second largest on-shore oil and gas field. The two blocks are also located in a gas pipeline hub in central China with three existing major trunk lines transporting gas from the west regions to the country’s main consuming centres in the east.
Natural gas at the wellhead in Changqing is priced at between US$4.26 and US$6.35 per million standard cubic feet/day.
To date, SGE has drilled and found gas in 13 vertical wells, and the potential to improve production by applying horizontal drilling and multi-zone completion techniques.
MIE, which is involved in the exploration, development and production of oil and gas in China, Kazakhstan and the US, said it has successfully drilled horizontal wells and performed multi-zone completion in its US and China projects.
MIE said China, which overtook Japan to become Asia’s largest gas consumer in 2009, is expected to consumer over 10 trillion cubic feet a year by 2030.
In a separate earlier statement, the company said its subsidiary, Emir-Oil, has been granted a two-year extension by Kazakhstan’s Ministry of Oil and Gas to continue exploring in the 808-sq km Aksaz-Dolinnoe-Emir (ADE) area.
The extension from January 9, 2013 to January 9, 2015 will enable Emir Oil to continue appraising area as well as evaluate several prospects and leads.