HONG KONG, June 29 /PRNewswire-Asia/ -- Oil and gas company Genesis Energy Holdings Limited (to be renamed "Sino Oil and Gas Holdings Limited", HKEx: 702) announces the signing of a legally non-binding memorandum of understanding with an independent third party for the proposed acquisition of the entire stake in Orion Energy International Inc. ("Orion"). Orion is engaged in coalbed methane (CBM) exploration, exploitation and production in the Shanxi-Shaanxi-Henan Triangle, the PRC.
The consideration for the anticipated possible acquisition will not be higher than US$350,000,000 (approximately equivalent to HK$2.72 billion), which will be settled by way of cash and the issue of new shares in the Company. As one of the pre-requisite conditions for the official agreement, the project company is required to submit a qualified and authoritative valuation report verifying its CBM reserve of not less than 200 billion cubic feet.
Genesis Energy Executive Director Dr. Dai Xiaobing noted: "Upon completion of the fund raising exercise, the Group holds cash in hand of close to HK$400 million with no gearing. This enables us to explore and negotiate acquisition opportunities with promising investment potential. CBM will be the focus of our future investments. As China's limited conventional natural gas reserve is met with rapidly growing demand, the natural gas market has been in an undersupply scenario. However, China is rich in CBM resources. According to the latest national CBM study, China has total CBM geological resources of approximately 36.81 trillion cubic metres at depths of less than 2,000 metres, ranking the country the third in the world. This is fundamentally equivalent to conventional natural gas resources on land. Shanxi, in particular, has strong prospects for CBM exploration. And more importantly, the Chinese government has introduced a series of tax incentives and financial subsidies in order to encourage the furtherance of CBM exploration. CBM exploration technologies have also become more sophisticated. The planned acquisition target has the advantages of rich reserves, shallow coalbeds and proximity to major pipelined networks. This high-quality CBM project is anticipated to have proven reserves of 56 billion cubic metres."
Orion's shareholder and General Manager Dr. Louis Yang added: "We are very excited about our co-operation with Genesis Energy, which represents an integration of technology with capital. The co-operation will also help expedite commercialized CBM exploration in the Triangle district." Dr. Yang holds a PhD from the China University of Mining and Technology and is the founder of Orion. He has more than 15 years of experience in CBM reserve valuation, drilling and commercial exploration in China. He and his team have developed a unique multi-lateral horizontal drilling method, which has been successfully deployed in many CBM fields across China.
Genesis Energy invests in and operates a number of oil and gas assets in China and the US, and continuously seeks suitable investment opportunities to expand its asset portfolio and revenue base. With the recent introduction of new strategic investors into the Company, it is seeking to join hands with them to further its oil and gas asset portfolio in Greater China.
About Genesis Energy
Genesis Energy Holdings Limited (HKEx: 702) is an energy company with a key focus on oil and gas. The Group is committed to building a portfolio of oil and gas assets and operations with an aim to develop into one of the leading independent oil and gas companies in Greater China. The Group currently operates oil and gas fields in the PRC and the US.
Contacts: t6.communications limited Jenny Lee or Angus Ho Tel: +852-2511-8388 Fax: +852-2511-8238 Email: email@example.com URL: http://www.t6pr.com
SOURCE Genesis Energy Holdings Limited