Sino Gas and Energy Holdings Limited (ASX:SEH) Completed 1st Phase of 2011 Well Testing Program

Perth, Aug 25, 2011 AEST (ABN Newswire) - Sino Gas & Energy Holdings Limited (ASX:SEH) has now successfully implemented the 1st phase of its 2011 well testing program with the completion of the TB08 well test program.

Commenting on this important milestone, Sino Gas's Managing Director, Stephen Lyons, said that "Sino Gas had delivered commercial gas flows on all 5 new flow tests carried out in the program:

- TB09: ~ 1,150,500 scf/day (unfracced) with additional potential through fracture stimulation and additional untested zones;

- TB03: ~ 326,500 scf/day (unfracced);

- TB06: ~1,000,000 scf/day (unfracced) being the rate estimated by site personnel; and

- TB08: ~ 882,500 scf/day from an upper and lower zone in the well.

The results achieved on these tests add significantly to our understanding of the field and our intention to move towards development of our gas assets in China", said Mr Lyons.

As Sino Gas moves forward it is intended that these wells be added to the Company's Pilot developments.

TB04 Well - Good results achieved on reserve focused test

Sino Gas is testing the TB04 well on the Sanjiaobei PSC in order to generate the data on the longer term well productivity for the purposes of the Chinese Reserves Report.

As part of that test, the TB04 well has been on flow for 12 days at relatively constant flow rates between 247,000 scf/day and 282,000 scf/day with a stable pressure response being observed and measured at each of these flow rates.

The calculated flow rate at 200 psi THP has been confirmed at ~ 530,000 scf/day.

The flow data and pressure response obtained so far is a good indication that the well will perform in line with Sino Gas's future expectations.

Sino Gas will now proceed with the 2nd part of the test which will see the well 'shut in' for approximately 20 days to conduct a pressure build up test.

Sanjiaobei PSC - Seismic Processing Continuing, preparations for new well underway Sino Gas has recently completed the shooting of 410.5 km's of new seismic on the Sanjiaobei PSC with the processing of data continuing. The seismic data is expected to assist in delivering the Chinese Reserves Report and planning for new well locations, particularly horizontal wells on the Sanjiaobei PSC.

The processed seismic has so far enabled Sino Gas to select the first drilling location on the Sanjiaobei PSC for 2011 and additional high potential areas are emerging from the seismic analysis.

As previously announced, Sino Gas has awarded the drilling contract to CNPC Bohai Drilling Engineering Company Limited (BDEC) for a series of wells on the Sanjiaobei PSC.

Site preparations for the SJB1 well are underway although have been impacted by heavy rain within Shanxi Province. Following completion of the site preparation and the process of obtaining necessary approvals Sino Gas will mobilise the rig to the SJB1 site and "spud" (commence drilling) in a well program expected to last for 30 days.

TB08 Well - Comingled productivity from two zones ~882,500 scf/day Sino Gas is completing a test program involving two zones in its TB08 well.

Following the perforation and fracture stimulation of one of the lower pay zones, operations have been focused on flowing back the zone to remove all frac fluid from the formation.

This operation has now been completed with a final stable dry gas flowing rate of ~ 176,500 scf/day at ~ 200 psi THP being recorded. This zone will be shut in now whilst a pressure build up test is conducted.

Sino Gas has also now installed a special downhole sliding sleeve device (SSD) and downhole isolation packer enabling the well to be produced from both the tubing string and the annular in order to produce gas from both the lower and upper zone simultaneously.

The successful test has proved Sino Gas's ability to produce from both the tubing string and annular simultaneously in our wells which will be important in a development scenario.

In a co-mingled fashion the TB08 well would be expected to produce at ~ 882,500 scf/day which represents for Sino Gas a significant commercial gas rate.

Contact

Stephen Lyons Managing Director Sino Gas and Energy Tel: +86-139-1148-1669 +86-10-6530-9260 Email: slyons@sinogasenergy.com Gavin Harper Chairman Sino Gas & Energy Email: gharper@sinogasenergy.com http://www.sinogasenergy.com