Sino Gas And Energy Holdings Limited (ASX:SEH) Spuds SJB1 on Sanjiaobei Production Sharing Contract with PetroChina CBM

Perth, Sep 26, 2011 AEST (ABN Newswire) - Sino Gas And Energy Holdings Limited (ASX:SEH) is pleased to advise that it has 'spudded' (commenced drilling) its new SJB1 appraisal well on the Sanjiaobei Production Sharing Contract (PSC) and is now at 274 m. Sino Gas is operator on the Sanjiaobei PSC and is working closely with its Chinese partner CNPC (PetroChina CBM).

The spudding of SJB1 follows the completion of the acquisition and preliminary interpretation of 410.5 km's of new seismic on the Sanjiaobei PSC.

Sino Gas is now finalizing the interpretation of that seismic with the seismic contractor and the National Centre for Coal Bed Methane (NCCBM). NCCBM was appointed by Sino Gas to deliver the Chinese reserves report on the Sanjiaobei PSC.

The location for SJB1 has been selected to evaluate and confirm the potential extension to highly productive pay zones encountered elsewhere on Sino Gas's acreage.

Commenting on the progression of work being undertaken on the Sanjiaobei PSC, Sino Gas Managing Director, Stephen Lyons said that the completion of the seismic program represented a major milestone in the progress toward development of the 1,100 km2 Sanjiaobei PSC.

"The seismic program was completed safely, on-time and on-budget.

Whilst Sino Gas is currently working with its independent reserves and resources assessor to quantify the impact of the new seismic and will release this review when available, the Company's own analysis suggests the potential for a significant increase in Sino Gas's resource base," said Mr Lyons.

SJB1 Spudded and underway

Following the mobilization of all equipment and requisite HSE checks Sino Gas confirmed the acceptance of the rig from its drilling contractor CNPC Bohai Drilling Engineering Company Ltd (BDEC). Following a spudding ceremony the well was then spudded.

As at 08:00 hours, yesterday, the rig was at 274 m with the surface casing having been run and cemented in place.

As per the drilling program, the well will now be drilled to a total depth of around 2,100 meters then electronically logged and cased. This process is expected to last around 30 days.

Following the completion of drilling, and the analysis of the electronic logs, Sino Gas plans to test potential pay zones in much the same way as the Company has done on previous wells.

Weather permitting, the BDEC rig will drill up to 2 additional wells on the Sanjiaobei PSC in 2011.

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