Blue Sky Power Holdings has entered into a memorandum of understanding (MOU) to invest in Triple Energy Ltd and the company’s coalbed methane (CBM) project in Heilongjiang, China.
According to the MOU, Waypost Ltd, a 60%-owned subsidiary of the Blue Sky, agreed to subscribe 158,000,000 Tranche 1 placement Shares, representing approximately 19.90% of the issued share capital of Triple Energy after the completion of the placement. The total consideration is AU$ 790 000 at a price of approximately AU$ 0.005 per Triple share.
Waypost agreed to lend CFT Heilongjiang (HK) Ltd – a wholly-owned subsidiary of Triple – AU$ 500 000, which is convertible into 83,333,333 new Triple shares at a price of AU$0.006 per share.
This fresh investment in Chinese CBM will help the country’s unconventional gas sector, which has reported increasing production of gas in recent months.
As part of the MOU, Waypost will also procure a drilling company to perform drilling services for Triple at a consideration of not more than US$ 2.75 million. Waypost will be issued with further shares in Triple as payment for doing so.
Once all is said and done – and conditions of the deal have been met – Waypost shall own approximately 56.17% of Triple. Blue Sky shall thus indirectly own 33.70% of the issued share capital of Triple and Triple will become an associate of the company.
Triple Energy is an Australian registered oil and gas exploration company. Through its wholly-owned subsidiary, CFT, Triple has 80% interest in a CBM project and a Co-operative Joint Venture, Heilongjiang Aolong Energy Co. Ltd. with Longmay Group, one of the largest state-owned coal mining enterprises in China, holding the remaining 20% profit interest.
Heilongjiang Aolong Energy operates pursuant to the coal mining and exploration leases held by the Longmay Group in areas such as the Hegang mines, Shuang Ya Shan mines, Qi Tai He mines and Yixi mines in Heilongjiang Province under the joint venture agreement registered with the relevant government authority in the PRC.
The Co-operative Joint Venture intends to focus on the Hegang mines first in view of its expected significant potential volumes of CBM in the area. In July 2013, the first drill stem test well was drilled in the Hegang mines and the evaluation of the drilling result showed excellent existing potential for further development.
According to Triple, the Hegang mines covers an area of 210 km and, based on the preliminary technical assessment, the potential volumes of CBM gas could be up to 534 billion ft3.
Tommy Cheng, Chairman and Executive Director of Blue Sky Power, said, "The company proposes to enter into the MOU in order to further establish our market presence and strengthen our existing business portfolio of natural gas business operations in China. It will be complementary to the existing business model of the company, which can result in a vertical integration of the natural gas business and provide certain natural gas sources by ourselves from the gas resources of the Hegang mines."
Adapted from press release by Sam Dodson
Read the article online at: https://www.worldcoal.com/cbm/26112014/new-investment-in-chinese-coalbed-methane-sector-cbm151/