28/11/2011
[28 November 2011, Hong Kong] MIE Holdings Corporation (“MIE” or the “Company”, together with the subsidiaries, the “Group”; Stock Code: 1555), the largest independent upstream oil company operating onshore in the PRC as measured by gross production under production sharing contracts, is pleased to announce that the Company has acquired a 25% working interest in 7,450 net acres of oil and gas leases in the Niobrara formation within the DJ basin located at Weld County, Colorado, United States (“Niobrara Asset”).
The Target Asset
The Niobrara shale play is now emerging as a significant unconventional resource play in US. The use of new horizontal drilling and multi-stage hydraulic fracturing completion techniques developed for Bakken and Eagle Ford has greatly expanded the ability of producers to produce natural gas and oil from such shale formation, including the liquids-rich Niobrara shale play in DJ Basin.
The Transaction
The acquisition was carried out through a strategic partnership with Pacific Energy Development Corp. (“PEDCO”), a privately held oil and gas company based in California, U.S. Under the partnership, PEDCO acquired a 50% working interest in the Niobrara Asset and assigned 31.25% at nil consideration to a joint venture formed with MIE, Condor Energy Technology LLC (“Condor”), which MIE and PEDCO own 80% and 20% respectively.
In connection therewith, MIE subscribed 4,000,000 shares of restricted Series A convertible preferred stock in PEDCO on 31 October 2011 for an aggregate consideration of US$ 3,000,000, representing approximately 17.8% of the issued share capital of PEDCO.
Reasons for the Acquisition
The acquisition of the 25% working interest in the Niobrara Asset and Company’s alliance with a U.S. strategic partner marks the latest achievement in the Company’s efforts to expand its asset portfolio overseas and enter into the emerging shale play in the U.S. The acquisition will also allow the Company to access the technologies used in developing shale oil and gas including those for horizontal drilling and completions. The Company already has some experience and expertise in hydraulic fracturing of low permeability reservoirs in China.
“MIE is pleased to partner with PEDCO to explore and evaluate the full potential of the resource play in this area. The acquisition is part of our strategic alliance with PEDCO that will open up a gate to the US market for the Company and allows us to gain the horizontal drilling technology which is increasingly needed in China.” said Forrest Dietrich, the executive director and senior vice president of MIE.
Horizontal drilling technology is the key technology to exploit shale gas which is an energy resource seen as having great potential in China. As reported by the US Energy Information Administration, China has an estimate of 1,275 trillion cubic feet of technically recoverable shale gas reserves, being the largest out of all countries with technically recoverable shale gas reserves. The resource is largely untapped and Chinese central government is taking initiatives to increase its shale gas production capacity.
The Operation
Condor will serve as the operator of the Niobrara Asset with a drilling program led by Houston-based South Texas Reservoir Alliance (“STXRA”). STXRA is managed by a team of professionals who possess experience in operations, drilling, petrophysics and energy finance. In 2010, this team was involved in drilling and completing over 30 horizontal wells with multi-stage hydraulic fracture completions in Texas (Eagle Ford shale oil trend) and Oklahoma. The Company will be able to work side by side with STXRA on the acreage.
Condor currently plans to commence drilling of the first horizontal well with multi-stage fracture on the Niobrara Asset in Q2 2012. Well control data has been collected and 3D seismic analysis has been conducted on the acreage.
About MIE Holdings Corporation
MIE is an independent oil and gas company engaged in the exploration and production of crude oil and natural gas in China and Kazakhstan. It is the largest independent upstream oil company operating onshore in the PRC as measured by gross production under production sharing contracts. The Group operates the Daan, Moliqing and Miao 3 oilfields in the Songliao Basin under three separate production sharing contracts with PetroChina, the largest oil company in China. The Group also holds an exploration contract and three production contracts that allow the Group to conduct exploration and production activities in the Mangistau province in the southwestern region of Kazakhstan. In addition, the Group pursues other development and production opportunities in China, and exploration, development and production opportunities internationally, both independently and in partnership with other major and independent oil companies.
MIE was successfully listed on the main board on HKEx on December 14, 2010 with stock code 1555.
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Issued by Porda Havas International Finance Communications Group for and on behalf ofMIE Holdings Corporation. For further information, please contact:
Porda Havas International Finance Communications Group
Mr. Terence Wong +852 3150 6773 terence.wong@pordahavas.com
Mr. Henry Ho +852 3150 6712 henry.ho@pordahavas.com
Ms. Beverly See-To +852 3150 6721 beverly.seeto@pordahavas.com
Fax：+852 3150 6728