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Triple Energy to Acquire Xian Moke, Gets Stakes in 4 CBM Blocks in China

Source: www.gulfoilandgas.com 10/12/2015, Location: Asia

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Australia's Triple Energy Ltd. reported that the company has entered into a non-binding Letter of Intent (LOI) with Xian Moke Industrial Co. Ltd. (Moke) to acquire 100 percent ownership of Moke and consequently an operating interest in up to four coal bed methane (CBM) blocks located in the Ordos basin of Shaanxi Province in China.

Summary
The LOI includes total of four blocks covering around 146 square miles (378 square kilometers) in the Ordos basin of Shaanxi Province in China. The Tongchuan Block already has eight CBM wells drilled with seven currently on test production.

The Wang Feng Block has four wells drilled to date with two on test production and a full field development plan is underway.

This potential acquisition represents a continuation of the Company's strategy, and adds significant near-term growth opportunities.

Wang Feng CBM Block - Shaanxi Province (75 percent interest - Operator)
This block is 31 miles (50 kilometers) from Wang Feng Hancheng City in Northern Shaanxi Province. The underpinning coal mining lease area covers an area of 37 square miles (95 square kilometers). It is located nearby to transportation infrastructure including rails and roads.

The coal seams are well understood having been mapped by an extensive borehole grid of 93 coal borehole wells and seismic. The coal seams targeted are interpreted at depths of between approximately 1,476 and 3,281 feet (450 and 1,000 meters) in a simple relatively unfaulted structure.

The coal seams are interpreted to be stacked in two main levels, which are mapped as ranging between 6.6 and 21.3 feet (2 and 6.5 meters) thick with gas content of between 353.1 and 529.7 cubic feet (10 and 15 cubic meters) per ton.

Four wells have already been drilled in this block with two more understood to be on test production.

Moke has advised that a development preliminary concept/plan has already been prepared wherein around 45 directional (fracced) wells will be drilled from 15 vertical well surface locations.

Tongchuan CBM Block - Shaanxi Province (75 percent interest - Operator)
The Tongchuan Coal Mine area is located in Tongchuan City town Qu Yao, also in the Ordos Basin of the Shaanxi Province in China. It is 29 miles (47 kilometers) from Tongchuan City and covers an area of 40 square miles (103 square kilometers) over four coal mines.

The coal seams are well understood having been mapped by 36 coal borehole wells and seismic data. Moke has advised that this block already has eight wells drilled of which seven are currently on test production (at constrained pump rates awaiting off-take).

There are two main coal seams in the developed area interpreted to occur at depths of between 1,509 and 3,281 feet (460 and 1,000 meters). The Chenjiashan seams are understood to have a thickness ranging between 9.8 and 39.4 feet (3 and 12 meters), averaging of 23 feet (7 meters). The Xiashijie seams range between 32.8 and 41 feet (10 and 12.5 meters) thick, averaging 36 feet (11 meters).

A full field development plan concept is understood to have been prepared which we believe comprises of another six horizontal wells to be drilled (for a total of 13-14 producing wells). The field is understood to produce over a 10 year period. The gas will be used as feedstock for a mini-power generation station, which will be constructed nearby with the electricity being sold into the electrical grid, located just a few (hundred meters) away.

Comment
The above two CBM blocks held by Moke are well suited to the growth plans and overall strategy of Triple Energy. Specifically, they have the potential to generate near term production and a reserves report will be commissioned in the near future prior to completion of any transaction. This could in turn prepare the Company for a possible dual-listing on the Hong Kong Stock Exchange, subject to all of the listing requirements being satisfied in due course.
The other two blocks over which the LOI provides a first right of refusal will be assessed in more detail in due course. The parties are currently negotiating the final adjusted purchase price, which is intended to be paid by the issue of shares in Triple, subject to the finalization of due diligence, reserves report and any necessary regulatory approvals, etc.
Providing this potential acquisition is advanced to an execution stage after due diligence and agreement on the consideration, a full slide presentation will be made available for investors.

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