Orion Energy International Inc. ("Orion") is pleased to announce that the company's controlling shareholder, Dr. Louis Yang, has recently entered into a memorandum of understanding ("MOU") with Hong Kong listed Genesis Energy Holdings Limited ("Genesis Energy", to be renamed as 'Sino Oil and Gas Holdings Limited', HKEx: 702). Pursuant to the MOU, Genesis Energy plans to acquire the entire interest in Orion. The successful completion of the acquisition will mark the official introduction of Sino-foreign owned coal bed methane ("CBM") projects in China to the local capital market. This seamless integration of technology and capital will also help expedite the mass commercial development of China's CBM industry.
Orion possesses advanced CBM production technologies and holds a 70% revenue interest in a production sharing contract in a CBM project in the Sanjiao Block in Shanxi Province in the PRC. The consideration for the acquisition will not exceed US$350,000,000 (approximately HK$2.72 billion). The project is believed to be one of the Sino-foreign CBM projects with the highest foreign holding.
Orion's controlling shareholder and General Manager Dr. Louis Yang remarked: "Our collaboration with Genesis Energy represents an integration of technology and capital. Orion has already entered into a production sharing contract with a major Mainland petroleum company to facilitate works in relation to the exploration, development and production of methane in the Sanjiao Block. This high-quality CBM project has the advantages of rich reserves, shallow coal beds and proximity to major pipelined networks, and is anticipated to have proven reserves of not less than 56 billion cubic metres."
Genesis Energy Executive Director Dr. Dai Xiaobing continued to say that: "Our group is keen to explore and negotiate investment opportunities that promise good potential, with CBM being the focus of our future investments. Orion has extensive experience in CBM reserve assessment, drilling technology applications and commercial development in the PRC. Dr. Yang and his team have developed unique techniques in surface multi-lateral drilling which have been successfully deployed in many CBM fields across China.
The acquisition of the entire interest in Orion does not only provide access to a commercially viable project, but also offers an opportunity for our group to gain sustainable momentum through tapping into the core competences of Orion's technical team. Our recent placing completed in June was met with strong response reflecting investors' confidence in our development prospects. Approximately HK$170 million were raised. In order to fund this promising Shanxi CBM project, we entered into another agreement on July 3 for the placing of up to 4.415 billion new shares at a price of not lower than HK$0.53 per new share."