AIM-listed Green Dragon Gas said on April 2 that it has reached an agreement with state-owned China United Coalbed Methane Corporation (CUCBM) to collaborate on five onshore coalbed methane production sharing contracts in China.

The deal secures interest and revenue share of about 1,600 wells drilled by CUBCM in line with the PSCs. And the PSC exploration terms have been extended for a further two years.

Green Dragon has a direct equity interest in over 1,800 drilled wells. The equity interest varies between 47% and 70% and the total invested capital exceeds $1 billion.

Under the agreement, the companies will work jointly on the Shizhuang South, Shizhuang North Block, Qinyuan Block, Fencheng and Panxie East blocks in China.

At the Shizhuang Block, Green Dragon will continue as operator, with the company’s equity increasing from 60% to 70%.

CUCMB has pledged another $100 million for exploration at the Shizhuang North Block for an extra 10% interest.

The Qinyuan Block has been sub-divided into two equal-sized blocks, with Block A to be operated by CUCMB and Block B to be operated by Green Dragon.

Interest in the remaining two blocks will remain as is.