Primeline Energy Holdings Inc.
TSX VENTURE : PEH

Primeline Energy Holdings Inc.

June 18, 2012 08:37 ET

Primeline Signs New Petroleum Contract for Block 33/07

HONG KONG, HONG KONG--(Marketwire - June 18, 2012) - Primeline Energy Holdings Inc. ("Primeline" or the "Company") (TSX VENTURE:PEH) announces that Primeline and China National Offshore Oil Corporation ("CNOOC") entered into a new Petroleum Contract for Block 33/07 on 15th June 2012.

CNOOC and Primeline had previously agreed that the petroleum contract for Block 25/34 would be amended so that no further exploration would be carried out under that contract and a new Petroleum Contract for Block 33/07 would be entered into to allow Primeline to continue exploration work in the same area.

Primeline and CNOOC now have two Petroleum Contracts in which Primeline Energy China Ltd. ("PECL"), a wholly owned subsidiary of the Company, and Primeline Petroleum Corp. ("PPC"), an affiliated company, are the "Contractors".

  • Block 25/34 covers 84.7 sq km, being the development and production area for the LS36-1 gas field for which CNOOC Limited is the Operator, with a 51% interest, and the Company and PPC holding 36.75% and 12.25% respectively.

  • Block 33/07 covers an offshore area of 5,877 sq km (1.45 million acres) enclosing Block 25/34, and the Contractor's interest is shared 75%/25% by the Company and PPC. Another wholly owned subsidiary of the Company, Primeline Energy Operations International Ltd. (PEOIL), is the operator for Block 33/07. The Contractor is responsible for 100% of the exploration costs and CNOOC has the right to participate, up to 51%, in any commercial development.

The new Petroleum Contract has a 7-year exploration period divided into 3 exploration phases of 3, 2 and 2 years, each with a minimum work commitment. The firm commitment in the first phase is for two exploration wells plus 600 sq km of 3D seismic. Any discoveries in the new contract area have the right to use the production facilities being built for the LS36-1 gas field. The fiscal terms for Block 33/07 are the same as for Block 25/34.

Block 33/07 covers the majority of the Lishui Basin in the East China Sea where the LS36-1 gas field is located. Primeline has previously carried out significant exploration work in the area and is very familiar with the geological and geophysical conditions of the Block. Primeline has 737 sq km of 3D seismic data in the Block within which a number of potential prospects near the LS36-1 development have been mapped. Primeline also has extensive 2D seismic coverage over the rest of the block and has identified a number of exploration leads in this area.

Primeline and PPC have now obtained an important strategic exploration area around the LS36-1 gas field. Any exploration success in the area will be developed rapidly and cost-effectively by tie-in to the LS36-1 gas field development.

There was a signing ceremony for Block 33/07 held in Qingdao, China, where the LS36-1 platform is being fabricated.

Mr. Zhu Weilin, Executive Vice President of CNOOC, commented: "This is the fourth Petroleum Contract that Primeline has signed with CNOOC and it is signed at a time when our first gas field development is progressing very well. We value our relationship with Primeline and expect great results from our cooperation."

Mr. Victor Hwang, Chairman and President of Primeline commented: "We look forward to a very fruitful future in our joint venture with CNOOC under the rolling development strategy. With the LS36-1 gas field coming onstream next year, Primeline is committed to speed up the exploration effort in Block 33/07."

In the meantime, CNOOC Limited, as the Operator for Block 25/34, is continuing to advance the preparation work on the LS36-1 development now that the Environmental Impact Assessment report has been approved and the Overall Development Program has been filed with the Chinese Central Government. The development is currently on schedule with first production expected to be around Q3 2013.

About Primeline Energy Holdings Inc.

Primeline is an exploration and development company focusing exclusively on China resources to become a major supplier of gas and oil to the East China market. Primeline has a 75% Contractor's interest in and is the operator of the petroleum contract with CNOOC for the 5,877 sq km (1.45 million acres) Block 33/07 in the East China Sea and a 36.75% interest in the LS36-1 gas field in Block 25/34 which is being developed by CNOOC Limited (acting as Operator for the development) together with Primeline and Primeline Petroleum Corp. ("PPC"). Shares of the Company are listed for trading on the TSX Venture Exchange under the symbol PEH.

ON BEHALF OF PRIMELINE ENERGY HOLDINGS INC.

Ming Wang, Chief Executive Officer

Please visit the Company's website at www.pehi.com. Should you wish to receive Company news via email, please email bren@chfir.com and specify "Primeline Energy" in the subject line.

Forward-Looking Statements

Some of the statements in this news release contain forward-looking information, which involves inherent risk and uncertainty affecting the business of Primeline. These statements relate to first production from the LS36-1 gas field. While these statements are based on assumptions believed by management to be reasonable, actual results may vary from those anticipated in such statements. Gas may first be produced from the field at a later date, or not at all. If gas is produced later than expected or is not produced, revenues from the sale of such gas may be realized later than presently anticipated, or not realized at all. Exploration for oil and gas is subject to the inherent risk that it will not result in a commercial discovery.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Primeline Energy Holdings Inc.
    Dr. Ming Wang
    CEO
    +44 207.499.8888 or Toll Free: 1.877.818.0688
    +44 207.499.2288 (FAX)
    IR@pehi.com
    www.pehi.com

    CHF Investor Relations
    Robin Cook
    Senior Account Manager
    +1 416.868.1079 ext. 228
    +1 416.868.6198 (FAX)
    robin@chfir.com