Sino Gas & Energy Holdings Limited (ASX:SEH, “Sino Gas”, “the Company”), is pleased to announce that a flow rate of 2.1 million standard cubic feet per day (MMscf/d) has been recorded from an upper zone of the LXDG-04 exploration well. In addition, the Company provides a commercial update on Sanjiaobei.

LXDG-04 testing results

Exploration well LXDG-04 tested at 2.1 MMscf/d from an upper zone in the prospective exploration area of the Linxing (East) Production Sharing Contract (PSC). This stable flow rate was recorded at a wellhead tubing pressure of 760 psi over a period of 48 hours and is in addition to the rate of over 600 thousand standard cubic feet per day (Mscf/d) recorded in a middle lower zone previously announced in the Q3 2015 Activities Report.

Sino Gas estimates LXDG-04 could produce over 3 MMscf/d at standard field operating pressures. Additional exploration disclosure for the testing of LXDG-04 and LXDG-05 is detailed on page 3. Linxing (East) first reserve bookings expected in year-end reserve assessment LXDG-04 exploration well is the third well in the Linxing (East) exploration area to yield production test flow rates above commercial thresholds following positive flow tests achieved on LXDG-03 and LXDG-05.

LXDG-02 is currently being tested. In addition, as previously announced, good log results have been received from LXDG-06 with 57.8 meters of net pay identified. LXDG-07 and LXDG-08 are currently drilling and, if successful, is planned to be tested in 2016 along with LXDG-06.

In Sino Gas' most recent independent reserve and resource report assessment, RISC estimated 924 bcf1 of gross deep gas P50 Prospective Resources in the Linxing (East) area (276 bcf net to Sino Gas), based on a prospective area of 334km2 as at 31 December 2014. From the results discussed above, Sino Gas expects the
forthcoming assessment as at 31 December 2015 will result in the conversion of a portion of the prospective resources into the first reserve bookings for the Linxing (East) area.

The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. Refer to Resources Statement for additional disclosure.

Sanjiaobei CGS Restart

Revised commercial terms for the restart of the Sanjiaobei Central Gathering Station (CGS) had been substantially negotiated prior to the 18 November 2015 National Development and Reform Commission (NDRC) announcement on revised city gate prices. This agreement would have allowed the immediate re-start of production from the Sanjiaobei station. However, in light of the updated city-gate prices, negotiations are continuing to incorporate these changes. The restart date of the Sanjiaobei station is expected before the end of the year and an update will be given once negotiations are completed.

Gas Payment Update

Sino Gas has now received all regulatory approvals necessary to allow the finalisation of gas sales payments from our PSC partner at Sanjiaobei to the Joint Venture Company. The outstanding hurdle is to finalise payment procedures with our PSC partner. These procedural issues have largely been pre-agreed with our partner. Sino Gas anticipates finalising these discussions by the end of the year as previously guided with final receipt of cash expected in late 2015 or early 2016.

Commenting on the flow testing results and Sanjiaobei regulatory approvals, Sino Gas’ Managing Director, Glenn Corrie said: "We are delighted to see the additional material flow test from LXDG-04 which, in combination with the flow rates achieved on the other wells tested on Linxing (East), demonstrate the area's potential to allow the first resource to reserve conversion. This will create another area of production growth for the company in the future.

I am also pleased with the progress being made on the Sanjiaobei gas sale and payment commercial issues and look forward to these both being resolved in the near term. I would like to thank our customers, Chinese partners and all stakeholders for the constructive approach that has been taken to make progress on these issues."