Drilling Update

Green Dragon Gas Ltd
30 August 2007


30 August 2007


                             GREEN DRAGON GAS LTD.
                       ('Green Dragon' or the 'Company')

               GREEN DRAGON COMMENCES 80 WELL DRILLING PROGRAMME

Green Dragon Gas Ltd (AIM: GDG), the Chinese coal bed methane ('CBM') business,
today announces that its 2007 drilling programme is well underway and targeted
to be concluded by the Chinese New Year in mid-February 2008. 80 wells are to be
drilled across the five blocks to complement the 47 wells successfully drilled
in 2006. The exact number of wells within each block could be modified during
the drilling period.

BLOCK        WELLS DRILLED  TOTAL WELLS   2007 DRILLING      
                 2006         DRILLED       PROGRAMME        SPUD DATE
                            TO END 2006
SHIZHUANG S       26            41              33            30 July

SHIZHUANG N        4             4               8          3 September

QINYUAN            6             6              15          6 September

FENGCHENG          6             8              17           2 August

PANXIE EAST        5             7               7         15 September

TOTAL WELLS      47             66              80


The wells are expected to be drilled by twelve drilling contractors utilising
twenty-two drilling rigs. The target coal seams are identical to those drilled
in 2006 and this year's drilling programme further extends the pilots drilled
last year in essentially the same area within the blocks.

In addition to the 80 wells being drilled by the Company, China United Coal Bed
Methane Corporation Limited ('CUCBM') has drilled 51 wells on the Chengzhuang
section of the Shizhuang Block under a farm-out agreement entered into by the
Company last year. These wells are expected to be fracture stimulated next year
concurrent with the related infrastructure being brought online.

The Overall Development Programme ('ODP') for Green Dragon's most advanced
block, Shizhuang South, has been submitted to NDRC. This first ODP, compiled by
the Company, CUCBM and CPPEI (a PetroChina subsidiary), upon approval, will
allow the Company's partners to obtain authorisation to pay for their 40%
working interest of development expenses and furthermore confirm the
commerciality of the block. Cumulative gas production from pilot wells located
on this block has exceeded 5,550,000 cubic meters demonstrating
the gas production potential from the related coal seams.

The Company's Chairman and CEO, Mr. Randeep S. Grewal, commented,

'The growth continues on plan and in accordance with our strategy. The Company
is well funded for its 2007 drilling plan and related infrastructure. The wells
drilled last year in Shizhuang South and North, Qinyuan and Fengcheng have been
systematically completed and put on production during the last quarter as
planned. De-watering of the coals has been initiated and the early results have
been productive in enhancing our 2007 drilling programme. This year's drilling
will provide the technical conclusions for a continuous drilling programme for
the next ten years and hence, this is an important decision making year for the
Company. We are currently producing gas from wells that have been in production
for the last eight years and we aim to have similar consistent gas supply in
order to build a reliable distribution network across all our blocks as we
continue to become an integrated gas supplier.'

For further information on the Company and its activities, please refer to the
website at www.greendragongas.com or contact:

Randeep S. Grewal                                 Tim Thompson / Nick Melson
Betty Cheung                                      Investor Relations
Green Dragon Gas                                  Buchanan Communications
[phone]                                    [phone]

Dr Azhic Basirov / David Jones
Nominated Adviser & Broker
Smith & Williamson Corporate Finance Limited
[phone]






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