Primeline Energy Holdings Inc. is an independent upstream oil and gas company focusing exclusively on opportunities in China. Through its 75% interest in a production contract covering a block in the East China Sea the Company is working to become a natural gas producer and supplier to East China markets.

Common share trading symbols:
TSX Venture Exchange: PEH
Frankfurt Stock Exchange: P7K
Common shares:
Outstanding: 47,020,623
Fully diluted: 52,520,622
Working capital: C$5 million (March end, 2010)
Fully diluted proceeds: C$10 million ($1.59 average strike price)
Corporate Debt: nil

Primeline owns a 75% interest in a petroleum contract with state-owned China National Offshore Oil Corporation (CNOOC). This contract entitles the Company to participate in the exploration, development and production of oil and gas in Block 25/34 in the East China Sea. This block covers an area of 5,221 sq. km. The Company is operator of the block.

Within the block Primeline and CNOOC are developing a gas discovery designated Lishui 36-1. An overall development plan for Lishui 36-1 has been finalized and the plan is being prepared for submission for government approval.

According to an independent resource estimate dated July 9, 2007 by McDaniel & Associates Consultants Ltd. (McDaniel), a gross best estimate Gas Initially In Place contingent resource for the Lishui 36-1 gas field was 292 billion cubic feet (bcf). In 2009 McDaniel upgraded certain of the natural gas and natural gas liquids located on Lishui 36-1 from Contingent and Prospective Resources to Probable and Possible Reserves in accordance with NI 51-101. McDaniel estimates that Lishui 36-1 has total project recoverable Probable Reserves of 119 bcf of natural gas and 4.91 millions of barrels (mmbbl) of natural gas liquids (translating into Company net Probable Reserves of 43 bcf of gas and 1.8 mmbbl of natural gas liquids). McDaniel also estimates project Possible Reserves of 93 bcf of gas and 3.8 mmbbl of natural gas liquids (translating into Company net Possible Reserves of 34 bcf of gas and 1.38 mmbbl of natural gas liquids).

In May, 2010 a drill stem test (DST) program for exploration well LS 35-3-1 resulted in a hydrocarbon discovery which confirms that hydrocarbons have migrated to and are trapped in channel systems in the west flank of the West Lishui Basin, in large part within Block 25/34. The Company is evaluating the results from LS 35-3-1 to better understand the resources discovered and as input in planning further exploration drilling.

Natural gas supply in Eastern China depends on gas transported by pipeline from the Tarim Basin in Western China and imports of LNG to LNG terminals on the coast. Supply from these sources has not kept up with demand. This has led to the launch of additional west-to-east pipeline construction projects and LNG terminal construction projects.

The Lishui gas field is in proximity to the populous eastern China province of Zhejiang, in particular to the population centre of Wenzhou in the southern part of the province. Zhejiang Province has a small provincial natural gas distribution grid in the north. Provincial gas distribution policy calls for the connection of the northern grid to the new west-to-east pipelines and LNG import capacity as well as the expansion of the grid to population centres including Wenzhou. This expansion will provide the Company with the opportunity to supply gas through a delivery point in Wenzhou both to Wenzhou and to other major cities in the province and beyond.

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