Kunlun Energy : Announcements and Notices - Acquisition of 51% Equity Interest in Jingtang Co. Owned by Petrochina by Kunlun Gas,a Wholly-owned Subsidiary of the Company

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

KUNLUN ENERGY COMPANY LIMITED

(incorporated in Bermuda with limited liability)

昆 侖 能 源 有 限 公 司

(Stock Code: 00135.HK)

The Board is pleased to announce that on 28 September 2017, Kunlun Gas, a wholly-owned subsidiary of the Company and PetroChina entered into the Acquisition Agreement, pursuant to which, PetroChina has agreed to sell and Kunlun Gas has agreed to purchase 51% equity interest in Jingtang Co. owned by PetroChina at a Consideration of RMB1,546,954,800. The Consideration will be settled in RMB and subject to adjustment by the gains or losses during the transition period. Upon the Acquisition, Jingtang Co. will become a non-wholly-owned subsidiary of the Company.

As at the date of this announcement, PetroChina indirectly holds 4,708,302,133 Shares of the Company, representing approximately 58.33% of the issued share capital of the Company. PetroChina is the controlling shareholder of the Company, thus PetroChina is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. In the meantime, Kunlun Gas is a wholly-owned subsidiary of the Company. Accordingly, the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio of the Acquisition exceeds 0.1% but is less than 5%, the Acquisition is subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules but is exempted from the independent Shareholders' approval requirements.

As at the date of this announcement, none of the Directors has any material interest in the Acquisition. As such, none of the Directors is required to abstain from voting at the Board meeting approving the Acquisition Agreement and the transactions contemplated thereunder.

The Board is pleased to announce that on 28 September 2017, Kunlun Gas, a wholly-owned subsidiary of the Company and PetroChina entered into the Acquisition Agreement. The major terms of the Acquisition Agreement are set out below:

1. Date

   28 September 2017

2. Parties

3. Purchaser: Kunlun Gas;

4. Vendor: PetroChina; and

5. Target Company: Jingtang Co.

6. Acquisition Target

   Pursuant to the Acquisition Agreement, PetroChina has agreed to sell and Kunlun Gas has agreed to purchase 51% equity interest in Jingtang Co. owned by PetroChina.

7. Consideration and Payment

   Pursuant to the Acquisition Agreement, the Consideration payable by Kunlun Gas to PetroChina will be RMB1,546,954,800, and shall be settled by way of cash in one-off full payment to the bank account designated by PetroChina prior to the Completion Date.

   In addition, both parties shall be responsible for the tax involved in the Acquisition respectively pursuant to relevant laws and regulations and each party shall perform its tax reporting obligation. Both parties shall be responsible for any fees incurred in the execution of the Acquisition Agreement and upon Completion of the Acquisition.

   In the meantime, pursuant to the Acquisition Agreement and as agreed between both parties, the period between the execution date and the Completion Date is the transition period. All gains or losses of Jingtang Co. during the transition period shall be attributable to PetroChina, which means that profits realized during the transition period of Jingtang Co. will be shared by PetroChina according to its shareholding percentage and Kunlun Gas will increase the Consideration by the amount equivalent to such profits; the losses incurred during the transition period will be compensated by PetroChina according to its shareholding percentage and Kunlun Gas will reduce the Consideration by the amount equivalent to such losses.

8. Basis of Consideration Determination

   Pursuant to the Acquisition Agreement, the Consideration amounting to RMB1,546,954,800 was determined by both parties with reference to the valuation. Both parties have engaged Beijing China Enterprise Appraisals Co. Ltd. for issuing the Valuation Report. Beijing China Enterprise Appraisals Co. Ltd. conducted the asset valuation using asset-based approach. The Valuation Reference Date is 31 December 2016. As at the Valuation Reference Date, the estimated net assets of Jingtang Co. amounted to RMB3,033,244,700. With reference to the valuation on net assets of Jingtang Co. and taking into account the development prospect of the industry where Jingtang Co. operates and its business conditions, the Consideration was determined to be RMB1,546,954,800 upon arm's length negotiations between both parties.

9. Conditions Precedent

   The Acquisition Agreement is subject to the satisfaction, or waiver by both parties upon agreement, of the following conditions precedent:

10. there is no material adverse change to the Jingtang Co. between the execution date of the Acquisition Agreement and the Completion Date;

11. all necessary approval, consent, filing and waiver (if any) from any government authorities or other third party in respect of the execution of Acquisition Agreement and the Completion of the Acquisition having been obtained by both parties; and

12. all necessary internal approval and authorization in respect of the execution of Acquisition Agreement and the Completion of the Acquisition having been obtained by both parties.

13. Completion Time and Completion

The Completion of the Acquisition will take place upon all the conditions precedent to the Acquisition Agreement being satisfied or waived, subject to the completion of the change of the commerce and industry registration regarding the change of the holder of 51% equity interest in Jingtang Co. from PetroChina to Kunlun Gas and the relevant date shall be the Completion Date of the Acquisition. Upon the Completion of the Acquisition, Jingtang Co. will become a non-wholly- owned subsidiary of the Company and the assets, liabilities and financial results of Jingtang Co. will be consolidated into the consolidated financial statements of the Company.

BUSINESS AND FINANCIAL INFORMATION OF JINGTANG CO. Key Business Information of Jingtang Co.

Jingtang Co. was jointly established by PetroChina, Beijing Enterprises Group Company Limited and Hebei Natural Gas Company Ltd. on 28 September 2012, with current registered capital of RMB2,600,000,000. Prior to the Acquisition, PetroChina is the controlling shareholder of Jingtang Co..

The major operating scope of Jingtang Co. comprises: liquefied natural gas terminal, storage and re- gasification services; providing port facilities for vessels; providing cargo uploading and unloading, warehousing and loading services within the port area etc.

Key Financial Information of Jingtang Co.

According to the financial statements prepared by Jingtang Co. in accordance with the China Accounting Standards for Business Enterprises, the consolidated net asset value, the consolidated net asset value attributable to Shareholders of Jingtang Co., the profit before income tax expense, the profit for the period/year and the profit for the period/year attributable to Shareholders of Jingtang Co. for the two years ended 31 December 2016 were as follows:

Year Ended 31 December 2016 2015

(RMB' million) (RMB' million)

Consolidated net asset value	2,995.8	2,825.8
Consolidated net asset value attributable to Shareholders of Jingtang Co.	2,995.8	2,825.8
Profit before income tax expense	222.2	175.8
Profit for the period/year	166.0	131.6
Profit for the period/year attributable to Shareholders of Jingtang Co.	166.0	131.6
REASONS FOR AND BENEFITS OF THE ACQUISITION
The Board (including independent non-executive Direcors) believes	that the Acquisition	would be in

the best interests of the Company for the following reasons: through the Acquisition, all of the three LNG receiving terminals of PetroChina will be under the operation and management of the Company, which is in line with its business positioning and development strategies, increases the geographic coverage of the natural gas business of the Company, further achieves our resource integration and helps rationalize its business management. In addition, the Acquisition will generate synergies among different businesses of the Company, enhance its cost control, improve its efficiency and profitability, facilitate the improvement of its internal business structure and create new business growth of the Company.

The Directors of the Company have considered and approved the resolution on the Acquisition. They are of the view that (i) the Acquisition is on normal commercial terms or better; (ii) the terms and conditions of the Acquisition are fair and reasonable; and (iii) the Acquisition is in the interest of the Company and Shareholders as a whole.