Primeline Energy Holdings Inc. ("Primeline" or the "Company") (TSX VENTURE:PEH)
today announced that Primeline, China National Offshore Oil Corporation
("CNOOC") and Primeline Petroleum Corporation ("PPC") have signed various
agreements ("Development Agreements") setting out the basis on which CNOOC and
Primeline will proceed with the development of the Lishui 36-1 gas field.


As previously announced, the overall development program for the Lishui 36-1 gas
field ("ODP") was approved in principle by Primeline and CNOOC in late August
2009 and was finalised in December 2009. Since September, Primeline and CNOOC
have been preparing the supporting documents required for submission of the ODP
to the Government for approval, including an environmental impact study report
and a safety assessment report. CNOOC and Primeline are in the process of
submitting these studies and the ODP as required by the relevant regulations.


At the same time, Primeline and CNOOC have been negotiating the terms of the
Development Agreements and have now entered into a Supplemental Development
Agreement ("SDA"), a Joint Operating Agreement ("JOA"), an agreement relating to
the implementation of the development and procurement and cost control
principles ("Implementation Agreement") and a letter agreement amending a
previous agreement relating to the terms of the Petroleum Contract ("Amendment
Agreement"), all of which are dated 17th March 2010. The main terms of the
Development Agreements are summarised below.


Transfer of Operatorship for the Development

One of the principal purposes of the Development Agreements is to transfer the
operatorship for the development and production operations for the Lishui 36-1
gas field from Primeline Energy Operations International Limited ("PEOIL"), a
subsidiary of Primeline, to CNOOC China Ltd Lishui Operating Company ("CCLOC"),
to be established as a wholly owned subsidiary of CNOOC China Limited, a
subsidiary of CNOOC Ltd. (the listed subsidiary of CNOOC). There are expected to
be various benefits from this transfer of operatorship. Firstly, CNOOC Ltd. has
an established project management team which has considerable relevant
experience and can be mobilised with minimum delay. Secondly, as a subsidiary of
CNOOC Ltd., CCLOC is able to procure the services and equipment required for the
development of the gas field on the basis of existing CNOOC long term
procurement contracts with various contractors which, together with other
operational efficiencies, should result in cost savings for the Development.
CCLOC will act only as operator in respect of the development and production
operations for the Lishui 36-1 gas field; PEOIL will continue to act as operator
under the Petroleum Contract in respect of all continuing exploration
operations.


Development Agreements

Under the SDA, CNOOC has formally confirmed it will exercise its right under the
Petroleum Contract to take its full participating interest of 51% in the Lishui
36-1 gas field, such that the respective participating interests in the
development of and production from the gas field will be 51% CNOOC, 36.7%
Primeline and 12.25% PPC (which is wholly owned by Primeline's Chairman and
substantial shareholder, Victor Hwang). The development and operating costs will
be borne by the parties in their respective participating interests.


The SDA also confirms that:



--  a development area of circa 85 km2 surrounding the LS 36-1 gas field
    will be carved out of Block 25/34; 
--  the production period for the Lishui 36-1 gas field will be for a
    minimum of 15 years from the commencement of commercial production and
    will be extended in the event that additional gas resources are
    discovered within Block 25/34 which can be tied into the production
    facilities established for Lishui 36-1; and 
--  the production facilities will be owned by the parties jointly in the
    proportions of their participating interests until full cost recovery
    and the parties shall have the continuing right, until the end of the
    production period, to use the production facility assets in respect of
    any additional resources which may be discovered within Block 25/34 and
    which can be tied into the production facility assets. 



The SDA is subject to the ratification of the Ministry of Commerce of the
People's Republic of China and will become effective on the date of such
ratification. 


The JOA, which has been entered into by CNOOC China Ltd., sets out the basis on
which CCLOC shall establish a project management team in Shanghai and carry out
the development and production operations. In particular, it provides that
Primeline may appoint certain key members to the project management team who
will be involved in all procurement and operational decisions and grants
Primeline a significant degree of control over how those operations are carried
out with all major decisions being by unanimous decisions of the Parties. The
JOA is supplemental to the SDA and accordingly will become effective on the date
that the SDA becomes effective.


In the Implementation Agreement, Primeline and CNOOC have agreed that the
necessary development preparation work needs to be implemented immediately in
order that the development can be completed in time to deliver first gas to
Zhejiang Gas in accordance with the agreed target date of mid 2012 and it has
been agreed that CNOOC will be responsible for such initial preparation work in
order to maintain the target.. The Implementation Agreement sets out the agreed
principle that as much of the procurement of the development as possible should
be contracted using long term procurement contracts established by CNOOC in
order to achieve cost savings so that the development can be delivered as
economically and efficiently as possible.


Pursuant to a previous amendment agreement in February 2008, CNOOC and Primeline
agreed that the first exploration period under the Petroleum Contract would be
extended by one year and that one of the two subsequent two-year exploration
periods would be reduced by a corresponding period of one year, unless otherwise
agreed. It has now been agreed, pursuant to the Amendment Agreement, that the
two remaining exploration periods under the Petroleum Contract will be for two
years each. Thus, the second exploration period, which commenced on 1st May
2009, will end on 30th April 2011, and the third exploration period will
commence on 1st May 2011 and end on 30th April 2013.


Mr. Victor Hwang, Chairman and President of Primeline, commented: "The signing
of the Development Agreements marks the commencement of the development project
with Primeline and CNOOC working in close co-operation, playing to their
respective strengths for the common goal of a successful rolling development.
The agreed principles will lead to cost saving and streamlined management and
scheduling which are both vitally important to the development of the Lishui gas
field. In addition, the clear division of responsibilities enables Primeline to
focus on the step out exploration programme for which we continue to be the
operator."


Development Financing

Primeline has made significant progress in its discussions with financial
institutions on the project finance for the Lishui 36-1 development and one of
the main Chinese banks is currently conducting due diligence on the project
based on agreed preliminary financing terms. Primeline has secured the
commitment of the financial institution that it will issue supporting
documentation to allow the submission of the ODP and Primeline aims to secure a
conditional loan agreement as soon as possible. A further announcement will be
made when the conditional loan agreement has been finalised. On the basis of the
funding arrangements agreed to in the Implementation Agreement, Primeline's
financing requirement does not start until three months after government
approval of the ODP has been obtained.


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 the Petroleum Contract with
CNOOC for Block 25/34, an offshore exploration area of 5,221 km2 in the East
China Sea where the Lishui 36-1 discovery is located. A 3D survey was used to
define a number of high potential prospects near the discovery for the Company's
step out exploration programme. Previously drilled wells in and around Block
25/34 encountered oil and gas shows and flows indicating that there is
significant hydrocarbon potential in the remainder of the Block. 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 catarina@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 Primeline's expectation that it will be
able to secure a conditional loan agreement for the project finance of the
Lishui 36-1 development. They are based on an assumption that negotiations for
such an agreement can be successfully concluded with a Chinese financial
institution. It is possible such negotiations may not be successfully concluded,
as a result of factors which include without limitation financial market
instability, the international credit crisis, and unforeseen technical problems.
If they are not, Primeline will have to seek alternate sources of project
finance, and if they cannot be found Primeline will be unable to proceed with
the development. Documentation may be delayed for technical and other reasons,
and if they are, submission of the ODP will also be delayed, and required
government approvals may not be obtained in a timely fashion, or at all. If
funding is not sufficient or governmental approvals are not obtained, the
Company may be unable to develop the gas field.. Exploration for oil and gas is
subject to the inherent risk that it will not result in a commercial discovery.