About China Morth East Petroleum:
China North East Petroleum Holdings, Limited (NYSE Amex: NEP) is a non-state-owned oil production company that engages in oil drilling project management and the extraction of crude oil in proven oilfields in Northern China.
About GN Solids Control Equipments
China North East Petroleum (“NEP”) leased its first oilfield in 2003 and today operates four oilfields with over 247 wells managed by our 257 dedicated employees. NEP management has significant specialized oil development and operations experience.
China North East Petroleum has acquired all of the equity interest in Song Yuan Tiancheng Drilling Engineering Co. Ltd. (“Tiancheng”), an oil drilling and services company based in Song Yuan City, China. This acquisition marks NEP’s expansion into the oilfield services industry and enhances the Company’s vertical integration within China’s private oil exploration and production (E&P) industry.
NEP paid US $13.0 million in cash for 100% of the equity interest in Tiancheng. Due to PRC legal restrictions, 5% of the equity interest has to be held in trust for the benefit of NEP.
Tiancheng is a leading oil drilling and services company with seven rigs in operation. With approximately 320 employees, it has the capacity to drill 220 wells on an annual basis. Tiancheng is the largest of three PetroChina-licensed private drilling operators based on the total number of drilling rigs. The company counts PetroChina and two private oil producers as its main customers. PetroChina represents the majority of the company’s revenue and NEP has not utilized Tiancheng for drilling services in the past. In 2008, Tiancheng generated revenue of approximately $14.7 million, net profit of $5.2 million and was cash flow positive from operations.
In 2005 through 2007, NEP acquired additional oil reserve leasing rights of three oilfields (Hetingbao 301 Oilfield, Da’an 34 Oilfield, and Gu’dian 31 Oilfield) bringing total oilfields under management to four. Today, according to a report prepared by PetroChina Jilin Branch of Research Institute for Exploration and Development, total geological reserves of the oilfields that NEP operates total 75 million barrels or 5.5 million barrels of proven reserves according to 2008 SEC proven reserve report prepared by R.E. Davis Associates.*
With a strong track record of oil production management, NEP’s 257 results-driven employees are committed to accelerating production, generating strong cash flow and creating shareholder value.
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