China North East Petroleum Holdings Limited, a rapidly growing oil producer in Northern China, today announced preliminary crude oil production figures for the second quarter. Crude oil production increased 119% to 135,193 barrels, compared to 61,732 barrels for the same period in 2007. This also represents an 18% sequential increase over 1Q 2008. The company added 27 new wells during the quarter, bringing the total well count up to 192.
”The second quarter was another strong quarter for our business,” stated Mr. Hongjun Wang, President of China North East Petroleum. “We are particularly pleased to report record production results this quarter, as the second quarter is traditionally one of our slower quarters during the fiscal year. Our new wells added during the quarter were supported by the cash flow generated from our existing wells and we utilized very little cash from the $15 million financing we closed in March 2008. We continue to make good progress in our business and look forward to a strong second half of the fiscal year.”
China North East has a unique arrangement with PetroChina Group (PTR), which has guaranteed to purchase China North East’s output at prevailing market rates through 2022, with PTR entitled to 20% of production through 2012 and 40% of production thereafter in exchange for leasing rights. China North East has never drilled a dry well and targets a total well count of 650 on the land it currently controls. The company has stated its interest in acquiring more leasing rights.
China North East is striving to become Sarbanes-Oxley compliant, a key requirement of getting listed on a major exchange, which could occur before the end of the fiscal year. Shares have traded in a 52-week range of $0.38 – $5.58, and are currently trading 7.6% higher at $4.65 on today’s news.
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