China North East Petroleum Holdings, Limited (CNEH.OB), a producer of crude oil in Northern China, announced second quarter financial results this afternoon after the close of regular trading. Revenues surged 246% year-over-year to $14.2 million, compared to $4.1 million. This represents a sequential increase of 31% from $10.8 million in the first quarter. Net income tripled to $3.8 million, or 19 cents per share, compared to $1.3 million, or 5 cents per share for the same period last year. No analysts currently cover the stock.
“We continue to see strong results in 2008, with the second quarter yielding record production results in what is typically our slowest quarter of the year,” said Mr. Hongjun Wang, President of China North East Petroleum. “The first half of 2008 laid the groundwork for what we believe will continue to be a strong year for the company. We continue to actively pursue new growth opportunities that can enhance our overall productivity and expect further revenue and earnings growth for the remainder of the year. Our installation of new wells and increased production output will allow us to produce strong results and maintain steady margins as oil prices continue to fluctuate.
“Additionally, our focus on maximizing shareholder value remains a top priority for our company. As part of this effort, we were pleased to move forward with some major corporate governance initiatives, including the election of an independent Board of Directors that would enable CNEH to further qualify for a listing on a major U.S. exchange by the end of the fiscal year. We have a great opportunity to further expand the presence of our operations and increase our productivity in the second half. The initiatives we have in place today will provide benefits to our shareholders in the months and years ahead,” concluded Wang.
China North East added 27 new wells during the quarter, bringing total well count up to 192. The company has contracted out the drilling of 60 additional wells by the end of March 2009. PetroChina Group (PTR) has an agreement to purchase the company’s total crude oil output at prevailing market rates through 2022. Shares of CNEH closed at $4.67 today and have traded in a 52-week range of $0.38 – $5.58. With 19.2 million shares outstanding, CNEH has a market cap of $90 million and a trailing twelve-month P/E of 8.5.
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