China North East Petroleum Holdings Limited, a pioneer in China’s oilfield drilling and production industry, today announced a spectacular increase in revenue and net income for the third quarter of 2008.
Total sales for the third quarter increased 227% over the same quarter last year to $19.7 million. The jump was due to an increase in crude oil production, and the price received for crude oil from PetroChina (PTR), the company’s sole customer. Crude oil production doubled to 172,730 barrels over the same quarter last year. The production boost was attributed to refracturing improvements, and the implementation of water injection technology, improving the efficiency of existing oil wells, together with the addition of 30 new wells drilled during the third quarter.
Gross profit also soared for the quarter, increasing 241%, to $9.2 million, with net income jumping 229% to $4.0 million.
Quarterly results boosted nine-month sales figures from $11.8 million last year to $44.1 million this year, a 273% increase, with nine-month net income increasing by 223%. This, together with the company’s drilling schedule for the remainder of 2008, prompted the company to reiterate comfort with anticipated 2008 net income growth of 190%-200%.
China North East Petroleum President, Hongjun Wang, commented on the current report. “We were pleased to report another strong quarter of revenue and profit growth and are on plan to report record production increases in 2008. We added 30 new wells during the third quarter bringing our total oil well count to 218 wells through September. During the quarter, we were particularly satisfied to see significant improvements to our financial liquidity. We grew our cash position by 220% sequentially to nearly $8 million and our operating cash flow improved notably as well.”
He went on to address concerns about future oil demand and prices. “Heading into the fourth quarter, we expect to be impacted by lower per- barrel oil prices which will likely impact revenue growth but believe we can sustain our full year net profit projection of $14.5-$15 million and diluted EPS of $0.62-$0.65 due to our strong production rates in the second half of the year as well as from a lower government oil surcharge rate. As oil prices decline, the amount of oil surcharge we are required to pay to the Chinese government declines. During this difficult market environment, we are keeping our operating costs low and continue to implement strict cost controls in all key areas of operation.”
China North East Petroleum operates four oilfields in Jilin Province in northern China, managed by over 300 employees. The company has 20-year lease agreements with PetroChina Jilin Branch for the extraction of crude oil in Jilin Qian’an Oilfield.
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