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NEP big news:


HARBIN, China and NEW YORK, Jan. 20, 2011 -- /PRNewswire-Asia-FirstCall/ -- China North East Petroleum Holdings Ltd. (the "Company" or "NEP") (NYSE Amex: NEP), a leading independent oil producing and oilfield services company in Northern China, today announced it entered into a binding agreement to acquire Sunite Right Banner Shengyuan Oil and Gas Technology Development Co., Ltd. ("Shengyuan"), an operator with exclusive oilfield exploration and drilling rights to the Durimu oilfield in Inner Mongolia.

China North East Petroleum is expected to pay a total consideration of $43.4 million consisting of RMB 70 million (approximately USD$10.6 million) in cash upon closing of the acquisition and 5.8 million shares of NEP restricted common stock in exchange for 100% ownership of Shengyuan. The Company's Board of Directors approved the purchase price. Shengyuan's primary assets include three exploration wells and 24 years of exclusive drilling and exploration rights to a 175 square kilometer oilfield, called Durimu, located in Sunite Right Banner, Inner Mongolia. The Company expects to finance the cash portion of the purchase price agreements from cash on hand. Ralph E. Davis, an independent worldwide petroleum consultant based in Houston, Texas conducted a study of the Durimu oilfield in accordance with generally accepted petroleum engineering and evaluation principles in conformity with SEC definitions and guidelines. The Company expects to close the intended acquisition by the end of its 2011 first quarter.

In 2010, Shengyuan signed a 25 year exclusive exploration agreement with Sunite Right Banner Jiangyuan Mining Co. Ltd. ("Jiangyuan"), a state-owned enterprise of the local government to drill in the Durimu oilfield in Inner Mongolia. According to Ralph E. Davis, the proven oil reserve within this oilfield is approximately 1.54MM barrels. According to a geologist study that PetroChina conducted, the Durimu oilfield has a geological reserve of approximately 77.5MM tons (approximately 573.5MM barrels); the recoverable reserve is approximately 25%, or 19.4MM tons (approximately 143.4MM barrels). This same survey estimated that the number of wells drilled in this oilfield could exceed 2,000. Shengyuan has drilled three exploration drills since 2010.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "This intended acquisition represents an exciting new phase for our company that will better position NEP for accelerated oil production growth and long-term success. We have been evaluating opportunities to expand our operations, secure additional oil reserves and seek better returns on our investment over the past year and believe Shengyuan represents a fantastic opportunity to develop NEP into a much larger independent, regional oil producer and oilfield services company in the coming years. The size of the Durimu oilfield is nearly three times larger than the four oilfields we currently lease in PetroChina's Jilin oilfield and it contains much larger oil extraction and drilling opportunities. For example, Shengyuan achieves greater production yields from its three current exploration wells (approximately 30 barrels each per day during the initial testing period) than the 6-7 average barrels per day for each of our existing wells within our four current oilfields.
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Read more: http://www.sunherald.com/2011/01/20/2791793/china-north-east-petroleum-signs.html#ixzz1BaFKVmft