China Daqing Mh Petr (GREY:CHDP)

Third Quarter 2011 Results

• Revenues for the three months ended June 30, 2011 totaled to $7.57 million, as compared to $5.58 million for the same period in 2010, an increase of $1.99 million or 36%.
• Gross profit for the three months ended June 30, 2011 totaled to $3.94 million, as compared to $3.00 million for the same period in 2010, an increase of $0.94 million or 31%.
• Net Income for the three months ended June 30, 2011 totaled to $2.74 million, as compared to $2.01 million for the same period in 2010, an increase of $0.73 million or 36%.
• Earnings per diluted share of $0.09 on 31.9 million shares. For three months ended June 30, 2010, the Company reported fully diluted earnings per share of $0.06 on 31.9 million shares.

"Right now, our primary objective is improving our oil operations," said Mr. Gong. "We plan on maintaining our business model by developing additional wells and reengineering our existing wells to increase oil output and productivity. We plan to drill between 30-35 additional wells in year 2012. Furthermore, we believe that our ongoing partnership with ChinaPetro will help drive our future growth considerably. Industry policy in China encourages the participation of private capital in mergers and acquisitions of oilfields. Moreover, there are over 100 non-state-owned oil production companies with signed co-development contracts with PetroChina or Sinopec in China, some of which are publicly listed in China mainland or Hong Kong stock markets. This offers us some excellent precedents for potential oilfield mergers and/or acquisitions, and what's more, established industry standards and deal structuring would streamline our M & A activities."

"Currently, we are targeting oil companies that co-develop oilfields with PetroChina, since this would greatly shorten the transition period and related cost after acquisition," added Mr. Gong. "Notably, the model of co-developing oilfields with PetroChina is expressly endorsed by national industry policy, so the risk of making this type of acquisition would be minimized. Furthermore, due to our close working relationship with PetroChina, we can conduct in-depth analysis of prospective candidate's oilfields, geological reserves and oil quality before making an acquisition."