CHINA NORTH EAST PET (GREY:CNEP)

JUNO BEACH, Fla. - NextEra Energy Partners, LP (NYSE: NEP) today reported 2015 third-quarter net income attributable to NextEra Energy Partners of $1 million. NextEra Energy Partners also reported 2015 third-quarter adjusted EBITDA of $99 million. For the third quarter of 2015, cash available for distribution (CAFD) was $15 million.

NextEra Energy Partners' management uses adjusted EBITDA and CAFD, which are non-GAAP financial measures, internally for financial planning, for analysis of performance and for reporting of results to the board of directors of its general partner. NextEra Energy Partners also uses these measures when communicating its financial results and earnings outlook to analysts and investors. The attachments to this news release include a reconciliation of historical adjusted EBITDA and CAFD to net income, which is the most directly comparable GAAP measure.

"Although the quarter's results were slightly below our expectations because of weak wind resource, NextEra Energy Partners' portfolio performed well and remains on track to achieve the distribution per unit expectations that we have shared by the end of the year," said Jim Robo, chairman and chief executive officer. "We recently completed the acquisitions of seven natural gas pipelines in Texas and the Jericho wind project in Canada. The partnership's sponsor, NextEra Energy Resources, continues to expand its development pipeline of contracted assets, which gives NextEra Energy Partners even greater visibility into its long-term growth potential. I also am pleased to announce that the board of directors of our general partner has approved putting in place an up to $150 million at-the-market equity issuance or 'dribble' program, which gives the partnership the flexibility to issue new units when the price supports new issuance. In addition, NextEra Energy has authorized a program to purchase, from time to time, up to $150 million of NextEra Energy Partners' outstanding common units, which gives NextEra Energy the ability to demonstrate its commitment to the partnership by purchasing units when they are undervalued. We continue to view NextEra Energy Partners as a best-in-class YieldCo."

Increases quarterly distribution
The board of directors of the general partner of NextEra Energy Partners declared a quarterly distribution of $0.27 per common unit (corresponding to an annualized rate of $1.08 per common unit) to the unitholders of NextEra Energy Partners. The distribution increased $0.14 per common unit on an annualized basis from the second quarter of 2015. The distribution will be payable on Nov. 13, 2015, to unitholders of record as of Nov. 5, 2015.

NextEra Energy Partners plans to put in place an at-the-market equity issuance program and NextEra Energy authorizes a common unit purchase program
NextEra Energy Partners plans to put in place an up to $150 million at-the-market equity issuance or "dribble" program. In addition, NextEra Energy Partners has been advised that NextEra Energy has authorized a program to purchase, from time to time, subject to market conditions and other considerations, up to $150 million of NextEra Energy Partners' outstanding common units. The common unit purchase program will not require NextEra Energy to acquire any specific number of common units and may be modified or terminated by NextEra Energy at any time.

Outlook
For the full year 2015, NextEra Energy Partners continues to expect the portfolio to grow to support a distribution level at an annualized rate of $1.23 per unit by the end of 2015. After 2015, the partnership expects 12 to 15 percent per year growth in limited partner distributions through 2020.

NextEra Energy Partners' 2015 expectations remain unchanged for adjusted EBITDA of $400 million to $440 million and CAFD of $100 million to $120 million. NextEra Energy Partners' Dec. 31, 2015, run rate expectations for adjusted EBITDA of $540 million to $580 million and CAFD of $190 million to $220 million reflect calendar year 2016 expectations for the portfolio at year-end Dec. 31, 2015. The Dec. 31, 2016, run rate expectations for adjusted EBITDA of $640 million to $760 million and CAFD of $210 million to $290 million reflect calendar year 2017 expectations for the forecasted portfolio at year-end Dec. 31, 2016. These expectations are net of expected IDR fees, as these fees are expected to be treated as an operating expense.

Adjusted EBITDA and CAFD expectations assume, among other things, normal weather and operating conditions, public policy support for wind and solar development and construction, market demand and transmission expansion support for wind and solar development and access to capital at reasonable cost and terms. Please see the accompanying cautionary statements for a list of the risk factors that may affect future results. Adjusted EBITDA and CAFD do not represent substitutes for net income, as prepared in accordance with generally accepted accounting principles. The adjusted EBITDA and CAFD run rate expectations have not been reconciled to GAAP net income because NextEra Energy Partners did not prepare estimates of the effect of the acquisitions on certain GAAP line items that would be necessary to provide a forward-looking estimate of GAAP net income, and the information necessary to provide such a forward-looking estimate is not available without unreasonable effort.

JUNO BEACH, Fla., May 12, 2015 /PRNewswire/ -- NextEra Energy Partners, LP (NYSE: NEP) today announced that it has completed its previously announced agreement to acquire approximately 664 megawatts (MW) of operating renewable power generation assets from the sponsor, NextEra Energy Resources, LLC. 

With the addition of the four wind generating facilities, NextEra Energy Partners' portfolio expands to approximately 1,923 MW of contracted, clean energy projects. The additional facilities include:

• Ashtabula Wind III, a 62.4-MW wind generating facility located in Barnes County, N.D.;
• Baldwin, a 102.4-MW wind generating facility located in Burleigh County, N.D.;
• Mammoth Plains, a 198.9-MW wind generating facility located in Dewey and Blaine Counties, Okla.; and
• Stateline, a 300-MW wind generating facility located on the border of Walla Walla County, Wash., andUmatilla County, Ore.

NextEra Energy Partners expects the acquisitions to contribute 2015 adjusted EBITDA of approximately $40 million to $50 million and cash available for distribution (CAFD) of approximately $15 million to $20 million. The acquisitions are expected to increase the annual run-rate of adjusted EBITDA by approximately $75 million to $85 million and CAFD by approximately $28 million to $32 million.

In addition, NextEra Energy Partners today announced that it has completed the sale of a total of 2,594,948 common units representing limited partnership interests in NextEra Energy Partners in a private placement to certain eligible purchasers for an aggregate purchase price of approximately $109 million, or $41.87 per common unit, the closing price of NextEra Energy Partners' common units on May 6, 2015.

Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Goldman, Sachs & Co. acted as lead placement agents in connection with the private placement.

The common units were offered and sold in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act). The common units have not been registered under the Securities Act, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This news release does not constitute an offer to sell, or a solicitation of an offer to purchase, the units in any jurisdiction in which such offer or solicitation would be unlawful.

NextEra Energy Partners used the net proceeds from the private placement of common units, proceeds from a previously announced $313 million term loan and cash on hand to fund the purchase price of the acquisitions.

HARBIN, China and NEW YORK, April 11, 2012 /PRNewswire-Asia/ -- China North East Petroleum Holdings Limited (the "Company") (NYSE Amex: NEP), announced that it has received a letter dated April 4, 2012 from NYSE Regulation, Inc. in which NYSE Staff allege the Company no longer complies with NYSE's continued listing standards as set forth in the Company Guide and its securities are, therefore, subject to delisting from the NYSE.

In general, the NYSE allegations primarily relate to issues concerning documentation and disclosures for transactions between the Company and related parties, including those identified in the John Lees & Associates report to the Company, dated July 2010, and the failure of the Company to file its Form 10-K for 2011 on time. Additional information regarding the April 4, 2012 letter from NYSE can be found in the Company's filing on form 8-K made today with the SEC.

The Company intends to appeal the attempted delisting before the Listing Qualifications Panel of the NYSE and will on or before April 11, 2012, submit a formal request for hearing before the Listing Qualifications Panel (the "Panel"). According to NYSE, hearings on such matters are scheduled within 45 days of the date the request for hearing is submitted. After the hearing, the Company understands that the Panel will issue a written decision (the "Panel Decision"). Should the Company disagree with the Panel Decision, the Company may seek review of the Panel Decision by the Committee on Securities.

There can be no assurance that the Panel will grant the Company's request for continued listing on the NYSE Amex.

HARBIN, China and NEW YORK, March 22, 2012 /PRNewswire-Asia/ -- China North East Petroleum Holdings Limited (the "Company") (NYSE Amex: NEP) previously announced that on March 1, 2012, the Company discovered that the Securities & Exchange Commission ("SEC") issued an Order of Suspension of Trading of the stock of the Company. In the Order, the SEC stated that: "Questions have arisen regarding the accuracy and completeness of information contained in NEP's public filings with the Commission concerning, among other things, certain transfers of cash from the company's bank accounts to the personal bank accounts of related parties."

In a press release issued after close of market on March 14, 2012, the Company provided updated information regarding the matters discussed in the SEC Order. The March 14, 2012 release, however, contained a typographical error, which this press release corrects. The reference in the second paragraph of the March 14, 2012 press release to $3.9 million should have said $39 million. Thus, the second paragraph should have read:

The trading suspension appears related to an investigation the Staff of the SEC is conducting that addresses these issues. Although the Company cannot be certain of the scope of the investigation, it appears that the principal focus is on various related party transactions aggregating approximately $39.0 million that occurred in 2009 and were identified in the previously-disclosed report provided to the Company by John Lees & Associates, the accuracy of the Company's books and records and financial statements concerning those transactions, and related disclosures in the Company's 2009 S-3 registration statement and S-8 registration statements.

HARBIN, China and NEW YORK, March 15, 2012 /PRNewswire-Asia/ -- China North East Petroleum Holdings Limited (the "Company") (NYSE Amex: NEP), announced that as previously announced on March 1, 2012, the Company discovered that the Securities & Exchange Commission ("SEC") issued an Order of Suspension of Trading of the stock of the Company. In the Order, the SEC stated that: "Questions have arisen regarding the accuracy and completeness of information contained in NEP's public filings with the Commission concerning, among other things, certain transfers of cash from the company's bank accounts to the personal bank accounts of related parties."

The trading suspension appears related to an investigation the Staff of the SEC is conducting that addresses these issues. Although the Company cannot be certain of the scope of the investigation, it appears that the principal focus is on various related party transactions aggregating approximately $3.9 million that occurred in 2009 and were identified in the previously-disclosed report provided to the Company by John Lees & Associates, the accuracy of the Company's books and records and financial statements concerning those transactions, and related disclosures in the Company's 2009 S-3 registration statement and S-8 registration statements.

The Company is taking the investigation seriously. The Company has produced various documents to the SEC and some of its personnel have appeared before SEC staff. The Company is not in a position to predict the outcome of the investigation or whether it may have a material impact on the Company's financial position or business operations.

HARBIN, China and NEW YORK, March 3, 2012 /PRNewswire-Asia-FirstCall/ -- China North East Petroleum Holdings Limited (the "Company") (NYSE Amex: NEP), announced that during the day of March 1, 2012, the Company discovered that the Securities & Exchange Commission ("SEC") issued an Order of Suspension of Trading of the stock of the Company. The SEC did not provide the Order directly to the Company and thus the Company does not know precisely when the SEC issued the Order. In the Order, the SEC states:

"Questions have arisen regarding the accuracy and completeness of information contained in NEP's public filings with the Commission concerning, among other things, certain transfers of cash from the company's bank accounts to the personal bank accounts of related parties."

The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of NEP. The Order states further that trading in our stock "is suspended for the period from 9:30 a.m. EST, March 1, 2012, through 11:59 p.m. EDT, on March 14, 2012."

This action surprised the Company insofar as it had no advance notice the SEC intended to issue the Order. Nor does the Company know the specific "questions" to which the SEC refers. The Company is endeavoring to obtain more information and will provide investors with updates as additional information becomes available.

HARBIN, China and NEW YORK, Dec. 15, 2011 /PRNewswire-Asia/ -- China North East Petroleum Holdings Limited (the "Company") (NYSE Amex: NEP), today announced that it has entered into a Share Transfer Agreement with China Kinwa High Technology Co., Ltd., (Shanghai Exchange share code: 600110) ("Kinwa") and its wholly-owned subsidiary Beijing Shixin Taide Investment Consultancy Co., Ltd., to purchase exclusive oilfield exploration and drilling rights to the Qian 122 oilfield in Jilin Province (the "Acquisition").

China North East Petroleum is expected to pay a total cash consideration of $26.7 million to acquire 100% of the equity interest in Kinwa's subsidiary that holds the exploration and drilling rights to the Qian 122 oilfield. The purchase price will be paid in three tranches: an initial deposit of RMB 34.0 million (approximately US$5.3 million); a first payment of RMB 116.0 million (approximately US$18.2 million) and a final payment of RMB 20.0 million (approximately US$3.1 million). The deposit is payable upon execution of the Share Transfer Agreement. The first payment is due within five business days after the fulfillment of certain conditions, including the approval of the transaction by Kinwa's shareholders, and the final payment is due within 180 days thereafter.

Third Quarter 2011 Results

• Revenue for the 2011 third quarter totaled $23.8 million compared to $24.3 million in the 2011 second quarter and $20.0 million in the 2010 third quarter.
• Excluding the non-cash charge related to the fair value of warrants, 2011 third quarter net income was $5.6 million, or $0.15 per diluted share, compared to $9.2 million, or $0.26 per diluted share, in the 2011 second quarter and $6.8 million, or $0.22 per diluted share, in the 2010 third quarter.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "Our third quarter business performance was slightly lower than the second quarter 2011 but higher than the third quarter 2010 with increased oil production output. In our oil production segment, we conducted fracture work on thirty wells, which was a higher level compared to the prior quarter and resulted in each of the thirty wells being off-line for an average of 10-15 days. This fracture work on our existing wells is necessary to maximize production. We expect to conduct fracture work on another 30 of our 295 wells in the fourth quarter. As we conduct this level of fracture work, we expect our regular quarterly operational output for our 295 current wells in production to be in the range of 145-155 thousand barrels. We also plan to resume basic levels of drilling activity in our Jilin oilfields with plans to drill 7-10 wells in the fourth quarter."

"With over $88 million in cash at the end of the third quarter, we have an exceptionally strong cash position. While we remain focused on our expansion initiatives, we will continue to minimize our costs wherever possible. We are encouraged with our overall efforts to develop promising opportunities to support our revenue and profit growth in the years ahead."

Second Quarter 2011 Results

Revenue for the 2011 second quarter totaled $24.3 million compared to $21.8 million in the 2011 first quarter and $27.7 million in the 2010 second quarter. When compared to the 2010 second quarter, the Company's 2011 second quarter revenue was primarily impacted by a decrease in revenues from its drilling services segment.

Rodman and Renshaw on NEP   

Results in line. NEP announced Q2 production of ~1.8 MBo/d, in line with our forecast (production was down 2.5% sequentially). Production came in at the low end of the company’s guidance range of ~1.8-2.0 MBo/d. In addition, NEP announced that its drilling subsidiary, Tiancheng, drilled 40 wells during Q2, which was also in line with our expectations. For the remainder of the year, we expect production to remain roughly flat. On the drilling unit side, we’re looking for an increase in activity to ~45 wells/quarter. 

No share buybacks completed yet. One of the main items that gave the stock a charge recently was the announcement of a share buyback program. However, it seems NEP has yet to repurchase any shares. We’d be lying if we said we weren’t disappointed by this, and worry that the failure to follow through with the share repurchases could further hurt the company’s reputation with investors. 

Jilin activity could increase. One reason that NEP is deemphasizing its Jilin assets is that the royalty is scheduled to increase to 40% from 20% at the end of 2012. However, it seems that PetroChina is considering pushing the step-up date out another 5 years to stimulate more activity. If PetroChina does indeed do this, NEP would likely get more active on its legacy fields, and could drill 15-20 wells later this year. That could result in upside to our existing production forecast for the year. Additional drilling at Jilin would likely push out drilling at Durimu to late this year or Q1’12. 

Adjusting estimates. Our estimates do not materially change as a result of the updated production and drilling results. However, due to the continued spread between WTI and international oil prices, we are increasing our oil price realizations for NEP. This is partially offset by an increase to our G&A forecast as well as the removal of the share repurchases from our estimates. As a result, our 2011 CFPS estimate rises to $1.30 from $1.25. Our 2012 CFPS estimate falls a penny to $1.36. 

Maintain Market Outperform and $5.50 Target. While we’re disappointed in the lack of share buybacks given the company’s apparent depressed valuation (currently trading at ~1x EBITDA), we’re going to leave our rating unchanged for now. At current levels, we see ~65% upside to our target. We arrive at our target price by applying a 1x multiple to our NAV of the company’s proved and risked upside reserves, valued at long-term commodity prices of $90/Bbl and $6/Mcf. 

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on NEP                                        6/10/2011

Upgrading to Market Outperform on Valuation

Upgrading to Market Outperform on valuation. We’ve been on the sidelines for a while on NEP given its lack of production growth as well as overall concerns regarding the performance of Chinese stocks. And while we still have these concerns, and note that NEP has had accounting issues in the past (trading in it was suspended for a few months last year), we think the stock is just too cheap at current levels, as NEP has ~$2/share of cash on its balance sheet and is generating excess cash flow. The stock is trading at only 1.0x 2011e EBITDA, well below the peer average of 8.4x. And while we’re not sure how long NEP will be jaded by Chinese-company accounting concerns, we just don’t see its valuation staying this depressed over the long term. Given this, we think buying NEP makes sense for value players with a long-term time horizon. We are resuming our NAV-based target price at $5.50, which implies a 2011 EBITDA multiple of only 2.4x.

NAV detail. We are taking what we believe to be a very conservative approach to NEP’s valuation. We value the company’s 3.4 MMBbl of PDP reserves at its Jilin assets at ~$2/share. Given the nature of its contracts, coupled with its shift away from these assets, we are allocating no value to the company’s PUD reserves at these fields. We are being equally conservative with our Durimu valuation, only giving NEP credit for the proved reserves of 1.5 MMBbl, which we value at ~$0.50/share. The other key contributors to our NAV are the company’s drilling services subsidiary, which we value at 1x EBITDA, or ~$1/share, and its net cash position of ~$2/share.

Share repurchase program. NEP’s Board of Directors approved a share repurchase program for up to $5 million of its common stock. At the company’s current stock price, the program would allow it to buy back ~4% of its FD shares. We think this is an attractive use of capital as the company has a strong balance sheet and is generating excess cash. At the end of Q1, NEP had a net cash position of ~$75 million.

Increasing estimates. As a result of the buyback program, we are increasing our 2011 and 2012 CFPS estimates to $1.25 and $1.37 from $1.24 and $1.32. This assumes NEP completes the program by year-end 2011.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

HARBIN, China and NEW YORK, June 9, 2011 /PRNewswire-Asia/ -- China North East Petroleum Holdings Limited (the "Company") (NYSE Amex: NEP), a leading independent oil producing and oilfield services company in Northern China, today announced that its Board of Directors has approved a share repurchase program for up to $5 million of its common stock.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "Based on current market conditions, our strong balance sheet and cash generation capacity, we believe that the implementation of a stock buyback program is an attractive use of available funds at this time and is in the best interests of our shareholders. We believe the amount of our buyback is appropriate at this time as we continue to focus on the growth of our operations, particularly as we develop our oil production activities within the Durimu oilfield.  We remain highly confident in our business and remain comfortable with our near and long-term growth initiatives."

Under the terms of the approved program, the Company may repurchase up to US$5 million of its issued and outstanding common shares from time to time over the next 12 months. The repurchases will be made on the open market at prevailing market prices or in block trades and subject to restrictions relating to volume, price and timing. The timing and extent of any purchases will depend upon market conditions, the trading price of the shares, the nature of other investment opportunities presented to the Company, the Company's cash flows and expected cash flows, general economic conditions and other factors. The Company plans to fund repurchases made under this program from its available cash balance.

HARBIN, China and NEW YORK, May 31, 2011 /PRNewswire-Asia/ -- China North East Petroleum Holdings Limited (the "Company") (NYSE Amex: NEP), a leading independent oil producing and oilfield services company in Northern China, today announced that on Friday, May 27th, the Clerk of the United States District Court for the Southern District of New York entered Judgment dismissing the consolidated shareholder derivative action against NEP and certain of its current and former officers and directors.

On September 22, 2010, the Company filed an 8-K and issued a press release announcing that on September 15, 2010, the Company engaged Ernst & Young (China) Advisory Ltd. (“Ernst &Young”) to assist the Company to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
 
More specifically, the Company engaged Ernst &Young to help the Company understand its overall controls environment, as well as key financial accounting procedures, to identify any differences between the Company’s internal controls and those required by SEC rules and regulations, and to define areas that needed improvement and the method for implementation of such improvement.

Ernst & Young proceeded in two phases, which took several months.  Its work, performed for the Company and its four subsidiaries, included, among other things, the collection and review of data, policies, regulations and procedural documentation, a variety of testing and re-testing, the development of internal control templates for management, the identification of areas of improvement and the issuance of recommendations.

Ernst & Young has completed both phases of its work and has concluded its engagement.

Based on the results of the E&Y engagement, the Company has developed an improvement plan for implementation in 2011.  The Company believes that the improvement plan substantially improves the quality of its internal controls and is in line with legal and regulatory requirements.  The independent auditor for the Company will perform interim internal control tests in the second quarter of 2011.

Rodman and Renshaw on NEP                                  5/11/2011

Both E&P and Drilling Services Trending Lower than Expected; Maintain Market Perform

Q1 miss. NEP reported Q1 operating EPS of $0.22, missing our $0.30 estimate. Operating EPS excludes a 14c non-cash gain on change in fair value of warrants. Lower-than-expected production, higher-than- expected unit LOE and lower-than-expected Tiancheng operating income were the primary culprits in the miss. CFPS of $0.29 was also shy of our $0.40 estimate. Q1 production of 1.8 MBo/d was 9% lower than our forecast.

Lowering production forecast. In March, NEP reported that production was running ~2.2 MBo/d, which led to us increasing our production forecast. However, on its Q1 call, the company provided quarterly production guidance of ~1.75-2.0 MBo/d from its legacy Jilin assets going forward. While the company expects to generate production growth from its new Durimu Field in Inner Mongolia, it does not expect to begin drilling at the field until late Q3; thus, we are not expecting much of a production impact this year. As a result, we are lowering our 2011 production forecast to 1.8 MBo/d from 2.2. While we still expect NEP to grow production in 2012 thanks to the impact of Durimu, the growth should come from a lower base, causing our 2012 production forecast to fall to 2.1 MBo/d from 2.5.

Tiancheng comes in light. The company’s drilling services unit (Tiancheng) completed just 26 wells in Q1, about half our estimated number. This put Q1 operating income at $3.7 million, well shy of our $7.1 million estimate. Going forward, NEP expects its drilling services unit to drill 40-50 wells/quarter with its existing fleet (40 wells in Q2), which is lower than our expectations of ~55 wells/quarter. As a result of the lower activity, plus a lower operating margin (we’re forecasting ~55% going forward, down from ~60%), our estimated 2011 operating income falls to $23 million from $28 million. NEP did say that it is looking to expand its drilling fleet; additional rigs are expected to cost $5-$6 million each. Our numbers currently assume no impact from additional rigs.

Lowering estimates. Due to our lowered expectations for both the E&P unit and drilling services unit, our 2011 EPS/CFPS estimates fall to $0.91/$1.24 from $1.16/$1.54. For 2012, our estimates fall to $0.98/$1.32 from $1.18/$1.58.

Maintain Market Perform. While we do see upside potential in the company’s assets, we don’t see NEP outperforming until it demonstrates that it can generate material production growth again…something we’re not expecting until late this year.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

• Revenue for the first quarter of 2011 totaled $21.8 million down from $28.9 million in the prior year period.  Gross profit for the first quarter of 2011 was $11.7 million, a 37.0% decrease from $18.6 million for the same period last year.  Gross margin in the quarter was 53.9% compared to 64.3% in first quarter of 2010.

• Operating expenses for the quarter were $1.4 million compared to $1.7 million in the prior year period.  This 19% decrease was primarily due to the decrease in production output.  

• Operating income decreased 38.8% to $10.4 million, or 47.6% of revenue in the first quarter 2011, from $17.0 million, or 58.4% of revenue in the prior year period.  

• The Company had a $4.4 million non-cash gain in the quarter compared to a $10.8 million non-cash gain in the prior year period due to a change in the fair value of warrants.

• Net income for the first quarter decreased 48% to $11.3 million, or $0.36 per diluted share, compared to $21.7 million, or $0.69 per diluted share in the prior year period.

• Excluding the non-cash change in fair value of warrants for the first quarter of 2011 and 2010, net income was $6.9 million, or $0.22 per diluted share, compared to $10.9 million, or $0.34 per diluted share in the prior year period.

Geoteam® Note: 2011 First quarter analyst EPS estimates were $0.29.

Revenue was impacted by a decrease in both oil production and drilling services compared to the prior year's quarter. Although total oil production increased sequentially from 135,473 barrels in the third quarter and 161,279 barrels in the fourth quarter of 2010, on a period over period basis, total oil production in the first quarter of 2011 declined 28.4% to 162,990 barrels, from 227,626 barrels in the prior year period. The total number of wells in production as of March 31, 2011 was 295 compared to 289 wells in production as of March 31, 2010. The average price per barrel during the first quarter was approximately US$91.18, a 24.6% increase from US$73.16 during the first quarter of 2010. The appreciation of oil prices in 2011 partially offset the decline in oil production.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "We are pleased that our crude oil production increased for the third consecutive quarter.  We also benefitted from a 25% rise in the price of oil in the first quarter compared to the prior year period."

"Drilling services in our Tiancheng production was slower in the first quarter.  However, Tiancheng's drilling activity has accelerated since March and is expected to remain strong going forward.  As a result of the higher price of oil, PetroChina Jilin has approved the drilling of a large number of new wells in its Jilin oilfield and we are hopeful our drilling services business can benefit from expanded drilling initiatives at PTR as well as among other private oil companies operating in the Jilin oilfield.  In fact, earlier this week, our Tiancheng subsidiary signed another contract with PTR to drill another twenty wells.  Drilling is scheduled to commence this month and conclude by the end of the year."  

"We are pleased to have recently closed our Durimu acquisition which has allowed us to secure additional oil reserves, and which will significantly expand our operations and generate better returns on our investment.  Our healthy cash flow from operations generated this quarter and expected in future quarters will provide us with adequate resources to further develop oil production activities within the Durimu oilfield.  We are excited about the potential of our recent acquisition which further propels NEP into a larger regional oil producing and oilfield services company."

HARBIN, China and NEW YORK, April 25, 2011 /PRNewswire-Asia/ -- China North East Petroleum Holdings Ltd. today announced it has completed its acquisition (the "Acquisition") of Sunite Right Banner Shengyuan Oil and Gas Technology Development Co., Ltd. ("Shengyuan"), a company organized and operating under the laws of the People's Republic of China ("PRC") in accordance with the Share Transfer Agreement, dated as of January 19, 2011, by and among the Company's subsidiary, Songyuan North East Oil Technical Services Co. Ltd. ("Songyuan Technical") and the shareholders of Shengyuan, and in accordance with the Share Issuance Agreement, dated as of January 19, 2011 by and among the Company, the former Shengyuan shareholders, and Bellini Holdings Management Ltd., a company owned by the former Shengyuan shareholders and organized and existing under the laws of the British Virgin Islands ("Bellini"). As a result of the Acquisition, Shengyuan is now a wholly-owned subsidiary of Songyuan. Pursuant to a 25 year lease signed in 2010, Shengyuan has exclusive oilfield exploration and drilling rights to the Durimu oilfield in Inner Mongolia.

As is common among all private, independently-owned and operated oil companies in China, NEP does not directly own its oil fields in China and is only allowed to obtain exploration and drilling rights from qualified state-owned-enterprises ("SOE's"). The Durimu oilfield belongs to Yanchang Petroleum Group ("Yanchang"), the fourth largest SOE for oil and gas exploration in China.  Yanchang has assigned management over oil exploration and production activities in the Durimu oilfield to Sunite Right Banner Jianyuan Mining Co. Ltd. ("Jianyuan"), a local SOE. In turn, Jianyuan has entered into an agreement with Shengyuan, granting Shengyuan exclusive oilfield exploration and drilling rights in the Durimu oilfield (the "Lease").  Yanchang has qualified Shengyuan to operate in the Durimu oilfield subject to the supervision of Jianyuan.  The Company will benefit from the 24 years remaining under the Lease and Shengyuan has the first right of refusal to renew the Lease at the end of its term.  

Ralph E. Davis, an independent worldwide petroleum consultant based in Houston, Texas, conducted a proven reserve study of the portion of the Durimu oilfield subject to the Lease in accordance with generally accepted petroleum engineering and evaluation principles and in conformity with SEC definitions and guidelines.  The Ralph E. Davis study was based on the performance of the three existing exploration wells.  The Ralph E. Davis study estimated total proven reserves ("total P1") in the Durimu oilfield at 1.54MM Barrels and the PV10 at approximately $46.4MM. The PV10 includes the estimated future gross revenue to be generated from the production of the proven reserves, net of estimated production and development costs, and with an annual discount rate of 10%. The PV10 also excludes the 25% royalty to the SOE.  

According to a geological study conducted by PetroChina's North Center Branch Exploration and Development Research Institute, the Durimu oilfield has geological reserves of 77.5MM tons (approximately 573.5MM barrels), and a recoverable reserve of approximately 19.38MM tons (approximately 143.4MM barrels).  PRC geologists have also suggested that the optimal number of wells that can be drilled in the Durimu oilfield is in excess of 2,000.

Pursuant to the terms of the Share Transfer Agreement and the Share Issuance Agreement, the final acquisition price is approximately $43.4 million payable in cash and shares of the Company's common stock.  No later than May 16th ("or within the next 15 business days"), the Company's subsidiary Songyuan Yu Qiao Oil and Gas Development Co., Ltd.  will pay the former Shengyuan shareholders RMB70 million (approximately US$10.6 million) in cash.  In addition, the Company will issue to Bellini 5.8 million shares of the Company's restricted Common Stock (the "Acquisition Shares"), which carries a value of $32.8 millionbased on the 30 day trading average from December 6, 2010-January 7, 2011. The cash portion of the purchase price will be paid utilizing cash on hand.  In addition, Bellini has entered into a lock-up agreement pursuant to which Bellini is prohibited from disposing of any Acquisition Shares for a period of six months after the closing date of the Acquisition and is prohibited from disposing of 50% of the Acquisition Shares for a period of 12 months after the closing date of the Acquisition.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "This acquisition will allow NEP to expand its operations and secure additional oil reserves that can provide better overall returns on our investment.  The Durimu oilfield is nearly three times larger than the four oilfields we currently lease in PetroChina's Jilin oilfield with much larger oil extraction and drilling opportunities.  We have the knowledge and experience to scale production in the Durimu oilfield aggressively in the coming years and further establish NEP as a major independent, regional oil producing and oilfield services company in China."

HARBIN, China and NEW YORK, April 14, 2011 /PRNewswire-Asia-FirstCall/ -- China North East Petroleum Holdings Ltd. responded today to the research report published online on April 13, 2011 by a short seller operating under the pseudonym "Bigfish Research."

By its own admission, Bigfish published its "report" to support its short-selling activities. After a review of the report when first published, NEP management has determined that the report, like other self-serving short seller "reports," is inaccurate. Further, the Company confirms that it was never contacted by Bigfish regarding any claims made in its report.

The Contract Drilling Business of the Company's subsidiary oil drilling company is real, as are the revenues and profits the oil drilling business has generated as previously disclosed in the Company's financial filings.  Each of the Company's drilling contracts exist and are genuine and the Company stands behind all of its prior statements regarding them.  The Company intends to have its drilling contracts translated from Mandarin and will make them available to the public as soon as practicable.

The Company reaffirms the financial results as published or, where applicable, as restated in its Quarterly and Annual Reports for the time period called into question.

The Company is preparing a more detailed response to the allegations of short-seller Bigfish, which it intends to publish within the next few days.

Mr. Jingfu Li, Chief Executive Officer of China North East Petroleum commented, "We thank our investors and shareholders for their support, and regret that entities like Bigfish Research, hiding behind pseudonyms, try to make easy money at the expense of investors, by such conduct. When this sort of conduct occurs, everyone loses -- except the short sellers. We implore our investors and those who are interested in our company to read the Bigfish report carefully and note the differences between fact and innuendo, misinterpretation, uninformed conclusions and matters presented as fact but without identifiable or credible sources, as characterized in the Bigfish Research "report." We are confident that the defamatory report will not survive such scrutiny."

Rodman and Rehsaw NEP                                              3/17/2011

Q4 Miss, But Production Running Higher than Expected

Q4 miss. NEP reported Q4 operating EPS of $0.15, missing our $0.23 estimate. CFPS of $0.29 was also below our $0.32 estimate. Higher-than-expected income tax expense and G&A were the primary culprits. Q4 production of 1.8 MBo/d had been pre-announced.

Focus turns to Durimu. NEP plans to shift its focus to the Durimu Field in Inner Mongolia once the acquisition is completed. The company plans to drill 20-30 test wells in the field this year. As for the company’s existing assets in Jilin, NEP plans to drill 10-20 wells in order to hold production flat. We estimate this level of activity, plus the company’s planned seismic acquisition, equates to a capex budget of ~$30 million for the year. NEP should have ample liquidity to fund a budget of this level.

Raising 2011 production forecast. Current production is running ~2.2 MBo/d, higher than we were expecting based on our prior discussions with management. However, given the company’s shift to Durimu, we’re not expecting any material growth from these levels until later this year when production from the field starts to ramp up. Despite this, the higher current run rate takes our 2011 production forecast up to 2.2 MBo/d from 1.7. For 2012, we are forecasting production of 2.5 MBo/d.

No surprises on the reserve front. NEP reported year end reserves of 5.5 MMBo, in line with our expectations. Year-end reserves were all oil and 38% PUD. For the year, NEP replaced 9% of its production at a cost of ~$18/Boe. Its year-end PV10 was ~$153 million, which implies a per-unit value roughly in line with what we were using in our NAV.

Raising estimates. Due to our higher production forecast, our 2011 EPS/CFPS estimates rise to $1.11/$1.49 from $1.01/$1.30. For 2012, our estimates rise to $1.13/$1.54 from $0.99/$1.28.

Maintain Market Perform. While we’re pleased to see production doing better than expected, we’re going to maintain our Market Perform rating at this time as we see more compelling ideas elsewhere in the E&P space.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

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Fourth Quarter Results:

• Revenue for the fourth quarter of 2010 totaled $23.0 million from $20.0 million in the 2010 third quarter and $30.0 million in the prior year fourth quarter period

Mr. Jingfu Li, CEO of China North East Petroleum commented, "We are pleased that our fourth quarter oil production output showed signs of sequential improvement after experiencing severe flooding in the third quarter.  While the impact of this flooding continued to affect the fourth quarter production output within our four operating oil fields, our production has returned to a normalized rate in the 2011 first quarter."

Rodman and Renshaw on NEP                         2/07/2011

Q4 Looks Light; Maintain Market Perform 

Q4 production shy of expectations. NEP reported Q4 production of 1.8 MBoe/d, 3% light of our forecast. As a result of the company’s focus shift to its Durimu acquisition, we do not expect additional production growth until late this year. And based on the lack of new wells in Q4, we expect to see volumes fall slightly in Q1. We continue to forecast production to fall by 10%-15% y/y in 2011.

Fewer than expected drilling contracts completed in Q4. The company’s drilling service subsidiary completed 35 wells in Q4, shy of the 53 wells we were forecasting (it had averaged 52 wells in the prior 3 quarters). The lower activity level was attributed to maintenance work as well as the impact of previously-reported flooding in the region. As a result, we estimate Q4 operating income for the unit to be $4.5 million, below our prior estimate of $7.1 million and down from $6.5-$7.5 million/quarter in the prior three quarters. We expect activity to return to more normal levels in Q1.

Reducing estimates. As a result of the update, we are trimming our Q4 EPS/CFPS estimates to $0.23/$0.32. For 2011, our CFPS estimate falls a penny to $1.30.

Maintain Market Perform. We view the update as disappointing. While we do see significant upside potential in the company’s assets, we don’t see NEP outperforming until it demonstrates that it can generate material production growth again…something we’re not looking for until late this year.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

HARBIN, China and NEW YORK, Feb. 7, 2011 /PRNewswire-Asia-FirstCall/ --China North East Petroleum Holdings Ltd. today announced preliminary fourth quarter and full year 2010 oil production results and fourth quarter 2010 drilling results for its oil drilling and service subsidiary, Tiancheng.

The Company's crude oil production for the full year 2010 totaled 723,154 barrels, a 20% decrease from 908,126 barrels in 2009. Oil production in the 2010 fourth quarter was 161,279 barrels, a 19% increase sequentially from 135,473 barrels in the 2010 third quarter. The total number of wells in production as of December 31, 2010 were 295 compared to 289 wells in production as of December 31, 2009.

Additionally, the Company's oil drilling and service subsidiary, Tiancheng, completed drilling contracts for 35 wells with total drilling depth of 61,935 meters (203,199 feet) in the fourth quarter of 2010.  Tiancheng performed standard rig and equipment repair and maintenance work at year end that impacted drilling performance in the fourth quarter. Drilling activity was also lower in the fourth quarter as Tiancheng's customers continued to be impacted by previously reported flooding in the third quarter and therefore focused more on repairing and restoring oil production in the fourth quarter period. Tiancheng has experienced a resumption of regular drilling activity in January.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "Our fourth quarter oil production output was sequentially higher than the third quarter but lower than the first two quarters of 2010 as we continued to be impacted by severe flooding that occurred in the third quarter.  In addition, oil production output and overall production time in the fourth quarter was impacted by additional repair and maintenance work required in our oilfields.  However, we were pleased to see sequential growth in production output each month of the fourth quarter.  We did not drill any new wells during the fourth quarter as we chose to preserve cash for our recently announced Durimu oilfield acquisition.

Rodman and Renshaw on   NEP                              1/31/2011

Shengyuan Acquisition Adds Significant Upside Potential; Maintain Market Perform 

Acquisition details. NEP recently announced plans to acquire Shengyuan Oil and Gas Technology Development Co. (Shengyuan) for $43.4 million ($10.6 million cash and 5.8 million shares). The acquisition gives NEP a 24-year exclusive contract to explore and develop the 175 km² Durimu field in Inner Mongolia. To date, 3 exploration wells have been drilled on the acreage, and proved reserves are estimated at 1.5 MMBo. The asset currently has no production. PetroChina has estimated the field to have potential reserves of 143 MMBo, or 105-110 MMBo net to NEP. The deal is expected to close by the end of Q1.

Focus likely to shift to Durimu. Assuming NEP can successfully develop the field, Durimu appears to have a number of advantages over its Jilin assets. First, it provides a much bigger target in terms of reserve potential. Second, it likely generates better returns as the wells appear to have higher deliverability as well as better royalties (25%, vs. royalties on its existing leases which will increase to 40% over the next couple of years). Third, the remaining term on this license is much longer than on its existing licenses (24 years vs. ~12 years). As a result, NEP plans to shift its focus to Durimu over time. Initial plans call for a 3D seismic shoot as well as 10-20 wells over the next 12-18 months. NEP plans to move 2-3 of its drilling rigs to the field to facilitate this activity.

Acquisition appears slightly accretive to our NAV. Given the limited information available about the new asset, we are going to take a conservative approach to valuing it. We are initially risking Durimu’s potential by 95%, which equates to 5-6 MMBoe. We value this at ~$55-$60 million, or ~$10.50/Boe, As a result, the acquisition appears slightly accretive to our NAV. As we get more information on the characteristics of the Durimu wells, we will reassess our estimates.

Reducing production forecast. While the company shifts its focus to Durimu, it only plans to drill 30-40 wells annually on its Jilin assets in order to hold production flat. As a result, we’re not expecting to see sequential production growth this year until Q4. And given that NEP didn’t drill any wells last quarter, and isn’t likely to resume drilling until after the Chinese New Year, our production forecast appears too high. As a result, we’re trimming our Q4’10 and 2011 production forecast to 1.8 and 1.7 MBo/d, respectively, from 1.9 and 2.0 MBo/d.

Maintain Market Perform. 2010 was a bumpy year for the company, with production having likely fallen ~20%. And given the shift in focus to Durimu, 2011 production is likely down another 10%-15%. With the falling production and lack of near-term catalysts, we don’t expect the stock to be a near-term outperformer. As a result, although we see upside potential to our $7 NAV, we’re maintaining our Market Perform rating at this time. 

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

XI'AN, China, Jan. 4, 2011 /PRNewswire-Asia-FirstCall/ --  today announced that it has signed a contract with an existing wholesale distribution customer to deliver an estimated 200,000 tons of petroleum products in 2011, an increase of 40,000 tons, or 25%, from 2010. This newly signed contract is expected to generate an additional $36 million in revenue in 2011.

• Revenue for the third quarter of 2010 increased 38.8% to $20.0 million from $14.4 million in the prior year period.  
• Third quarter 2010 gross profit increased 37.1% to $12.7 million, or 63.6% of revenue, from $9.3 million, or 64.4% of revenue, in the third quarter of 2009.  
• Third quarter 2010 operating expenses totaled $2.0 million compared to $1.1 million for the prior year third quarter period, an increase of 76%. The increase was primarily due to additional expenses related to new drilling operations and higher professional and consulting fees due to the company's recent restatement of financial results.
• Operating income increased 31.8% year over year to $10.7 million, or 53.7% of revenue in the third quarter of 2010, from $8.2 million, or 56.6% of revenue in the third quarter of 2009.  
• Other expenses for the third quarter of 2010, which primarily included a change in fair value of warrants were $0.4 million compared to an income gain of $2.0 million in the prior year third quarter period, primarily due to a change in fair value of warrants.  As a result, net income for the third quarter decreased 11% to $6.6 million, or $0.21 per diluted share, compared $7.4 million, or $0.31 per diluted share in the third quarter of 2009.

GeoTeam® Note: We have made what we feel are more comprehensive non-GAAP adjustments to net income. NEP only makes adjustments for a change in fair value of warrants (which appears off for 2010. However, the cashflow statement indicates that there are many more adjustments that must be made: (investors must subtract nine month cash flow figures from six months figures to obtain third quarter adjustments).

Third quarter Non-GAAP income: $7.5 million vs. $5.8 million
Third quarter Non-GAAP EPS: $0.24 vs. $0.24

                                                                                   3 months 2009 vs 2010   6 months

Also:

• NEP mentions a 2010 $400,000 expense, while it appears it should be a gain $81,430, as indicated in the income statement. 
• It appears that management or IR paid little attention to detail in the presentation of the financial table in the press release: 2010 income statement is presented as entire numbers, while 2009 is presented in 1,000's. No big deal, but not what you expect from a company that has just been scrutinized).

Mr. Jingfu Li, CEO of China North East Petroleum commented, "Our third quarter business performance was aided by the contribution of our drilling services business and a strong rise in oil prices when compared to the prior year period.  While our per barrel oil production rate was lower, we believe our fourth quarter production will operate at a more normalized rate. Our Tiancheng oilfield services drilled 45 new wells in the third quarter and 156 wells through the first nine months of the year.  This business now has eight oil drilling teams with the same number of drilling rigs and it is the largest of the four private contract drilling and service companies operating in PetroChina's Jilin oilfield. Tiancheng has additional contracts under negotiation which we expect will result in the full utilization of its rigs and steady sales growth for the next several quarters."

"There are now 292 producing wells within the four oilfields in which we operate, which represents less than half of the total number of wells we believe can be drilled in these four oilfields.  We continue to view these four oilfields as viable growth opportunities for our business however, we have decelerated our well drilling plan year-to-date to instead focus on potential acquisition opportunities. We have identified several potential targets and believe that if we are successful with our acquisition efforts, it could result in significant contributions to our overall operations.  We remain focused on minimizing our operating expenses and growing our cash position for the time being and look forward to updating our investors on any developments related to our acquisitions opportunities in the near future."

"With respect to our financial disclosure controls and procedures, the management team is actively working to improve the control environment and to implement procedures that will ensure the integrity, accuracy and timeliness of our financial statement preparation process going forward.   We have utilized an outside consulting firm with specialized knowledge in financial accounting and specific knowledge of oil industry accounting to assist us with the review and restatement of past financial statements. We have also engaged Ernst & Young (China) Advisory Ltd. to assist us with SOX 404 compliance. Ernst & Young will also provide recommendations to our management for instituting necessary additional controls to enhance the risk management capability of our internal controls over financial reporting.  In the third quarter, we also implemented financial reporting training programs for specific staff members, particularly with respect to accounting for non-cash items.  We are making the effort to support these endeavors to ensure that our previous reporting delays do not recur."

"As we look at our business in the fourth quarter and beyond, we continue to evaluate opportunities to expand production, increase our scale, drill more wells, and expand into new regions.  Through our efforts today, we believe China North East Petroleum can play a larger regional role in China's oil production and services industry in the future," concluded Mr. Li.  

On September 30, 2010, Andrew Kan resigned as the Acting Chief Financial Officer of China North East Petroleum Holdings, Ltd.  Mr. Kan’s resignation was due to personal reasons and not because of any disagreement with the Company on any matter relating to the Company's operations, policies or practices.

On September 30, 2010, our Board of Directors appointed Mr. Shaohui (Steven) Chen as the Acting Chief Executive Officer the Company effective immediately.

Rodman&Renshaw on NEP

YTD 2010 results below expectations. NEP finally updated its YTD results, which look quite disappointing from a production standpoint. Production trended down in Q1 and Q2, and only averaged 2.2 MBo/d in Q2, 24% below our forecast and down 12% y/y. The production decline was due to the absence of new wells drilled to date in 2010, which the company attributed to bad weather (a snowstorm in Q1 and flooding in Q2). We do need additional color on this as the company’s drilling unit remained active drilling for 3^rd parties. It doesn’t sound like any new wells have been drilled in Q3 either, so production is likely still in decline. Given the lack of drilling, our old 2010 production forecast of 3.0 MBo/d was too aggressive; we are reducing this to 2.2 MBo/d as a result.

Future drilling program is a question mark. Our former expectations were based upon a drilling program of ~60-70 wells in 2010 and ~100 wells per year after that. While our 2010 forecast was too aggressive, the company was unable to provide guidance on when its drilling program would resume or what the drilling pace would be once it resumes. Given this, we are going to take a much more conservative view of NEP’s future production growth, and lower our 2011 production forecast to ~2.2 MBo/d from 3.6. 

Reducing estimates. Given the lower production forecast for 2010 and 2011, our CFPS estimates fall to $1.64 and $1.63 from $1.75 and $2.06, respectively. 

Valuation breakdown. After adjusting our numbers for NEP’s updated financials, our NAV falls to $7 from $9. The breakdown is ~$3/share for the company’s year-end 2010e proved reserves (valued at ~$20.50/Bbl), ~$2/share for its drilling unit (valued at 2.5x EBITDA), and ~$2/share of net cash. The decline in our NAV resulted primarily from removing upside reserve potential from our valuation (which was ~$2-$3/share). This impact was partially offset by a higher valuation for the drilling unit and a higher cash balance. 

Downgrading to Market Perform. While we do see upside to our NAV from current levels, we think NEP is likely to trade at a discount until it can restore investor confidence, which could take some time. Additionally, its declining production profile probably creates an added headwind (and as the company could not provide color on its future drilling program, we can’t accurately forecast when growth will resume). These issues likely keep the stock from outperforming in the near-term.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Mr. Wang concluded, 'Looking forward as we head into the third quarter, despite minor delays caused by the rainy season in the second quarter, our management and the drilling teams are working at full throttle to speed up the well drilling. We remain confident in our ability to accomplish the original drilling program and to continue to increase our production levels. Furthermore, the Company's strong cash position provides us with a heavily favored position when applying for new oilfield leases in order to further expand our business presence and market position in the domestic private oil industry in China. The application has been submitted to PetroChina headquarters, and we will update the shareholders on our progress when we have additional information that can be disclosed. We continue to be optimistic about the Company's future and believe that the fundamental features of the Company will grow faster and stronger. We remain confident in our outlook for the remainder of 2009,'

Source: PR Newswire (August 14, 2009)

Comments from 1st quarter 2009 press release

"heading into the second quarter, our management established a production and well drilling plan for the remainder of 2009. Our current plan is to drill an additional 48 wells in the next 10 months, with 5 wells expected to be drilled each month. If oil prices continue to recover, we may speed up the drilling and place more wells into production in the near future. With this growth plan in place, we expect to yield strong financial results ahead."

The GeoTeam™ is removing CNEH from the GeoBargain list as it no longer meets the 30% minimum EPS growth rate requirement. Analyst estimates show an EPS growth rate of -21% for 2009.

The GeoTeam™ would prefer to see a stronger current asset to current liability ratio.  As of the second quarter 2007 the ratio stood at 1.05:1. On a positive note their accounts payable number is significantly improved.

The GeoTeam™ is attempting to verify data as it relates to insider ownership