China North East Petroleum Holdings Ltd. announced the purchase of an exploration and production company with the drilling rights on oil properties in Inner Mongolia. The deal is expected to close during the first quarter of 2011.
China North East Petroleum Holdings Ltd. will purchase Sunite Right Banner Shengyuan Oil and Gas Technology Development Co., Ltd. for a total of $43.4 million in a combination of stock and cash. The company will pay $10.6 million in cash at closing and issue 5.8 million shares of restricted common stock in exchange for a 100% interest in the company.
The Sunite Right Banner Shengyuan Oil and Gas Technology Development Co. owns a concession at the Durimu oil field located in Sunite Right Banner, Inner Mongolia. The oil field is approximately 175 kilometers in size.
China North East Petroleum Holdings Ltd. said that a recent study by a petroleum geology firm estimated that the Durimu oil field contains approximately 574 million barrels of oil, with recoverable reserves of 143 million barrels of oil.
China North East Petroleum Holdings Ltd. estimates that the total proved reserves of the properties acquired by the company total 1.54 million barrels of oil. The PV 10 value of the properties is estimated at $46.4 million.
For more information on the company, go to www.cnepetroleum.com