The Long Case for China North East Petroleum

China North East Petroleum (CNEH.OB) is an oil driller & producer in north-east China.

For several reasons, CNEH stock may appear unsuitable for investors: it is a micro-cap traded only on the OB market and thus below the threshold of institutional and most private investors; the company doesn’t yet have a trusted record of delivering predictable earnings growth quarter on quarter; it has no broker coverage; and, not surprisingly, the company’s business model is understood by very few in the investment community. Further, the company’s web site has not been updated in over a year and doesn’t yet mention the total size of CNEH’s oil reserves and, finally, the stock price has recently been pressured by the overhang of company disclosures in late 2007 concerning funding efforts.

This formidable list of negatives has kept investors at bay. However, factor in that (a) the financing overhang should be removed in early 2008 by local bank borrowings; (b) the company is already in the process of fully updating its English web site with critical information and is expected to go live in coming weeks; (c) with the appointment of IRC as investor relations advisors in Jan ’08 the company announced its intentions to seriously improve visibility within the investment community; and (d) the company is assured of delivering dramatically improved financial results in the coming years. Against all this it becomes clear that CNEH’s beaten-down stock, trading on a 2008 p/e of 3.0 and with anticipated EPS growth of 85% pa 2008 to 2010, has the ingredients to make it an exceptionally appealing investment over the next 2-3 years.

Ultimately CNEH is an oil driller & producer and its fate will be decided by the global oil price and by China’s voracious demand for oil, which is expected to continue for the foreseeable future. The company has total oil reserves of 75.2 million barrels of which they should successfully extract and sell 35% i.e. 26 million barrels. With the entire market cap of the company being under $40 million based a share price of $2.07, the current market value of the company is valuing CNEH’s estimated extractible oil reserves at only $1.54 per barrel. This is a small fraction of the profit per barrel the company will make over the coming years – refer Profit/Bbl on the following table.

During 2007, the company commenced a multi-year drilling program in order to properly exploit its reserves. From a total of 44 wells at the beginning of 2007, CNEH ended 2007 with approximately 140 wells and, when the current drilling program is completed in 2010, there will be a total of 675 wells in production. On the back of this multi-year drilling program CNEH will experience buoyant sales and earnings growth:

In order to complete the drilling plan CNEH has committed to investing all available free cash into drilling activities during years 2008 to 2010 and beyond if required. Thereafter, the company will generate large cash surpluses; $47 million surplus in 2011 and an average of $42 million each year thereafter.

Longer-term: Following privatization by PetroChina (PTR) of several minor oilfields in 2002 there remains today 36 small independent oil entities in the Jilin region other than CNEH. This gives CNEH amply opportunity to expand its existing oil acreage when it chooses.

Timeline of events

First half of 2008

• Appointment of investor relations advisors
• completion of financing
• updated / re-launch web site with, inter alia, details of company’s oil reserves
• build record of delivering predictable earnings growth
• CNEH stock discovered by wider investor audience

First half of 2009

• likelihood of shares traded on main stock market
• increased share liquidity
• significantly larger market cap
• broker coverage

2009-2011

• Acquisition of additional drilling acreage

The stock’s p/e multiple will be boosted significantly when the above factors are in place. By then, given the company’s continuing strong growth prospects, the stock should trade on a current-year p/e of 12, or on a next-year p/e of 8 by the middle of each year, and on higher next-year multiples towards the end of each year. Whilst such a healthy picture will take time to evolve, it shows that the stock should trade around $20 by year-end 2009.

In the meantime, however, investors will have to exercise patience and live with lower expectations, albeit that growth potential is strongest in these early years. By mid 2008, a 11 x multiple of $0.66 2008 EPS is a fair valuation i.e. $7.25. By y/e 2008, as investors start to focus on 2009 EPS, the shares are likely to trade around $10, being 10 times 2009 EPS. That would equate to a still-cheap valuation of $7.30 per barrel of extractable oil.

Background & Oil Reserves

CNEH was established in 1999 as a Nevada company called Draco Holding Corporation. In 2004 it changed its name to China North East Petroleum Limited, and acquired Hong Xiang Petroleum, already the part-owner of Qian’an 112 oilfield rights since 2003. In 2006 Hong Xiang transferred the Qian’an 112 rights to Song Yuan Technical, by then CNEH’s 90% owned Chinese subsidiary. Via Song Yuan Technical, CNEH acquired rights to 3 further fields in 2005 and early 2007.

CNEH, through its 90% Chinese subsidiary Song Yuan Technical, now has drilling and extraction rights covering 4 fields, all of which had been part of a privatisation by PetroChina of small oil fields in early 2002 when oil traded in the range of $19 to $22/Bbl. In each case these rights specify an oil production split 80%-20% in favor of CNEH for the first 10 years (2002 to 2011), and 60%-40% for the remaining 10 years (2012 to 2021). All four oilfields are within the Jilin Oilfield, one of the largest oilfields in China, located about 10km east of Qian’an town, Jilin Provence, in north-east China.

Total estimated oil reserves at the four fields, in millions of barrels, are:

As of December 2006, CNEH had proven reserves of 1.47 million barrels based on the 44 wells then in production. Proven reserves figures are largely influenced by actual wells producing. Considering that CNEH expanded its drilling program during 2007, and by year-end had a total of about 140 wells, it is understood that proven reserve figures for y/e 2007 will be much higher than a year ago. This SEC-compliant exercise to prove reserves at y/e 2007 will be concluded prior to the company filing its 10K in March 2008.

By 2010, on completion of the current drilling program, CNEH should have a total of 675 producing wells in the 4 oilfields. A large increase in the numbers of wells will lead to ongoing significant upward revisions to the company’s proven reserves. Eventually, these reports should indicate proven reserves somewhat in line with management estimates that it can extract 35% of the total oil reserves during the useful life of the oilfields, equivalent to about 26 million barrels.

CNEH Business Model

Because the company’s share of oil produced in the 4 oilfields drops from 80% currently to 60% in 2012, the CNEH business model is about getting oil-wells into production ASAP, generating profit and cash-flow from those oil-wells and using those profits and cash to drill more oil-wells which in turn produces more profits and cash to support the long-term growth of the company. It is a high-growth, high-profit, and strong cash-flow strategy.

From a base of about 140 wells at December 2007 the company plans to drill an additional 535 wells. At an average drilling cost per well of $310,000, this represents capital expenditure of $166 million. This is to be funded via a combination of:

• agreed extended payment terms to the driller, a subsidiary of PetroChina
• bank borrowings of $5m in H1’08, rising to $10m in 2010
• internal cash-flow

The agreed extended payment terms with the driller being:

1. Payable up-front 30%; $93k per well.
2. Payable evenly over months 1-12 (year 1); fracturing, ground & underground facilities, others, total $100k.
3. Payable evenly over months 13-24 (year 2); drilling costs $147k per well.

Bringing land based oil-wells into production is a quick affair, taking 10-11 days to drill and a further 6-7 to bring into production, a total of less than 20 days. A new well is producing oil and generating cash-flows which, allied to the extended payment terms offered by the driller, quickly enable CNEH to drill more wells with those same cash flows. The following cash-flow model shows the cash-flow per annum for one new oil-well assuming a constant oil price of $90/Bbl.

Cash-flow Model

*excludes 20 days output during well drilling

This model shows how each new oil well is $(72.0)k cash-flow negative for the first quarter followed by strong operations cash-flow in each subsequent quarters which quickly reduces the cumulative cash-flow deficit to only $(11.6)k by the end of Yr1.

Layering-in additional wells, and starting with $100k cash, the cash-flow model becomes:

In just 3 years the number of production well can increase by a factor of 5 times whilst cash remains comfortably positive at all times throughout. This in-built cash-flow multiplier will lead to CNEH being several times larger than it is today in a few years.

The balance sheet summary outlined below demonstrates that, not only can the company complete the 675 well drilling program by 2010, but that in 2011 CNEH generates $47 million cash surplus and will go on to generate cash surpluses of over $42 million each year thereafter. If, due to the extra heavy drilling program foreseen by CNEH in 2010, there are insufficient drilling crews available to complete all wells that year then the company can defer some new wells to 2011. Although it exists, such a risk is not seen as material to CNEH’s overall prospects.

Relationship with PetroChina

CNEH has a close relationship with PetroChina. Farming out development of under-utilized acreage is of interest to PetroChina because, at a time when oil is in tremendous demand in China, PetroChina collects a 20% royalty and 40% in later years, for zero input cost. Additionally, PetroChina avoids being burdened with bureaucratic issues such as employment, social costs, housing, schooling etc. Furthermore, a partnership approach to business is very much favored by the Chinese authorities and this inclusive approach allows more overall progress to be achieved by all concerned.

For its part PetroChina provides CNEH with normal staff training and geological support, it has transferred select highly skilled technical staff to CNEH, it has made available drilling crews via a subsidiary company, Songyuan Drilling Services, which in turn provides CNEH with extended payment terms, and PetroChina guarantees purchase of all oil production out to 2022. CNEH delivers its oil to PetroChina’s pumping facilities located beside CHEN’s oilfields and from there it is shipped and sold to PetroChina’s Jilin refinery, about 4km away. The agreed sales price for each month is the open market spot price of oil set on Singapore crude oil market on the first day of the month.

CNEH Management Team

• Mr Hong Jun Wang, Chairman and President. Founder member of CNEH with over 20 years experience in the oil industry, including specialization in petroleum exploration and production and oil operations management. Ex Jilin Oil & Drilling Co, part of PetroChina group.
• Mr Wei Guo Ping, Director. Extensive experience in Government positions. Also 10 years of operations and strategic planning experience in private sector. Author of several economic related theses nationally.
• Mr Zhang Yang, CFO. CPA qualification from the UK. Prior to joining CNEH Mr Yang worked in financial management and funding roles in the Chinese hotel business.
• Mr Xin Chang Ma, Chief General Engineer. Over 30 years of experience in oil business. Awarded three patented technologies with relating to oil extraction. Highly regarded within the oil industry.

Interpreting the forecast P&L and Balance Sheet summaries

Oil Price & Demand

In December 2007 Goldman Sachs predicted that oil should average $95/Bbl for 2008 and move past the $100 threshold in subsequent years. This note uses a slightly more conservative $86/Bbl for 2008, $95/Bbl for 2009 and $100/Bbl thereafter. In China oil demand growth is seen as remaining strong for several years, driven not least by a burgeoning middle and motorist class. Within the context that global oil prices over the next several years are forecast to be comfortably higher than at present, the use of $100/Bbl in the longer end of these forecasts should not be viewed as excessive.

Output per well & fracturing

Typically there are several oil-bearing layers in each well. The production decline curve after 1 year is about 20% and oil output is then stable for 3-5 years after which a further drop sets in. To counteract the production decline after 3-5 years, CNEH undertakes a fracturing program in order to bring more layers into production and thereby restore production to stable levels for another 3-5 years and so on. CNEH’s share of output during the first year after drilling a new well is about 255 Bbl per month and then 210 Bbl per month for subsequent years, equal to 765 Bbl and 635 Bbl per reporting quarter. Combining production from new wells just drilled with that from wells already in place, the average quarterly blended oil output per well over each year in the P&L forecast is: 2007 = 716 Bbl/qtr, 2008 = 677 Bbl/qtr, 2009 = 630 Bbl/qtr, 2010 = 659 Bbl/qtr, 2011 = 671 Bbl/qtr and the average for years 2012 and beyond, bearing in mind that CNEH’s share of oil output drops from 80% to 60%, is 476 Bbl/qtr.

The cost of fracturing as part of the initial well drilling activity is $33k and, taking account of mobilization costs, fracturing should cost $35k per well every 4 years when done independently. In total the balance sheet forecasts incorporate capital expenditures for fracturing and sundry others of $55 million up to 2021.

Capex amortization

Except for a negligible residual balance all fixed assets are written-off by end 2021. Hence, the forecasted profits are computed after having amortized virtually all of the $200+ million well drilling capex as well as $55 million fracturing and other capex.

Government levy

The Chinese Government levies a charge on oil sales calculated on a graduated basis: Below $40 zero charge, $40-45 20%, $45-55 30%, $55-60 35% and above $60 40%. For example; with oil at $100/Bbl, CNEH must pay $21.50 levy per barrel.

Issuance & cancellation 10m shares in 2007 and cancellation of $7.2m loan

Following privatisation by PetroChina of small oilfields in 2002 there existed in the Jilin region about 40 small new independent oil entities owning rights to various oil fields. CNEH, via its 90% owned Chinese subsidiary Song Yuan Technical, acquired the rights for Q112 oilfield (total reserves 37.4m Bbl) together with a company called Yu Qiao which is owned by parties related to CNEH’s President & Chairman, Mr Hong Jun Wang, particularly Ms Guizhi Ju, mother of Mr Wang.

In June 2005 CNEH acquired the rights to H301 oilfield (total reserves 15.4m Bbl) from an independent company called LongDe that had previously acquired the PetroChina rights.

In January 2007, CNEH acquired the rights to Da34 and Gu31 oilfields (total reserves of 6.1m Bbl and 16.3m Bbl) from Yu Qiao, which had previously independently acquired the PetroChina rights. CNEH paid for these rights by issuing 10 million new shares to Yu Qiao. At that time CNEH shares traded on the OB market at 31 cents per share, thus the total value of these 10m new share shares was $3.1m. This payment equated to about $0.13/Bbl for the 22.4m barrels just acquired, at a time when oil was trading at $60/Bbl.

Whilst the cost of CNEH acquiring Da34 and Gu31 was exceptionally cheap in monetary terms at just $0.13/Bbl, the impact of CNEH increasing its shares in issue from 19m to 29m had a 35% diluting effect on the company’s EPS going forward.

As 2007 progressed and CNEH first developed its multi-year drilling plans, it became evident that it was very much in the interests of the company, and all its shareholders, to:

(a) retain maximum internal cash-flow for its well drilling program, and;

(b) ensure that CNEH annual profits and EPS growth were as strong as possible in order to facilitate CNEH issuing further shares publicly (e.g. to acquire additional acreage) without significantly diluting EPS.

By June 2007, Mr Wang and Ms Wu had collectively made cash advances to CNEH during fiscal years 2005, 2006 and 2007 amounting in aggregate to $7.2 million.

In mid 2007 it was apparent that the $7.2m million payables to Mr Wang and Ms Wu, as well as the EPS-diluting effect of having issued 10 million new shares, would likely be viewed in the marketplace as impediments to CNEH’s long-term goals; the $7.2m loan causing the balance sheet’s gearing ratio to curtail CNEH’s borrowing capability from the financial community and the 10m shares diluting forward EPS by 35%. Accordingly, on 29 June 2007, Mr Wang and Ms Wu unconditionally and irrevocably agreed to have the $7.2m loan and the 10m shares cancelled (refer SEC form 8K filed July 6, 2007).

The net result of these actions was that Mr Wang and Ms Wu, through their company Yu Qiao, irrevocably gifted CNEH two oilfields containing 22.4m Bbl (Da34 & Gu31) as well as cash advances amounting to $7.2m. Thereby, CNEH emerged into H2 2007 as a company with strong reserves - 75.2m Bbl in total - and a clean balance sheet.

Whilst this was a magnanimous gesture on the part of Mr Wang and Ms Wu it is also a clear vote of confidence in the future of CNEH and, since they remain major shareholders of the company, it must be viewed as a sound and correct strategic decision on their part i.e. one that will benefit all shareholders in future, including, ultimately, Mr Wang and Ms Wu. Nonetheless, their actions and foresight must be commended.

For the purposes of ease of readability, the EPS figures for 2007 in the below P&L summaries are calculated using only 19.3m shares. This pro-forma approach differs to the published SEC reports which will continue to use 29.3m shares for H1, 2007. Whilst ‘loan and share cancellation’ queries may be periodically raised by interested parties, references to them will all-but disappear when the H1’07 comparatives cease to be used in future. As such, this topic is viewed as a temporary phenomenon.

P&L Summaries

Balance Sheet Summaries

References:

• Company old website
• Appointment of IR advisors
• Q4’07 production results
• Q3’07 earnings release
• Confirmation concerning 75.2 million Bbl total oil reserves per November 2007 presentation: Obtain copy via email from Mr Chao Jiang, Director of Finance: [e-mail]
• For extended payment terms relating to drilling capex, and various other facts about the company, refer to recent SEC reports via Edgar-online:
  • 10Q, June 30, 2007
  • 10Q, Sept 30, 2007
  • 10K, Dec 31, 2006
  • and 8K filed July 6, 2007

Disclosure: Author has a long position in CNEH.OB

Comments

[Aurelien]

Wow, excellent article. I was planning on writing one on CNEH myself, but I don't think I will need to anymore. I was wondering if you are one of the regular posters on either the yahoo or investor village message boards.
Also, one question. Where did you get the information about the actual timing on costs for drilling each well. On the boards we all were understanding that the total cost was only about $320k, split up in the following way: $100k up front and then the remaining $220k split up evenly between the next 24 months.
What you explained was different and if it is the case I am very interested in changing it in my models.

[AtticvsResearch]

I observed that the description of the drilling payment terms provided by the company in the recent 10Q reports differred to the description provided by the company in the November & December investor presentations. I asked them to clarify, and they did.

My overall sentiment is that it is extremely rare to come across a company with so much undiscovered potential as exists at CNEH. ICR will never have a job as easy as this one, all the information is just sitting there for them. What is particularly surprising is that it is virtually impossible for an new would-be investor to discover that the company has a total of 75m barrels of oil - this information is not stated on the company web site, the PR issued on September 4th 2007 mentioning it has now disappeared from Yahoo Finance and it was not mentioned in the 10Q reports. Yet, it is perfectly correct. A stunning situation. I look forward to ICR doing their job.

[Aurelien]

Excellent point. Thanks for clearing that up!

[max petrisek]

I've been following CNEH for a few years. The article is impressive and should be reassuring for shareholders. I'm biased & I'm accumulating here.

[hiwind]

Can anyone answer the following issues posted on Yahoo message board on 1-31-2008
----------------------...
no cash left when Q4/07 is out 31-Jan-08 01:51 pm here is the number.

revenue was $8.4mm based on oil price of $90/b
Production costs: $1.0mm (12% same as before)
Depreciation+Amortizat... $2.0mm (23.7%, same as before, and you can add this amount to cash flow from operation)
Government oil surcharge: $1.49mm ($16/b when oil price is $90)
OPERATING EXPENSES: $0.42mm (5%, same as before)
otherEXPENSES $0.09mm
income before tax: $3.4
tax: $1.178mm (34.66%)
Minority interests: $0.267 (12% of after tax incmoe, same as before)
income: $1.96mm EPS: 10 cents
cash flow from operation assuming account receivable and account payable is the same: $1.96+2.0mm =$4.0 mm

Now don't forget the company added 26 new well in Q4/07
It did cost $0.11mm x 26 =$2.86mm cash up-front payment
and those $8.58mm Accounts payable is due in 12 months
so company had to pay around $2.14mm each quarter.
total payment is $5mm
and company could not pay tax on time, old # was $2.228mm, this time, it have to add $1mm more so that cash flow could be $5mm
balance sheet is just like balance "sh*t" since
26 new wells added $0(.31-0.11)x26=$5.2mm to "24 months" and total will be $16.7+5.2=$21.9mm
tax payable will increase to $3.3mm,
cash is amlost "0"
current asset is still $5.9mm
current Current Liabilities is $12mm
total Liabilities is $35mm up from $31mm

bottom line: total Liabilities increases each Q, and no cash left for this company since it started, and may end the same way.
A 25 year old kid can't fix the problem, no even those NY financial guru

Just my 2 cents

[AtticvsResearch]

Hiwind, thank you for your query and comments. First, it is true that CNEH is using available cash to drill more wells. They are doing this because the extractible oil reserves are in the ground at a valuation of about $2 per barrel and they make a profit on sales of this oil of over $25, net of all costs including govt levy. Thus, their strategy use available cash to drill new wells is correct. Second, bear in mind that Chinese bank borrowings for 2007 were maxed-out by government restrictions that came along in October, but that 2008, being a new year, brings a lot more borrowing availability particularly in Q1 and Q2. This explains why CNEH did not close out local bank borrowings in Q4 2007 and why they will conclude it in early 2008. Third, it is my belief that the company added less than 26 wells in Q4 ’07, thereby preserving higher levels of cash than you suggest even using your calculations. Fourth, CNEH is a Delaware, US corporation and does not have to pay income tax for 2007 until before the end of Q1 2008 and similarly for subsequent years. As such, the company is fully up to date with tax payment obligations. Fifth, bear in mind that the speed of well drilling is totally under the control of CNEH, management is ex-PeteroChina and they maintain a close and flexible relationship with PetroChina. As such it is not really conceivable that CNEH would drill wells first (without formulating an overall drilling plan – which they have done) and afterwards notice that they did not have sufficient cash to meet its rather obvious liabilities. Sixth, the CNEH cash-flow model is highly cash-flow positive. At an oil price of $90/Bbl the company generates sufficient cash-flow from each well to enable it to multiply its overall number of operating well by 500% in less than 3 years. Please refer to the cash-flow model I explained above within the main Seeking Alpha article.

Ref your P&L numbers: Your Q4 sales figure is about $500k too high. However, your COGS are also high; extraction costs an amortization are more closely fixed to quantities of oil produced rather than to the price per barrel of oil. Overall, Net Income will be slightly higher than you suggest.

Comment about the age of the CFO. He may be young, if not quite as young as you portray, but in my discussions with him I certainly found him to be a totally capable executive. Besides, let’s not forget that the company does have a good overall management team.

The bottom line for CNEH
They have extractible oil reserves in the ground at a current valuation of about $2 per barrel which it can sell, net of all extractions costs including Govt levies, and make a profit after tax of over $25 per barrel based on an oil price of $90 per barrel. These are compelling numbers and explain in an instant why it is correct for CNEH to use available cash to drill more wells. The more the better.

[Aurelien]

I would like to point out that hiwind's question was responded to on the Yahoo message board as well. I showed in detail how CNEH would be fine, and yet this poster asked the same question in another thread. I see that he is trying to create doubts in people instead of actually being concerned himself, since the answer has been explained multiple times.

[jrs1987]

i've been invested in this stock for months and i think this is a great china growth stock. but i wanted to ask about the price movement after the huge run to $4.55. doesnt it seem strange that every time we have a run up on good news the stock is brought right back down sharply? is this normal and what do you think it is?? mostly profit taking or are we being manipulated in some way? thanks...

[AtticvsResearch]

Don't know jrs. I did see the stock run to $4.55 but I didn't buy because; with so little known about the company's prospects, with so little information available in the public domain at that time, with such a short track record of delivering good quarterly results (Q2 which was just published, was then the only set of decent results), with no mention of their multi-year drilling program, and without having renegotiated the extended well-drilling payment terms with PetroChina - against all this it didn't look like a good risk-reward to me back then. Additionally, from the daily volume of shares traded it seemed to me that daytraders were piling in and would probably disappear just as quickly as they had arrived, and they did.

Since then the CNEH picture has changed a great deal for the better. As good information is made available and excellent financial results are reported during 2008 there is every reason to believe that the stock price will evidence a strong up-slope during the year with some peaks and troughs along the way. It's a very cheap stock.

[AtticvsResearch]

Where to oil prices the next 5 years?

Summary article on Seeking Alpha:

seekingalpha.com/artic...
static.seekingalpha.co...

[perf]

Kevin,

You stated:

For its part PetroChina provides CNEH with normal staff training and geological support, it has transferred select highly skilled technical staff to CNEH, it has made available drilling crews via a subsidiary company, Songyuan Drilling Services, which in turn provides CNEH with extended payment terms, and PetroChina guarantees purchase of all oil production out to 2022.

With this kind of statement it is obvious that it is in PetroChina's best interest that CNEH becomes a huge success, it's a win win for both companies. With PetroChina purchasing all oil production for the next 15 years, why don't we see more interest in the stock? Do you think that will change when they are listed on another exchange, it seems like they meet all the criteria right now for a Nasdaq listing, when do you see this happening. Thank you, and great article by the way.

[97m6formula]

I was wondering what would cause the recent drops in the price. Considering all oil has done the past week is gone up, it's weird to see a company that profits from it go down without having any bad news. I have bought at todays price of 1.87 and also 2.15. I will be longing this one, but i'm just wondering if anyone has some insight. Thanks

[User 163394]

Unfortunately, my average purchase price is close to $4 per share which is twice what it's trading at now.

However, I love this company. Kevin Brennan's analysis has left me believing that CNEH will grow and is greatly undervalued.

Does anyone have a link for their website. The old link no longer works.

[User 163394]

money.cnn.com/news/new...

This might attract some institutional investors. Wouldn't that be nice?

[User 163394]

Record earnings and up on the highest volume in about a year. Current P/E is now less than 10. We would like to hear your comments, Kevin.

[max petrisek]

CNEH is all about oil- Oil prices skyrocketing to bubble portions. Some dday the happy hour will en but not for weeks. Last week I have added to my CNEH holdings @ 3.95.

[max petrisek]

CNEH is still doing a bit better than other O&G companies. China O&Gs are tracking US O&G companies down with the drop in oil price from the 147 to todays 126, I'm holding a lot of CNEH and pleased with it's outlook. Yes I have added morfe shares in the 4.3 to 4.7 range. Thus I'm very biased. Watch the next earnings report due in about 2 weeks- boom time? The company is unique in many ways. Seeing is beleving! max petrisek wrote:

> CNEH is all about oil- Oil prices skyrocketing to bubble portions.
> Some dday the happy hour will en but not for weeks. Last week I have
> added to my CNEH holdings @ 3.95.

[max petrisek]

In the long run were all guessing about oil price- that's the driver and with CNEH the phenomenal growth and great outlook! The odds for a winner are great!


On Mar 12 11:44 AM 97m6formula wrote:

> I was wondering what would cause the recent drops in the price. Considering
> all oil has done the past week is gone up, it's weird to see a company
> that profits from it go down without having any bad news. I have
> bought at todays price of 1.87 and also 2.15. I will be longing this
> one, but i'm just wondering if anyone has some insight. Thanks