China New Energy to Acquire Remaining Interest in Qinhuangdao Chensheng Gas Co., Ltd.

China New Energy Group Company, a leading energy project developer specializing in the development of natural gas distribution networks, and distribution of natural gas in China, today announced that it has entered into an agreement to acquire 51% of Qinhuangdao Chensheng Gas Co., Ltd. (”Chensheng Gas”), a leading natural gas project operator in Nandaihe, northeast China and indirect, 49% owned subsidiary of the Company.

Under the terms of the agreement, China New Energy agreed to purchase 51% of the outstanding equity of Chensheng Gas from 17 individuals (the “Sellers”) for an aggregate purchase price of RMB 12.56 million (approximately $1.84 million) (the “Purchase Price”). Following the consummation of the transaction, the Company will own 100% of the equity of Chensheng Gas. The transaction is expected to close in about a month.

Chensheng Gas has constructed a main pipeline network of 12 kilometers, which will supply natural gas to about 50,000 households in Nandaihe, a city located in the center of Bohai Bay Economic Development Zone in north China. To date, Chensheng Gas has connected about 10,000 households in the region.

“We are pleased to successfully close this acquisition,” said Mr. Jiaji Shang, the Company’s Chief Executive Officer. “This new addition will further expand our market share in north China, as we target second and third tier emerging cities around Bohai Bay Economic Development Zone, which includes Tianjin, Hebei Province, Liaoning Province and Shandong Province. With several other projects under review, we will continue to leverage our existing human and capital resources to ensure China New Energy’s rapid growth.”