Hanwei signs definitive agreement to acquire CNPC’s interest in Harvest

Hanwei Energy Services Corp. announced today that it has signed a binding agreement with Daqing Changyuan Investment Co. Ltd., an indirect subsidiary of China National Petroleum Corp. (CNPC), the parent company of PetroChina Co., Ltd., to acquire the remaining 8.925 percent equity interest in Daqing Harvest Longwall High Pressure Pipe Co. Ltd. (“Harvest”) for RMB 25.7 million ($4.7 million). Hanwei currently owns a 91.075 percent equity interest in Harvest. Hanwei and Changyuan are in the process of settling the treatment of Changyuan’s minority interest in Harvest’s earnings since August 2007 when the acquisition was first contemplated. The acquisition is expected to be immediately accretive to net income, since Hanwei will fund the acquisition from cash on hand, internally generated cash flow, and existing debt facilities.

Hanwei has received all required government and regulatory approvals for the acquisition, with the exception of revising Harvest’s business license to reflect Hanwei as the sole owner, which will be granted once the acquisition has closed.

With the acquisition, Hanwei will own 100 percent of China’s largest fibreglass reinforced pipe (FRP) manufacturer with an estimated market share of 55 percent. Hanwei recently announced that it has increased its annual production capacity by 44 percent to 4600 kilometres per annum, and expects sales to grow by 70 percent in 2008. CNPC remains Hanwei’s partner for FRP pipe in export markets in Kazakhstan and other Commonwealth of Independent States, and is expected to remain the Company’s largest customer for FRP pipe.

“Changyuan was a founding investor in our FRP pipe business and CNPC related oil fields in China were our initial customers. While CNPC related oil fields have increased their purchases every year, in 2007 we started to expand internationally and to add new customers. In 2008, we introduced new larger diameter pipe products that can be applied to a wider range of oil, chemical and water applications. This acquisition is a reflection of our confidence in the future growth opportunities in China and international markets,” commented Fulai Lang, president and CEO of Hanwei. “The acquisition of the remaining equity in Harvest will boost our top and bottom line performance, as we continue to strengthen our long and successful relationship with CNPC and its subsidiaries.”