BEIJING, Dec. 17, 2010 (GLOBE NEWSWIRE) -- SinoTech Energy Limited (Nasdaq:CTE) ("SinoTech"), a fast-growing provider of enhanced oil recovery ("EOR") services in China, today announced that it has signed an RMB437 million (US$ 65.7 million) agreement to purchase 10 additional lateral hydraulic drilling ("LHD") units. SinoTech will take delivery of the equipment in three batches over the next year, with the first two units arriving in March 2011. The 10 new units will double the capacity of Sinotech's LHD service, one of the company's two core EOR offerings, by the end of 2011.
SinoTech holds the exclusive rights to use LHD technology and equipment in China. LHD increases the output of crude oil or coalbed methane gas from existing vertical wells by using a high-pressure water jet to drill horizontal holes in multiple directions from the well to surrounding reservoirs, thereby increasing the flow of oil or gas. Sinotech's LHD units are self-contained, truck-mounted mobile facilities that can be driven directly to customers' oil or gas wells. The company currently has an existing fleet of 10 LHD units serving oil and gas fields in northern China.
"This agreement clearly demonstrates SinoTech's confidence in the strong demand in China for our cost-effective and high-performance LHD services, and our commitment to expanding our LHD capacity to meet that demand. As we expand, our increasing scale has allowed us to lower the purchase price of LHD units," said Mr. Guoqiang Xin, CEO of SinoTech.
"Each of our LHD units is an important revenue source so with our entire LHD fleet currently fully contracted, and a strong pipeline of contracts and letters of intent, it is vital for future growth that we rapidly expand our LHD capacity. We look forward to taking delivery of this new equipment, which will enable us to service contracts with new and existing customers and comfortably meet our previously announced intent to place 20 LHD units in the field by March of 2012."
SinoTech expects to take delivery of the first two new units in late March 2011, at the end of the second quarter of the company's fiscal year. Four further units will be delivered in late July 2011, and the remaining batch of four units will arrive in late December 2011.
In addition to LHD, SinoTech offers EOR solutions that utilize a molecular deposition film ("MDF") technology for which the company holds a PRC patent. SinoTech's MDF technology increases oil recovery from mature wells by displacing the residual oil that adheres to sedimentary rock or sand in oil reservoirs.
About SinoTech Energy Limited
SinoTech Energy Limited (Nasdaq:CTE) ("SinoTech") is a fast-growing provider of enhanced oil recovery ("EOR") services in China. SinoTech provides innovative EOR services to major oil companies in China using leading edge technologies, including certain patented lateral hydraulic drilling ("LHD") technologies, which the company has an exclusive right to use in China, and a molecular deposition film technology, for which the company holds a PRC patent. SinoTech also provides technical services to coalbed methane customers using the LHD technology.
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Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this press release are forward-looking statements, including but not limited to, SinoTech's goals and strategies, its future business development, growth of its operations, financial condition and results of operations, its ability to introduce successful new services and attract new clients, growth of the EOR services market in China and worldwide, its beliefs regarding its strengths and strategies, changes in the oil services industry in China, including changes in the policies and regulations of the PRC government governing the oil services industry, its access to current or future financing arrangements, and fluctuations in general economic and business conditions in China, and other risks and uncertainties disclosed in SinoTech's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on information available to SinoTech's management as of the date hereof and on its current expectations, assumptions, estimates and projections about SinoTech and the oil and gas industry. Actual results may differ materially from the anticipated results because of such and other risks and uncertainties. SinoTech undertakes no obligation to update forward-looking statements to reflect subsequent events or circumstances, or changes in its expectations, assumptions, estimates and projections except as may be required by law.
CONTACT: SinoTech Energy Limited, Beijing Ms. Rebecca Guo + 86-10-8712-5567 rebecca.guo@sinotechenergy.com Brunswick Group LLP Ms. Yue Yu +86-10-6566-2256 sinotech@brunswickgroup.com