Sinoenergy Corporation Signs Share Exchange Agreement for Joint Venture Companies
Tuesday August 12, 8:00 am ET


BEIJING, Aug. 12 /Xinhua-PRNewswire-FirstCall/ -- Sinoenergy Corporation (Nasdaq: SNEN - News; \"Sinoenergy\" or the \"Company\", a manufacturer of compressed natural gas (CNG) vehicle and gas station equipment and a designer, developer and operator of retail CNG filling stations in the People\'s Republic of China, today announced that it has signed a share exchange agreement with China New Energy Development Investment Co., Ltd (China New Energy) to exchange part of the ownership between the two party\'s jointly established companies, Hubei Gather Energy Co., Ltd (Hubei Gather) located in Wuhan City and Anhui Gather Energy Co., Ltd (Anhui Gather) located in Wuhu City.

Both Hubei Gather and Anhui Gather are joint venture companies between Sinoenergy and China New Energy that engage in the construction and operation of CNG mother stations. Prior to the share exchange, Sinoenergy, through its fully owned subsidiary Sinoenergy Holding Limited, owned 55% and 45% of the equity of Hubei Gather and Anhui Gather respectively; China New Energy owned the remaining equity of Hubei Gather and Anhui Gather. Each joint venture has obtained natural gas quota of 200 million cubic meters per year for 20 years from Sinopec starting from 2007.

According to the share exchange agreement, Sinoenergy will transfer 25% of its ownership of Anhui Gather to China New Energy. In return, China New Energy will transfer 25% of its ownership of Wuhan Gather to Sinoenergy. The transaction is expected to be completed by the end of August 2008 on non-cash basis.

\"We are pleased to reach this share exchange agreement with China New Energy,\" commented Mr. Bo Huang, CEO of Sinoenergy. \"Following the share exchange, Sinoenergy will possess 80% ownership of Hubei Gather. The increased ownership will enhance our control over Hubei Gather and further guarantee the CNG supply to our rapid growing CNG filling stations in Wuhan city.\"

\"Currently, Hubei Gather CNG mother station is under construction and is expected to be completed and begin operation in the third quarter of 2009. The maximum daily CNG processing capacity is estimated to reach 600,000 cubic meters. As the automobile CNG market in Wuhan is growing rapidly, we believe our CNG mother station will soon reach its maximum operation capacity after opening, which would result in annual revenue and operating income contribution of about $65 million and $22 million, respectively,\" added Mr. Bo Huang.

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