China North East Petroleum Holdings, Limited Reports Second Quarter 2007 Results

China North East Petroleum Holdings, Limited , an leading oil producing company in Northern China, announced financial results for the second quarter of 2007, which Sales Revenue and Net Profit increased 221% and 746% respectively.

Key Highlights for the three months ended June 30, 2007:
-- Revenues increased 221%
-- Net Income increased 746%
-- EPS increased to $0.04 from $0.01

For the 6 months ended June 30, 2007:
-- Revenues increased 151%
-- Net Income Increased 551%
-- EPS increased to $0.05 from $0.01


"We are very pleased with our company's latest financial results," commented Mr. Hongjun Wang, President of China North East Petroleum. "We successfully completed a large scale well drilling project. At the present time, we have more than 110 wells in production. A new drilling project will commence in the near future."

"We have also built our management team," Mr. Hongqun Wang continued, "by recruiting key experienced personnel from Petrol China, the State owned Oil Company. The experience they brought to the company improved the overall production efficiency dramatically. We have also raised the average well production and output by constantly investing in new oil production equipment and technologies."

Financial Details

Revenues were $4,097,554 for the three months ended June 30, 2007, compared to $1,276,634 for the quarter ended June 30, 2006, an increase of $2,820,920, or 221%. This increase was due to an increase in crude oil production. Our output of crude oil for the three months ended June 30, 2007 was 8,364.8 tons compared to 2,583.2 tons for the same quarter in 2006. The increase in production was mainly because of the new wells being brought into production.

Cost of Sales increased by 259% from $550,425 for the three months ended June 30, 2006 to $1,976,519 for the three ended June 30, 2007. The increase in cost of sales resulted primarily from the increase in production.

Operating Expenses increased by 7% from $327,166 for the three months ended June 30, 2006 to $349,223 for the three months ended June 30, 2007. The slight increase was due primarily to increase in depreciation of fixed assets.

Net Income increased by 740% from $148,243 for the three months ended June 30, 2006 to $1,253,567 for the three months ended June 30, 2007, primarily as a result of a 221% increase in sales. Earnings per share were $0.04 compared to $0.01 in the prior year.

For the six months ended June 30, 2007:

Revenues were $5,977,501 compared to $2,383,512 for the same period 2006, an increase of $3,593,989, or 150%. This increase was due to an increase in crude oil production. Our output of crude oil for the six months ended June 30, 2007 was 12,732 tons compared to 5,086.4 tons for the same period in 2006. The increase in production was mainly because of the new wells being taken into production.

Cost of sales increased by 147% from $1,160,469 for the six months ended June 30, 2006 to $2,862,291 for the six months ended June 30, 2007. The increase in cost of sales resulted primarily from the increase in production.

Operating Expenses increased by 13% from $573,301 for the six months ended June 30, 2006 to $648,640 for the same period 2007.

Net Income increased 551% to $1.540, 930 from $236,816. Earnings per share were $0.05 compared to $0.01 in the prior period.

Cash flow provided by operating activities was $4,203,145 for the six months ended June 30, 2007, compared to $967,087 for the same period 2006.

"Every team member of the company is delighted to see their hard work has delivered solid results," Mr. Wang stated. "It further proves our company's true potential for creating values for our shareholders. We look forward to continuing strong results in the future."


China North East Petroleum Holdings Limited and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive Income For the three months and six months ended June 30, 2007 and 2006
(Unaudited)

Three months ended Six months ended
June 30 June 30
Restated Restated
2007 2006 2007 2006

NET SALES $4,097,554 $1,276,634 $5,977,501 $2,383,512
COST OF SALES
Production costs 627,808 239,677 964,598 500,196
Depreciation of oil
and gas properties 850,602 163,689 1,239,829 510,673
Amortization of
intangible assets 2,653 1,150 5,277 3,691
Government oil
surcharge 495,456 145,909 652,587 145,909
Total Cost
Of Sales 1,976,519 550,425 2,862,291 1,160,469

GROSS PROFIT 2,121,035 726,209 3,115,210 1,223,043

OPERATING EXPENSES
Selling, general
and administrative
expenses 279,141 274,185 499,406 467,849
Professional fees 4,000 3,000 20,000 33,773
Consulting fees 27,125 27,125 54,250 27,125
Depreciation of
fixed assets 38,957 22,856 74,984 44,554
Total
Operating
Expenses 349,223 327,166 648,640 573,301

INCOME FROM
OPERATIONS 1,771,812 399,043 2,466,570 649,742
OTHER INCOME (EXPENSE)
Other income -- 3,522 -- 18,284
Interest expense (12,513) (12,345) (23,104) (25,664)
Imputed interest
expense (829) (96,180) (132,675) (136,728)
Interest income 242 226 490 325
Gain on disposal of
fixed assets 14,757 -- 14,757 --
Recovery of deposit
from a supplier
previously written
off 356,094 -- 356,094 --
Total Other
Income
(Expense),
net 357,751 (107,777) 215,562 (143,783)
NET INCOME BEFORE
TAXES AND MINORITY
INTERESTS 2,129,563 294,266 2,682,132 505,959
Income tax expense (718,918) (148,347) (940,325) (276,603)
Minority interests (157,078) 2,324 (200,877) 7,460

NET INCOME 1,253,567 148,243 1,540,930 236,816

OTHER COMPREHENSIVE
INCOME (LOSS)
Foreign currency
translation gain
(loss) 127,509 2 214,760 (8,588)

COMPREHENSIVE
INCOME $1,381,076 $148,245 $1,755,690 $228,228

Net income per share-
basic and diluted $0.04 $0.01 $0.05 $0.01
Weighted average
number of shares
outstanding during
the period
basic and diluted 29,004,300 29,208,695 29,113,583 28,779,881

About China North East Petroleum Holdings, Limited

China North East Petroleum Holdings Ltd is engaged in the production of crude oil in Northern China. CNEH has a guaranteed arrangement with Jilin Refinery of PetroChina to sell its produced crude oil for use in the China marketplace. The Company currently operates 4 oilfields with 110 producing wells in Northern China and estimates generating approximately average 1,600 barrels of high quality crude oil per day. Further well drilling project has been planned in future.