Gas Distribution Agreement Signed by Pacific Asia Petroleum, Inc.
Exhibit
99.1
Gas
Distribution Agreement Signed by Pacific Asia Petroleum, Inc.
FOR
RELEASE: TUESDAY, JULY 7, 2009
Hartsdale,
New York, July 7: Pacific Asia Petroleum, Inc. (PFAP.OB), a
U.S. publicly traded company (the “Company”) announced today that its
China affiliate, Inner Mongolia Sunrise Petroleum Co. Ltd. (“Sunrise”), has
entered into a Letter of Intent with Handan Hua Ying Company Limited (“Handan”),
relating to the acquisition of a 49% ownership interest in the Xxxxxx Xxxxx Xxxx
Natural Gas Company, Ltd. (“HGC”) held by Handan. HGC owns and
operates gas distribution assets in and around Handan City in the Hebei Province
of the People’s Republic of China. This Letter of Intent supplements the Letter
of Intent entered into by the Company in November 6, 2008 covering the same gas
distribution assets.
HGC was
founded in May 2001, and is the only gas pipeline and distributer in Handan
City, which is 400km south of Beijing, in Hebei Province. Handan city
has a population of 1.4 million.
HGC owns
57 km of a main gas pipeline, and more than 700 km of delivery gas pipelines
which have a delivery capacity of 3 x 108 m3/day.
Currently, HGC has over 300,000 customers. HGC also owns a 7,400
m2
field distribution facility. HGC is now delivering gas from the Zhongyuan
oil & gas field (supplied by Sinopec), and from a northern gas pipeline
owned by PetroChina. Revenues for HGC have been increasing at an average rate of
over 40%/year over the last 4 years.
Pursuant
to the Letter of Intent, the Company will continue with its final legal and
financial due diligence with a goal of entering into a final sale and purchase
agreement before the end of the year, and will also enter into negotiations with
the Handan Gas Company (which owns the balance of 51% of HGC) with the intent of
creating a joint venture to operate and manage the HGC business.
Commenting
on the Letter of Intent, Xxxxx X. Xxxxxxxxxx, President & CEO of Pacific
Asia Petroleum, said: “This venture has the opportunity to deliver on Pacific
Asia’s business plan which is to invest in high quality, early cash flow
investments in the China energy sector. We have already concluded a considerable
amount of due diligence on this asset pursuant to our earlier agreement and have
now entered into negotiations on the formation of a joint venture to manage and
operate this venture with the 51% owner and also with other international
companies whose core business is the commercialization of these gas distribution
ventures. As explained in the Company’s Investor Conference call last week, we
plan to bring in international partners to cover our purchase cost and our share
of capital commitments so that we can close this venture without the need for
any financial assistance from the capital markets. The venture currently has
attractive cash flow that has the potential to immediately contribute to the
bottom line of our Company. This venture has the prospect to deliver on our
desire to be an asset owner across the
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energy
value chain. Our Zijinshan coal bed methane venture and our recently announced
enhanced oil recovery and production venture complement this acquisition. We
believe that China’s commitment to dramatically expand its environmentally clean
gas production and distribution in its energy sector will provide the commercial
framework for a partnership to deliver economic value for all the stakeholders.
This project, if concluded, should bring immediate positive cash flow to our
Company.”
About Pacific Asia
Petroleum, Inc.
Pacific
Asia Petroleum, Inc. is engaged in the business of oil and gas exploration,
development, production and distribution in Asia and the Pacific Rim countries,
with a specific focus on developing a broad range of energy opportunities,
including clean and environmentally friendly natural gas ventures, in
China. The company’s executive offices are located in Hartsdale, New
York, and the company also has offices located in Beijing, China and
California.
Media
Contact:
Pacific
Asia Petroleum, Inc.
Xxxxxx
Xxxx
xxxxxxxxxx@xxxxxxxxxxx.xxx
000 Xxxx
Xxxxxxxxx Xxx.
Hartsdale,
NY 10530
(000)
000-0000
xxx.xxxxxxxxxxx.xxx
Investor Relations
Contact:
Liviakis
Financial Communications, Inc
Xxxx
Xxxxxxxx
(000)
000-0000
Xxxx@Xxxxxxxx.xxx
xxx.xxxxxxxx.xxx
000
Xxxxxxx Xxx, Xxxxx 000
Mill
Valley, CA 94941
Cautionary
Statement Relevant to Forward-Looking Information.
Some of
the items discussed in this press release are forward-looking statements about
Pacific Asia’s activities in the People’s Republic of China. Words such as
“anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,”
“seeks,” “estimates,” “budgets” and similar expressions are intended to identify
such forward-looking statements. The statements are based upon management’s
current expectations, estimates and projections; are not guarantees of future
performance; and are subject to certain risks, uncertainties and other factors,
some of which are beyond the Company’s control and are difficult to predict.
Among the factors that could cause actual results to differ materially are
changes in prices of, demand for and supply of crude oil and natural gas;
actions of competitors; results of additional testing;
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timely
development of production opportunities and acquired technologies; the
successful issuance and assignment of enhanced oil recovery-related patent
rights by the government of the People’s Republic of China; the potential
disruption or interruption of testing and development activities due to
accidents, political events, civil unrest, or severe weather;
government-mandated restrictions on scope of company operations; general
economic and political conditions; the Company’s ability to successfully
consummate the contemplated acquisitions on terms and conditions satisfactory to
the Company, obtain required government approvals, and to successfully integrate
the acquired entities and operations into the Company’s business; and other
risks described in the Company’s filings with the Securities and Exchange
Commission. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. Unless
legally required, Pacific Asia undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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