China Rongsheng Heavy : Announcements and Notices - Voluntary Announcement Business Update on Development of Oilfield Zones in Kyrgyzstan

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中國熔盛重工集團控股有限公司

(Incorporated in the Cayman Islands with limited liability) (stock code: 01101)

This announcement is made by China Rongsheng Heavy Industries Group Holdings Limited (the "Company", and together with its subsidiaries, the "Group") on a voluntary basis with the purpose of keeping its shareholders and potential investors informed of the latest business development of the Company.
Reference is made to the Company's announcements dated 21 August 2014, 11 September
2014 and 14 October 2014 in relation to the acquisition (the "Acquisition") of 60% interest in the Kyrgyzstan project (the "Kyrgyzstan Project ") relating to five oilfield zones (the "Oilfield Zones").
The board of directors of the Company (the "Board") is pleased to announce that the oil production of new wells in the Kyrgyzstan Project has continuously achieved satisfactory results. Up to present, the drilling works of five new oil wells in the Kyrgyzstan Project have been completed, four of which have achieved satisfactory results in oil production, while the remaining one is awaiting the shipment of perforating charges in order to conduct perforation. One of the four new wells has already completed the V-layer perforation and has initially recorded a daily production volume of 63 barrels of oil. In another new well, despite perforating only 8 meters in the III-layer oil reservoir which has an approximate total thickness of 20 meters, its daily production volume of oil has reached 128.9 barrels of oil after perforation, with fracturing yet to take place which will further increase production. Together with the new well which has completed fracturing and recorded a daily production volume of approximately 174 barrels of oil (as previous announced), such development results have shown good progress being achieved in increasing the oil production of the Kyrgyzstan Project.
The Group will continue the process of perforating, testing and fracturing of the new wells. The supply of perforating charges, which once limited the project production, in shipment and will facilitate continuous normal perforation to meet the demand for the project's production. In order to further increase oil production, the Company will take greater efforts in the exploitation of new wells, speeding up the repair of the old wells, and enlarging the scale of fracturing.
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The Board believes that the completion of the Acquisition in September 2014 represented a great opportunity for the Group to enter into the energy sector. Given the relatively adverse market conditions of the shipbuilding industry for the time being, appropriate business opportunities in the energy sector can assist the Group in diversifying its operations and broadening its sources of revenue, and promoting the Group's transformation to a comprehensive heavy industry player in the energy industry, so as to generate a greater contribution to the overall interests of its shareholders.

By Order of the Board

Hong Kong, 28 October 2014

As at the date of this announcement, the directors of the Company are: Executive directors:

Mr. CHEN Qiang (Chairman), Mr. WU Zhen Guo, Mr. HONG Liang, Mr. Sean S J WANG, Mr. WANG Tao, Mr. WEI A Ning and Ms. ZHU Wen Hua;

Independent non-executive directors:

Mr. XIA Da Wei, Mr. HU Wei Ping, Mr. WANG Jin Lian and Ms. ZHOU Zhan.

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