China North East Petroleum Subsidiary to Drill 100 Wells in Inner Mongolia

China North East Petroleum's subsidiary, Song Yuan Tiancheng, has signed a contract with Beijing Junlun Runzhong Technology ("JLRZ") to drill 100 new wells in JLRZ's oilfield in Inner Mongolia. This is the Company's first drilling contract with JLRZ and the sixth drilling contract signed since the acquisition of Tiancheng in the second half of 2009.

Drilling of the 100 wells is expected to commence this month and be completed by September 2011. Tiancheng will allocate two rigs to Inner Mongolia and each well is expected to drill 50 wells during the one-year contract term. The value of this contract with JLRZ will be contingent upon the drilling depth of each of the 100 wells drilled.

The Company's executive management team had the following commented, "We are very pleased to have signed our sixth drilling contract since we acquired Tiancheng in 2009. Through the first eight months of this year, Tiancheng has completed the drilling of 142 wells which more than doubles the number of wells we completed in 2009, post acquisition. With more drilling contracts under negotiation, we expect that Tiancheng will continue to contribute significantly to our top line growth going forward."


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