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Petroleum industry

China North East Petroleum Holdings Ltd. Announces Financial Restatement

Strategic Insights

— 1 min read

China North East Petroleum Holdings Ltd., a leading independent oil producing and oilfield services company in Northern China, announced that it will restate its financial statements for 2008 and 2009 due to certain non-cash accounting errors. The errors include the incorrect classification of warrants as equity instruments, improper interest expense calculation, and incorrect ceiling test impairment calculations. The company is currently evaluating the cumulative impacts of these errors and will issue further disclosure detailing the impact and the net result of these changes to the financial statements as soon as possible.

Key Takeaways:

  • The company's financial statements for 2008 and 2009 will be restated due to non-cash accounting errors.
  • The errors include the incorrect classification of warrants, improper interest expense calculation, and incorrect ceiling test impairment calculations.
  • The company is currently evaluating the cumulative impacts of these errors and will issue further disclosure detailing the impact and the net result of these changes to the financial statements.
  • The restatement is related to non-cash accounting items and will not impact the company's previously reported revenues, cash balances, or EBITDA.
  • China North East Petroleum Holdings Ltd. has been a pioneer in China's private oil exploration and production industry for many years.
  • The company has a guaranteed arrangement with PetroChina to sell its produced crude oil for use in the China marketplace.
  • The company operates four oilfields in Northern China and has an oil service subsidiary through its acquisition of Song Yuan Tiancheng Drilling Engineering Co. Ltd.

Statistics:

  • The company will restate its financial statements for 2008 and 2009 due to non-cash accounting errors.
  • The errors include the incorrect classification of warrants as equity instruments, which is a non-cash charge.
  • The improper interest expense calculation also represents a non-cash charge.
  • The company's chief financial officer, Hongjun Wang, stated that the restatement is solely to adjust for non-cash accounting items.
  • The company has a guaranteed arrangement with PetroChina to sell its produced crude oil for use in the China marketplace.

Sources:

  • China North East Petroleum Holdings Ltd. Press Release
  • Form 10-K for the year ended December 31, 2008
  • Form 8-K filed with the SEC today

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