SOURCE: New Oriental Energy and Chemical Corp.

November 20, 2007 08:00 ET

New Oriental Energy & Chemical Corporation Announces $7.5 Million in New Fertilizer Sales Contracts

Separately, the Company Has Signed Agreements Totaling $4 Million to Ensure Winter Coal Supply

NEW YORK, NY--(Marketwire - November 20, 2007) - New Oriental Energy & Chemical Corp. (NASDAQ: NOEC), a specialty chemical and emerging alternative fuel manufacturer in The People's Republic of China (PRC), announced today that it signed several fertilizer sales contracts for urea and ammonium bicarbonate totaling $7.5 million. Separately, the Company also signed supply agreements guaranteeing its winter coal supply with contracts totaling $4.0 million for deliveries beginning December 1, 2007.

Four of the new sales contracts are for an aggregate of 26,815 tons of urea, the Company's largest fertilizer product, for a total of $6.3 million, and represent an estimated 85% of the Company's expected fiscal third quarter urea output. The average selling price under these contracts was approximately $238 per ton, reflecting the Company's good production quality. The Company anticipates a gross margin on these sales of more than 18% using current cost data.

The five other new sales contracts are for a total of $1.2 million of ammonium bicarbonate, at an average selling price of $54 per ton, representing all of the company's expected production for its fiscal third quarter and two thirds of anticipated fiscal fourth quarter production. Utilizing current cost data, the Company believes this would translate to gross margins on the sales of more than 6%.

In addition, in order to manage its costs of goods more effectively, the Company recently signed agreements with four of its major coal suppliers, totaling approximately $4 million for 70,000 tons of coal, which will supply all of the Company's coal requirements through February. According to the Company, the agreements will save it an estimated $130,000 on the purchase costs for coal in a period when coal prices tend to escalate due to seasonal factors.

"We are pleased with the progress we have made year to date on a number of fronts. One of our goals it to continue growing our core urea business, which has consistently been a contributor to the Company's cash flow," commented Mr. Chen Si Qiang, New Oriental Energy & Chemical Corporation's Chief Executive Officer. He added, "With coal being a key component for all of our production it is vital to ensure a steady supply, particularly at this time of year. Our recent agreements satisfy this requirement while saving us money, which will ultimately enhance our margins."

About New Oriental Energy & Chemical Corp.

New Oriental Energy & Chemical Corp. is an emerging alternative fuel and specialty chemical manufacturer based in Henan Province, China. The Company is focused on the production of Dimethyl ether (DME), Methanol and fertilizer products. The Company sells its products primarily through a network of distribution partners.

Safe Harbor Statement:

This earnings release contains forward-looking statements concerning New Oriental Energy & Chemical Corp. The actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, new product development, shipment timelines, market acceptance of DME and new products, additional competition from existing and new competitors, changes in technology or product techniques, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. New Oriental Energy & Chemical Corp. undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Contact Information

  • Contact:

    Company Contact:

    New Oriental Energy & Chemical Corp.
    Mr. Wang Gui Quan
    President
    Xicheng Industrial Zone of Luoshan, Xinyang
    Henan Province, The People's Republic of China
    Tel: (011-86) 376-2169211

    Investors:

    Mark Miller
    East West Network Group
    mmeastwest@hotmail.com
    Ph: (770) 436-7429

    Press:

    Ken Donenfeld
    DGI Investor Relations
    donfgroup@aol.com
    kdonenfeld@dgiir.com
    Ph: (212) 425-5700
    Fax:(212) 425-6951