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China Natural Gas, Inc. Reports Record Earnings Per Share of $0.08 in 2005 and Revenues Up 400%

Posted on: Wednesday, 22 March 2006, 09:00 CST

China Natural Gas, Inc., (OTCBB:CHNG, website: www.naturalgaschina.com) the first China-based natural gas public company in the U.S. capital market today announced that it achieved profitability and record growth in revenues from the sales and delivery of its natural gas services and products.

The following are some of the key financial highlights for the year ended December 31, 2005 from the company's Form 10-K filed with the Securities and Exchange Commission (SEC) today:

2005 KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS

-- 2005 Revenues more than quadrupled to approximately $4.9 million from $884,413 in 2004

-- Gross Profit increased to $2.4 million, from $370,367 for the prior year.

-- Net Income was $1.3 million, compared with net loss of $(161,768) for 2004.

-- Fully diluted EPS grew to $0.08 from a loss of $(0.02) in 2004.

-- Increased residential and commercial customers to 50,000 by December 31, 2005.

"We're very pleased that the company achieved profitability this year, which reflected our efforts to capitalize on the growing demand for natural gas - a less expensive and environmentally friendly alternative to traditional energy and fuel sources," said Minqing Lu, CEO of China Natural Gas. "The company's revenue growth in 2005 was driven primarily by increased construction and installation sales to new residential and commercial customers, a demand we were able to meet as a result of the construction and infrastructure projects we implemented in 2004. Simultaneously, we experienced growth in the distribution of CNG as a vehicular fuel.

REVENUES

For the year ended December 31, 2005, China Natural Gas recorded $4,850,699 in total revenues, an increase of $3,966,286 from the prior year when the company had revenues of $884,413. The growth in revenue was the result of increased construction and installation revenues as the company attracted new residential and commercial customers, as well as increased sales of vehicular compressed natural gas.

GROSS PROFIT

China Natural Gas achieved gross profit of $2,446,662 for 2005, an increase of $2,076,295 from 2004 when the company recorded gross profit of $370,367. The company's gross profit margin grew to 50.4% for 2005, compared to 41.9% for 2004. The increase in gross margin was due to increased sales of the company's products and services.

NET INCOME

The company achieved net income of $1,252,083, or $0.08 per fully diluted share, for the twelve months ended December 31, 2005, compared with net loss of $(161,768), or $(0.02) for the same period last year.

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CHNG"), a Delaware company, is the first China based US public natural gas services provider that owns and operates a 120 kilometer long compressed natural gas pipeline in China's Xi'An area, a fast growing Chinese city supported by a population of 7 million and is the "gateway" to the broad Western regions of China. CHNG has three profitable business segments: end user delivery of natural gas services to residential and industrial customers, wholesale natural gas to retail natural gas filling stations, and retail natural gas at company owned natural gas filling stations. The city of Xi'An has approximately 20,000 Taxis, 3,000 buses and 2,000 special purpose vehicles that are powered by compressed natural gas.

Safe Harbor Statement

This press release may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of China Natural Gas, Inc. management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Source: Business Wire

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