Hanwei Energy corporate update


    TSX.V: HE

    VANCOUVER, June 20 /CNW/ - Hanwei Energy Services Corp. (TSX-V: HE) (the
"Company") is pleased to provide a corporate update further to the press
release dated June 19, 2007 announcing the results of its annual general
meeting. Since the completion of the acquisition of Daqing Harvest Longwall
High Pressure Pipe Co. Ltd. ("Harvest"), its 82.15% owned subsidiary, Hanwei
has made good progress in building shareholder value. Hanwei has leveraged its
expertise in manufacturing high pressure fibreglass reinforced plastic ("FRP")
pipes for the oil industry to increase the production capacity of its plant in
Daqiing, China, expand sales and marketing to other regions of China and Asia,
and diversify into FRP products for the coal power and wind power industries.
After the closing of the recently announced bought deal private placement,
expected on or about June 21, 2007, Hanwei will have raised over $75 million
in 2007 to fund its growth plans.
    The Company is committed to implementing best practices in corporate
governance and disclosure as indicated by the election of a board consisting
of a majority of independent directors, announced on June 19, 2007. Following
the filing of its financial statements for the first quarter ended March 31,
2007, the Company engaged its auditor, Ernst & Young LLP, to commence a review
of its quarterly financial statements, intending this to be done every
quarter. In connection with that review, Ernst & Young LLP recommended a
restatement of the Company's financial statements and management discussion
and analysis for the first quarter ended March 31, 2007, including the
reclassification of $1,048,323 of prepaid expenses to fixed assets and
adjusting its presentation of its first quarter loss per share, described
below and filed on SEDAR. The restatements have no impact on the Company's
total revenues, the amount of its total net loss, or total assets for the
first quarter ended March 31, 2007.

    High Pressure FRP Pipe for the Oil Industry

    Hanwei has completed the increase of production capacity at its Daqing
high pressure FRP oil pipe plant to 2,400 km per annum, representing a 50%
increase over production and sales of approximately 1,600 km in 2006 and a 20%
increase over production capacity of 2,000 km as of the beginning of 2007. The
Company has identified a site in Tianjin, China on which it plans to construct
a manufacturing plant with initial capacity of 800 km per annum of high
pressure FRP pipe for the oil industry. Hanwei is now seeking government
approvals for the Tianjin plant, and plans to commence operations in Tianjin
in the fourth quarter of 2007. Two new production lines with capacity of
approximately 400 km per annum have been assembled in its Daqing plant that
will be moved to the Tianjin site. These two lines will be used to commence
operations in Daqing in June 2007 to ensure that the Company meets its
production and sales targets in 2007.
    In March 2007, the Company announced that it had signed an Exclusive
Cooperation Agreement (the "ECA") with China Petroleum Technology and
Development Corporation (CPTDC), a wholly owned subsidiary of China National
Petroleum Corp. ("CNPC"), a state-owned entity and the parent company of (i)
Daqing Oil Management Bureau which owns Daqing Changyuan Investment Co. Ltd.
(Harvest's joint venture partner) and (ii) Petrochina Co., Ltd. a major
Chinese oil and gas company listed on the New York Stock Exchange (NYSE:   PTR).
Under the ECA, Harvest and CPTDC agreed to cooperate to develop markets for
Harvest's FRP products in Kazakhstan and other Commonwealth of Independent
States (including: Azerbaijan, Armenia, Belarus, Georgia, Kyrgyzstan, Moldova,
Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine); also Indonesia,
India, Saudi Arabia, Oman, and Peru for an initial period of two years. The
ECA is a mutually exclusive agreement for the designated countries such that
Harvest cannot sell through any other distributor and CPTDC cannot sell FRP
products from any other supplier (unless Harvest does not offer a similar
    In the first quarter of 2007, Harvest commenced sales and marketing with
CPTDC in Kazakhstan and generated an initial sales order for approximately RMB
10 million ($1.4 million). Over the past year, Hanwei has conducted market
analysis and established a working relationship with CPTDC in Kazakhstan.
According to the Energy Information Administration, an agency of the U.S.
government, Kazakhstan produced 1.29 million barrels per day (bbl/day) in
2005, and the Kazakh government hopes to increase production levels to around
3.5 million bbl/d in 2015. The Company believes that there is a significant
need for FRP oil pipe in Kazakhstan to solve corrosion problems and that there
is limited competition. Hanwei has commenced the process of establishing two
subsidiaries in Kazakhstan with the goal of increasing sales and marketing
activity and plans to conduct a feasibility study to determine if it should
build a high pressure FRP oil pipe production plant in Kazakhstan in order to
reduce transportation costs, address barriers to entry into the Kazakh market
and build market share.

    Coal Power Industry

    Hanwei commenced commercial operations of FRP spray headers for wet flue
gas desulphurization ("FGD") pollution control systems in early 2007. Coal
fired plants generated over 50% of the 26 million tonnes of sulphur dioxide
(SO(2)) emitted in China in 2005. The Chinese government has implemented
pollution control policies that require that all new coal fired plants and a
large percentage of existing coal fired plants install SO(2) pollution control
systems. Wet FGD systems are widely used in North America and Europe to reduce
SO(2) emissions from coal fired power plants, but are relatively new in China.
The wet FGD process results in up to 90% of SO(2) being removed from flue gas,
but also causes the flue gas to become highly corrosive. FRP is a cost
effective material used to protect pipes, ducts and chimneys from corrosive
flue gas. Hanwei has established relationships with coal plant owners and FGD
contractors and had over $1 million in sales orders for FRP spray headers in
the first quarter of 2007. Spray headers comprise about 10% of the potential
purchase of FRP products for FGD systems. Hanwei plans to develop or acquire
technology to produce a full set of FRP products for FGD systems. Currently
the Company has two FRP spray header production lines in a leased production
facility in Beijing with capacity of approximately 700 tonnes per annum. The
Company plans to move these production lines to the planned Tianjin plant in
the fourth quarter of 2007.

    Wind Power Industry

    Harvest has an agreement with Deta to manufacture approximately
RMB 200 million (C$28.1 million) worth of wind power products, including
turbines, blades and towers, and an expression of intent for the placing of
additional orders with Harvest for wind power products in the amount of RMB
600 million (C$84.4 million) in 2008 and RMB 900 million (C$126.6 million) in
2009, subject to satisfactory completion by Harvest of the 2007 order. For
details on the terms of the agreement please see the Company's press release
dated June 1, 2007.
    According to a report by the Global Wind Energy Council ("GWEC"), a wind
power industry association, in 2006 approximately US$23 billion of new wind
power generation equipment was installed throughout the world, representing a
25% increase in global wind power capacity to more than 74 gigawatts ("GW").
The GWEC report estimated that in 2006, China's wind power capacity grew by
more than 100%, or 1,347 megawatts (MW) to 2,604 MW. In February 2005, China
published a renewable energy law, that came into force on January 1, 2006,
under which national targets for renewable energy were established, to be
supported by various measures, including subsidies, cost sharing and
requirements that provincial power grids purchase certain amounts of renewable
energy. Recently, the Chinese government proposed a target of 30 GW of wind
power generation by 2020. Inner Mongolia, including the Durbert Mongolia
Autonomous County, where the equipment Harvest is producing will be installed,
is forecasted to host some 33% or 10,000 MW of China's wind capacity by 2020.
    As announced on June 5, 2007, the Company has entered into an agreement
with a syndicate of underwriters led by Canaccord Capital Corp., and including
GMP Securities LP and Research Capital Corp. for a bought deal private
placement of special warrants with gross proceeds of $45 million, expected to
close on or about June 21, 2007 to fund the wind power business and for
general corporate purposes.

    Restatement of Financial Statements for the first quarter ended March 31,

    Pursuant to a review of its financial statements for the first quarter
ended March 31, 2007 by its auditor, Ernst & Young LLP, the company has made
the following restatements:

    -   Cash and cash equivalents increased by $1,500,000 to $3,067,411, due
        to the reclassification of $1,500,000 of short term investment.
    -   Prepayments were reduced by $1,048,323 to $1,527,241 due the
        reclassification of $1,048,323 of prepayments for equipment and
        materials used to build production lines to property, plant and
        equipment. This reclassification resulted in a decrease of $1,048,323
        for current assets and a corresponding increase in long term assets;
        accordingly total assets were unchanged at $36,430,139.
    -   Diluted earnings per share were restated to a loss of $0.06 per share
        (based on 23,933,333 shares), from a loss of $0.04 per (based on
        37,705,089 fully diluted shares) share since according to GAAP basic
        and dilutive loss per share are both recorded based on the basic
        weighted average number of common shares outstanding.
    -   The Company also updated the notes and made a number of small
        corrections to the statements. Please see the Company's restated
        financial statements for the first quarter ended March 31, 2007 filed
        on SEDAR.

    The restatements had no impact on the Company's revenues, net loss, or
total assets for the first quarter ended March 31, 2007.



    Certain information in this news release is forward-looking within the
meaning of certain securities laws, and is subject to important risks,
uncertainties and assumptions. This forward-looking information includes,
among other things, information with respect to management's expansion and
growth plans, as well as information with respect to the Company's beliefs,
plans, expectations, anticipations, estimates and intentions. The words "may",
"could", "should", "would", "suspect", "outlook", "believe", "anticipate",
"estimate", "expect", "intend", "plan", "target" and similar words and
expressions are used to identify forward-looking information. The
forward-looking information in this news release describes the Company's
expectations as of June 20, 2007.
    The results or events anticipated or predicted in such forward-looking
information may differ materially from actual results or events. Material
factors which could cause actual results or events to differ materially from a
conclusion, forecast or projection in such forward-looking information
include, among others: general economic factors, adverse industry events, its
ability to make and integrate acquisitions, industry and government
regulation, risks associated with integrating new production lines, risks
associated with entering new product lines and markets, risks associated with
establishing new production facilities and the potential for costs over-runs
or delays associated with construction and a risk that the Company may be
unable to procure needed capital for its growth plans. In connection with the
planned wind power manufacturing business, there are the following specific
risks: a risk that the agreements with Deta may not complete on the terms
currently agreed or that Deta may have insufficient funds to make the required
payments to Harvest, risks associated with doing business with Provincial
Chinese Governments, including a risk that the Heilongjiang provincial power
authority may not fulfill its promise to purchase all of the wind power
developed by Ruihao or companies associated with Ruihao, a risk that Harvest
may not be able to fulfill its obligations for the wind power products as set
out in the agreements with Deta, a risk that Harvest's wind power customer may
not have procured all necessary PRC regulatory approvals to establish a wind
power farm , a risk that while it is the Company's belief that the bidding
process for the wind power project conforms to local practice, such process
may not have complied with all requirements of Chinese law, risks relating to
Hanwei's entry into a new technology, risks relating to recruiting and
maintaining qualified personnel, risks relating to the reliance on
partners/other parties, risks relating to the need for funds, risks relating
to Hanwei's entry into a new business, risks relating to technology that is
evolving, and risks relating to legal uncertainty as to the regulation of the
wind power in China. In connection with the private placement scheduled to
close on June 21, 2007, there is no assurance it will close.
    The Company cautions that the foregoing list of material factors is not
exhaustive. When relying on the Company's forward-looking information to make
decisions, investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. The Company has assumed
a certain progression, which may not be realized. It has also assumed that the
material factors referred to in the previous paragraph will not cause such
forward-looking information to differ materially from actual results or
events. However, the list of these factors is not exhaustive and is subject to
change and there can be no assurance that such assumptions will reflect the
actual outcome of such items or factors. For additional information with
respect to certain of these and other factors, refer to the Risk Factors
section of the Company's management's discussion and analysis dated June 19,
2007 filed with Canadian securities regulators, which is available on SEDAR at

For further information:

For further information: Kim Oishi, Senior Vice President, Finance and
Business Development, (416) 804-9228, koishi@hanweienergy.com

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