Feb 18 2011
China GengSheng Minerals, Inc. ("GengSheng") (AMEX: CHGS), a leading China-based high-tech industrial materials manufacturer producing heat resistant, energy efficient materials for a variety of industrial applications, today announced that it has been awarded $10.5 million a follow-on contract for its fracture proppants from a China-based distributor specializing in sales to overseas oil and gas companies. GengSheng will begin shipments to this customer in February 2011 and expects to supply approximately 27,000 tons of proppant products over a six-month period.
"During 2010, we achieved tremendous growth in our fracture proppant business, driven by robust demand from both domestic and international customers. Throughout the year, we worked to develop strong relationships with our customers and key distributors, and it is clear that these efforts are bearing fruit. We are pleased that this distributor has recognized the quality of our products and high level of customer service we provide by awarding us this significant follow-on order," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "We entered 2011 with our proppant manufacturing operations near full capacity. We expect drilling activity to remain high throughout the year, driving continued strong demand for proppant materials. In an effort to capture this anticipated demand, we are currently exploring opportunities to expand our fracture proppant manufacturing capacity later in the year."
GengSheng commercially launched its fracture proppant products in the second quarter of 2007, and reported full-year 2009 revenue from this product segment of $8 million, representing a 3-year CAGR of 323%. Fracture proppant sales in the third quarter of 2010 were a record $5 million. In order to meet the growing demand for its fracture proppant products, GengSheng signed a 3-year operating facility lease in the fourth quarter of 2010. This facility increased the Company's fracture proppant manufacturing capacity to 75,000 metric tons per year.