Honghua Group  announced that it has, pursuant to a JV agreement it has entered into with Gansu Huateng Petroleum Machinery Manufacturing Co., Ltd., agreed to establish a wholly-owned project company in Gansu Province that will purchase assets from Gansu Huateng at a consideration of RMB39 million.

Thereafter, Honghua and Gansu Huateng will make capital contribution towards the project company with RMB42 million in cash and with asset valued at RMB36 million respectively for formation of a JV company.

The registered capital of the JV company will be RMB120 million, with Honghua and Gansu Huateng respectively holding 70% and 30% of its equity interest.

The JV company is principally engaged in manufacturing and marketing of special vehicles (modified trucks); fabrication and marketing of pressure pumps (Class III, low- and medium-pressure containers); oil exploration and production; mining and metallurgy; oil refining and chemical; processing and sale of industrial pumps; technical consulting services; oilfield engineering services; and import and export commerce.

Honghua's directors consider that the formation of the JV company indicates the group officially enters into the area of oil fracturing and recovery equipment manufacturing, which is advantageous to extend the group's products chain and is strategically complementary to the traditional drilling rigs manufacturing business.