Qinan Ji, Chairman and CEO of China Natural Gas, Inc. commented: "We are pleased to share the results of our second quarter, as we believe that they demonstrate continued progress toward our geographic growth and forward integration objectives. We invested significant resources during the second quarter toward the completion of our LNG facility in Shaanxi province, for which we held the opening ignition ceremony on June 30, 2010. We completed four new fueling station acquisitions in the second quarter, increasing the size of our network to 40 stations. Our successful acquisition of a fully operational CNG compression station in Hanchuan City will also drive top- and bottom-line growth in the coming quarters, especially as a step stone for our future expansion in Hubei Province. Our outlook for the second half of the year is promising as we continue to grow our business, and we look forward to sharing any future developments as they materialize."

Second Quarter 2010 Financial and Operating Results

Revenues in the second quarter of 2010 increased 1.9% to $21.1 million from $20.7 million in the second quarter of 2009, driven by sales from 5 new fueling stations added since the third quarter of 2009, as well as an increase in the number of residential and commercial pipeline customers to 112,343 as of June 30, 2010 from 103,343 as of June 30, 2009. Natural gas sales grew 3.2% year-over-year to $16.2 million, up from $15.7 million in the second quarter of 2009. Gasoline revenues in the second quarter of 2010 increased to $2.03 million, up 24.5% from $1.63 million in the prior year's period, which was mainly attributable to the increase of international oil prices. Installation and services revenue decreased 15.0% year-over-year to $2.88 million from $3.39 million in the year-ago period. In the second quarter of 2010, sales of natural gas, gasoline, and installation and other services contributed 76.7%, 9.6%, and 13.6% of total revenues, respectively.

Gross profit in the second quarter of 2010 decreased 6.4% to $9.6 million, from $10.3 million in the prior year's same period. Gross margin in the second quarter of 2010 was 45.5%, compared to 49.6% a year ago. Gross profit and gross margin decreased primarily due to increased procurement costs in Henan Province, a main area of operations.

Operating income in the second quarter of 2010 was $4.7 million, a decrease of 31.3% year-over-year from $6.8 million in the second quarter of 2009. The change was primarily due to a $1.5 million increase in operating expenses to $5.0 million during the second quarter in 2010, versus $3.5 million in the same period in 2009.

Income tax expense was $973,611 for an effective tax rate of 18.1%, as compared to an effective tax rate of 21.3% in the second quarter of 2009.

Net income in the second quarter of 2010 increased 18.1% to $4.6 million, from $3.9 million, in the second quarter of 2009. Net margin increased to 21.6% during the three months ended June 30, 2010 from 18.6% during the three months ended June 30, 2009. EPS decreased to $0.21 per diluted share, down 19.2% from $0.26 per diluted share in the second quarter of 2009.

As of June 30, 2010, the Company had $42.6 million in cash and cash equivalents , compared to $48.2 million in cash and cash equivalents at December 31, 2009. The decrease in cash and cash equivalents was primarily attributable to the construction of the LNG plant, additions of fueling stations, and market development initiatives in Henan and Hubei Province.

Net cash provided by operating activities was $10.9 million for the six months ended June 30, 2010, compared to net cash provided by operations of $14.4 million for the six months ended June 30, 2009. The primary reason for the change was due to lower operating income and an increase in working capital of $596,743.

Business Developments and Outlook

On July 1, 2010, the Company announced the commencement of test run of its Jingbian liquefied natural gas (LNG) plant, marked by an ignition ceremony. The Company plans to begin commercial production within the second half of this year. The plant's completion will also serve as the precursor to the Company's forward integration strategy, which involves the potential development of its own network of LNG fueling stations.

On July 8, 2010, the Company announced that it had successfully acquired a compressed natural gas (CNG) compressor station in Hanchuan City, China. The station currently has sufficient capacity to process 80,000 to 100,000 cubic meters of natural gas daily and is centrally located near rail lines and arterial roadways, which should reduce transportation costs and improve shipping efficiency. Management foresees the compressor station servicing the Company's future expansion in Hubei province.

On August 6, China Natural Gas announced that a ship powered by LNG and modified by the Company successfully completed its test navigation in Wuhan on August 3rd, 2010. The historic event is the first time an LNG-powered ship has navigated in China's domestic waterways, demonstrating that LNG can be used both in cars and ships as a transportation fuel. The Company succeeded in fueling a tugboat weighing over 300 tons with LNG for Wuhan Ferry Company. The ship now runs on a fuel formula of 30% diesel and 70% natural gas, representing significant energy and cost savings. CHNG is also planning to apply for related ship modification patents and intends to pursue additional applications for the technology.

Following a meeting in early July by the Chinese State Council regarding the economic development of western China, the Company announced that it will continue to benefit from a preferential 15% corporate income tax rate for the next 10 years. The income tax policy, as well as a transition from a volume-based to a price-based resource tax on oil and natural gas, is part of the State Council's strategy to spur economic growth in underdeveloped parts of western China.

Conference Call

Management will hold a conference call on Monday, August 16, 2010 at 8:30 a.m. ET (5:30 a.m. Pacific) to discuss these second quarter results.

To participate in the call please dial (877) 941-2068, or 480-629-9712 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found at the Company's website at http://www.naturalgaschi... .

A replay of the call will be available for two weeks from 11:30 a.m. on August 16, 2010, EDT until 11:59 p.m. EDT on August 30, 2010. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the pin number for the replay is 4344157. In addition, a recording of the call will be available via the company's website at http://www.naturalgaschi... for one year.

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 28 CNG fueling stations in Shaanxi Province and 12 CNG fueling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fueling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fueling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

Forward-Looking Statements

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

XIAN, China, March 31 /PRNewswire-Asia/ -- China Natural Gas, Inc. (Nasdaq:CHNG - News), a leading natural gas operator of compressed natural gas (CNG) fueling and pipeline natural gas (PNG) services in China, today announced that its joint venture with CNPC Kunlun Natural Gas Co. has received local government approval to build one CNG compressor station and six fueling stations in Pingdingshan City, Henan Province.

According to the local government approval document, the joint venture, Henan CNPC Kunlun Xilan Compressed Natural Gas Co., Ltd., will build one CNG compressor station and two fueling stations in Ye County, Pingdingshan City, two fueling stations in Baofeng County, Pingdingshan City, and two fueling stations in Wugang County, Pingdingshan City. The development marks the formal launch of the joint venture between China Natural Gas, Inc. and CNPC in this region.

Pingdingshan City and the three municipalities under its administration are located in the central and western regions of Henan Province. Baofeng County is an important transportation junction in the province and also a political, economic, cultural center. Located southwest of Pingdingshan City and known as the rock salt capital of China, Ye County is a major salt and grain production base in the country. Wugang County is a modern industrial and tourist destination in central Henan Province.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, Inc. commented: "We are very pleased to make this announcement that our joint venture with CNPC is progressing well and has received construction permit of one CNG compressor and six fueling stations in Pingdingshan City in Henan Province. CNPC Kunlun has broad market coverage and strong gas supply channels. By leveraging the existing pipeline and supply networks of our business partner, CNPC, we will be able to fully utilize our competitive advantages in strategic management, marketing development and business operations to further expand our market and ultimately generate better returns for our investors."

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 24 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline- fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. Statements that are not historical facts including statements about the Company's beliefs and expectations are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    China Natural Gas Inc.
     Jacky Shi
     IR Director
     Tel:   +86-29-8832-3325 x922
     Cell:  +86-139-9287-9998
     Email: yjshi@naturalgaschina.com

    Investor Relations:
    RedChip Companies, Inc.
     Jon Cunningham
     Tel:   +1-800-733-2447 x107
     Email: info@redchip.com
     Web:   http://www.RedChip.com

Mr. She joined China Natural Gas in February 2008 as Vice President of Finance and was placed in charge of the Company's New York office. He returned to the Company's headquarters in Xi'an, China, in December 2008 and was soon promoted to Assistant Chief Financial Officer. He is succeeding Veronica Jing Chen, who is resigning as Chief Financial Officer due to family reasons.

Mr. Qinan Ji, Chairman and Chief Executive Officer of China Natural Gas, Inc., stated: "We are delighted that David She has agreed to serve as Acting Chief Financial Officer of the Company and look forward to utilizing his considerable talents and experience as a valuable member of our senior management team. I have the highest confidence in David's ability to manage the continued financial growth of China Natural Gas. His international experience combined with his financial and operations experience make him uniquely qualified for this position. I also want to express my appreciation to Veronica Jing Chen for her fine work in service to the Company, and I wish her every success in her future endeavors."

Mr. She was in charge of several functions within the Company, including the oversight of quarterly and annual filings with the U.S. Securities and Exchange Commission, evaluations of the Company's major acquisition opportunities, and the management of investor relations. He helped to coordinate the Company's $40 million debt financing in March 2008 and supervised legal, audit and regulatory reporting issues in the Company's $57 million underwritten public offering in September 2009. Prior to joining China Natural Gas, Mr. She served as a securities analyst for West China Securities in Beijing. He received bachelor's degrees in mathematics and business administration from Beijing Institute of Technology as well as a master's degree in finance from State University of New York in Buffalo.

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 24 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

Safe Harbor: Forward-Looking Statements

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    At the Company:

    China Natural Gas, Inc.
     Jacky Shi
     Investor Relations Director
     Tel:   +86-29-8832-3325 x922
     Cell:  +86-139-9287-9998
     Email: yjshi@naturalgaschina.com

    Investor Relations:

    RedChip Companies, Inc.
     Jon Cunningham
     Tel:   +1-800-733-2447 x107
     Email: info@redchip.com
     Web:   http://www.RedChip.com

Mr. Qinan Ji, Chairman and Chief Executive Officer of China Natural Gas, Inc., stated: "We chose RedChip Companies to lead our investor and public relations program based on their success in increasing visibility for public companies as well as their expertise in market positioning, their strong international presence and their best-in-class products and services. We are certain that RedChip will bring an unmatched level of professionalism to our team, helping China Natural Gas build solid and lasting relationships with new investors while strengthening existing relationships with current investors."

Dave Gentry, President and Chief Executive Officer of RedChip Companies, Inc., said: "We are very excited for the opportunity to represent China Natural Gas, the first China-based natural gas company that trades publicly on a United States stock exchange. The Company enjoys strong growth and is poised to continue its expansion as it nears completion of a liquefied natural gas processing and distribution plant in Jingbian, and expands its presence into heavily populated Henan province. We look forward to introducing China Natural Gas to RedChip's investor network as we launch a comprehensive investor relations program."

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 24 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

Safe Harbor: Forward-Looking Statements

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    For more information, please contact:

    At the Company:
    China Natural Gas, Inc.
     Jacky Shi
     Investor Relations Director
     Tel:   +86-29-8832-3325 x922
     Cell:  +86-139-9287-9998
     Email: yjshi@naturalgaschina.com

    Investor Relations:
    RedChip Companies, Inc.
     Jon Cunningham
     Tel:   +1-800-733-2447 x107
     Email: info@redchip.com
     Web:   http://www.RedChip.com

NEW YORK, Nov. 10 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced its financial results for the third fiscal quarter, ended September 30, 2009.

Third Quarter 2009 Results

Revenue in the third quarter of 2009 increased 9.4% to $20.1 million from $18.4 million in the third quarter of 2008, driven by additional fueling stations and higher residential and commercial pipeline customers. Sales of natural gas grew 0.7% YoY to $15.5 million, from $15.4 million in the third quarter of 2008. Gasoline revenue in the third quarter of 2009 increased 37.5% to $1.6 million, from $1.2 million in the prior year's period. Installation and services revenue grew 63.4% YoY to $3.0 million, from $1.9 million a year ago. In the third quarter of 2009, sales of natural gas, gasoline, and installation and other services contributed 76.8%, 8.1%, and 15.1% of total revenue, respectively.

Gross profit in the third quarter of 2009 expanded 2.4% to $9.7 million, from $9.5 million in the prior year's same period, driven by the increased sales volume of natural gas and increased revenue from installation business. Gross margin in the third quarter of 2009 was 48.3%, compared to 51.6% a year ago, mainly due to higher procurement costs of natural gas in Henan.

Operating income in the third quarter of 2009 was $5.9 million, a decrease of 8.4% YoY, from $6.4 million in the prior year's period. Meanwhile, operating expenses in the third quarter of 2009 increased by approximately $0.7 million to $3.8 million, versus $3.1 million in the prior year's period, mainly due to additional expenses related to the acquisition of Lingbao Natural Gas, Co. and the addition of 3 new fueling stations added since the third quarter of 2008. Consequently, third quarter 2009 operating margin was 29.3%, compared to 34.9% for the same period of last year.

During the quarter, the Company recognized $0.4 million non-cash expense from an estimated change in the fair value of warrants, versus zero in the third quarter of 2008.

Income tax expense was $1.0 million for an effective tax rate of 17.7%, as compared to an effective tax rate of 16.8% in the third quarter of 2008. Net income in the third quarter of 2009 decreased 9.5% to $4.6 million, or $0.29 per diluted share, from $5.1 million, or $0.35 per diluted share, in the third quarter of 2008.

Excluding the impact of the non-cash expenses (see "About Non-GAAP Financial Measures" toward the end of this release), adjusted net income was 5.1 million, versus $5.3 million in the third quarter of 2008. For the third quarter of 2009, adjusted earnings per diluted share was $0.32, versus $0.36 per diluted share in the third quarter of 2008.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented, "We are satisfied with our third quarter's steady growth and profitability. During this quarter, we increased our number of pipeline customers to 118,973, and we expanded the number of our CNG gas stations to 36. We also successfully completed a secondary offering and were encouraged by the strong interest and solid participation by new and existing shareholders. We believe this transaction will ensure the future growth of our LNG business and expansion of our existing CNG business, as well as further strengthen our balance sheet and enhance our working capital."

Liquidity and Capital Resources

As of September 30, 2009, the Company increased cash and cash equivalents to $55.9 million, compared to $9.7 million as of June 30, 2009. During the quarter, cash flow provided by operating activities was $3.9 million, versus $4.6 million a year ago. The Company invested an additional $7.9 million to construction-in-progress related to its LNG project. Accounts receivable was a modest $1.1 million, and Days Sales Outstanding remained solidly below 10 days.

Financial Outlook for 2009

The Company reaffirms its projection for the full year 2009 of revenue growing 15% to 20% to a range of $78 million to $83 million, from $68 million in 2008. The Company also reaffirms its net income guidance of a range of $17.5 million to $18.5 million, a 15% to 22% growth from $15.2 million in 2008.

Mr. Ji concluded, "We are excited about the potential demand growth and price increase in China's natural gas market. We will continue to grow our business strategically by steadily expanding our CNG customer base, and we are confident that our integrated strengths of considerable operational scale, technical expertise, and balance sheet will help sustain our steady growth and profits.

"We remain optimistic about our long-term opportunities in the LNG market. As recent as mid October of 2009, our LNG plant was on schedule to be completed and to begin operations by the end of this year. However, recent unexpected events have pushed that date back to 2Q10. During mid-October, we learned that several imported critical components took longer to ship and subsequently were held up at entry ports due to a change in tariff policy, which required additional documentation. In late October, we were also notified that the LNG plant requires additional reinforcements in order to meet our strict safety requirements. Eventually, upon the completion of our new LNG plant, we intend to aggressively grow our LNG business so as to capture a sizable share of China's nascent LNG market. We believe that once in full operations, our LNG business will enable us to further strengthen our market position, enhance our brand, accelerate our growth and ultimately reward our new and existing shareholders with greater value."

Conference Call

The management team will hold a conference call on Tuesday, November 10th, 2009, at 8:00 am ET to discuss its third quarter 2009 results. Listeners may access the call by dialing 1-888-230-5944 or 1-913-312-1482 for international callers. A webcast will also be available via the Company's website at http://www.naturalgaschi... . A replay of the call will be available through November 17, 2009. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers, access code: 6706463.

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for earnings that exclude the effect of non-cash non-operating expense related to the Senior Notes issued in January and March 2008 as well as change in fair market value of the Company's outstanding warrants. China Natural Gas' management uses those non-GAAP financial measures when it internally evaluates the performance of business and makes operating decisions, including internal budgeting and performance measurement. China Natural Gas believes that providing the non-GAAP measures is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand China Natural Gas' financial performance in comparison to historical periods, and it allows investors to evaluate China Natural Gas' performance using the same methodology and information as that used by China Natural Gas' management. However, investors need to be aware that non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure.

The Company has provided a reconciliation table of the non-GAAP measure to the equivalent GAAP measure.

                    CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                   RECONCILIATION OF GAAP TO NON-GAAP MEASURES
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

                                Three months ended       Nine months ended
                                   SEPTEMBER 30             SEPTEMBER 30
                                 2009         2008        2009        2008

    GAAP Net Income           4,647,519    5,136,590  12,711,898  11,458,053
    Add:
       Amortization of
        discount on senior
        notes                    63,054       95,528     280,250     555,001
       Amortization of
        deferred offering
        costs                    11,505       24,410      63,940     147,002
       Change in fair value
        of warrants             357,979           --   1,473,762          --

    Non-GAAP Net Income       5,080,057    5,256,528  14,529,850  12,160,056
     (Excludes all non-cash
     items)
    Weighted average shares
     outstanding
       Basic                 15,754,696   14,600,154  14,985,001  14,600,154
       Diluted               16,139,820   14,639,795  15,035,172  14,658,419

    GAAP Basic EPS                 0.29         0.35        0.85        0.78
    Add:
       Amortization of
        discount on senior
        notes                    0.0040       0.0065      0.0187      0.0380
       Amortization of
        deferred offering
        costs                    0.0007       0.0017      0.0043      0.0101
       Change in fair value
        of warrants              0.0227           --      0.0983          --

    Non-GAAP Basic EPS             0.32         0.36        0.97        0.83

    GAAP Diluted EPS               0.29         0.35        0.85        0.78
    Add:
       Amortization of
        discount on senior
        notes                    0.0039       0.0065      0.0186      0.0379
       Amortization of
        deferred offering
        costs                    0.0007       0.0017      0.0043      0.0100
       Change in fair value
        of warrants              0.0222           --      0.0980          --

    Non-GAAP Diluted EPS           0.32         0.36        0.97        0.83

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    China Natural Gas Inc.
     Jacky Shi
     IR Director
     Tel:   +86-29-8832-3325 x922
     Cell:  +86-139-9287-9998
     Email: yjshi@naturalgaschina.com

    ICR, Inc.
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: Michael.Tieu@icrinc.com



                      CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                  AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008

                                           September 30,      December 31,
                                                2009               2008
                                            (Unaudited)
                   ASSETS
    CURRENT ASSETS:
    Cash & cash equivalents             $       55,931,579 $       5,854,383
    Accounts receivable                          1,141,615           906,042
    Other receivable - employee advances           238,962           332,263
    Inventories                                  1,464,958           519,739
    Advances to suppliers                        1,809,560           837,592
    Prepaid expense and other current
     assets                                        455,586           838,294
    Loan receivable                                293,400           293,400
    Total current assets                        61,335,660         9,581,713

    PROPERTY AND EQUIPMENT, NET                 71,840,861        76,028,272
    CONSTRUCTION IN PROGRESS                    42,124,222        22,061,414
    DEFERRED FINANCING COSTS                     1,439,456         1,746,830
    OTHER ASSETS                                13,350,012         8,844,062

    TOTAL ASSETS                        $      190,090,211 $     118,262,291

    LIABILITIES AND STOCKHOLDERS' EQUITY
     CURRENT LIABILITIES:
    Accounts payable and accrued
     liabilities                        $        1,412,215 $         800,013
    Other payables                                 245,397           124,151
    Unearned revenue                             1,741,827           944,402
    Accrued interest                               274,941           861,114
    Taxes payable                                1,942,670         1,862,585
    Total current liabilities                    5,617,050         4,592,265

    LONG TERM LIABILITIES:
    Notes payable, net of discount of
     $13,457,880 and $15,478,395 as of
     September 30, 2009 and December 31,
     2008, respectively                         26,542,120        24,521,605
    Redeemable liabilities - warrants           17,500,000        17,500,000
    Derivative liabilities - warrants            2,488,070                --
    Total long term liabilities                 46,530,190        42,021,605

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY:
    Preferred stock, $0.0001 per share;
     5,000,000 shares authorized; none
     issued                                             --                --
    Common stock, $0.0001 per share;
     45,000,000 shares authorized,
     21,183,904 and 14,600,154 shares
     issued and outstanding at
     September 30, 2009 and December
     31, 2008, respectively                          2,118             1,460
    Additional paid-in capital                  79,812,871        32,115,043
    Cumulative translation adjustment            8,700,988         8,661,060
    Statutory reserves                           5,417,413         3,730,083
    Retained earnings                           44,009,581        27,140,775
    Total stockholders' equity                 137,942,971        71,648,421

    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                             $      190,090,211 $     118,262,291



                      CHINA NATURAL GAS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
          FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
                                     (Unaudited)

                        Three months ended             Nine months ended
                           September 30                   September 30
                       2009            2008          2009             2008
    Revenue
     Natural gas
      revenue    $   15,454,386 $   15,354,461 $   46,140,884  $   40,494,646
     Gasoline
      revenue         1,633,478      1,187,754      4,440,892       3,466,601
     Installation
      and other       3,037,320      1,858,985      8,813,594       5,356,113
    Total revenue    20,125,184     18,401,200     59,395,370      49,317,360

    Cost of revenue
     Natural gas
      cost            7,536,188      6,973,035     21,773,635      20,369,778
     Gasoline cost    1,534,806      1,085,311      4,194,615       3,208,326
     Installation
      and other       1,336,498        850,487      3,797,586       2,492,650
    Total cost of
     revenue         10,407,492      8,908,833     29,765,836      26,070,754

    Gross profit      9,717,692      9,492,367     29,629,534      23,246,606

    Operating expenses
     Selling
      expenses        2,406,462      2,098,343      7,062,429       5,008,631
     General and
      administrative
      expenses        1,422,300        968,169      4,286,620       2,947,494
    Total operating
     expenses         3,828,762      3,066,512     11,349,049       7,956,125

    Income from
     operations       5,888,930      6,425,855     18,280,485      15,290,481

    Non-operating
     income expense)
     Interest income      7,248         13,536         23,940         120,297
     Interest expense   (68,407)      (212,774)      (745,064)     (1,249,003)
     Other income
     (expense), net     178,728         (6,786)      (137,954)        (17,512)
     Change in fair
      value of
      warrants         (357,979)            --     (1,473,762)             --
     Foreign
      currency
      exchange
      income (loss)         280        (48,605)       (50,527)       (101,436)
    Total non-
     operating
     expense           (240,130)      (254,629)    (2,383,367)     (1,247,654)

    Income before
     income tax       5,648,800      6,171,226     15,897,118      14,042,827

    Provision for
     income tax       1,001,281      1,034,636      3,185,220       2,584,774

    Net income        4,647,519      5,136,590     12,711,898      11,458,053

    Other
     comprehensive
     income
     Foreign
      currency
      translation
      gain              195,040        756,316         39,928       4,554,040
    Comprehensive
     income      $    4,842,559 $    5,892,906 $   12,751,826  $   16,012,093

    Weighted
     average
     shares
     outstanding
      Basic          15,754,696     14,600,154     14,985,001      14,600,154
      Diluted        16,139,820     14,639,795     15,035,172      14,658,419

    Earnings per
     share
      Basic      $         0.29 $         0.35 $         0.85  $         0.78
      Diluted    $         0.29 $         0.35 $         0.85  $         0.78



                      CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
                                   (Unaudited)

                                            Nine Months Ended September 30,
                                               2009                    2008

    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                           $   12,711,898        $   11,458,053
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
    Depreciation and amortization             4,175,175             2,295,534
    Loss on disposal of equipment                21,372                12,265
    Amortization of discount on senior
     notes                                      280,250               555,001
    Amortization of financing costs              63,940               147,002
    Stock based compensation                    186,672                51,861
    Change in fair value of warrants          1,473,762                    --

    Change in assets and liabilities:
    Accounts receivable                        (235,396)           (1,269,832)
    Other receivable                            (31,011)                   --
    Other receivable - employee advances         93,231              (273,759)
    Inventories                                (754,309)             (194,580)
    Advances to suppliers                      (971,240)             (508,417)
    Prepaid expense and other current assets    223,206              (783,706)
    Accounts payable and accrued liabilities    611,924               193,212
    Other payables                              121,234                37,587
    Unearned revenue                            796,827                34,855
    Accrued interest                           (586,173)              350,002
    Taxes payable                                80,025               606,233
    Net cash provided by operating
     activities                              18,261,387            12,711,311

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment          (47,797)          (21,693,376)
    Proceeds from sales of equipment             41,308                    --
    Proceeds from short term investments             --               249,464
    Additions to construction in progress   (18,064,065)          (16,679,747)
    Prepayment on long term assets           (4,434,118)           (6,774,616)

    Proceeds from loan receivable                    --               286,740
    Return of acquisition deposit               449,970                    --
    Payment for intangible assets               (68,347)                   --

    Payment for land use rights                (455,830)                   --
    Net cash used in investing activities   (22,578,879)          (44,611,535)

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Stock issued for cash                    57,607,813                    --
    Proceeds from senior notes                       --            40,000,000
    Payment for offering costs               (3,237,452)           (2,122,509)
    Net cash provided by financing
     activities                              54,370,361            37,877,491

    Effect of exchange rate changes on
     cash and cash equivalents                   24,327             1,115,706

    NET INCREASE IN CASH AND CASH
     EQUIVALENTS                             50,077,196             7,092,973

    CASH AND CASH EQUIVALENTS,
     BEGINNING OF PERIOD                      5,854,383            13,291,729

    CASH AND CASH EQUIVALENTS,
     END OF PERIOD                       $   55,931,579        $   20,384,702

    SUPPLEMENTAL DISCLOSURE OF
     CASH FLOW INFORMATION:
    Interest paid, net of
     capitalized interest                $    1,014,956        $           --
    Income taxes paid                    $    3,176,730        $    1,203,048

NEW YORK, Oct. 28 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that it plans to release its third quarter 2009 financial results on Monday, November 9, 2009, after the market closes.

The management team will hold a conference call on Tuesday, November 10, 2009, at 8:00 am ET to discuss its third quarter 2009 results. Listeners may access the call by dialing 1-888-230-5944 or 1-913-312-1482 for international callers. A webcast will also be available via the Company's website at http://www.naturalgaschi... .

A replay of the call will be available through November 17, 2009. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers, access code: 6706463.

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high pressure pipelines and operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline -- fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    China Natural Gas Inc.
     Jacky Shi
     IR Director
     Tel:    +86-29-8845-4353
     Mobile: +86-139-9287-9998
     Email:  ir.chng@naturalgaschina.com

    ICR, Inc.
     Michael Tieu
     Tel:    +86-10-6599-7960
     Email:  Michael.Tieu@icrinc.com

The exercise of the over-allotment option brings the total number of shares sold by China Natural Guess in this public offering to 6,583,750. The aggregate net proceeds received by the Company totaled approximately $54.7 million, after deducting underwriting discounts and commissions and the Company's roadshow travel expenses but before other expenses.

Roth Capital Partners, LLC acted as the sole book runner for the offering, and Simmons & Company International acted as a co-manager for the offering.

The net proceeds from the offering will be used for the construction of the Company's liquefied natural gas (LNG) facility, the acquisition of eight CNG fueling stations, the purchase of eight CNG trucks to transport CNG and the establishment of a joint venture company with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd., as well as for general working capital purposes.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction. Copies of the prospectus supplement relating to this offering may be obtained from Roth Capital Partners, LLC, Attention: Equity Capital Markets, 24 Corporate Plaza Drive, Newport Beach, CA 92660, by telephone at (949) 720-7194, or via email at rothecm@roth.com .

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high pressure pipelines and operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline -- fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the joint venture with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd. and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    China Natural Gas, Inc.
     Jacky Shi, IR Director
     Tel:   +86-29-8845-4353
     Cell:  +86-139-9287-9998
     Email: ir.chng@naturalgaschina.com

    ICR, Inc.
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: Michael.Tieu@icrinc.com

NEW YORK, Sept. 14 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that it has completed its underwritten public offering for 5,725,000 shares of its common stock at a price of $8.75 per share on September 9, 2009. The offering of shares was made pursuant to a registration statement previously filed with the Securities and Exchange Commission.

The net proceeds, after deducting underwriting discounts and commissions and the Company's roadshow travel expenses but before other expenses, is approximately $47.5 million. China Natural Gas has granted the underwriters a 30-day option to purchase up to an additional 858,750 shares to cover over-allotments at the public offering price. Roth Capital Partners, LLC acted as the sole book runner for the offering, and Simmons & Company International acted as a co-manager for the offering.

The net proceeds from the offering will be used for the construction of the Company's liquefied natural gas (LNG) facility, the acquisition of eight CNG fueling stations, the purchase of eight CNG trucks to transport CNG and the establishment of a joint venture company with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd., as well as for general working capital purposes.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented, "We are very pleased to announce the closing of this public offering. We believe this transaction will ensure the future growth of our LNG business and expansion of our existing CNG business, as well as further strengthen our balance sheet and enhance our working capital. We are encouraged by the strong interest and solid participation by reputable shareholders in our offering and we will work diligently to optimize shareholder value and reward their confidence in China Natural Gas. We will continue to grow our business strategically by steadily expanding our CNG customer base and growing our LNG business so as to capture the opportunities that arise in this rapidly growing natural gas markets."

About China Natural Gas, Inc.

China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the joint venture with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd. and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    China Natural Gas, Inc.
    U.S.:
     Kewa Luo
     Tel:   +1-212-401-1233
     Cell:  +1-917-880-8726

    CHINA
     Jacky Shi
     Tel:   +86-29-88454353
     Cell:  +86-139-9287-9998

     Email: ir.chng@naturalgaschina.com

    ICR, Inc.
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: Michael.Tieu@icrinc.com

The Rodman & Renshaw Annual Global Investment Conference is being held from Wednesday, September 9, 2009, through Friday, September 11, 2009, at the New York Palace Hotel in New York, NY. Management is currently scheduled to meet with institutional investors and to present at 3:15 p.m. ET on September 10, 2009. A webcasting of the presentation will be available at

    For more information, please contact:

    China Natural Gas Inc.

    U.S.:
     Kewa Luo
     Tel:  +1-212-401-1233
     Cell: +1-917-880-8726

    CHINA:
     Jacky Shi
     Tel:  +86-29-88454353
     Cell: +86-139-9287-9998

     Email: ir.chng@naturalgaschina.com

    ICR, Inc.
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: Michael.Tieu@icrinc.com

NEW YORK, Sept. 3 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that it has priced a public offering of 5,725,000 shares of its common stock, at $8.75 per share. The shares are being sold under the Company's previously filed shelf registration statement, which was declared effective by the Securities and Exchange Commission on August 20, 2009.

Net proceeds, after underwriting discounts and commissions and expenses, will be approximately $47,339,063. China Natural Gas has granted the underwriters an option to purchase up to an additional 858,750 shares to cover over-allotments, if any. The offering is subject to customary closing conditions and is expected to close on Wednesday, September 9, 2009.

The net proceeds from the offering will be used for the construction of the Company's liquefied natural gas (LNG) facility, the acquisition of eight CNG fueling stations, the purchase of eight CNG trucks to transport CNG and the establishment of a joint venture company with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd., as well as for general working capital purposes.

Roth Capital Partners, LLC is acting as the sole book runner for the offering. Simmons & Company International is acting as a co-manager for the offering.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any jurisdiction. The shares of common stock may only be offered by means of a prospectus. Copies of the final prospectus supplement and accompanying base prospectus can be obtained from Roth Capital Partners, LLC (Attention: Equity Capital Markets, 24 Corporate Plaza Drive, Newport Beach, CA, 92660, by telephone at 1-949-720-7194 or by e-mail torothecm@roth.com.)

About China Natural Gas, Inc.

The Company transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in China's Xi'an area, including Lantian County and the districts of Lintong and Baqiao, in Shaanxi Province. The Company owns approximately 120 km of high pressure pipelines in Xi'an, Shaanxi Province and, as of June 30, 2009, operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province.

The Company's four primary business lines include: (1) the distribution and sale of CNG through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fuelled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the joint venture with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd. and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    China Natural Gas, Inc.
     Jacky Shi
     IR Director
     Tel:   +86-29-8832-3325 x 922
     Cell:  +86-139-9287-9998
     Email: yjshi@naturalgaschina.com

    ICR, Inc.
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: Michael.Tieu@icrinc.com

Shaanxi Province Doubled the Investment in Supporting Company's LNG Initiative with Funding for Electrical Station

NEW YORK, Aug. 17 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced the updates for the power supply agreement with Yulin Municipal Government and Shaanxi Provincial Government.

As mentioned in the previous press release on March 25th, 2009, China Natural Gas has reached a power supply agreement with the municipal government of Yulin and Shaanxi Provincial Government. In this latest agreement, Yulin Electric Power Supply Bureau offers to invest RMB40 million (approximately US$5.9 million), which doubled the amount of its previously promised funding, to build an integrated 110KV transformer substation to ensure the supply of electricity for the Company's LNG plant. The commitment letter from Yulin Electric Power Supply Bureau states that because China Natural Gas's LNG initiatives are important at both provincial and municipal levels, the Bureau has made decision to add more investment in this built-out to guarantee to stability and capacity of the electricity demand for this key project.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas commented, "We are very glad to be informed this news by the Yulin government, and very delighted to share with our investors with this update. This doubled investment from the local government to build power facilitates for China Natural Gas demonstrates the government's continued support in implementing our LNG project. Having established a long-trusted safety record, with dominant market leading position, strong brand and broad market coverage, China Natural Gas has been recognized by the local government as a key player in the development of local economy too. More importantly, this RMB 40 million investment will further save our cost in building such transformer substation, which provides us with more financial flexibility in the future."

Mr. Ji continued, "We have received much positive news from the government in supporting the natural gas industry. Currently, the pricing mechanism of natural gas in China is influenced more by government policies than market forces. In early August, research from the State Information Center indicated that natural gas prices would soon be raised. And, because the price of natural gas in China is currently much lower than that of the international market, it is reasonable to estimate that the Chinese government is preparing to raise natural gas prices closer in line with global prices. We are confident that with the strong support from the government, we will continue our commitment to grow our business toward our goal of becoming the leader in China's fast growing natural gas market and we are excited about our ability to deliver sustained, strong financial results and to ultimately reward our supportive shareholders with greater share value."

About China Natural Gas, Inc.

The Company transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in China's Xi'an area, including Lantian County and the districts of Lintong and Baqiao, in Shaanxi Province. The Company owns approximately 120 km of high pressure pipelines in Xi'an, Shaanxi Province and, as of March 31, 2009, operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province.

The Company's four primary business lines include: (1) the distribution and sale of CNG through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline- fuelled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

    For more information, please contact:

    China Natural Gas Inc.
     Jacky Shi
     IR Director
     Tel:   +86-29-8832-3325 x922
     Cell:  +86 139-9287-9998
     Email: yjshi@naturalgaschina.com

    ICR, Inc.
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: Michael.Tieu@icrinc.com

 NEW YORK, Aug. 11 /PRNewswire-Asia/ --

            - 2Q09 Revenue Increases 22.8% YoY to $20.7 Million -

        - 2Q09 Gross Margin Increases 417 Basis Points YoY to 49.6% -

       - 2Q09 Adjusted Net Income Increases 34.5% YoY to $5.2 Million -

            -2Q09 Adjusted Diluted EPS Increases 29.6% to $0.35 -

China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced its financial results for the second fiscal quarter, ended June 30, 2009.

Second quarter 2009 Results

Revenue in the second quarter of 2009 increased 22.8% to $20.7 million from $16.9 million in the second quarter of 2008, driven by higher sales across all revenue categories. Sales of natural gas grew 14.0% YoY to $15.7 million, from $13.8 million in the second quarter of 2008. Installation and services revenue grew 74.0% YoY to $3.4 million, from $1.9 million a year ago; while gasoline revenue increased 42.2% to $1.6 million, from $1.1 million in the prior year's period. In the second quarter of 2009, sales of natural gas, installation and services, and gasoline contributed 75.8%, 16.3%, and 7.9% of total revenue, respectively.

Gross profit in the second quarter of 2009 expanded 34.1% to $10.3 million, from $7.7 million in the prior year's same period. Correspondingly, gross margin expanded 417 basis points to 49.6% in the second quarter of 2009, from 45.4% a year ago, as the Company continues to benefit from a combination of higher sales of natural gas and lower costs of natural gas supply.

Operating income in the second quarter of 2009 increased by $1.7 million, or 33.8% YoY, to $6.8 million, from $5.1 million in the prior year's period. Meanwhile, operating expenses in the second quarter of 2009 increased by approximately $0.9 million to $3.5 million, versus $2.6 million in the prior year's period, mainly due to additional expenses related to the acquisition of Lingbao Natural Gas, Co. in Oct. 2008 as well as the addition of 6 new fueling stations added since the second quarter of 2008. Consequently, second quarter 2009 operating margin expanded 267 basis points to 32.6%, from 29.9% in second quarter of 2008.

During the quarter, the Company recognized $1.3 million non-cash expense from an estimated change in the fair value of warrants, versus zero in the second quarter of 2008. Income tax expense was $1.2 million for an effective tax rate of 23.5%, as compared to an effective tax rate of 19.7% in the second quarter of 2008. As a result, net income in the second quarter of 2009 increased 10.0% to $3.9 million, or $0.26 per diluted share, from $3.5 million, or $0.24 per diluted share, in the second quarter of 2008.

Excluding the impact of the non-cash expenses (see "About Non-GAAP Financial Measures" toward the end of this release), adjusted net income grew 34.5% to $5.2 million, versus $3.9 million in the second quarter of 2008. Adjusted earnings per diluted share was $0.35, an increase of 29.6% from $0.27 per diluted share in the second quarter of 2008.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented, "We are pleased to have extended our solid track record of consistent growth and profitability. During this quarter, we successfully fulfilled our commitment to list China Natural Gas' stock on the NASDAQ Global Market, which was a landmark event in our Company's history. We believe this achievement highlights our dedication to not only raise our visibility among the investment community but also increase the liquidity and trading efficiencies of our common stock. I'd like to thank our investors for their support and confidence in our team, growth strategy and operating plans. We continue to leverage our strong brand and considerable operational scale to expand our geographical presence and steadily grow our CNG customer base. As demonstrated by our strong performance in revenue growth, gross margin expansion and solid cash flows, we remain confident in our outlook for the remainder of 2009.

Liquidity and Capital Resources

As of June 30, 2009, the Company had $9,701,176 of cash and cash equivalents on hand compared to $29,180,315 of cash and cash equivalents as of June 30, 2008. Net cash provided by operating activities was $14.4 million for the six months ended June 30, 2009 compared to net cash provided by operations of $8.1 million for the six months ended June 30, 2008. The Company paid $10.4 million to the LNG processing plant as a prepayment on equipment as well as an additional investment to construction in progress. Accounts receivable was a modest $1.0 million, and Days Sales Outstanding remained solidly below 10 days.

Financial Outlook for 2009

The Company reaffirms its projection for the full year 2009 of revenue growing 15% to 20% to a range of $78 million to $83 million, from $68 million in 2008. The Company also reaffirms its net income guidance of a range of $17.5 million to $18.5 million, a 15% to 22% growth from $15.2 million in 2008.

Mr. Ji concluded, "We expect to take advantage of the long-term opportunities driven by government policies and regulations, as well as the growing need for natural gas for industrial, commercial and residential uses in China. We remain steadfast in our vision, and we believe that with our successful listing on NASDAQ and our continued strong financial performance in the second quarter of 2009, we have marched several steps closer toward our goal of becoming the leader in China's fast growing natural gas market. We continue to be delighted with our growth opportunities, and we are excited about our ability to deliver sustained, strong financial results and to ultimately reward our supportive shareholders with greater share value."

Conference Call

The management team will hold a conference call on Tuesday, August 11th, 2009, at 8:00 am ET to discuss its second quarter 2009 results. Listeners may access the call by dialing 1-800-289-0730 or 1-913-312-0710 for international callers. A webcast will also be available via the Company's website athttp://www.naturalgaschi... . A replay of the call will be available through August 18, 2009. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers, access code: 7941819.

About China Natural Gas, Inc.

The Company transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in China's Xi'an area, including Lantian County and the districts of Lintong and Baqiao, in Shaanxi Province. The Company owns approximately 120 km of high pressure pipelines in Xi'an, Shaanxi Province and, as of March 31, 2009, operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province.

The Company's four primary business lines include: (1) the distribution and sale of CNG through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fuelled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for earnings that exclude the effect of non-cash non-operating expense related to the Senior Notes issued in January and March 2008 as well as change in fair market value of the Company's outstanding warrants. China Natural Gas' management uses those non-GAAP financial measures when it internally evaluates the performance of business and makes operating decisions, including internal budgeting and performance measurement. China Natural Gas believes that providing the non-GAAP measures are useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand China Natural Gas' financial performance in comparison to historical periods, and it allows investors to evaluate China Natural Gas' performance using the same methodology and information as that used by China Natural Gas' management. However, investors need to be aware that non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure.

The Company has provided a reconciliation table of the non-GAAP measure to the equivalent GAAP measure.

                     CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                   RECONCILIATION OF GAAP TO NON-GAAP MEASURES
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008

                                  Three months ended      Six months ended
                                       JUNE 30                JUNE 30
                                    2009       2008        2009       2008


    GAAP Net Income             $3,862,756  3,512,892  $8,064,379  6,321,463

    Add:
      Amortization of discount
       on senior notes              46,484    312,810     217,196    459,473
      Amortization of deferred
       offering costs               13,857     66,322      52,435    122,592
      Change in fair value of
       warrants                  1,312,834         --   1,115,783         --
                                 5,235,931  3,892,025   9,449,793  6,903,528
    Non-GAAP Net Income
     (Excludes all non-cash
      items)
    Weighted average shares
     outstanding
        Basic                   14,600,154 14,600,154  14,600,154 14,600,154
        Diluted                 14,726,647 14,661,748  14,600,154 14,664,867

    GAAP Basic EPS                    0.26       0.24        0.55       0.43
    Add:
      Amortization of discount
       on senior notes              0.0032     0.0214      0.0149     0.0315
      Amortization of deferred
       offering costs               0.0009     0.0045      0.0036     0.0084
      Change in fair value of
       warrants                     0.0899         --      0.0764         --
    Non-GAAP Basic EPS                0.35       0.27        0.64       0.47

    GAAP Diluted EPS                  0.26       0.24        0.55       0.43
    Add:
      Amortization of discount
       on senior notes              0.0032     0.0213      0.0149     0.0313
      Amortization of deferred
       offering costs               0.0009     0.0045      0.0036     0.0084
      Change in fair value of
       warrants                     0.0891         --      0.0764         --
    Non-GAAP Diluted EPS              0.35       0.27        0.64       0.47

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

                   CHINA NATURAL GAS, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
          FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                                 (Unaudited)

                        Three months ended            Six months ended
                             June 30                      June 30
                        2009          2008          2009          2008
    Revenue
    Natural gas
     revenue         $15,720,679   $13,794,866   $30,686,498   $25,140,185
    Gasoline
     revenue           1,633,016     1,148,097     2,807,414     2,278,847
    Installation
     and other         3,388,825     1,947,523     5,776,274     3,497,128
    Total revenue     20,742,520    16,890,486    39,270,186    30,916,160

    Cost of revenue
    Natural gas cost   7,490,518     7,214,469    14,237,447    13,396,743
    Gasoline cost      1,529,752     1,054,978     2,659,809     2,123,015
    Installation
     and other         1,444,060       955,276     2,461,088     1,642,163
    Total cost of
     revenue          10,464,330     9,224,723    19,358,344    17,161,921

    Gross profit      10,278,190     7,665,763    19,911,842    13,754,239

    Operating
     expenses
    Selling
     expenses          2,331,739     1,568,674     4,655,967     2,910,288
    General and
     administrative
     expenses          1,182,399     1,040,000     2,864,320     1,979,325

    Total operating
     expenses          3,514,138     2,608,674     7,520,287     4,889,613

    Income from
     operations        6,764,052     5,057,089    12,391,555     8,864,626

    Non-operating
     income
     (expense)
    Interest income        7,784        51,476        16,692       106,761
    Interest
     expense            (388,618)     (676,569)     (970,110)   (1,036,229)
    Other income
     (expense), net      (20,926)       (3,600)      (23,229)      (10,726)
    Change in fair
     value of
     warrant          (1,312,834)           --    (1,115,783)           --
    Foreign
     currency
     exchange loss           (19)      (52,831)      (50,807)      (52,831)
    Total non-
     operating
     expense          (1,714,613)     (681,524)   (2,143,237)     (993,025)

    Income before
     income tax        5,049,439     4,375,565    10,248,318     7,871,601

    Provision for
     income tax        1,186,683       862,673     2,183,939     1,550,138

    Net income         3,862,756     3,512,892     8,064,379     6,321,463
    Other
     comprehensive
     income
    Foreign
     currency
     translation
     gain (loss)          (2,997)    1,494,722      (155,112)    3,797,724
    Comprehensive
     income           $3,859,759    $5,007,614    $7,909,267   $10,119,187

    Weighted
     average shares
     outstanding
    Basic             14,600,154    14,600,154    14,600,154    14,600,154
    Diluted           14,726,647    14,661,748    14,600,154    14,664,867

    Earnings per
     share
    Basic                  $0.26         $0.24         $0.55         $0.43
    Diluted                $0.26         $0.24         $0.55         $0.43



                   CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                  AS OF JUNE 30, 2009 AND DECEMBER 31, 2008

                                                 June 30,         December, 31
                                                   2009               2008
                                                (Unaudited)
                                     ASSETS
    CURRENT ASSETS:
    Cash & cash equivalents                     $9,701,176        $5,854,383
    Accounts receivable                            979,179           906,042
    Other receivable - employee advances           152,813           332,263
    Inventories                                  1,196,791           519,739
    Advances to suppliers                        1,105,243           837,592
    Prepaid expense and other current assets       558,868           838,294
    Loan receivable                                293,000           293,400
    Total current assets                        13,987,070         9,581,713

    PROPERTY AND EQUIPMENT, NET                 73,104,770        76,028,272
    CONSTRUCTION IN PROGRESS                    33,644,992        22,061,414
    DEFERRED FINANCING COSTS                     1,541,914         1,746,830
    OTHER ASSETS                                 9,021,067         8,844,062

    TOTAL ASSETS                              $131,299,813      $118,262,291

                  LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Accounts payable and accrued
     liabilities                                $1,621,773          $800,013
    Other payables                                 197,161           124,151
    Unearned revenue                             1,969,317           944,402
    Accrued interest                             1,237,778           861,114

    Taxes payable                                2,166,889         1,862,585
    Total current liabilities                    7,192,918         4,592,265

    LONG TERM LIABILITIES:
    Notes payable, net of discount
     $14,167,334 and $15,478,395 as of
     June 30, 2009 and December 31,
     2008, respectively                         25,832,666        24,521,605
    Redeemable liabilities - warrants           17,500,000        17,500,000
    Derivative liabilities - warrants            2,130,091                --
    Total long term liabilities                 45,462,757        42,021,605

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY:
    Preferred stock, $0.0001 per share;
     5,000,000 shares authorized; none
     issued                                             --                --
    Common stock, $0.0001 per share;
     45,000,000 shares authorized,
     14,600,152 shares
     issued and outstanding at June 30,
     2009 and December 31, 2008                      1,460             1,460
    Additional paid-in capital                  25,357,254        32,115,043
    Cumulative translation adjustment            8,505,948         8,661,060
    Statutory reserves                           4,880,681         3,730,083
    Retained earnings                           39,898,795        27,140,775
    Total stockholders' equity                  78,644,138        71,648,421

    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                                   $131,299,813      $118,262,291



                   CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                                 (Unaudited)

                                                  Six Months Ended June 30,
                                                   2009              2008

    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                 $8,064,379        $6,321,463
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
      Depreciation and amortization             2,782,209         1,358,378
      Loss on disposal of building
       improvements and equipment                  21,370            12,134
      Amortization of discount on senior notes    217,196           459,473
      Amortization of financing costs              52,435           122,592
      Stock based compensation                    100,758            38,896
      Change in fair value of warrants          1,115,783                --
      Change in assets and liabilities:
        Accounts receivable                       (74,409)         (513,994)
        Other receivable - employee advances      109,963           101,267
        Inventories                              (487,908)         (269,136)
       Advances to suppliers                     (268,922)         (279,741)
       Prepaid expense and other current assets   157,372          (637,244)
       Accounts payable and accrued
        liabilities                               822,997           (11,440)
       Other payables                              73,210             8,525
       Unearned revenue                         1,026,693           530,551
       Accrued interest                           376,664           454,164
       Taxes payable                              306,975           430,244
     Net cash provided by operating
      activities                               14,396,765         8,126,132

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of property and equipment          (21,033)      (12,471,764)
      Proceeds from sales of property and
       equipment                                   41,305                --
      Proceeds from short term investments             --           246,802
      Additions to construction in progress   (10,372,858)      (11,736,887)
      Change in prepayment on long term
       assets                                    (110,836)       (3,559,485)
      Return of acquisition deposit               449,910                --
      Payment for intangible assets               (66,971)               --
      Payment for land use rights                (463,870)          (36,341)
      Increase in stockholder receivable               --        (2,836,800)
    Net cash used in investing activities     (10,544,353)      (30,394,475)

    CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from senior notes                       --        40,000,000
      Payment for offering costs                       --        (2,122,509)
    Net cash provided by financing activities          --        37,877,491

    Effect of exchange rate changes on
     cash and cash equivalents                     (5,619)          279,438

    NET INCREASE IN CASH & CASH
     EQUIVALENTS                                3,846,793        15,888,586

    CASH & CASH EQUIVALENTS, BEGINNING OF
     PERIOD                                     5,854,383        13,291,729

    CASH & CASH EQUIVALENTS, END OF
     PERIOD                                    $9,701,176       $29,180,315

    SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:
      Interest paid, net of capitalized
       interest                                  $237,641              $ --
      Income taxes paid                        $1,934,887        $1,203,048

China Natural Gas to Report Second Quarter 2009 Financial Results on August 10, 2009

-- Company to Hold Conference Call on August 11, 2009 --

NEW YORK, Aug. 3 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that it plans to release its second quarter 2009 financial results on Monday, August 10, 2009, after the market closes.

The management team will hold a conference call on Tuesday, August 11th, 2009, at 8:00 am ET to discuss its second quarter 2009 results. Listeners may access the call by dialing 1-800-289-0730 or 1-913-312-0710 for international callers. A webcast will also be available via the Company's website athttp://www.naturalgaschi... .

A replay of the call will be available through August 18, 2009. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers, access code: 7941819.

About China Natural Gas, Inc.

The Company transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in China's Xi'an area, including Lantian County and the districts of Lintong and Baqiao, in Shaanxi Province. The Company owns approximately 120 km of high pressure pipelines in Xi'an, Shaanxi Province and, as of March 31, 2009, operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province.

The Company's four primary business lines include: (1) the distribution and sale of CNG through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline- fuelled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward- looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

The goal of the joint-venture ("JV") is to establish a win-win strategic cooperation between Xilan and CNPC Kunlun, dedicated for the processing and distribution of CNG throughout China. The purpose of the JV will be to build and operate CNG compressor stations and fueling stations along CNPC's natural gas pipelines in China, sell compressed natural gas and provide vehicle conversion services from gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. CNPC Kunlun will hold 51% ownership of the JV, and Xilan will hold 49% ownership.

"We are extremely happy to be partnering with CNPC Kunlun, the largest oil and gas operator in China. The JV will highlight our complementary strengths and should mutually benefit both partners," commented Mr. Qinan Ji, China Natural Gas's CEO and Chairman of the Board. "CNPC Kunlun is a subsidiary of CNPC, the designated state-owned enterprise by CNPC to specialize in vehicular CNG business. It is also the largest CNG supplier in China, with business operations in 18 provinces and over 70 cities throughout China. In our view, CNPC Kunlun has dominant market leading position, strong brand, broad market coverage, and well-established distribution. We believe China Natural Gas has leading technology, rich experience, and deep expertise in developing, positioning, and managing natural gas operations, and the combination of our full-range CNG business line and pending LNG business line can provide us with unparalleled competitive advantages.

"As we proceed with our planned expansion in China to build and operate CNG compressor stations, we are confident that our combined strengths will allow the JV to quickly expand its market presence. Securing CNPC Kunlun as a strategic supplier of CNG not only will ensure the success of the JV but also will ensure a reliable supply of natural gas for Xilan's overall needs. We are convinced that our alliance with CNPC Kunlun will further reinforce China Natural Gas' market position and brand awareness, enhance its competitive advantage in the natural gas industry, and will ultimately create more value for our shareholders."

Additional information on this joint venture can be found in the Company's filing with the SEC.

About China National Petroleum Corporation Kunlun Natural Gas Co., Ltd.

CNPC Kunlun is an affiliate of CNPC, a state-owned fuel-producing corporation and the largest integrated oil and gas company in China. CNPC Kunlun is designated by CNPC to specialize in vehicular CNG businesses. It is the largest supplier of CNG in China, with an established presence in 18 provinces and over 70 cities throughout the country.

About China Natural Gas, Inc.

The Company transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in China's Xi'an area, including Lantian County and the districts of Lintong and Baqiao, in Shaanxi Province. The Company owns approximately 120 km of high pressure pipelines in Xi'an, Shaanxi Province and, as of March 31, 2009, operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province.

The Company's four primary business lines include: (1) the distribution and sale of CNG through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fuelled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

- Establishing Joint Venture Company for Compressing and Distributing CNG -

NEW YORK, July 9 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that on July 6, 2009, the Company's variable interest entity Xi'an Xilan Natural Gas Co., Ltd. ("Xilan") has signed a Strategic Cooperation Framework Agreement (the "Agreement") with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd. ("CNPC Kunlun"), a wholly owned subsidiary of China National Petroleum Corporation ("CNPC") and the largest supplier of CNG in China.

Under the Agreement, Xilan and CNPC Kunlun will create a joint venture company (the "JV") dedicated to the processing and distribution of CNG throughout China. The JV will build and operate CNG compressor stations, as well as the fueling stations that the CNG is supplied to, in cities along the natural gas pipelines of CNPC. This "mother-son CNG stations" program is planned to be established in 20 cities throughout China along CNPC's existing natural gas pipelines during the initial two years from the date of the Agreement. CNPC Kunlun will hold 51% ownership of the JV, and Xilan will hold 49% ownership of the JV.

"We are very excited about this cooperation agreement with such a leading supplier of CNG as CNPC Kunlun," commented Mr. Qinan Ji, China Natural Gas's CEO and Chairman of the Board. "The joint venture will take full advantage of each of CNPC Kunlun and our own complementary strengths, and allow us to explore and develop China's compressed natural gas market together. CNPC Kunlun's broad market coverage and well-established supply channels combined with China Natural Gas's strong market placement and extensive experience in the development, strategizing, and management of natural gas operations will allow us to penetrate the market more easily and establish a strong presence as a supplier and distributor of CNG in China. We are confident that this joint venture will mutually benefit both companies."

Additional information on this joint venture can be found in the Company's filing with the SEC.

About China National Petroleum Corporation Kunlun Natural Gas Co., Ltd.

CNPC Kunlun is an affiliate of CNPC, a state-owned fuel-producing corporation and the largest integrated oil and gas company in China. CNPC Kunlun is designated by CNPC to specialize in vehicular CNG businesses. It is the largest supplier of CNG in China, with an established presence in 18 provinces and over 70 cities throughout the country.

About China Natural Gas, Inc.

The Company transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in China's Xi'an area, including Lantian County and the districts of Lintong and Baqiao, in Shaanxi Province. The Company owns approximately 120 km of high pressure pipelines in Xi'an, Shaanxi Province and, as of March 31, 2009, operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province.

The Company's four primary business lines include: (1) the distribution and sale of CNG through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fuelled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

NEW YORK, June 3 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. (the "Company") (OTC Bulletin Board: CANL - News), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that it has received approval for listing on the NASDAQ Global Market.

The Company anticipates that its shares of common stock will commence trading on the NASDAQ Global Market on June 5, 2009, under the symbol "CHNG." Until that time, the Company's shares will continue to trade on the OTC Bulletin Board under the symbol "CANL."

Mr. Qinan Ji, CEO and Chairman of the Board of China Natural Gas, Inc., commented, "We are very proud to be listing on the Nasdaq Global Market, an effort that highlights our commitment to not only raise our visibility among the investment community but also increase the liquidity and trading efficiencies of our common stock. We believe this is a significant milestone in our Company's history as we continue to leverage our strong brand and considerable operational scale to expand our geographical presence and steadily grow our CNG customer base. We are steadfast in continually improving our corporate governance and business operations, and I am confident in our management team and in our competitive advantages. We aim to deliver sustained strong financial results and to ultimately reward our supportive shareholders with greater share value."

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CANL"), is the first China-based natural gas retailing company publicly traded in the U.S. The Company owns and operates a network of CNG filling stations as well as a 120-kilometer compressed natural gas pipeline in Xi'an, a fast growing Chinese city with population of 8.5 million and "gateway" to China's vast Western regions. CANL retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. It is estimated that there are already 5,000 buses and 20,000 taxis using CNG in Xi'an.

Safe Harbor Statement:

This press release may contain forward-looking statements. 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, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.

    CONTACT: 
    Michael Tieu
    ICR, Inc.
    +86 10 6599 7960

China Natural Gas Awarded Exclusive 'Green Card' for Xi'an International Business Port Project

NEW YORK, May 26 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. (OTC Bulletin Board: CANL - News;"the Company"), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that its project with Xi'an International Business Port ("the Port") has been awarded an exclusive "green card", which qualifies the Port project for various preferential policies.

The green card's advantages include favorable pricing on land purchase, discounted bank loans, preferred financing rights, and substantial logistical support from Xi'an's Transportation, Telecommunication and Utility Departments. The Port is intended to become one of the largest logistic and business hubs connecting Western and Eastern China, as well as transiting and distributing inland products. It is one of the major projects in the 11th 5-year-plan of Shaanxi province, and is also listed as one of the major projects of the national 11th 5-year-plan by National Committee of Development and Reform. Covering an area of approximately 8 square kilometers, the Port was recently chosen as one of 2009's key construction projects by the Committee of Development and Reform of Xi'an and is expected to receive government investment of approximately RMB9.8 billion (US $1.4 billion).

Mr. Qinan Ji, CEO and Chairman of the Board of China Natural Gas, commented, "We are very proud that China Natural Gas was selected as a strategic partner for Xi'an International Port for the installation and construction of natural gas delivery systems, as well as natural gas filling stations in the areas. This multi-dimensional project, which covers industrial, commercial and residential users, should further strengthen our government relationships and our reputation in the city of Xi'an. We are delighted to be awarded the green card for the Xi'an International Port Project. We believe our leading market position in Xi'an and proven capabilities of safely executing natural gas projects through various successful projects over the past years enabled us to win this green card award. The green card demonstrates Xi'an local government's commitment to improve energy efficiency and expand natural gas application, and as a market leader, we feel confident about our attractive business opportunities and our ability to deliver sustained solid financial performance in the years ahead."

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CANL"), is the first China-based natural gas retailing company publicly traded in the U.S. The Company owns and operates a network of CNG filling stations as well as a 120-kilometer compressed natural gas pipeline in Xi'an, a fast growing Chinese city with population of 8.5 million and "gateway" to China's vast Western regions. CANL retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. It is estimated that there are already 5,000 buses and 20,000 taxis using CNG in Xi'an.

Safe Harbor Statement:

This press release may contain forward-looking statements. 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, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.

Pursuant to OTCBB rules, a change of the Company's stock symbol is required due to the Company's 1-for-2 reverse stock split.

Reverse Stock Split

Effective today, May 13, 2009, every two shares of CHNG will exchange for one share of CANL. The reverse stock split will be effected simultaneously for all of the Company's common stock and the exchange ratio will be the same for all of the Company's common stock. The reverse stock split will affect all of the Company's common stockholders uniformly and will not affect any stockholder's percentage ownership interests in the Company or proportionate voting power, except to the extent that the reverse stock split results in any stockholders owning a fractional share.

Fractional Share

No scrip or fractional certificates will be issued in connection with the reverse stock split. Instead, any fractional share that results from the reverse stock split will be rounded up to the next whole share. This is being done to avoid the expense and inconvenience of issuing and transferring fractional shares of our common stock as a result of the reverse stock split.

Beginning at the effective time, each certificate representing Old Shares (CHNG) will be deemed for all corporate purposes to evidence ownership of New Shares (CANL). The Company's transfer agent, Interwest Transfer, Inc., is acting as exchange agent for purposes of implementing the exchange of stock certificates. Interwest is located at 1981 Murray Holladay Road, Suite 100 Salt Lake City, UT 84117. Their telephone number is (801) 272-9294. Holders of Old Shares may surrender certificates representing Old Shares for certificates representing New Shares. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder's outstanding certificate(s) to the exchange agent. The Company will be responsible for the payment of all fees, including the transfer agent's fee, associated with certificate exchange and delivery.

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CANL"), is the first China-based natural gas retailing company publicly traded in the U.S. The Company owns and operates a network of CNG filling stations as well as a 120-kilometer compressed natural gas pipeline in Xi'an, a fast growing Chinese city with population of 8.5 million and "gateway" to China's vast Western regions. CANL retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. It is estimated that there are already 5,000 buses and 20,000 taxis using CNG in Xi'an.

Safe Harbor Statement:

This press release may contain forward-looking statements. 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, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.

- 1Q09 Revenue Increases 32.1% YoY to $18.5 Million -

- 1Q09 Gross Margin Increases 859 Basis Points YoY to 52.0% -

- 1Q09 Net Income Increases 49.6% YoY to $4.2 Million -

-1Q09 Diluted EPS Increases 52.6% to $0.29 -

NEW YORK, May 12 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. (OTC Bulletin Board: CHNG - News), one of the leading providers of pipeline natural gas for industrial, commercial and residential use and compressed natural gas (CNG) for vehicular fuel in Xi'an, China, today announced its financial results for the first fiscal quarter ended March 31, 2009 and a 1-for-2 reverse stock split effected April 28, 2009.

First Quarter 2009 Results

Revenue in the first quarter of 2009 increased 32.1% to $18.5 million from $14.0 million in the first quarter of 2008. The increase in revenue was driven by a 31.9% increase in sales of natural gas to $15.0 million from $11.3 million, and a 54.1% increase in installation and other sales to $2.4 million from $1.5 million. Gasoline revenue was $1.2 million, an increase of 3.9% from $1.1 million in the prior year's period. In the first quarter of 2009, gasoline contributed $1.2 million, or 6.3% of total revenue, compared to $1.1 million, or 8.1% of total revenue, in the prior year's period. As the revenue contribution from gasoline became material, the Company began to break out revenue contribution from the sale of gasoline through its CNG fueling stations in the fourth quarter of 2008.

Gross profit in the first quarter of 2009 increased 58.2% to $9.6 million, from $6.1 million in the first quarter of 2008. Gross margin expanded 859 basis points to 52.0% in the first quarter from 43.4% in the first quarter of 2008. Gross margin performance reflects increased sales of natural gas, which generated gross margin of approximately 54.9%, compared to 45.5% in the prior year's period.

Operating income in the first quarter of 2009 increased 47.8% to $5.6 million from $3.8 million in the prior year's period. Operating margin in the first quarter of 2009 was 30.4%, compared to 27.2% in the prior year's period. Operating expenses in the first quarter of 2009 were $4.0 million, compared to $2.3 million in the prior year's period, reflecting expanded business operations.

Net income in the first quarter of 2009 increased 49.6% to $4.2 million, or $0.29 per diluted share, from $2.8 million, or $0.19 per diluted share, in the first quarter of 2008.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented, "We are pleased with strong financial performance in the first three months of 2009. During this quarter, we signed an agreement with the governments of Yulin city and Shaanxi province that secured our power supply and provided a cost savings of approximately RMB 26 million. We became the exclusive provider of natural gas services to Xi'an Baqiao Science and Technology Industrial Park, a transportation hub to eastern China. We also grew our customer base for CNG to nearly 100,000 accounts. We believe that all of these factors will contribute to our sustained strong performance in the future."

Liquidity and Capital Resources

As of March 31, 2009, the Company increased cash and cash equivalents by $3.2 million to $9.1 million, compared to $5.9 million as of December 31, 2008. Cash flows from operations grew 78.1% YoY to $6.2 million, versus $3.5 million a year ago. The Company invested an additional $2.5 million to construction in progress related to its LNG project. Accounts receivable was a modest $0.9 million, and DSOs remained significantly below 10 days.

Reverse Stock Split

All share and per share amounts used in the Company's discussion on financial results, consolidated financial statements and notes thereto have been retroactively restated to reflect the 1-for-2 reverse stock split, which was effected on April 28, 2009. Although this reverse stock split has already occurred under Delaware corporate law, the Company advises that the Company's common stock continues to trade under the OTCBB ticker symbol, "CHNG" on a pre 1-for-2 reverse stock split basis. The Company is currently in the process of working with OTC Bulletin Board through FINRA to ensure that the Company's common stock will trade on a post 1-for-2 reverse stock split basis as soon as possible.

Financial Outlook for 2009

The Company anticipates full year 2009 revenue will grow 15% to 20% to a range of $78 million to $83 million, from $68 million in 2008. The Company estimates full year 2009 net income will grow 15% to 22% to a range of $17.5 million to $18.5 million, from $15.2 million in 2008.

Mr. Ji concluded, "As demonstrated by our strong performance in revenue growth, gross margin expansion, and solid cash flows, the first quarter is a good start for China Natural Gas in 2009. We are very pleased with the arrival of Ms. Veronica Chen to our senior management team, as we welcome her multi-cultural experience, profound knowledge of financial systems and markets, and impressive professional and academic achievements. Ms. Chen will work closely with me in helping China Natural Gas accomplish its strategic objectives in 2009 and beyond. For the remainder of 2009, we remain committed to listing on NASDAQ. We are focused on steadily growing our CNG customer base, as we leverage our considerable operational scale. I am confident in our management team and in our competitive advantages, and I look forward to delivering sustained strong financial results and to ultimately reward our supportive shareholders with greater share value.

Conference Call

The management team will hold a conference call on Tuesday, May 12, 2009, at 8:00 am ET to discuss its first quarter 2009 results. Listeners may access the call by dialing 1-888-677-8769 or 1-913-312-1514 for international callers. A webcast will also be available via the Company's website at www.naturalgaschina.com. A replay of the call will be available through May 19, 2009. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers, access code: 6108490.

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CHNG"), is the first China-based natural gas retailing company publicly traded in the U.S. It currently owns and operates a network of CNG retail filling stations as well as a 120 kilometer long compressed natural gas pipeline in Xi'an, China. Xi'an is a fast growing Chinese city supported by a population of 8.5 million and is the "gateway" to the broad Western regions of China. CHNG currently retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. Currently it is estimated that there are 5,000 buses and 20,000 taxis using CNG in Xi'an.

This press release may contain forward-looking statements. 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, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.

                     CHINA NATURAL GAS, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                                    (Unaudited)

                                              Three Months Ended March 31,
                                                  2009             2008

      Revenue
           Natural gas revenue              $  14,965,819    $  11,345,319
           Gasoline revenue                     1,174,398        1,130,750
           Installation and other               2,387,449        1,549,605
               Total revenue                   18,527,666       14,025,674
      Cost of revenue
           Natural gas cost                     6,746,929        6,182,274
           Gasoline cost                        1,130,057        1,068,037
           Installation and other               1,017,028          686,887
               Total cost of revenue            8,894,014        7,937,198
      Gross profit                              9,633,652        6,088,476
      Operating expenses
           Selling expenses                     2,324,228        1,341,614
           General and administrative expenses  1,681,921          939,325
               Total operating expenses         4,006,149        2,280,939
      Income from operations                    5,627,503        3,807,537
      Non-operating income (expense):
           Interest income                          8,908           55,285
           Interest expense                      (581,492)        (359,660)
           Other income (expense), net             (2,303)             304
           Change in fair value of warrant        197,051                -
           Foreign currency exchange loss         (50,788)          (7,430)
               Total non-operating expense       (428,624)        (311,501)
      Income before income tax                  5,198,879        3,496,036
      Provision for income tax                    997,256          687,465
      Net income                                4,201,623        2,808,571
      Other comprehensive income
           Foreign currency translation
            gain (loss)                          (152,115)       2,303,002
      Comprehensive income                  $   4,049,508    $   5,111,573
      Weighted average shares outstanding
           Basic                               14,600,152       14,600,152
           Diluted                             14,600,152       14,667,042
      Earnings per share
           Basic                            $        0.29    $        0.19
           Diluted                          $        0.29    $        0.19



                         CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                               CONSOLIDATED BALANCE SHEETS
                        AS OF MARCH 31, 2009 AND DECEMBER 31, 2008

                                                      March 31,   December 31,
                                                        2009          2008
                                                    (Unaudited)
                           ASSETS
                           ------
    CURRENT ASSETS:
       Cash & cash equivalents                      $  9,058,361  $  5,854,383
       Accounts receivable                               946,047       906,042
       Other receivable - employee advances              180,205       332,263
       Inventories                                       488,221       519,739
       Advances to suppliers                             684,632       837,592
       Prepaid expense and other current assets          953,578       838,294
       Loan receivable                                   293,000       293,400
          Total current assets                        12,604,044     9,581,713
    PROPERTY AND EQUIPMENT, NET                       74,549,788    76,028,272
    CONSTRUCTION IN PROGRESS                          25,110,473    22,061,414
    DEFERRED FINANCING COSTS                           1,644,372     1,746,830
    OTHER ASSETS                                       9,278,092     8,844,062
       TOTAL ASSETS                                 $123,186,769  $118,262,291
           LIABILITIES AND STOCKHOLDERS' EQUITY
           ------------------------------------
    CURRENT LIABILITIES:
       Accounts payable and accrued liabilities     $  1,103,837  $    800,013
       Other payables                                    336,936       124,151
       Unearned revenue                                1,138,536       944,402
       Accrued interest                                  531,111       861,114
       Taxes payable                                   1,904,943     1,862,585
          Total current liabilities                    5,015,363     4,592,265
    LONG TERM LIABILITIES:
       Notes payable, net of discount $14,844,315
        and $15,478,395 as of March 31, 2009 and
        December 31, 2008, respectively               25,155,685    24,521,605
       Redeemable liabilities - warrants              17,500,000    17,500,000
       Derivative liabilities - warrants                 817,257             -
          Total long term liabilities                 43,472,942    42,021,605
    COMMITMENTS AND CONTINGENCIES
    STOCKHOLDERS' EQUITY:
       Preferred stock, $0.0001 per share;
        5,000,000 shares authorized; none issued               -             -
       Common stock, $0.0001 per share; 45,000,000
        shares authorized, 14,600,152 shares
        issued and outstanding at March 31, 2009
        and December 31, 2008                              1,460         1,460
       Additional paid-in capital                     25,271,339    32,115,043
       Cumulative translation adjustment               8,508,945     8,661,060
       Statutory reserves                              4,284,815     3,730,083
       Retained earnings                              36,631,905    27,140,775
          Total stockholders' equity                  74,698,464    71,648,421
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $123,186,769  $118,262,291



                     CHINA NATURAL GAS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                                    (Unaudited)
                                                        Three Months Ended
                                                             March 31,
                                                         2009         2008
    CASH FLOWS FROM OPERATING ACTIVITIES:
        Net income                                    $4,201,623  $ 2,808,571
        Adjustments to reconcile net income to
         net cash provided by operating activities:
           Depreciation and amortization               1,389,565      656,587
           Loss on disposal of building
            improvements and equipment                         -       11,957
           Amortization of discount on senior notes      170,712      146,663
           Amortization of financing costs                38,578       56,270
           Stock based compensation                       14,842            -
           Change in fair value of warrants             (197,051)           -
           Change in assets and liabilities:
              Accounts receivable                        (41,244)    (163,656)
              Other receivable - employee advances       151,617            -
              Inventories                                 30,812     (782,687)
              Advances to suppliers                      151,828       63,341
              Prepaid expense and other current assets  (100,912)    (257,016)
              Accounts payable and accrued liabilities   304,860       95,847
              Other payables                             212,961        1,129
              Unearned revenue                           195,435       22,709
              Accrued interest                          (330,003)      73,717
              Taxes payable                               44,898      768,939
        Net cash provided by operating activities      6,238,521    3,502,371
    CASH FLOWS FROM INVESTING ACTIVITIES
           Purchase of property and equipment            (13,484)    (555,720)
           Proceeds from short term investments                -      243,200
           Additions to construction in progress      (2,552,098)  (9,586,215)
           Prepayment on long term assets               (426,913)  (4,128,711)
           Payment for intangible assets                 (35,822)           -
           Payment for land use rights                         -      (25,091)
        Net cash used in investing activities         (3,028,317) (14,052,537)
    CASH FLOWS FROM FINANCING ACTIVITIES:
           Proceeds from senior notes                          -   40,000,000
           Payment for offering costs                          -   (2,122,509)
        Net cash provided by financing activities              -   37,877,491
    Effect of exchange rate changes on cash and cash
     equivalents                                          (6,226)     635,076
    NET INCREASE IN CASH & CASH EQUIVALENTS            3,203,978   27,962,401
    CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD       5,854,383   13,291,729
    CASH & CASH EQUIVALENTS, END OF PERIOD            $9,058,361  $41,254,130
    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
        Interest paid, net of capitalized interest    $1,084,130  $         -
        Income taxes paid                             $  997,257  $    57,893

NEW YORK, April 28 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. (OTC Bulletin Board: CHNG - News), one of the leading providers of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today appointed Ms. Veronica Jing Chen as its Chief Financial Officer, effective May 1st, 2009.

Ms. Chen is a seasoned executive with more than 20 years of experience in accounting, finance, and general management. Prior to joining China Natural Gas, she had been Chief Financial Officer of China Valve Technology (OTC Bulletin Board: CVVT - News) and Origin Agritech - two China-based companies listed on U.S. exchanges. Before that, she served as Senior Director of Finance at iKang Healthcare; Director of Finance at eLong; and Finance Manager of the North China Region for Eli Lilly Asia Inc. China Representative Office.

During her extensive career as a financial executive, Ms. Chen successfully built and managed accounting systems, improved financial reporting and controls, and implemented internal policies and procedures in compliance with standards required by the Sarbanes-Oxley Act. Ms. Chen currently holds memberships with CPA Australia and The National Institute of Accountants (NIA), and received a Ph.D. in Business Administration from Victoria University, Neuchatel, Switzerland, and an MBA from City University, Seattle, Washington.

"We are very pleased in welcoming Ms. Chen to our senior management team,'" commented Mr. Qinan Ji, CEO and Chairman of the Board of China Natural Gas. "We welcome her multi-cultural experience, profound knowledge of financial systems and markets, and impressive professional and academic achievements. Throughout her career, she has demonstrated successful leadership and accomplishments in various corporate functions that our Company seeks to improve. With excitement, I look forward to working closely with Ms. Chen; and with high confidence, I anticipate her excellent contributions in helping China Natural Gas accomplish its growth objectives in the months and years ahead."

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CHNG"), is the first China-based natural gas retailing company publicly traded in the U.S. The Company owns and operates a network of CNG filling stations as well as a 120-kilometer compressed natural gas pipeline in Xi'an, a fast growing Chinese city with population of 8.5 million and "gateway" to China's vast Western regions. CHNG retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. It is estimated that there are already 5,000 buses and 20,000 taxis using CNG in Xi'an.

Safe Harbor Statement:

This press release may contain forward-looking statements. 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, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.

    CONTACT
    ICR, Inc.
    Michael Tieu
    +86 10 6599 7960

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented, "We are saddened by Mr. Wu's departure, and on behalf of the Company, we would like to thank Mr. Wu for his many contributions. We wish him every success in the future."

Mr. Ji continued, "Meanwhile, we are actively searching for candidates with strong industry and financial expertise, CPA designation and U.S. capital market experience. We anticipate that the search for a qualified successor will be completed in the near future."

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CHNG"), is the first China-based natural gas retailing company publicly traded in the U.S. It currently owns and operates a network of CNG retail filling stations as well as a 120 kilometer long compressed natural gas pipeline in Xi'an, China. Xi'an is a fast growing Chinese city supported by a population of 8.5 million and is the "gateway" to the broad Western regions of China. CHNG currently retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. Currently it is estimated that there are 5,000 buses and 20,000 taxis using CNG in Xi'an.

This press release may contain forward-looking statements. 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, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.

    CONTACT

    ICR, Inc.
    Ashley Ammon
    (US) +1 203-682-8200
    Ashley.ammon@icrinc.com

    Wei-Jung Yang
    (China) +86 10 6599-7968
    Weijung.yang@icrinc.com