Changfeng Formalized and Signed the Gas Supply Contract With CNOOC

Further to the press releases dated December 4th, 2015 and December 30th, 2015, Changfeng Energy Inc. announces that its wholly owned subsidiary, Sanya Changfeng Offshore Natural Gas Distribution Co., Ltd. has finalized and signed the Gas Supply Contract (the "Contract") with Hainan Fuel Chemical Co., Ltd., a subsidiary of China National Offshore Oil Corporation ("CNOOC"). A gas quota of approximately 25 million m3 (883 million ft3) will be secured and provided to the Company in 2016 at a favorable price by CNOOC.

The price under the new Contract, while higher than under the previous 24 million m3 gas quota with CNOOC, remains favorable compared with the market price. It is expected that the gross margin for gas distribution utility in Sanya for 2016 will be lower than in previous years. It is anticipated that a new gas supply contract will be signed when this Contract expires.