New Chinese Billionaire Emerges as Oil Services Company Yantai Jereh Soars

Wang Kunxiao, president of Yantai Jereh Oilfield Services Group (Jereh), has become a new billionaire as shares of the Chinese oil and gas service provider he co-founded with fellow billionaire Sun Weijie surged more than 60% this year amid an shale gas equipment boom in China.

Jereh shares increased to a new high of 77.17 yuan on Tuesday on Shenzhen Stock Exchange. The stock has gained 65% since January and 82% in the past twelve months. With a  18% stake, Wang Kunxiao is the second largest stockholder, after fellow billionaire Sun Weijie, the company's chairman. Wang's 83 million shares are worth $1 billion as of Tuesday. Sun Weijie, who debuted on FORBES' 2013 World Billionaires List, has also seen his net worth increase 20% to $1.5 billion since February 14.

The shares are riding on bullish future expectations. For all its growth, Yantai Jereh is still a relatively small player. Revenues climbed 63% to $386 million (2.4 billion yuan) in 2012. Profits were up 52% to $104 million (643 million yuan).

Still, Jereh has about half the market share for shale gas equipment in China. The company is considered a benefactor of China's ambitious goal to boost annual shale-gas production from near zero today to 60 billion cubic meters by 2020. This has been hailed as a "shale gas revolution" to help pave the way to a cleaner energy future for the world's number one greenhouse gas producer.  In January, China announced that 16 companies had won a second round of bidding to explore 19 shale gas blocks around China, who have agreed to invest $2 billion over the coming years. In November, China unveiled a plan to subsidize 0.4 yuan (6.4 cents) for each cubic meter of shale gas produced between 2012 and 2015, according to the Chinese Ministry of Finance.

China is believed to hold the world's largest reserves of shale gas, with the Ministry of Land and Resources estimating the country has 134 trillion cubic meters of shale gas, of which 25 trillion cubic meters are recoverable. An earlier estimate from the US Energy Information Administration (EIA) was even larger, at 36 trillion cubic meters. The United States,by comparison, has an estimated 24 trillion cubic meters of unexplored recoverable resources of shale gas, according to the EIA.  Last year, China's National Energy Administration announced the goal of producing 6.5 billion cubic meters of shale gas annually by 2015 and between 60 and 100 billion cubic meters annually by 2020.

China's shale gas development plan has already attracted foreign equipment manufacturing companies like Royal Dutch Shell, BP, Chevron, and Total. Shell said on Tuesday that the company has received approval from the Chinese government for its first shale gas production-sharing contract in China. BP predicted in January that China will be the most successful country outside North America in developing shale gas by 2030.

Wang, 43, co-founded Yantai Jinri OMY Construction Equipment Co. with Sun Weijie and Liu Zhenfeng in 1997. The company initially sold imported construction machinery spare parts. Two years later, they founded Yantai Jereh, which grew into a major supplier of oilfield equipment and services for oil and gas drilling, natural gas liquefaction and environmental control. In 2010, Wang, Sun and Liu listed Jereh's shares on the Shenzhen Stock Exchange. Now the company employs 3,200 people globally and has 18 subsidiaries in the US, Canada, Middle East, Russia, Australia, and Southeast Asia, according to the company website. It has also established a R&D center and a manufacturing factory in Houston, Texas.

Jereh was also picked by Venuezuela's state oil company, PDVSA, to supply equipment valued at $178 million. Jereh announced the PDVSA order on January 10.