China Natural Gas, Inc. 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 quarter ended September 30, 2012.

Shuwen Kang, CEO of China Natural Gas, Inc. commented: "We are pleased to share the results of our third quarter. The company has successfully commenced commercial production of its Jingbian liquefied natural gas ("LNG") plant on July 16, 2011, which represents a key milestone in its corporate history.

Our network of compressed natural gas, or CNG, fueling stations currently contains 32 stations, a significant presence in the markets we operate in. Our outlook for the forthcoming quarter of the year is promising as we continue to grow our business, and we look forward to sharing any future developments as they materialize."

Revenues in the third quarter of 2012 decreased by 15.8% to $31.06 million from $36.90 million in the third quarter of 2011,the decrease was primarily attributable to the sales volume decrease.Natural gas sales decreased 13.4% year-over-year to $27.90 million, compared to $32.23 million in the third quarter of 2011.

Gasoline revenues in the third quarter of 2012 decreased to $0.65 million, down by 57.1% from $1.51 million in the same period of the prior year, which was mainly attributable to the closure of two gasoline fuelling stations during the fourth quarter of 2011. Installation and services revenue decreased by 20.6% year-over-year to $2.51 million, compared to $3.16 million in the comparable period of 2011.

In the third quarter of 2012, sales of natural gas, gasoline, and installation and other services contributed 89.8%, 2.1%, and 8.1% of the total revenues, respectively.

Gross profit in the third quarter of 2012 decreased 26.1% to $10.48 million, compared to $14.18 million in the same period of the prior year. Gross margin in the third quarter of 2012 was 33.7%, compared to 38.4% a year ago. Gross margin decreased primarily due to the current lower gross margin level of our LNG business, as compared to the gross margins of those business lines making greatest contribution to revenue.