Reeling with debt, Shandong Molong raises 'significant doubts' on future

HONG KONG, April 11 (Reuters) - Shandong Molong Petroleum

Machinery Co Ltd said on Tuesday it had

"significant doubts" about its ability to continue operating

with its liabilities exceeding assets by 15.83 billion yuan

($2.3 billion) at the end of 2016.

The petroleum equipment maker, however, said it also had

sufficient funds to maintain normal production and operation,

but did not say for how long.

The firm said it was taking measures to reduce production

costs, expand its financing channels and diversify its sources

of income. Controlling shareholder Zhang Enrong will also

provide financial support, the company said in a filing to the

Hong Kong bourse.

The company's shares in Hong Kong, which fell 20 percent on

Monday, climbed 8.4 percent in early trade on Tuesday.

Shandong Molong said it failed to maintain effective

internal controls of its financial reporting at the end of last

year.

The company, along with Enrong and its general manager, are

under investigation by China Securities Regulatory Commission

for possible securities violations.

The company faces the possibility of being delisted from the

mainland stock exchange, after reporting two straight years of

losses. Last year's net loss widened to 612.5 million yuan.

($1 = 6.8988 Chinese yuan renminbi)

(Reporting by Donny Kwok; Editing by Randy Fabi)