China Oilfield Services Limited — Proxy Solicitation & Information Statement 2016

Nov 9, 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Oilfield Services Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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(Incorporated in the People’s Republic of China as a joint stock limited liability company)

(Stock Code: 2883)

CONTINUING CONNECTED TRANSACTIONS ENTERING INTO THE MASTER SERVICES FRAMEWORK AGREEMENT

PROPOSED AMENDMENTS TO THE CONNECTED TRANSACTIONS DECISION-MAKING MECHANISM

AND

PROPOSED APPOINTMENT OF NON-EXECUTIVE DIRECTOR AND RE-APPOINTMENT OF EXECUTIVE DIRECTOR

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 4 to 17 of this circular and a letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 18 of this circular.

A letter from Platinum, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 19 to 37 of this circular.

A notice convening an EGM to be held at 10:00 a.m. on Thursday, 15 December 2016, at Meeting Room I & II, 3rd Floor, JW Marriott Shenzhen, 6005 Shennan Boulevard, Futian District, Shenzhen, Guangdong, the PRC is set out on page 48 to 49 of this circular. A proxy form for use by the Shareholders for the EGM is enclosed with this circular. Whether or not you are able to attend the EGM in person, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon and return the same to the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 24 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof (as the case may be) should you so wish.

H Share Shareholders who intend to attend the EGM must complete and return the written replies for attending the EGM to the Company’s office in Hong Kong by facsimile or post no later than 24 November 2016.

9 November 2016

CONTENTS

			Page
Definitions . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**Letter from **	**the **	Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
**Letter from **	**the **	Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
**Letter from **	Platinum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		19
Appendix I	−	The Connected Transactions Decision-Making Mechanism
		of COSL (Comparison Version) . . . . . . . . . . . . . . . . . . . . . . . .	38
Appendix II –		General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44
Notice of EGM		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48

– i –

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

• “Articles of Association”

• the articles of association of the Company as amended from time to time;

• “A Share(s)”

RMB denominated domestic share(s) of nominal value of RMB1.00 each in the ordinary share capital of the Company which are listed on the Shanghai Stock Exchange;

• “associates” has the same meaning as given to it under the Listing Rules;

• “bbl” a barrel, which is equivalent to approximately 158.988 liters or 0.134 tons of oil (at a API gravity of 33 degrees);

• “Board” the board of Directors;

• “Company”

• China Oilfield Services Limited, a joint stock company incorporated in the People’s Republic of China with limited liability, the A Shares of which are listed on the Shanghai Stock Exchange and the H shares of which are listed on main board of the Stock Exchange;

• “CNOOC”

• China National Offshore Oil Corporation, a state-owned enterprises incorporated under the laws of the PRC, the controlling shareholder of the Company, as well as the controlling shareholder of two companies listed in Hong Kong, namely, CNOOC Limited (HKSE: 0883.HK) and China BlueChemical Limited (HKSE: 3983.HK), and two companies listed in PRC;

• “CNOOC Group” CNOOC and its subsidiaries, excluding the Group;

• “Director(s)” the director(s) of the Company;

• “Machinery Leasing, Equipment, Material and Utilities Services”

• the supply of machineries for leasing, the supply of equipment, material, labour, utilities and other ancillary services by the CNOOC Group to the Group under the Master Agreement;

– 1 –

DEFINITIONS

• “EGM” the extraordinary general meeting of the Company to be held at 10:00 a.m. on Thursday, 15 December 2016 at Meeting Room I & II, 3rd Floor, JW Marriott Shenzhen, 6005 Shennan Boulevard, Futian District, Shenzhen, Guangdong, the PRC or any adjournment thereof;

• “Group” the Company and its subsidiaries;

• “H Share(s)” overseas listed foreign shares of nominal value of RMB1.00 each in the share capital of the Company which are listed on the main board of the Stock Exchange and subscribed in Hong Kong dollars;

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC;

• “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;

• “Independent Board Committee” an independent committee of the Board, comprising the independent non-executive Directors, which has been appointed by the Board to advise the Independent Shareholders on the Continuing Connected Transactions;

• “Independent Financial Adviser”

• Platinum Securities Company Limited, a licensed corporation under the SFO licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, and the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Master Agreement and the relevant annual caps in relation to the continuing connected transactions;

• “Independent Shareholders” the shareholders of the Company other than CNOOC and its associates;

• “Latest Practicable Date”

• 4 November 2016, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular;

• “Master Agreement”

the Master Services Framework Agreement entered into between the Company and CNOOC on 4 November 2016;

– 2 –

DEFINITIONS

“NDRC”	the National Development and Reform Commission;	the National Development and Reform Commission;
“Oilfield Services”	the provision of offshore oilfield services by the	Group
	to the CNOOC Group under the Master Agreement,
	including drilling services, well services,	marine
	support services and geophysical and surveying
	services;
“PRC”	the People’s Republic of China;
“Property Services”	the leasing of certain properties in relation	to the
	Group’s operations from the CNOOC Group under the
	Master Agreement;
“RMB”	Renminbi, the lawful currency of the PRC;
“SFO”	the Securities and Futures Ordinance (Chapter	571 of
	the Laws of Hong Kong);
“Shares”	the ordinary shares issued by the Company,	with a
	RMB denominated par value of RMB1.00 each, the H
	Shares are listed on the Stock Exchange and	the A
	Shares are listed on the Shanghai Stock Exchange;
“Shareholders”	holders of the Shares;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“WTI”	West Texas Intermediate crude oil.

– 3 –

LETTER FROM THE BOARD

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(Incorporated in the People’s Republic of China as a joint stock limited liability company) (Stock Code: 2883)

Board of Directors: Liu Jian _(Chairman)_ Qi Meisheng Dong Weiliang Li Feilong Xie Weizhi Law Hong Ping, Lawrence Fong Chung, Mark Wong Kwai Huen, Albert**

Legal address in the PRC: 3-1516 Hebei Road Haiyang New and Hi-Tech Development Zone Tianjin Binhai New District The PRC

Registered Office in Hong Kong: 65/F, Bank of China Tower 1 Garden Road Hong Kong

• Non-executive Director

• ** Independent non-executive Director

9 November 2016

To the Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

ENTERING INTO THE MASTER SERVICES FRAMEWORK AGREEMENT

PROPOSED AMENDMENTS TO THE CONNECTED TRANSACTIONS DECISION-MAKING MECHANISM

AND

PROPOSED APPOINTMENT OF NON-EXECUTIVE DIRECTOR AND RE-APPOINTMENT OF EXECUTIVE DIRECTOR

INTRODUCTION

Reference is made to the announcement made by the Company on 6 November 2016 on entering into the Master Services Framework Agreement.

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LETTER FROM THE BOARD

As announced by the Company in the enclosed Notice of EGM, the Company proposes to amend the Connected Transactions Decision-making Mechanism.

Reference is also made to the announcement made by the Company on 28 October 2016 on proposed appointment of non-executive director and re-appointment of executive director.

The purpose of this circular is to provide you with further information in relation to the above matters and the recommendation from the Independent Board Committee and the recommendation from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the continuing connected transactions.

ENTERING INTO THE MASTER SERVICES FRAMEWORK AGREEMENT

Background

The Company is one of the leading integrated oilfield services providers in the world. Its services cover each phase of offshore oil and gas exploration, development and production.

CNOOC is the largest offshore oil producer in the PRC. CNOOC is the controlling shareholder of the Company. As at the date hereof, CNOOC holds 50.53% interest in the Company.

As disclosed in the announcement dated 25 October 2013 and the circular dated 14 November 2013, the Company has entered into the current Master Services Framework Agreement with CNOOC on 5 November 2013, the term of which will expire on 31 December 2016.

The Company has entered into a new Master Services Framework Agreement with CNOOC on 4 November 2016. Pursuant to the Master Agreement, the Group has agreed to continue to provide the Oilfield Services to the CNOOC Group, and the CNOOC Group has agreed to continue to provide the Machinery Leasing, Equipment, Material and Utilities Services as well as the Property Services to the Group. Upon approval at the general meeting, the Master Agreement will be effective from 1 January 2017.

Master Services Framework Agreement

Date

4 November 2016

Parties

The Company and CNOOC

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LETTER FROM THE BOARD

Details of the transaction

The terms of the Master Agreement have been reached after arm’s length negotiation between the Company and CNOOC.

Pursuant to the Master Agreement:

• (a) Provision by the Group of the Oilfield Services to the CNOOC Group

Pursuant to the Master Agreement, the Group will provide the Oilfield Services to the CNOOC Group in relation to its offshore oil and gas exploration, development and production activities.

The Group, and its predecessors, has been providing such offshore oilfield services to the CNOOC Group since 1982.

The Company proposes that the annual caps of the Oilfield Services provided by the Group to the CNOOC Group for the years ending 31 December 2017, 31 December 2018 and 31 December 2019, respectively, be set as follows. The Company also sets out below the historical transaction amounts under the same category for the three years ended 31 December 2015 and the period from 1 January 2016 to 30 June 2016.

• (1) Historical transaction amounts

			Period from
Year ended	Year ended	Year ended	1 January 2016 to
31 December 2013	31 December 2014	31 December 2015	30 June 2016
Aggregate	Aggregate	Aggregate	Aggregate
transaction amount	transaction amount	transaction amount	transaction amount
(RMB million)	(RMB million)	(RMB million)	(RMB million)
Approximately	Approximately	Approximately	Approximately
17,785	22,488	15,889	4,318

• (2) Proposed annual caps

Year	Year	Year	Year	Year	Year	Year
ended 31	ended 31	ended 31	ending 31	ending 31	ending 31	ending 31
December	December	December	December	December	December	December
2013	2014	2015	2016	2017	2018	2019
				Proposed	Proposed	Proposed
Annual	Annual	Annual	Annual	annual	annual	annual
cap	cap	cap	cap	cap	cap	cap
(RMB	(RMB	(RMB	(RMB	(RMB	(RMB	(RMB
million)	million)	million)	million)	million)	million)	million)
22,873	24,925	27,824	29,827	14,322	17,695	23,095

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LETTER FROM THE BOARD

• (b) Provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services to the Group

In the past, the CNOOC Group has provided the Group with various equipment, communication, warehousing, stevedoring, construction, medical, materials, utilities, labour and other ancillary services. Pursuant to the Master Agreement, the CNOOC Group will continue to provide the Group with such services, and the CNOOC Group will also continue to provide the Group with machinery leasing services.

The Company proposes that the annual caps of the Machinery Leasing, Equipment, Material and Utilities Services provided by the CNOOC Group to the Group for the years ending 31 December 2017, 31 December 2018 and 31 December 2019, respectively, be set as follows. The Company also sets out below the historical transaction amounts under the same category for the three years ended 31 December 2015 and the period from 1 January 2016 to 30 June 2016.

(1) Historical transaction amounts

			Period from
Year ended	Year ended	Year ended	1 January 2016 to
31 December 2013	31 December 2014	31 December 2015	30 June 2016
Aggregate	Aggregate	Aggregate	Aggregate
transaction amount	transaction amount	transaction amount	transaction amount
(RMB million)	(RMB million)	(RMB million)	(RMB million)
Approximately	Approximately	Approximately	Approximately
592	1,727	1,312	352

• (2) Proposed annual caps

Year	Year	Year	Year	Year	Year	Year
ended 31	ended 31	ended 31	ending 31	ending 31	ending 31	ending 31
December	December	December	December	December	December	December
2013	2014	2015	2016	2017	2018	2019
				Proposed	Proposed	Proposed
Annual	Annual	Annual	Annual	annual	annual	annual
cap	cap	cap	cap	cap	cap	cap
(RMB	(RMB	(RMB	(RMB	(RMB	(RMB	(RMB
million)	million)	million)	million)	million)	million)	million)
1,475	2,136	2,385	2,557	2,118	2,827	3,918

• (c) Provision by the CNOOC Group of the Property Services to the Group

The Group has leased certain properties from the CNOOC Group for warehousing, office, production and living quarters’ uses. Pursuant to the Master Agreement, the CNOOC Group will continue to lease the properties to the Group and provide the Group with property administration services.

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LETTER FROM THE BOARD

The Company proposes that the annual caps of the Property Services provided by the CNOOC Group to the Group for the years ending 31 December 2017, 31 December 2018 and 31 December 2019, respectively, be set as follows. The Company also sets out below the historical transaction amounts under the same category for the three years ended 31 December 2015 and the period from 1 January 2016 to 30 June 2016.

• (1) Historical transaction amounts

			Period from
Year ended	Year ended	Year ended	1 January 2016 to
31 December 2013	31 December 2014	31 December 2015	30 June 2016
Aggregate	Aggregate	Aggregate	Aggregate
transaction amount	transaction amount	transaction amount	transaction amount
(RMB million)	(RMB million)	(RMB million)	(RMB million)
Approximately 143	Approximately 153	Approximately 242	Approximately 41

• (2) Proposed annual caps

Year	Year	Year	Year	Year	Year	Year
ended 31	ended 31	ended 31	ending 31	ending 31	ending 31	ending 31
December	December	December	December	December	December	December
2013	2014	2015	2016	2017	2018	2019
				Proposed	Proposed	Proposed
Annual	Annual	Annual	Annual	annual	annual	annual
cap	cap	cap	cap	cap	cap	cap
(RMB	(RMB	(RMB	(RMB	(RMB	(RMB	(RMB
million)	million)	million)	million)	million)	million)	million)
245	248	277	305	340	460	638

The proposed annual caps were determined with reference to the historical transactional amounts between the CNOOC Group and the Group for the three years ended 31 December 2015 and the six months ended 30 June 2016, and the anticipated business volume between the CNOOC Group and the Group for the three years ending 31 December 2019.

The anticipated business volume between the CNOOC Group and the Group for the three years ending 31 December 2019 are based on (1) revenue forecasts for the next three financial years ending 31 December 2019 for the existing services offered by the Group to CNOOC; (2) assuming that the number of vessels operated by the Group will slightly increase; (3) applying the historical percentage of revenue being generated from the CNOOC Group; and (4) 20% buffer.

The transaction amounts of continuing connected transactions are closely linked to oil prices and capital expenditure of the CNOOC Group in exploration and production activities in offshore China. The oil prices have significantly dropped in 2015. In 2015, the average Brent oil price has dropped by 65% compared to 2013. As a result, the CNOOC Group has significantly cut capital expenditure. However, it is estimated by several industrial reports

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LETTER FROM THE BOARD

that oil prices are recovering. For example, IHS forecasts that Brent oil price and WTI oil price will rise to USD 60/bbl in 2017. Bernstein also forecasts that oil price will reach USD 80/bbl between 2019 and 2020. Following the rising oil prices, the capital expenditure in upstream oil exploration and production will also increase. According to IHS’s forecasts, by 2020, the global investments in upstream offshore exploration will return to the level of 2014. Therefore, the market anticipates that oil prices will increase during next three years, and capital expenditure of the CNOOC Group in exploration and production activities in offshore China will also increase. The Company has compared the Company’s past performance with the performance of the Company’s peers and the industry reports published by IHS, and the Company is of the view that the Company is capable and strategically prepared for the recovery of the business volume. Therefore, the historical transaction amounts for three years ended 31 December 2015 and six months ended 30 June 2016 as a whole are valuable indicators for future transaction amounts during the next three years, and the anticipated business volume between the Group and the CNOOC Group for the three financial years ending 31 December 2019 will also increase which is in line with the capital expenditure of the CNOOC Group. The year-one-year growth rate of proposed annual caps for the three years ending 31 December 2019 is also consistent with the expected trend of oil prices and the capital expenditure of the CNOOC Group.

Additionally, the Company estimates that its revenues from other customers will also increase during the next three years. The provision by the Group of the Oilfield Services to the CNOOC Group during the three financial years ended 31 December 2015 represented approximately 65-70% of the total revenue of the Group. Since the Oilfield Services have been the main contributor to the Group’s revenue, as such, the proposed annual caps and the actual historical transaction amounts being at a similar percentage against the total revenue of the respective period is an appropriate basis to assess the fairness and reasonableness of the proposed annual caps. Hence, the Company has used the same percentage to estimate proposed annual caps.

The detailed basis of calculating the 20% buffer is based on the historical data of the revenue of the Company as well as CNOOC for the past few years. The revenues of the Company and CNOOC have a noticeable amount of fluctuation for the past few years which implies that the future revenue can also be volatile. In addition, the fluctuation of oil price will also significantly affect the revenue of the Company and CNOOC as explained above. Although the Company has an estimation of the future oil price, there is still a certain degree of uncertainty that may cause an unanticipated huge increase in oil price, thus resulting in a higher than expected sales. Therefore, the Company has set such buffer to allow the Company to have flexibility to cater the increase of services due to expansions as well as revenue increase from CNOOC without being aggressive and overly optimistic. The Company considers the buffer is fair and reasonable.

Taking the above factors into account, the Company considers that the proposed annual caps are fair and reasonable and in the interest of the Company and Shareholders as a whole.

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LETTER FROM THE BOARD

Term and termination

Upon execution and seal by legal representative or authorized representative of each party and approval by the Shareholders on the general meeting, the Master Agreement will take effect from 1 January 2017 for a term of three years and will expire on 31 December 2019.

Implementation agreements and payments

The Company and each subsidiary of the Company may, from time to time and as necessary, enter into separate implementation agreement for each specific transaction contemplated under the Master Agreement with CNOOC and each subsidiary of CNOOC. Each implementation agreement will set out the specifications for the transaction. The implementation agreements provide for the provision of service as contemplated by the Master Agreement, and as such, they do not constitute new categories of connected transactions. Any such implementation agreement will stay within the bounds of the Master Agreement and the annual caps.

All payments made pursuant to the Master Agreement and its implementation agreements will be in cash.

Fairness of the continuing connected transactions and their impact on the independency of the Company

The Master Agreement is signed on normal commercial terms which are fair and reasonable, with the prices/fees agreed and confirmed by both parties by negotiating and concluding with arm’s length terms, taking into account the then prevailing market conditions, and in any event the terms of the relevant agreement and its transaction under such agreement given to the Company and its subsidiaries by CNOOC and its subsidiaries and associates shall be no less favourable than those offered by independent third parties to the Company and its subsidiaries for the same or similar type of services. The Company and its subsidiaries will sign necessary written agreements on detailed transactions with CNOOC and its subsidiaries and associates within the range set by the Master Agreement according to actual conditions, and pay and/or charge the relevant prices/ fees based on the agreed method set forth in the relevant agreements.

The Company will, through the Master Agreement and a series of risk management arrangements in accordance with the regulatory requirements, endeavour to maintain its independency in decision-making, the fairness of the prices and terms of the transactions as well as the flexibility in purchasing coal from independent third parties other than the connected persons so as to alleviate the independence on its controlling shareholder. Such arrangements shall include without limitation the Company’s right to make independent decisions as to the price and quantity of purchase and to access and obtain market information through various means so that the terms obtained by the Company and its subsidiaries from CNOOC and its subsidiaries and associates will be no less favorable than those available from independent third parties.

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LETTER FROM THE BOARD

Based on the above, the Company is of the opinion that the Master Agreement and the continuing connected transactions under it are in the interests of the Company and the Shareholders as a whole. Meanwhile, the Company has its complete business system and ability to operation independently facing the market, therefore the Master Agreement and the continuing connected transactions under it do not affect the independency of the Company.

Pricing policy and measures to safeguard the interest of the independent shareholders

The basis of determining the prices for the continuing connected transactions will be in accordance with: (1) the State-quoted price (including local government-quoted price), if the pricing of such a transaction is governed by the pricing policies of the PRC; (2) a comparable market price (as compared against local, national or international price), if the transaction is not governed by the pricing policies of the PRC; or (3) by agreement between the parties based on prices no less favourable to/from third parties or reasonably agreed between the parties, if no comparable market price can be taken as a reference.

For each type of continuing connected transaction, the specific pricing policies are set out as follows:

The Group is the leading provider of oilfield services in the offshore China market. For the Oilfield Services provided by the Group to the CNOOC Group, the prices are mainly determined through arm’s length negotiation with reference to international oil prices and market prices of oilfield services in Southeast Asia that are released by IHS (www.ihs.com) and Clarkson (www.crsl.com). IHS and Clarkson provide information and analysis to support the decision-making process of businesses and governments in a number of industries. In offshore oil & gas sector, IHS and Clarkson provide regional market data on equipment of drilling companies, contract terms, operators, operating areas and blocks, daily rates, estimated project volume and historic operation conditions which are normally updated on monthly basis. IHS and Clarkson publish a number of well-known industry reports such as IHS Petrodata World Rig Forecast, IHS Petrodata Seismic Quarterly Report, Clarkson Offshore Drilling Rig Monthly and Clarkson Offshore Intelligence Monthly. Southeast Asia is close to China and the Company considers that market prices in Southeast Asia are comparable to prices in the offshore China market. Prices for the Oilfield Services provided by the Group to the CNOOC Group will be approximately 10% more or less than the market prices of Southeast Asia. When determining contract prices, the Company will consider specific conditions of contract, including functions of specific equipment, depth of water and complexity of operation and contract term etc., market demand and historical transaction prices. The Company will ensure that the prices are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

For the provision of utilities by the CNOOC Group to the Group, including water, power and gas, the prices are under the guidance of State-quoted price promulgated by NDRC. Such prices are updated by NDRC from time to time and are published on websites of Pricing Bureaus.

For the provision of the Machinery Leasing, Equipment, Material and Utilities Services other than utilities, the prices are primarily determined by market price. In determining such prices, the Company will undergo a tendering process which promotes market competition to

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LETTER FROM THE BOARD

obtain best available rate. However, for the supply of machineries for leasing and the supply of equipment by the CNOOC Group to the Group, due to the nature of the industry, only the CNOOC Group has oilfield service machines and equipment that can satisfy special operation conditions in certain offshore areas of China. Therefore, a tendering process is not feasible. In this case, the prices are determined with reference to historical transactions and if possible, prices and terms obtained from not less than three third parties for comparable machines and equipment in other countries. The Company ensures that under current market conditions, the prices will not be higher than historical transaction prices. The tendering process is organized strictly following the requirements under the Tendering and Bidding Law of the PRC. In a typical procurement procedure, the Company invites not less than three bidders to submit its fee proposal and commercial proposal before the designated deadline. The procurement department of the Company that is separated from and independent of other departments will compare proposals and make decision. According to the Company’s procurement policy, in addition to the offer of same or more favourable terms by the counterparty in a transaction, the Company will also consider other factors, including the corporate background of the counterparty; its reputation and reliability; its ability to conduct the transaction in accordance with the terms of the contract; and its understanding of the Company’s needs, in order to maximise the Company’s interest in the transaction, and at the same time reduce the Company’s time and costs of transaction.

For the provision of the Property Services by the CNOOC Group to the Group, the prices are primarily determined by market price. The prices for the provision of Property Services are agreed by reference to the leasing of similar properties from nearby locations and/or consult the advice of not less than three reputable local real estate agents for benchmarks of assessment. Where no comparable market price can be taken as a reference, the Group will, having taken into account the location, scope, scale and term of the transaction and historical comparable transactions, determine the price of the relevant transaction based on arm’s length negotiations and on terms which are no less favourable from third parties.

Directors and senior management of the Company will monitor closely and review regularly each continuing connected transaction of the Company. The Company will adopt a series of risk management arrangements, and endeavour to maintain, in relation to each continuing connected transaction, the independence of the Company; the fairness of the price of the transaction; the fairness of the terms of the transaction; and the right of the Company to conduct transactions with independent third parties other than the CNOOC Group. The relevant arrangements include:

• the continuing connected transactions contemplated under the Master Agreement are conducted on a non-exclusive basis;

• Upon the signing of the Master Agreement and its approval by the Independent Shareholders, the marketing department and the procurement department of the Company will be responsible for the execution of the Master Agreement, and before the signing of each individual agreement, functional departments of the Company, including the risk control departments, will evaluate the terms, including the fairness of the price, of the agreement;

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LETTER FROM THE BOARD

• In addition to the annual review of the performance of specific contracts by the independent non-executive Directors and the Company’s auditors, the Company’s supervisors will also monitor the working arrangements involved in the Company’s continuing connected transactions, and review whether the Company’s transactions are fair, and whether the transaction prices are reasonable.

Reasons for entering into the Master Agreement and its benefits to the Company

The Company, including its predecessors, has been providing oilfield services to CNOOC and its associates since 1982. In addition, the CNOOC Group has also since 1982 been providing equipment, material and utilities services to the Group. CNOOC is the single largest customer of the Company, and the business, results of operations and financial condition of the Company depend in large on the performance of the Master Agreement. However, as CNOOC is the largest offshore oil producer in the PRC, holding the dominant position in offshore oil production in China that is the principal market of the Company, the Company will ensure secured revenues and a stable source of supply of equipment, materials and utilities through the performance of the Master Agreement. Therefore, the Company considers that it is in the interest of the Company to continuously enter into the continuing connected transactions with CNOOC.

The properties leased from the CNOOC Group are essential to the Group’s operations. Thus, the Company considers that it is in the interest of the Company to continue with the Property Services, as relocating to alternative premises would be costly and could lead to interruption to the Group’s operations.

Hong Kong Listing Rules Implications

CNOOC holds 50.53% interest in the Company, and is the controlling shareholder of the Company. As such, CNOOC is a connected person of the Company under the Hong Kong Listing Rules, and the Master Agreement and the transactions contemplated thereunder constitute continuing connected transactions of the Company pursuant to Chapter 14A of the Hong Kong Listing Rules.

In respect of the proposed annual caps under the Master Agreement, as one or more of the applicable percentage ratios exceed 5% as calculated in accordance with Rule 14.07 of the Hong Kong Listing Rules, the Master Agreement and the transactions contemplated thereunder are subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, there is no other transaction (other than those carried out pursuant to the current Master Services Framework Agreement) entered into between the Group and the CNOOC Group and its ultimate beneficial owners within a 12-month period or otherwise related, which would, together with transactions under the Master Agreement, be regarded as a series of transactions and treated as if they are one transaction under Rules 14A.81 of the Hong Kong Listing Rules.

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LETTER FROM THE BOARD

PROPOSED AMENDMENTS TO THE CONNECTED TRANSACTIONS DECISION-MAKING MECHANISM

As required by relevant regulatory rules and the Articles of Association, the Company has enacted the Connected Transactions Decision-making Mechanism before the listing of A Shares. In consideration that the relevant regulatory rules have been amended or adjusted, the Company proposes to amend the Connected Transactions Decision-making Mechanism according to actual situation. For details, please refer to Appendix I of this circular.

The principal sources of these amendments is the Guidelines of the Shanghai Stock Exchange on Connected Transactions of Listed Companies, and the major amendments include supplementing requirements on filing of connected persons, connected transaction control and daily management responsibilities. Meanwhile, special rules on disclosure of daily connected transactions and decision-making procedure are amended in more detail.

PROPOSED APPOINTMENT OF NON-EXECUTIVE DIRECTOR AND RE-APPOINTMENT OF EXECUTIVE DIRECTOR

Pursuant to the Company Law of the PRC and the Articles of Association, the Board proposes the appointment of Mr. Lv Bo as a non-executive Director. The Board also proposes the re-appointment of Mr. Li Feilong as an executive Director of the Company.

The above-mentioned proposed appointments of non-executive director and re-appointment of executive director are subject to the approval of the shareholders of the Company by way of ordinary resolution(s) at the second EGM of 2016.

Background of Mr. Lv Bo

Mr. Lv Bo , aged 53, Chinese. He graduated from China University of Mining and Technology with a bachelor degree of Science in management, and later obtained an MBA degree from China Europe International Business School. He is a senior economist. Since 1985, he served in the Ministry of Coal Industry, the Ministry of Energy, and the Organization Department of the Communist Party of China Central Committee. He served in a number of positions including a Vice-Director-level official in the Personnel and Labor Department of the Ministry of Energy, Vice Director and Director of Economic and Technology Cadre Bureau of the Organization Department of the Communist Party of China Central Committee, and Director of the Fourth and Fifth Cadre Bureaus of the Organization Department of the Communist Party of China Central Committee. He joined CNOOC in 2002 as the Director of the Human Resources Department of CNOOC. In November 2006, he served as Assistant President of CNOOC. In April 2010, he served as Vice President of CNOOC. Since December 2012, he has also served as the Chairman of the Board of CNOOC Energy Technology and Services Limited, a subsidiary of CNOOC. Since January 2014, he served as a Nonexecutive Director of CNOOC Limited.

Save as disclosed above, Mr. Lv has not held any directorship in other listed companies in the past three years.

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LETTER FROM THE BOARD

Save as disclosed above, Mr. Lv has no relationship with any directors, senior management or substantial or controlling shareholders of the Company. As at the date of this circular, Mr. Lv does not have any interest in the shares of the Company within the meaning of Part XV of the SFO.

Subject to the approval at the second EGM of 2016, Mr. Lv will enter into a service contract with the Company for a term of three years as director, subject to re-election at the general meeting of the Company. Mr. Lv will not receive any emolument from the Company.

Save for disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules, and the Company is not aware of any other matters that need to be brought to attention of Shareholders.

Background of Mr. Li Feilong

Mr. Li Feilong , aged 51, Chinese, Executive Director, Executive Vice President and CFO of COSL. He graduated from China University of Petroleum in 1986 with a Bachelor Degree in Management Engineering, and joined CNOOC in the same year. From 1986 to 1992, he served as an economist and senior analyst in the Planning Department of CNOOC. From 1993 to 1997, he served as audit manager and audit department chief in the Audit Department. From February to September 1998, he received a staff training from a petroleum company of the United States. From 1999 to 2001, Mr. Li served as head of the Finance Team of IPO Office and the Finance Manager of Hong Kong Office of CNOOC Ltd. From 2001 to 2003, he served as Assistant Controller of Finance management of CNOOC Ltd. and has been Controller since 2004. He has also been the director of CNOOC Southeast Asia Ltd., a subsidiary of CNOOC Limited and the director of CNOOC Insurance Company, a subsidiary of CNOOC. From 2007 to November 2011, Mr. Li was a member of Financial Accounting Standards Advisory Council by the Trustees of the Financial Accounting Foundation. From 2010 to June 2016, Mr. Li was a member of the International Financial Reporting Standards Interpretations Committee by the Trustees of International Financial Reporting Standards Foundation. Mr. Li was appointed as the Executive Vice President and CFO of the Company on 16 September 2010 and Executive Director of the Company on 22 December 2010.

Save as disclosed above, Mr. Li has not held any directorship in other listed companies in the past three years.

Save as disclosed above, Mr. Li has no relationship with any directors, senior management or substantial or controlling shareholders of the Company. As at the date of this circular, Mr. Li holds 60,000 H shares of the Company. Subject to the approval at the second EGM of 2016, Mr. Li will enter into a service contract with the Company for a term of three years, subject to re-election at the general meeting of the Company. Mr. Li’s annual remuneration will be determined pursuant to the Articles of Association, taking into account the recommendations made by the Remuneration and Assessment Committee of the Company and with reference to his duties and responsibilities with the Company.

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LETTER FROM THE BOARD

Save for disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules, and the Company is not aware of any other matters that need to be brought to attention of Shareholders.

EGM

A notice convening the EGM to be held at 10:00 a.m. on Thursday, 15 December 2016 at Meeting Room I & II, 3rd Floor, JW Marriott Shenzhen, 6005 Shennan Boulevard, Futian District, Shenzhen, Guangdong, the PRC is set out on page 48 to 49 of this circular.

Pursuant to Rule 13.39(4) of the Hong Kong Listing Rules, any vote of the shareholders at a general meeting must be taken by poll. Accordingly, all resolutions to be proposed at the EGM will be voted by poll.

The accumulative voting system may be adopted by the Company pursuant to the provisions of the Articles of Association or a resolution of the general meeting for the election of directors at the general meeting. Under the accumulative voting system, each Share shall be entitled to votes equivalent to the number of directors to be elected for the election of directors at the general meeting, and Shareholders may consolidate their voting rights when casting a vote.

A form of proxy for the EGM for use by the Shareholders is enclosed with this circular. Whether or not you are able to attend the EGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 24 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof (as the case may be) should you so wish.

Shareholders who intend to attend the EGM must complete and return the written replies for attending the EGM to the Company’s office in Hong Kong by facsimile or post no later than 24 November 2016.

Pursuant to the Hong Kong Listing Rules, CNOOC and its associates will abstain from voting on all resolutions relating to the continuing connected transactions to be proposed, considered and voted on at the EGM. As of the Latest Practicable Date, CNOOC and its associates hold in aggregate 2,410,849,300 shares of the Company, which amounts to approximately 50.53% of total issued shares of the Company.

Other than set out above and as of the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, there is no connected person of the Company, Shareholder and their respective associates (other than CNOOC and its associates) with a material interest in the continuing connected transactions to be proposed, considered and approved at the EGM required to abstain from

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voting at the EGM, and there is no connected person of the Company, Shareholder and their respective associates with a material interest in the other matters to be proposed, considered and approved at the EGM required to be abstain from voting at the EGM.

RECOMMENDATION

Based on the relevant information disclosed herein, the Directors, including all the independent non-executive Directors, believe that the terms, the proposed annual caps of and the transactions contemplated under the Master Agreement, proposed amendments to the Connected Transactions Decision-making Mechanism, proposed appointment of Mr. Lv Bo as a non-executive director of the Company and proposed re-appointment of Mr. Li Feilong as an executive director of the Company set out herein are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, and are in the interests of the Company and its Shareholders as a whole.

The Board has resolved and approved the resolutions in respect of the above matters. Of the Directors attending the board meetings, Mr. Liu Jian, Mr. Qi Meisheng, Mr. Dong Weiliang, Mr. Li Feilong and Mr. Xie Weizhi were considered to have material interests by virtue of being employed by CNOOC, and had thus abstained from voting on the board resolutions in respect of the continuing connected transactions. Accordingly, the Board recommends that the Shareholders vote in favour of all resolution(s) in relation to the above matter to be proposed at the EGM.

Platinum Securities Company Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to above continuing connected transactions. Having considered the advices given by the Independent Financial Adviser and the principal factors and reasons taken into consideration by them in arriving at their advices, the Independent Board Committee is of the opinion that the terms, proposed annual caps of and the transactions contemplated under the Master Agreement set out herein are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, and are in the interests of the Company and its Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of all resolution(s) in relation to the continuing connected transactions to be proposed at the EGM.

Your attention is also drawn to the letter from the Independent Board Committee set out on page 18, the letter from the Independent Financial Adviser set out on pages 19 to 36 and the other information set out in the appendices to this circular.

By Order of the Board China Oilfield Services Limited Wang Baojun Company Secretary

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in the People’s Republic of China as a joint stock limited liability company) (Stock Code: 2883)

9 November 2016

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

ENTERING INTO THE MASTER SERVICES FRAMEWORK AGREEMENT

We have been appointed to form the Independent Board Committee to consider and advise the Independent Shareholders as to whether, in our opinion, the terms, proposed annual caps of and the transactions contemplated under the Master Agreement set out herein are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, are in the interests of the Company and its Shareholders as a whole and how to vote.

Having considered the above and the advice of the Independent Financial Adviser in relation thereto as set out on pages 19 to 36 of this circular, we are of the opinion that the terms, proposed annual caps of and the transactions contemplated under the Master Agreement set out herein are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, and are in the interests of the Company and its Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of and approve all resolution(s) in relation to the Master Agreement to be proposed at the EGM.

Yours faithfully, For and on behalf of The Independent Board Committee of China Oilfield Services Limited Law Hong Ping, Lawrence Fong Chung, Mark Wong Kwai Huen, Albert Independent Non-executive Directors

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LETTER FROM PLATINUM

The following is the text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders for the purpose of incorporation into this circular.

9 November 2016

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

ENTERING INTO THE MASTER SERVICES FRAMEWORK AGREEMENT

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions (the “CCTs”). Details of the terms of the Master Agreement and the CCTs are contained in the circular of the Company dated 9 November 2016 (the “Circular”). Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

In our capacity as the Independent Financial Adviser, our role is to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the CCTs are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole; and to give independent advice to the Independent Board Committee and the Independent Shareholders.

In formulating our opinion, we have relied on the information and facts supplied to us by the Directors and/or management of the Company. We have reviewed, among other things: (i) the Master Agreement; (ii) the announcement of the Company dated 6 November 2016 (the “Announcement”); (iii) the circular of the Company dated 14 November 2013 (the “2013 Circular”); (iv) the audited annual report of the Company for the financial year ended 31 December 2015 (the “2015 Annual Report”); and (v) the unaudited interim report for the six months ended 30 June 2016 of the Company (the “2016 Interim Report”).

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We have assumed that all information, facts, opinions and representations contained in the Circular are true, complete and accurate in all material respects and we have relied on the same. The Directors have confirmed that they take full responsibility for the contents of the Circular and have made all reasonable inquiries that no material facts have been omitted from the information supplied to us.

We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy or completeness of the information of all facts as set out in the Circular and of the information and representations provided to us by the Directors and/ or management of the Company. Furthermore, we have no reason to suspect the reasonableness of the opinions and representations expressed by the Directors and/or management of the Company which have been provided to us. In line with normal practice, we have not, however, conducted a verification process of the information supplied to us, nor have we conducted any independent in-depth investigation into the business and affairs of the Company. We consider that we have reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our opinion regarding the CCTs. We are independent from, and are not associated with the Company or any other party to the CCTs, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules and accordingly, are considered eligible to give independent advice on the CCTs. We will receive a fee from the Company for our role as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the CCTs. Apart from this normal professional fee payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Company or any other party to the CCTs or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules.

The Independent Board Committee, comprising Mr. Law Hong Ping, Lawrence, Mr. Fong Chung, Mark, and Mr. Wong Kwai Huen, Albert, has been established to advise the Independent Shareholders as to whether the terms of the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the CCTs are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have taken into account the following principal factors:

1. Background of the CCTs

Reference is made to the Announcement in relation to the renewal of CCTs. The Board announces that on 4 November 2016, the Company entered into the Master Agreement with CNOOC in respect of the Continuing Connected Transactions. CNOOC

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LETTER FROM PLATINUM

is a substantial shareholder of, and currently holds approximately 50.53% of the issued share capital, of the Company. Accordingly, entering into the Master Agreement constitutes continuing connected transactions for the Company under the Listing Rules.

As the aggregate annual amount of the CCTs is expected to exceed the 5% threshold on an annual basis, the CCTs will be subjected to the approval of the Independent Shareholders under Rule 14A.35 of the Listing Rules.

2. Reasons for and benefits of the CCTs

(a) Provision by the Group of the Oilfield Services to the CNOOC Group

As stated in the letter from the Board in the Circular, the Company is principally engaged in the provision of offshore oilfield services and the Company is a leading integrated oilfield services provider in the world. The Company considers that it is in the interest of the Company to continuously enter into this CCTs with CNOOC, as it would ensure regular sales to the Company. Therefore, we are of the view that the Oilfield Services are squarely within the principal business of the Group and are in the ordinary and usual course of business of the Group.

Exhibit 1 – Historical revenue from the provision by the Group of the Oilfield Services to the CNOOC Group

	**For the **	**financial year **	ended
		31 December
	2013	2014	2015
	RMB	RMB	RMB
	million	million	million
Total revenue of the Group	27,364	32,993	23,174
Oilfield Services
Actual amount	17,785	22,488	15,889
Actual amount as a percentage of
total revenue of the Group	65%	68%	69%

As stated in the letter from the Board in the Circular, CNOOC is the largest offshore oil producer in the PRC. The Company, including its predecessors, has been providing Oilfield Services including drilling services, well services, marine support services and geophysical and surveying services to the CNOOC Group since 1982 in relation to its offshore oil and gas exploration, development and production activities. We have examined the actual historical amounts of revenue generated from the Oilfield Services to the CNOOC Group in Exhibit 1 above. We note that these historical transaction amounts represent approximately 65% to 70% of the total revenue of the Group for the three financial years ended 31 December

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LETTER FROM PLATINUM

1. We are of the view that the CNOOC Group is the single largest customer of the Group, and the business, results of operations and financial condition of the Company depend in large on the performance of the Master Agreement.

As such, given the significance of the CNOOC Group to the Group’s business, we are of the view that it is in the interests of the Group to continue this long-standing business relationship with its single largest customer, which is a dominant player in the PRC offshore oil industry, holding the dominant position in offshore oil production in China that is the principal market of the Company. In addition, we also understand from the management that the Group should obtain quotes from individual third parties both domestically and internationally such as those market players who offer similar kind of service as well as reference being made to updated research reports published by professional institutions when comparing the terms of the supply of oilfield services contracts, the Company followed the relevant procedures of its internal control manual and the contract price under such contracts shall be no less favourable than those offered by independent third parties to the Company for the same or similar type of services. Therefore, we consider that the provision by the Group of the Oilfield Services to the CNOOC Group is in the interests of the Company and its Shareholders as a whole.

(b) Provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services to the Group

As stated in the letter from the Board in the Circular, the CNOOC Group has since 1982 been providing Equipment, Material and Utilities Services to the Group. The Company considers that it is in the interest of the Company to continuously enter into this CCTs with the CNOOC Group, as it would ensure a stable source of supply of equipment, materials and utilities from the largest offshore oil corporation in the PRC.

Based on our discussion with the management of the Company, we understand that the provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services of the Group includes various equipment, communication, warehousing, stevedoring, construction, medical, materials, utilities, labour and other ancillary services. We understand from the management that the terms of the relevant agreement and its transaction under such agreement shall be no less favourable than those offered by independent third parties to the Company for the same or similar type of services. As such, we are of the view that the procurement of the Machinery Leasing, Equipment, Material and Utilities Services by the Group is in the ordinary and usual course of business of the Group.

Given that these services are vital in supporting the Group’s operations, we consider that it is in the interests of the Group to maintain a stable source of provision of such services. As stated in the Letter from the Board in the Circular, pursuant to the Master Agreement, the CNOOC Group will continue to provide the Group with such services, and the CNOOC Group will also provide the Group

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LETTER FROM PLATINUM

with machinery leasing services. As such, we are of the view that the provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services to the Group is in the interests of the Company and its shareholders as a whole.

(c) Provision by the CNOOC Group of the Property Services to the Group

Based on our discussion with the management of the Company, the Group has leased certain properties from the CNOOC Group for warehousing, office, production and living quarters’ uses. Pursuant to the Master Agreement, the CNOOC Group will continue to lease the properties to the Group and provide the Group with property administration services. We understand from the management that the terms of the relevant agreement and its transaction under such agreement shall be no less favourable than those offered by independent third parties to the Company for the same or similar type of services. As such, we are of the view that the procurement of the Property Services by the Group is in the ordinary and usual course of business of the Group.

As stated in the letter from the Board in the Circular, the properties leased from the CNOOC Group are essential to the Group’s operations. Thus, the Company considers that it is in the interests of the Company to continue with the Property Services, as relocating to alternative premises would be costly and could lead to interruption to the Group’s operations. As such, we are of the view that the provision by the CNOOC Group of the Property Services to the Group is in the interests of the Company and its Shareholders as a whole.

In addition, we understand from the management of the Company as well as stated in the letter from the Board in the Circular, the Company will, through the Master Agreement and a series of risk management arrangements in accordance with the regulatory requirements, endeavour to maintain its independency in decision-making, the fairness of the prices and terms of the transactions as well as the flexibility in purchasing from independent third parties other than the connected persons so as to alleviate the independence on its controlling shareholder. Such arrangements shall include without limitation the Company’s right to make independent decisions as to the price and quantity of purchase and to access and obtain market information through various means as the Company has its complete business system and ability to operate independently facing the market. Hence, we are of the view that entering into the Master Agreement and the CCTs will not affect the independency of the Company.

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LETTER FROM PLATINUM

3. Principal terms of the Master Agreement

Set out below are the principal terms of the Master Agreement:

• Date : 4 November 2016 Parties : The Company and CNOOC Subject : Pursuant to the Master Agreement, the Group and CNOOC or other members of the CNOOC Group will enter into various transactions as detailed under the paragraph headed “Non-Exempt Continuing Connected Transactions” below.

• Term and : Upon execution and seal by legal representative or termination authorized representative of each party and approval by the Shareholders on the general meeting, the Master Agreement will take effect from 1 January 2017 for a term of three years and will expire on 31 December 2019.

• Price : The basis of determining the prices for the Continuing Connected Transactions will be in accordance with: (i) the State-quoted price (including local government-quoted price), if the pricing of such a transaction is governed by the pricing policies of the PRC; (ii) a comparable market price (as compared against local, national or international price), if the transaction is not governed by the pricing policies of the PRC; or (iii) by agreement between the parties based on prices no less favourable to/from third parties or reasonably agreed between the parties, if no comparable market price can be taken as a reference.

Non-Exempt Continuing Connected Transactions

(a) Provision by the Group of the Oilfield Services to the CNOOC Group

Pursuant to the Master Agreement, the Company, including its subsidiaries, will provide the Oilfield Services including drilling services, well services, marine support services and geophysical surveying services to the CNOOC Group in relation to its offshore oil and gas exploration, development and production activities.

The Group, and its predecessors, has been providing such offshore oilfield services to the CNOOC Group since 1982.

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LETTER FROM PLATINUM

(b) Provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services to the Group

In the past, the CNOOC Group has provided the Group with various equipment, communication, warehousing, stevedoring, construction, medical, materials, utilities, labour and other ancillary services. Pursuant to the Master Agreement, the CNOOC Group will continue to provide the Group with such services, and CNOOC Group will also provide the Group with machinery leasing services.

(c) Provision by the CNOOC Group of the Property Services to the Group

The Group has leased certain properties from the CNOOC Group for warehousing, office, production and living quarters’ uses. Pursuant to the Master Agreement, the CNOOC Group will continue to lease the properties to the Group and provide the Group with property administration services.

4. Historical transaction amounts

On 5 November 2013, CNOOC and the Company entered into a master agreement in respect of certain non-exempt continuing connected transactions for a fixed term of three financial years ending 31 December 2016 (the “2013 Agreement”). Details of the transactions contemplated under the 2013 Agreement were disclosed in the announcement and circular of the Company dated 25 October 2013 and 14 November 2013, respectively. The transactions under the 2013 Agreement were approved by the independent shareholders at the extraordinary general meeting held on 20 December 2013.

As the 2013 Agreement is due to expire on 31 December 2016, it is proposed that the Master Agreement be entered into to govern the Continuing Connected Transactions.

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LETTER FROM PLATINUM

The historical transaction amounts between the CNOOC Group and the Group for the three financial years ended 31 December 2015 and the 6 months ended 30 June 2016 were as follows:

Exhibit 2 – Historical transaction amounts

	For the year	For the year	For the year	For the 6
	ended 31	ended 31	ended 31	months
	December	December	December	ended 30
	2013	2014	2015	June 2016
Type of transactions	Amount	Amount	Amount	Amount
	RMB million	RMB million	RMB million	RMB million
Oilfield Services:
Actual caps approved	22,873	24,925	27,824	29,827	(for the
					entire year
					of 2016)
Actual amount	17,785	22,488	15,889	4,318
Equipment, Material
and Utilities
Services:
Actual caps approved	1,475	2,136	2,385	2,557	(for the
					entire year
					of 2016)
Actual amount	592	1,727	1,312	352
Property Services:
Actual caps approved	245	248	277	305	(for the
					entire year
					of 2016)
Actual amount	143	153	242	41

As stated in the information above and the information provided by the Company to us, we note that the historical actual amounts on transactions in relation to Oilfield Services, Equipment, Material and Utilities Services, and Property Services have reached as high as 90%, 81% and 87% of the existing annual caps during the three years ended 31 December 2015 and the six months ended 30 June 2016, respectively.

5. Basis of consideration and measures to safeguard the interest of the independent shareholders

As stated in the letter from the Board in the Circular, the basis of determining the prices for the CCTs will be in accordance with: (i) the State-quoted price (including local government-quoted price), if the pricing of such a transaction is governed by the pricing policies of the PRC; (ii) a comparable market price (as compared against local, national or international price), if the transaction is not governed by the pricing

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LETTER FROM PLATINUM

policies of the PRC; or (iii) by agreement between the parties based on prices no less favourable to/from third parties or reasonably agreed between the parties, if no comparable market price can be taken as a reference.

We have discussed with the management of the Company on the above-mentioned price determination basis. We consider that: (i) PRC government sets the relevant prices for utilities such as gas, water and electricity, from time to time, and it is required for the Group to follow such State-quoted price as promulgated by the NDRC; (ii) if no State-quoted price, then finding a comparable market price by referencing to a price that is found in similar type of transaction conducted locally, domestically or internationally is a normal business practice, and such market price is obtained through various procedures to ensure it is the most competitive in the market; or (iii) if no comparable market price could be referenced, then finding a price that is no less favourable to/from third parties by referencing to historical transactions and market knowledge is also a normal business practice and the Company will ensure such market price will be no less favourable than the prices of the historical transactions. In addition, we are advised by the management that the Company strictly follows such policing policies as stated in their internal control manuals and ensures that the Company maintains its independency when negotiating the continuing connected transactions at all times. As such, we are of the view that by following the abovementioned basis of determining of prices, the Company is able to ensure terms of the continuing connected transactions will be fair and reasonable, on normal commercial terms and on terms no less favourable than third parties. As such, we are of the view that the above-mentioned price determination basis is fair and reasonable.

As stated in the letter from the Board in the Circular, the directors and senior management of the Company will monitor closely and review regularly each continuing connected transaction of the Company. The Company will adopt a series of risk management arrangements, and endeavour to maintain, in relation to each continuing connected transaction, the independence of the Company; the fairness of the price of the transaction; the fairness of the terms of the transaction; and the right of the Company to conduct transactions with independent third parties other than the CNOOC Group. The relevant arrangements include: (i) the continuing connected transactions contemplated under the Master Agreement are conducted on a non-exclusive basis; (ii) upon the signing of the Master Agreement and its approval by the Independent Shareholders, the marketing department and the procurement department of the Company will be responsible for the execution of the Master Agreement, and before the signing of each individual agreement, functional departments of the Company, including the risk control departments, will evaluate the terms, including the fairness of the price, of the agreement; and (iii) in addition to the annual review of the performance of specific contracts by the independent non-executive Directors and the Company’s auditors, the Company’s supervisors will also monitor the working arrangements involved in the Company’s continuing connected transactions, and review whether the Company’s transactions are fair, and whether the transaction prices are reasonable. As such, we are of the view that the Company has a sound risk management system to safeguard the interest of the independent shareholders.

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(a) Provision by the Group of the Oilfield Services to the CNOOC Group

After discussion with the management of the Company, we understand that when determining the prices for the provision of Oilfield Services to the CNOOC Group, the Group will take into consideration the scope of the services, the technical requirements of the services and determine the rates based on past experience and market information for providing similar services to independent customers.

In addition, the Group would reference certain data in relation to contract price offered by market competitors through a data base provided by IHS-Petrodata as well as some research reports released by Clarkson Research Services Limited, which considering they are independent market intelligence information providers. IHS and Clarkson provide information and analysis to support the decision-making process of businesses and governments in a number of industries. In offshore oil & gas sector, IHS and Clarkson provide oilfield service market data relating to equipment of drilling companies, contract terms, operators, operating areas and blocks, daily rates, estimated project volume, historic operation conditions which are normally updated on monthly basis. IHS and Clarkson publish a number of famous industry reports such as IHS Petrodata World Rig Forecast, IHS Petrodata Seismic Quarterly Report, Clarkson Offshore Drilling Rig Monthly and Clarkson Offshore Intelligence Monthly. Therefore, we consider IHS-Petrodata and Clarkson Research are internationally well-known information providers in the oil and gas industry and their data is commonly used by the industry players. Southeast Asia is close to China and the Company considers that market prices in Southeast Asia are comparable to prices in the offshore China market. Prices for the Oilfield Services provided by the Group to the CNOOC Group will be approximately 10% more or less than the market prices of Southeast Asia. When determining contract prices, the Company will consider specific conditions of contract, including functions of specific equipment, depth of water and complexity of operation and contract term etc., market demand and historical transaction prices. The Company will ensure that the prices are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

As such, we consider these factors under the Group’s pricing policy for the provision of the Oilfield Services are commonly adopted and considered in a negotiation process in connection of the provision of services of this kind. We also consider that a price that is reached through a negotiation of this kind under the Group’s pricing policy is consistent with the market practice and on normal commercial terms.

We have obtained and reviewed a sample collection of the previous internal memorandums and meeting minutes prepared by the Group for the provision of the Oilfield Services to the CNOOC Group. The sample collection was gathered randomly on a monthly basis from January to October 2016. We have reviewed at least five samples from the collection and confirmed that the selling price from each of the five samples was determined by the marketing department of the

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Group on the basis as described in the paragraph above. In addition, we note, from the five samples we have reviewed, each contract was reviewed by the Group’s risk control personnel to ensure that the contract price is in line with the Group’s internal risk control policy. As such, we consider that the Group has devoted reasonable human resources to ensure the pricing policy of the Group could be implemented.

As such, we are of the view that the basis to determine the pricing for the provision by the Group of the Oilfield Services to the CNOOC Group is fair and reasonable and are on normal commercial terms.

(b) Provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services to the Group

After discussion with the management of the Company, we understand that the State-quoted price is used in determining the pricing in connection with the provision of utilities such as gas, electricity and water. We are of the view that such pricing determination basis is fair and reasonable since such prices are updated by NDRC from time to time and are published on websites of Pricing Bureaus.

After discussion with the management of the Company, we understand that the pricing for purchases by the Group in relation to the Machinery Leasing, Equipment and Material is primarily determined by the market price. In determining such prices, the Company will undergo a tendering process which promotes market competition to obtain best available rate. However, for the supply of machineries for leasing and the supply of equipment by the CNOOC Group to the Group, due to the nature of the industry, only the CNOOC Group has oilfield service machines and equipment that can satisfy special operation conditions in certain offshore areas of China. Therefore, a tendering process is not feasible. In this case, the prices are determined with reference to historical transactions and if possible, prices and terms obtained from not less than three third parties for comparable machines and equipment in other countries. The Company ensures that under current market conditions, the prices will not be higher than historical transaction prices. The tendering process is organized strictly following the requirements under the Tendering and Bidding Law of the PRC. In a typical procurement, the Company invites not less than three bidders to submit its fee proposal and commercial proposals before the designated deadline. The procurement department of the Company that is separated from and independent of other departments will compare proposals and make decision. According to the Company’s procurement policy, in addition to the offer of same or more favourable terms by the counterparty in a transaction, the Company will also consider other factors, including the corporate background of the counterparty; its reputation and reliability; its ability to conduct the transaction in accordance with the terms of the contract; and its understanding of the Company’s needs, in order to maximize the Company’s interest in the transaction, and at the same time reduce the Company’s time and costs of transaction.

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We have obtained and reviewed a sample collection of the previous internal memorandums and meeting minutes of the Company in relation to the procurement of the Machinery Leasing, Equipment and Material by the Group. The sample collection was gathered randomly on a monthly basis from January to October 2016. We have reviewed at least five samples from the collection and confirmed that the purchase price from each of the sample was determined by the procurement department of the Group in accordance with the pricing policy as described in the paragraph above. In addition, we note, from the sample collection we have reviewed, each contract was reviewed by the Group’s risk control personnel to ensure that the contract price is in line with the Group’s internal risk control policy. As such, we consider that the Group has devoted reasonable human resources to ensure the pricing policy of the Group could be implemented.

As such, we are of the view that the basis to determine the pricing for the procurement of Machinery Leasing, Equipment, Material and Utilities Services by the Group is fair and reasonable and are on normal commercial terms.

(c) Provision by the CNOOC Group of the Property Services to the Group

After discussion with the management of the Company, we understand that the pricing for the procurement of the Property Services is determined by the market price with reference to the leasing of similar properties from nearby locations and/or consult the advice of not less than three reputable local real estate agents for benchmarks of assessment. Where no comparable market price can be taken as a reference, the Group will, having taken into account the location, scope, scale and term of the transaction and historical comparable transactions, determine the price of the relevant transaction based on arm’s length negotiations and on terms which are no less favourable from third parties. Given that the nature of the Property Services, we consider the leasing price of similar properties from nearby locations is the most appropriate pricing indicator which is commonly recognised and adopted in the property industry. Hence, we consider such pricing policy is fair and reasonable and is on normal commercial terms.

We have obtained and reviewed a sample collection of agreements between the Group and the CNOOC Group in relation to the Property Services. The sample collection was gathered randomly on a monthly basis from January to October 2016. We have reviewed at least five samples from the collection and confirmed that the consideration from each of the five sample was determined by the procurement department of the Group in accordance with the pricing policy as described above. In addition, we note, from the sample collection we have reviewed, each contract was reviewed by the Group’s risk control personnel to ensure that the contract price is in line with the Group’s internal risk control policy. As such, we consider that the Group has devoted reasonable human resources to ensure the pricing policy of the Group could be implemented.

As such, we are of the view that the basis to determine the consideration in relation to the provision by the CNOOC Group of the Property Services to the Group is fair and reasonable and are on normal commercial terms.

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Moreover, we note the Company conducts annual internal audit of the connected transactions to ensure that such transactions were entered into in accordance with the terms and conditions and pricing policy of the relevant agreements and that the requirements of the Listing Rules in respect of the connected transactions of the Company have been complied with. We have obtained and reviewed the most recent internal audit report compiled by the Company’s internal audit department and we are satisfied that the Company has carried out appropriate internal procedures to ensure the pricing policies of the relevant CCTs have been implemented.

In light of the above, we are of the view that the basis of pricing policy to determine the consideration of the CCTs is fair and reasonable and are on normal commercial terms.

6. The proposed annual caps

It is proposed that the cap amounts of the CCTs for each of the financial years ending 31 December 2019 will not exceed the followings:

Exhibit 3 – The proposed annual caps

	2017	2018	2019
	RMB	RMB	RMB
	million	million	million
Oilfield Services	14,322	17,695	23,095
Machinery leasing, Equipment, Material
and Utilities Services	2,118	2,827	3,918
Property Services	340	460	638

As stated in the letter from the Board in the Circular, the proposed cap amounts were determined with reference to the historical transactional amounts between the CNOOC Group and the Group for the three years ended 31 December 2015 and the six months ended 30 June 2016, and the anticipated business volume between the CNOOC Group and the Group for the three years ending 31 December 2019.

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(a) Provision by the Group of the Oilfield Services to the CNOOC Group

Based on our discussion with the management of the Company, we understand that as the Oilfield Services are the core business of the Group, the Group has determined the Annual Caps for the Oilfield Services based on, inter alia, the following factors, (i) revenue forecasts for the next three financial years ending 31 December 2019 for the existing services offered by the Group to CNOOC; (ii) assuming that the number of vessels operated by the Group will slightly increase; (iii) applying the historical percentage of revenue being generated from the CNOOC Group, which is approximately 70% as stated in Exhibit 1; and (iv) 20% buffer.

We understand from the discussion with the management of the Company that the Company’s revenue forecast for the financial year ending 31 December 2017 is expected to be lower than that of 2015. We understood from the management that the decrease is mainly due to two reasons: (i) cutting investments in oilfield services due to the unanticipated significant decrease in oil price; and (ii) the sluggish world economy as well as poor industry performance resulting in delay or cancellation of numerous projects thus decrease in business volume. Due to the reason that the transaction amounts of continuing connected transactions are closely linked to oil prices and capital expenditure of the CNOOC Group in exploration and production activities in offshore China. The oil price has significantly dropped in 2015. In 2015, the average Brent oil price has dropped by 65% compared to 2013. As a result, the CNOOC Group has significant cut capital expenditure. We have noticed that CNOOC’s capital expenditure is amounted to RMB22 billion as of August 2016, down 33.3% year-on-year, which is in line with the management’s forecast of the industry as well as providing an explanation to the low utilization rate for the two financial years ending 31 December 2016.

Nevertheless, we have noticed that the management of the Company is expecting total revenue to be increased by 27% to 35% year-on-year during the two years ending 31 December 2019. We have discussed with the management regarding such estimated increment and reviewed the Company’s business plan for the three financial years ending 31 December 2019. We understood that the increments are mainly due to four reasons: (i) the potential of significant increase in oil price; (ii) the anticipated increase in exploration and production volume of the Company’s client; (iii) the Company’s enhancement of well services capabilities; and (iv) the future growth drivers. We have discussed with the management of the Company and reviewed the industry past performance including the performance of the Company’s peers and the industry reports produced by the independent research organisations. In detail, we have reviewed research reports from IHS, Clarkson, Goldman Sachs and Bernstein, which cover the performance of the companies in the industry for the past few years as well as their predictions of the oil price for the next 3 to 5 years. We believe that the oil exploration and production industry is recovering due to the recent improvement in oil price. For example, IHS forecasts that Brent oil price and WTI oil price will rise to USD 60/bbl in 2017. Bernstein also forecasts that oil price will reach

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USD 80/bbl between 2019 and 2020. Following the rising oil prices, the capital expenditure in upstream oil exploration and production will also increase. According to IHS’s forecasts, by 2020, the global investments in upstream offshore exploration will return to the level of 2014. Therefore, the market anticipates that oil prices will increase during next three years, and capital expenditure of the CNOOC Group in exploration and production activities in offshore China will also increase. In addition, the management believes that the Company is capable and strategically prepared for the recovery of the business volume as stated in their future business plan and reasons above. The historical transaction amounts for three years ended 31 December 2015 and six months ended 30 June 2016 as a whole are valuable indicators for future transaction amounts during the next three years, and the anticipated business volume between the Group and the CNOOC Group for the three financial years ending 31 December 2019 will also increase which is in line with the capital expenditure of the CNOOC Group. The year-on-year growth rate of proposed annual caps for the three years ending 31 December 2019 is also consistent with the expected trend of oil prices and the capital expenditure of the CNOOC Group. Therefore, we consider we have reviewed sufficient market information to form the view that the revenue growth as anticipated by the management of the Company is prudent, fair and reasonable.

In addition, we note the provision by the Group of the Oil Services to the CNOOC Group during the three financial years ended 31 December 2015 represented approximately 65-70% of the total revenue of the Group. Since the Oilfield Services have been the main contributor to the Group’s revenue, as such, the proposed annual caps and the actual historical transaction amounts being at a similar percentage against the total revenue of the respective period is an appropriate basis to assess the fairness and reasonableness of the proposed annual caps. Hence, we consider the percentage of 70% as applied by the Company is fair and reasonable.

We note from the management of the Company that including of a buffer of approximately 20% to the proposed annual caps is mainly due to the anticipated increase of business of the Company for the three financial years ending 31 December 2016. We have discussed with the management of the Company and we understand that apart from the uncertainty of the potential increase of services provided to or by the CNOOC Group, the Company may deploy new equipment and commence operation of new vessels if the market is outperforming the Company’s expectations. Should such action be taken, the Company anticipates that such action will lead to an increase of businesses. The detailed basis of calculating the 20% buffer is based on the historical data of the revenue from the Company as well as from the CNOOC Group for the past few years. Through the analysis of the fluctuation of revenue, we noticed that the revenue of the two companies has a noticeable amount of fluctuation for the past few years which implies that the future revenue can also be volatile. In addition, we note that the fluctuation of oil price will also significantly affect the revenue of the Company and CNOOC as explained above. Through our analysis, we note that since early 2014, the crude oil prices has decreased for more than 50%. Although the

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Company has an estimation of the future oil price, there is still a certain degree of uncertainty given the historical sharp decrease in oil price and thus it is reasonable to believe that there may be an unanticipated huge increase in oil price take place during the next three years, thus resulting in a higher than expected sales. In addition, we are of the view that the Company used a relatively conservative approach when estimating the oil price for the next three years. In order to serve better for the operation of the Company and achieve higher business volume, we consider 20% is a reasonable amount of buffer to capture the opportunities if the market and the oil price is outperforming the Company’s estimations. Therefore, we concur with the Company that by setting such buffer allows the Company to have flexibility to cater the increase of services due to expansions as well as revenue increase from the CNOOC Group without being aggressive and overly optimistic. We consider the buffer is fair and reasonable.

As such, we are of the view the basis of determining the proposed annual caps for the Oilfield Services are fair and reasonable.

(b) Provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services to the Group

Based on our discussion with the management of the Company, we understand that the annual caps for the Machinery Leasing, Equipment, Material and Utilities Services are determined based on, inter alia, the following factors: (i) the total revenue forecasts for the three financial years ending 31 December 2016; (ii) the proposed annual caps will be at a certain percentage to the total revenue of the Group, with reference to the historical transaction amounts; (iii) the potential inflation in materials, utility price, and labor cost; and (iv) 20% buffer.

As mentioned in section 6(a) above, we consider we have reviewed sufficient market information to form the view that the revenue projection for the three financial years ending 31 December 2019 by the management of the Company is prudent, fair and reasonable.

We have obtained and reviewed the calculations provided by the management of the Company in relation to the computation of the anticipated amount of transactions in relation to the Machinery, Leasing, Equipment, Material and Utilities Services. We have examined the cost basis of the Group and have performed our analysis on the percentage of the proposed annual caps and historical transaction amounts against the total revenue of the Group. The rationale behind our analysis is that we note that an increase in the Group’s revenue will likely cause a corresponding increase in the amount of Machinery Leasing, Equipment, Material and Utilities Services demanded by the Group. Our analysis indicated that the proposed annual caps and the actual historical transaction amounts represent a similar percentage against the total revenue of the respective period. After discussion with the management of the Company, we understand that the anticipated amounts of provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities services to the Group for the three financial years ending 31 December 2019 are approximately 86% of the

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total provision by the CNOOC Group. We have calculated the same ratio for the five financial years ended 31 December 2015 and noticed that the ratio ranges from 84.5% to 91.5%, which corresponds with the management’s expectations. In addition, management of the Company has also factored in the potential inflation in materials, utilities, as well as labour cost when determining the proposed annual caps. We consider the proposed annual caps and the actual historical transaction amounts are consistent with each other and are fair and reasonable.

As mentioned in section 6(a) above, we have discussed with the management of the Company and we concur with the Company that setting a buffer of approximately 20% allows the Company to have flexibility to cater the increase of services due to the business expansions. Hence, we consider the buffer is fair and reasonable.

As such, we are of the view the basis of determining the proposed annual caps for the Machinery Leasing, Equipment, Material and Utilities Services are fair and reasonable.

(c) Provision by the CNOOC Group of the Property Services to the Group

Based on our discussion with the management of the Company, we understand that the annual caps for the Property Services are determined based on, inter alia, the following factors, (i) the total revenue forecasts for the three financial years ending 31 December 2016; (ii) the proposed annual caps will be at a certain percentage to the total revenue of the Group, with reference to the historical transaction amounts; (iii) the potential inflation in rental price and property services; and (iv) 20% buffer.

As mentioned in section 6(a) above, we consider we have reviewed sufficient market information to form the view that the revenue projection for the three financial years ending 31 December 2019 by the management of the Company is prudent, fair and reasonable.

We have obtained and reviewed the calculations provided by the management of the Company in relation to the computation of the anticipated amount of transactions in relation to the Property Services. We have examined the cost basis of the Group and have performed our analysis on the percentage of the proposed annual caps and historical transaction amounts against the total revenue of the Group. The rationale behind our analysis is that we note that an increase in the Group’s revenue will likely cause a corresponding increase in the size of the office and working space demanded by the Group. Our analysis indicated that the proposed annual caps and the actual historical transaction amounts represent a similar percentage against the total revenue of the respective period. After discussion with the management of the Company, we understand that the anticipated amounts of provision by the CNOOC Group of the property services to the Group for the three financial years ending 31 December 2019 are approximately 14% of the total provision by the CNOOC Group. We have calculated the same ratio for the five financial years ended 31 December 2015 and

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noticed that the ratio ranges from 8.1% to 15.5%, which corresponds with the management’s expectations. In addition, management of the Company has also factored in the potential inflation of land price as well as property services cost when determining the proposed annual caps. We consider the proposed annual caps and the actual historical transaction amounts are consistent with each other and are fair and reasonable.

As mentioned in section 6(a) above, we have discussed with the management of the Company and we concur with the Company that setting a buffer of approximately 20% allows the Company to have flexibility to cater the increase of services due to the business expansions. Hence, we consider the buffer is fair and reasonable.

As such, we are of the view the basis of determining the proposed annual caps for the Property Services are fair and reasonable.

RECOMMENDATION

We have considered the above principal factors and reasons and, in particular, having taken into account the following in arriving at our opinion:

• (a) the provision of the Oilfield Services by the Group is squarely within the principal business of the Group and are in the ordinary and usual course of business of the Group, on normal commercial terms and is in the interests of the Company and its Shareholders as a whole;

• (b) the provision by the CNOOC Group of the Machinery Leasing, Equipment, Material and Utilities Services to the Group is on normal commercial terms and in the interests of the Company and its Shareholders as a whole;

• (c) the provision by the CNOOC Group of the Property Services to the Group is on normal commercial terms and in the interests of the Company and its Shareholders as a whole;

• (d) the basis of determining the annual caps for the Oilfield Services are fair and reasonable;

• (e) the basis of determining the annual caps for the Machinery Leasing, Equipment, Material and Utilities Services are fair and reasonable; and

• (f) the basis of determining the annual caps for the Property Services are fair and reasonable.

Having considered the above, we are of the view that the terms of the CCTs are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves

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recommend the Independent Shareholders to vote in favour of the resolution in relation to the Master Agreement and the relevant annual cap amounts under the Master Agreement in relation to the CCTs to be proposed at the EGM.

Yours faithfully, For and on behalf of Platinum Securities Company Limited Li Lan

Director and Co-head of Corporate Finance

Mr. Li Lan is a licensed person registered with the Securities and Futures Commission and as responsible officer of Platinum Securities Company Limited to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO. Mr. Li Lan has over ten years of experience in corporate finance industry.

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APPENDIX I THE CONNECTED TRANSACTIONS DECISIONMAKING MECHANISM OF COSL (COMPARISON VERSION)

THE CONNECTED TRANSACTIONS DECISION-MAKING MECHANISM OF CHINA OILFEILD SERVICES LIMITED (COMPARISON VERSION)

Article 1 To enhance the management of connected transactions of China Oilfield Services Limited (hereinafter referred to as the “Company”) ~~the Company,~~ and to clearly define management duties and the allocation thereof, and to protect the legitimate interests of the Company, its shareholders, minority and medium investors and creditors, and to ensure that the connected transactions, to be entered into between the Company and the connected parties are in line with the principle of equality, fairness, openness and impartiality, these rules are formulated in accordance with requirements of laws, regulations and supervisory rules such as the Company Law of the PRC (as implemented since ~~1 January 2006~~ 1 March 2014), the Securities Law of the PRC (as implemented since ~~1 January 2006~~ 31 August 2014), the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Update ~~No.91 in March 2009~~ No. 117 in June 2016), the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange (as implemented since ~~1 October 2008~~ 16 November 2014) and the Guidelines of the Shanghai Stock Exchange on Connected Transactions of Listed Companies (as implemented since 1 May 2011) as well as the Articles of Association of the Company (as amended on ~~3 June 2009~~ 22 July 2016).

Article 2 The connected persons of the Company include connected legal persons, connected natural persons and potential connected persons.

• (I) Any of the following legal persons or other entities shall be regarded as connected legal persons of the Company:

• 1) legal persons or other entities who have direct or indirect control over the Company;

• 2) legal persons or other entities who are directly or indirectly controlled by the legal persons as mentioned in sub-paragraph (1) above, excluding the Company and its subsidiaries;

• 3) legal persons or other entities who are directly or indirectly controlled by the connected natural persons of the Company as listed in term (II) below, or whose directors, supervisors, chief executive officer and other senior management are connected natural persons, excluding the Company and its subsidiaries;

• 4) legal persons or other entities who hold 5% or more of the shares of the Company;

• 5) The other legal persons or other entities (which include legal persons or other entities holding 10% or more of the shares of the subsidiaries that have material influence on the Company) who may obtain beneficial interests from the Company due to their special relations with the Company, as

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identified and confirmed by the China Securities Regulatory Commission (“CSRC”), the stock exchanges on which the shares of the Company are listed and the Company based on the substance over form principle.

• 6) The Company and the legal persons as listed in sub-paragraph (2) in ~~above~~ this clause shall not be deemed to have connected relations by virtue of their being controlled by the same state-owned asset administrative institution, save for such legal persons whose chairman, general manager or majority of directors are also the directors, supervisors or senior management of the Company.

• (II) Any of the following persons shall be regarded as connected natural persons of the Company:

• 1) natural persons who directly or indirectly hold 5% or more of the shares in the Company;

• 2) the directors, supervisors, chief executive officer and other senior management of the Company;

• 3) the directors, supervisors, chief executive officers and other senior management of the connected legal persons as specified in sub-paragraph (1) of clause (I);

• 4) family members who have close relations with the persons as specified in sub-paragraphs (1) and (2) of this term, including their spouses; children aged over 18 and their spouses; parents and parents of their spouses; siblings and their spouses; siblings of their spouses and parents of their children’ spouses;

• 5) other natural persons (which include natural persons holding 10% or more of the shares of the subsidiaries that have material influence on the Company) who may obtain beneficial interests from the Company due to their special relations with the Company, as identified and confirmed by the CSRC, the stock exchanges on which the shares of the Company are listed and the Company based on the substance over form principle.

• (III) Any of the following legal persons, other entities or natural persons shall be regarded as connected persons of the Company, i.e. potential connected persons:

• 1) legal persons, other entities or natural persons who have entered into agreements or arrangements with a connected person of the Company, and according to such agreement or arrangement, they will become such legal persons or natural persons as described in term (I) or term (II) above when the agreement or the arrangement comes into effect, or within the forthcoming twelve months;

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• 2) legal persons, other entities or natural persons who used to be those as described in term (I) or term (II) above in the previous twelve months;

• 3) Other persons who are identified and confirmed as the connected persons of the Company in accordance with requirements of the listing rules of the place where the shares of the Company are listed or as identified and confirmed by the stock exchanges of such place.

Article 4 Directors, supervisors and senior management of the Company, and shareholders, de facto controllers and parties acting in concert with them holding 5% of more of the shares, shall inform the Company of the connected relationship between them and the listed company in a timely manner.

Article 5 The Audit Committee of the Board of the Company shall confirm the list of connected persons of the Company and report to the Board and the Supervisory Committee in a timely manner.

Article 6 The Company shall report and update the list of connected persons and information of connected relationship in a timely manner according to the requirements of supervisory authorities.

Article 7 Connected transactions of the Company refer to the transfer of resources or obligations entered into between the Company, its subsidiaries and its connected parties, whether with or without consideration, which shall be confirmed based on the substance over form principle. Connected transactions could be either one-off transactions (or known as occasional connected transactions) or continuing connected transactions (or known as ~~routine~~ daily connected transactions). Connected transactions of the Company include but not limited to:

• (1) the purchase of, disposal of, entrust of, donating or receiving assets;

• (2) external investments, including entrusted financial management, entrusted loans and etc.;

• (3) the provision of financial assistance;

• (4) the provision of security;

• (5) the disposal of fixed assets, including but not limited to purchase and sale, lease, entrusting, entrusted with, donating, receiving and etc.;

• (6) entrusted or trusted asset, capital and business utilization and management;

• (7) donating or receiving properties;

• (8) debt restructuring;

• (9) entering into licensing agreement;

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APPENDIX I THE CONNECTED TRANSACTIONS DECISIONMAKING MECHANISM OF COSL (COMPARISON VERSION)

• (10) the transfer or be transferred of research and development projects;

• (11) other transactions identified and confirmed by relevant authorities;

• (12) the purchase of raw materials, fuel and energy;

• (13) the sale of products and merchandise;

• (14) the provision or receipt of labor forces or services, including but not limited to advertising, renovation of workplace, legal, auditing, actuarial evaluation, asset assessment and etc.;

• (15) entrusting or entrusted with sale;

• (16) deposits in or loans from a financial company of a connected person;

• (17) joint investment with connected persons;

• (18) such other matters being identified and confirmed by the CSRC, stock exchanges on which the shares of the Company are listed or the Company based on the substance over form principle, that may lead to the transfer of resources or obligations through agreement ~~or identified by regulatory authorities~~ , including providing the company jointly invested with the connected person with financial aid or guarantee that exceeds its equity or investment proportion, or waiving the right of first refusal or the right to proportionally increase its holding in such jointly invested company;

Article 12 Price determination of connected transactions of the Company shall comply with the following principles:

• (1) Where there is a state-prescribed price for a transaction, such a price shall apply;

• (2) Where there is a state-recommended price for such a transaction, the ultimate trading price may be set within the indicative range set by the government;

• (3) Other than state-prescribed prices or state-recommended prices, the price for a connected transaction may be set based on the market price or charge standard of a comparable independent third party as long as such a price or standard is available;

• (4) Where such a market price is not available, the price may be based on the price of a non-connected transaction between a connected person and a third party independent of it;

• (5) Where there is no market price of independent third parties or price of non-connected transactions as reference, ~~the price for transaction between the Company and connected person shall follow market price. Where there is no market price,~~ the cost-plus price shall be applied; where ~~there is no market price~~

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APPENDIX I THE CONNECTED TRANSACTIONS DECISIONMAKING MECHANISM OF COSL (COMPARISON VERSION)

~~or~~ the cost-plus pricing is not applicable, the agreed price shall be applied. Both parties shall determine the pricing method according to the specific circumstances concerning the connected transactions, and specify such method in relevant agreements on the connected transactions. In the event that the cost-plus pricing is applicable, the specific profit proportion shall be formulated by the Board separately.

Article 22 Where the Company intends to conduct a connected transaction with its connected person, it shall propose the transaction to the Board for consideration after the independent directors have delivered their prior approval opinions. Before making any judgment, the independent directors may appoint an independent financial adviser to issue a report as the basis for their judgment.

The Audit Committee of the Company shall also review the matters concerning the connected transaction and form its written opinions, which shall be submitted to the Board for consideration and reported to the Supervisory Committee. The Audit Committee may appoint an independent financial adviser to issue a report as the basis for its judgment.

Article 32 The Audit Committee of the Board is responsible for the control and daily management of the connected transactions of the Company. The Audit Committee of the Board ~~shall~~ may, in due course, organize special audits for the connected transactions and report the audit results to the Board and the Supervisory Committee ~~once a year.~~ The Board shall submit special reports on the implementation of the mechanism for administration of connected transactions and matters concerning connected transactions to the general meeting on an annual basis.

CHAPTER 8 SPECIAL PROVISIONS FOR DISCLOSURE AND DECISION-MAKING PROCEDURES OF DAILY CONNECTED TRANSACTIONS

Article 40 When conducting the daily connected transactions listed in sub-paragraphs (12) to (16) of Article 6 hereof, the Company shall perform the corresponding decision-making procedures and disclosure obligations as the case may be.

Article 41 In case of a first-time daily connected transaction, the Company shall enter into a written agreement with the connected person and make disclosure promptly, and then submit the agreement to the Board or general meeting for consideration according to the total transaction amount involved in the agreement. In the absence of such total transaction amount, the agreement shall be submitted to the general meeting for consideration.

Article 42 In case of relatively large quantities of the daily connected transactions in various categories, the Company may make reasonable estimation on the total amount for such daily connected transactions which are expected to occur in the current year on a category by category basis before making disclosure in the annual report for the previous year and then submit the transactions to the Board or general meeting for consideration and make disclosure based on such estimation results.

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APPENDIX I THE CONNECTED TRANSACTIONS DECISIONMAKING MECHANISM OF COSL (COMPARISON VERSION)

In respect of the daily connected transactions within the scope of such estimation, the Company shall disclose them in its annual reports and interim reports according to relevant requirements.

In respect of the connected transactions of which the total transaction amount exceeds such estimation, the Company shall re-submit them to the Board or general meeting for consideration and make disclosure according to the exceeded amount.

Article 43 If a daily connected transaction agreement undergoes major changes in its major terms during implementation or requires renewal after expiration, the Company shall submit the amended or renewed agreement to the Board or general meeting for consideration and make disclosure promptly according to the total transaction amount under the agreement. In the absence of such total transaction amount, such agreement shall be submitted to the general meeting for consideration and disclosure shall be made promptly.

Article 44 A daily connected transaction agreement shall include:

• (1) pricing policy and basis;

• (2) transaction price;

• (3) method to determine the range of total transaction amount or the total transaction amount;

• (4) time and method of payment;

• (5) comparison with the actual transaction amount for the same category of daily connected transactions in the past three years;

• (6) other major terms that shall be disclosed.

Article 45 In case the term of a daily connected transaction agreement exceeds three years, the Company shall re-perform the relevant decision making procedures and disclosure obligations every three years according to this guideline.

Article 46 Independent non-executive directors and auditors of the Company shall audit such daily connected transactions on an annual basis and disclose their audit opinions in annual reports.

Article 52 “above”, ~~“below”, “between”, “more than”~~ in this mechanism include the number itself; ~~“less than”~~ “below” does not include the number itself.

Article 53 This mechanism shall take effect upon consideration and approval at the general meeting ~~and the A Shares of the Company is issued and listed~~ .

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GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ and senior management’s interests and short positions in shares, underlying shares and debenture

Save as disclosed below, as at the Latest Practicable Date, none of the Directors, chief executive and supervisors and their respective associates had any interest or short positions in the shares of the Company or any of its associated corporations which would fall to be notified to the Company and the Hong Kong Stock Exchange, pursuant to Divisions 7 and 8 of Part XV of the SFO or were required, pursuant to Section 352 of SFO, to be entered in the register referred to therein, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

			Approximate
			percentage
			of the
		Number of	interests (H)
		interested	in the
Name of Director	Capacity	shares	Company
Li Feilong	Beneficial Owner	60,000	0.003%

(b) Particulars of Directors’ and supervisors’ Service Contracts

As at the Latest Practicable Date, none of the Directors had an existing or proposed service contract with the Company, or any of its subsidiaries, which is not expiring or determinable by the Company within one year without payment of compensation (other than statutory compensation).

(c) As at the Latest Practicable Date:

• (i) none of the Directors had any direct or indirect interest in any assets which have been, since the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries; and

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GENERAL INFORMATION

APPENDIX II

• (ii) none of the Directors was materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Group.

(d) Directors’ interests in competing businesses

As at the Latest Practicable Date, in so far as the Directors are aware, none of the Directors or their respective associates (as defined in the Listing Rules) had any interest in a business which competes or likely to compete with the business of the Group.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register of interests kept by the Company under section 336 of the SFO and/or so far as is known to the Directors, the following companies (other than the Directors or chief executive of the Company) had, or were deemed or taken to have an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group or had any option in respect of such capital:

			Approximate	Approximate
			percentage	percentage
		Number	in the same	of total
	Capacity and nature of	(share) and	class of	issued share
Name of shareholder	interest	Class of Shares	Shares	capital
Commonwealth Bank of	Interest of corporation	198,992,000 (L)	10.99 (L)	4.17 (L)
Australia	controlled by the
	substantial shareholder
BlackRock, Inc.	Interest of corporation	146,713,752 (L)	8.10 (L)	3.07 (L)
	controlled by the	5,976,000 (S)	0.33 (S)	0.13 (L)
	substantial shareholder
JPMorgan Chase & Co.	Interest of corporation	106,427,412 (L)	5.87 (L)	2.23 (L)
	controlled by the	1,606,000 (S)	0.08 (S)	0.03 (S)
	substantial shareholder	62,510,236 (P)	3.45 (P)	1.31 (P)

Notes:

(a) “L” means long position.

(b) “S” means short position.

(c) “P” means lending pool.

Save as disclosed above, as at the Latest Practicable Date, as far as the Company is aware of, there was no other person (other than any Director or the chief executive of the Company) who had any interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company under Section 336 of the SFO.

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GENERAL INFORMATION

APPENDIX II

4. INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in the promotion of, or in any assets which have been, within the two years immediately preceding the date of this circular, acquired or disposed of by or leased to any member of the Group.

5. LITIGATION

In March 2016, there was some new status about the Company’s two drilling contracts. The Company disclosed announcements of “Status of Two Drilling Contracts” and “Further Status of Two Drilling Contracts” on 6 March 2016 and 20 March 2016 respectively. For details, please refer to relevant announcements published by the Company on the website of Hong Kong Stock Exchange (http://www.hkex.com.hk) and website of the Company (http:// www.cosl.com.cn).

Save as disclosed above, as at the Latest Practicable Date, no member of the Group was or might be engaged in any litigation or claim of material importance and, so far as the Directors were aware, no litigation or claims of material importance were pending or threatened by or against any member of the Group.

6. MATERIAL ADVERSE CHANG

Due to the impact of the decline in the service price and utilization rate, and the impairment of fixed assets and goodwill, the Company’s net profit attributable to the owners of the Company for the first half of 2016 is RMB-8,403,180 thousand (Unaudited) in accordance with the Hong Kong Financial Reporting Standards. The Company’s net profit attributable to the owners of the Company for the same period of last year was RMB894,748 thousand (Unaudited).

7. EXPERT’S QUALIFICATION AND CONSENT

The following is the qualification of the expert who has given its opinion or advice which is contained in this circular:

Name Qualification Platinum a licensed corporation under the SFO licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

Platinum has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which it appears.

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GENERAL INFORMATION

APPENDIX II

Platinum has confirmed that, as at the Latest Practicable Date:

• (a) it did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and

• (b) it did not have any direct or indirect interest in any assets which had been acquired, or disposed of by, or leased to, or which are proposed to be acquired, or disposed of by, or leased to, any member of the Group since 31 December 2015 being the date to which the latest published audited financial statements of the Company were made up.

8. GENERAL

• (a) The company secretary of the Company is Mr. Wang Baojun, who was appointed as the company secretary of the Company in 28 August 2015.

• (b) The principle share register and transfer office of the H-Shares of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (c) The English text of this circular will prevail over the Chinese text.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of the Company during normal business hours from the date of this circular up to and including the date of the EGM:

• (a) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 18 of this circular;

• (b) the letter from Platinum to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 19 to 37 of this circular;

• (c) the written consent from Platinum referred to in the paragraph headed “Expert’s Qualification and Consent” in this Appendix;

• (d) the Master Agreement; and

• (e) the service contracts entered into by and between the Company and Directors.

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NOTICE OF EGM

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(Incorporated in the People’s Republic of China as a joint stock limited liability company) (Stock Code: 2883)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of China Oilfield Services Limited (the “ Company ”) will be held at 10:00 a.m. on Thursday, 15 December 2016 at Meeting Room I & II, 3rd Floor, JW Marriott Shenzhen, 6005 Shennan Boulevard, Futian District, Shenzhen, Guangdong, the PRC for the purpose of considering and, if thought fit, passing the following resolutions of the Company:

ORDINARY RESOLUTIONS

1. To consider and approve the Company entering into the Master Services Framework Agreement with CNOOC and the terms, proposed annual caps and the transactions contemplated thereunder.

2. To consider and approve the amendments to the Connected Transactions Decision-making Mechanism.

3. To consider and approve the appointment of Mr. Lv Bo as a non-executive director of the Company.

4. To consider and approve the appointment of Mr. Li Feilong as an executive director of the Company.

By order of the Board China Oilfield Services Limited Wang Baojun Company Secretary

Hong Kong, 9 November 2016

Notes:

• (1) All resolutions at the EGM will be voted by poll pursuant to the Hong Kong Listing Rules and the results of the poll will be published on the Stock Exchange’s and the Company’s websites in accordance with the Hong Kong Listing Rules.

• (2) Holders of the Company’s overseas listed foreign invested shares (in the form of H Shares (“ H Shares ”)) and holders of the Company’s domestic shares (“ A Shares ”) whose names appear on the Company’s register of members on 25 November 2016 are entitled to attend and vote at the EGM.

• (3) H-Shares Shareholders who intend to attend EGM should complete and return the written replies for attending EGM to the Company’s Hong Kong office by facsimile or post no later than 24 November 2016 for the Company to assess whether or not it is necessary to despatch the Notice of general meeting again:

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NOTICE OF EGM

Address: 65/F., Bank of China Tower 1 Garden Road, Hong Kong Tel: (852) 2213 2515 Fax: (852) 2525 9322

• (4) Each Shareholder who has the right to attend and vote at EGM is entitled to attend in person or appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on his behalf. Where a Shareholder has appointed more than one proxy to attend the EGM, such proxies may only vote on a poll or a ballot. The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorized in writing. In the case that an appointer is a legal person, the power of attorney must be either under the common seal of the legal person or under the hand of its director or other person, duly authorized. If the instrument appointing a proxy is signed by an attorney of the appointor, the power of attorney authorizing that attorney to sign, or other documents of authorization, must be notarially certified. The power of attorney or other documents of authorization and proxy forms must be delivered to the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no less than 24 hours before the time appointed for the holding of EGM in order for such documents to be valid.

• (5) The Company’s register of members will be closed from 25 November 2016 to 14 December 2016 (both days inclusive), during which time no transfer of Shares will be registered. Transferees of H Shares who wish to attend EGM must deliver their duly stamped instruments of transfer, accompanied by the relevant Share certificates, to Computershare Hong Kong Investor Services Limited by no later than 4:30 p.m. on 24 November 2016 for completion of the registration of the relevant transfer in accordance with the Articles of Association of the Company.

Computershare Hong Kong Investor Services Limited’s address is as follows: Room 1712-1716

17th Floor, Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

• (6) Shareholders or their proxies must present proof of their identities upon attending the EGM. Should a proxy be appointed, the proxy must also present copies of his/her proxy form, or copies of appointing instrument and power of attorney, if applicable.

• (7) Shareholders or their proxies attending EGM are responsible for their own transportation and accommodation expenses.

• (8) The accumulative voting system will be adopted by the Company for the election of director(s) at the EGM.

As at the date of this announcement, the executive directors of the Company are Messrs. Qi Meisheng, Dong Weiliang and Li Feilong; the non-executive directors of the Company are Messrs. Liu Jian (Chairman) and Xie Weizhi; and the independent non-executive directors of the Company are Messrs. Law Hong Ping, Lawrence, Fong Chung, Mark and Wong Kwai Huen, Albert.

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