Hongxing Coldchain (Hunan) Co., Ltd. — Proxy Solicitation & Information Statement 2011

Jul 7, 2011

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 or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Sino Oil and Gas Holdings Limited (the “ Company ”), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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 Bermuda with limited liability) (Stock Code: 702)

CONNECTED TRANSACTION: AMENDMENTS OF TERMS OF THE CONVERTIBLE BONDS AND NOTICE OF SPECIAL GENERAL MEETING

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

Mansion House Securities (F.E.) Limited

A letter from the independent board committee (the “ Independent Board Committee ”) of the board of directors of the Company is set out on page 14 of this circular. A letter from Mansion House Securities (F.E.) Limited, the independent financial adviser of the Company, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 15 to 20 of the circular.

A notice convening a special general meeting (the “ SGM ”) of the Company to be held at Macau Jockey Club, 1/F., Function Room, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong on Monday, 25 July 2011 at 2:30 p.m. is set out on pages 26 to 27 of this circular. A form of proxy for use at the SGM is also enclosed with this circular.

Whether or not you are able to attend the SGM, you are advised to read the notice and to complete and return the enclosed form of proxy, in accordance with the instructions printed thereon, to the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjourned meeting. Completion and delivery of the form of proxy shall not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so desire.

8 July 2011

CONTENTS

	Page
Definitions.................................................................................................................................	1
Letter from the Board.............................................................................................................	6
Letter from the Independent Board Committee.................................................................	14
Letter from Mansion House...................................................................................................	15
Appendix — General information.........................................................................................	21
Notice of SGM..........................................................................................................................	26

– i –

DEFINITIONS

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

• “Acquisition”

the acquisition of the entire issued share capital in Power Great by the Company pursuant to the Agreement

• “Agreement”

• the sale and purchase agreement dated 16 July 2010 entered into among Ocean Glory, the Company, Mr. Yang Luwu, Major Port Limited, OEI and Petromic Corporation, together with the supplemental agreements subsequently entered into by the same parties with respect to the Acquisition

• “associates”

• has the meaning ascribed to this term under the Listing Rules

• “Board”

• board of the Directors

• “Bondholders”

• the bondholders as appeared on the register of the holders of the Convertible Bonds on 7 June 2011

• “Business Day”

• a day (excluding Saturday) on which banks in Hong Kong are open for business

• “ChinaCoal”

• China National Coal Group Corp. which is a state-owned enterprise established in the PRC

• “Company”

• Sino Oil and Gas Holdings Limited (stock code: 702), a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange

• “connected person(s)”

has the meaning ascribed to it under the Listing Rules

• “Contract Area”

• a total exploration area of approximately 461.74 square kilometers subject to reduction in accordance with the Production Sharing Contract located in Sanjiao Block in Shanxi and Shaanxi Provinces in the PRC

• “Conversion Share(s)”

• The new Share(s) falling to be allotted and issued upon the exercise of the conversion right attaching to the Convertible Bonds by the holder(s) thereof at the conversion price prevailing at the time the conversion notice is given by the relevant holder of the Convertible Bonds

– 1 –

DEFINITIONS

• “Convertible Bonds”

• the non-interest bearing bond(s) of principal amount of HK$780 million in aggregate carrying right to convert into new Shares at the initial conversion price of HK$0.50 per Share, subject to adjustments, which were issued by the Company to satisfy part of the consideration under the Acquisition on 18 November 2010

• “CUCMCL”

• 中聯煤層氣有限責任公司 (China United Coalbed Methane Corporation Limited*), a company incorporated in the PRC with limited liability and a wholly owned subsidiary of ChinaCoal

• “Deeds”

• the conditional modification deeds all dated 7 June 2011 and each entered into between each of the five Bondholders, collectively holding 75% of the entire outstanding principal amount of the Convertible Bonds, and the Company respectively relating to the alteration and restatement of the terms of the Convertible Bonds

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

• “Effective Date” the date on which the Deeds become effective

• “Group”

the Company and its subsidiaries

• “Hong Kong”

Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee”

• the independent board committee comprising all the independent non-executive Directors, which will be formed to advise the Independent Shareholders as to the fairness and reasonableness of the Proposed Alterations

• “Independent Shareholders”

• Shareholders which are not required to abstain from voting at the general meeting to approve a connected transaction

• “Independent Third Party(ies)”

• independent third party(ies) who is (are) not connected person(s) of the Company and is (are) independent of the Company and connected persons of the Company

• “Joint Management Committee”

• a joint management committee formed as required under the Production Sharing Contract to which each of the Operator and PetroChina may appoint two to five representatives as members

– 2 –

DEFINITIONS

• “Latest Practicable Date”

• 4 July 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “Maturity Date”

• 18 November 2013, being the day falling on the third anniversary of the date of issue of the Convertible Bonds

• “Mansion House” or

  • Mansion House Securities (F.E.) Limited, a licensed corporation

• “Independent Financial Adviser” to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance), type 7 (providing automated trading services) and type 9 (asset management) regulated activities under the SFO and the independent financial advicer appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the Proposed Alterations

• “Mr. King”

• Mr. King Hap Lee, the legal and beneficial owner of the entire issued share capital of Wai Tech Limited, one of the Bondholders

• “Ocean Glory”

• Ocean Glory Limited, a company incorporated in the Cayman Islands with limited liability

• “OEI”

• Orion Energy International Inc., a company incorporated in the Cayman Islands with limited liability

• “Operator” the entity responsible for the performance of the coalbed methane operations under the Production Sharing Contract, currently being OEI

• “Overall Development Program”

• a plan to be developed by OEI for the development of a coalbed methane field or part of a coalbed methane field (phased development) for the approval of the Joint Management Committee under the Production Sharing Contract and for the approval of the National Development and Reform Commission. The date of approval of the Overall Development Program by the National Development and Reform Commission marks the commencement of the development period of the relevant coalbed methane field under the Production Sharing Contract

– 3 –

DEFINITIONS

• “PetroChina” PetroChina Company Limited (stock code: 857), a joint stock limited company incorporated in the PRC under the Company Law of the PRC, and listed on the Shanghai Stock Exchange and Main Board of the Stock Exchange with American depository shares listed on the New York Stock Exchange, and its subsidiaries

• “Power Great” Power Great Limited, a company incorporated in the Cayman Islands with limited liability

• “PRC”

People’s Republic of China

• “PRC Partner”

• being (i) CUCMCL before the completion of the transfer by CUCMCL all of its interests and associated obligations with respect to certain gas fields (including those in the Contract Area) to PetroChina as approved by the State-owned Assets Supervision and Administration Commission of the State Council, and (ii) PetroChina after completion of such transfer

• “Production Sharing Contract” the production sharing contract dated 28 March 2006 entered into between OEI and the PRC Partner in relation to the exploration, development, production and sale of the coalbed methane and other related or derivative products that may exist in the Contract Area

• “Proposed Alterations” the proposed alterations and restatement of the terms of the Convertible Bonds pursuant to the terms of the Deed

• “Restated Convertible Bonds”

• the Convertible Bonds as altered and restated pursuant to the terms of the Deed

• “Sale Loan” The aggregate sum of US$3,274,478 (or approximately HK$25.54 million), representing the outstanding interest-free unsecured loan advanced by the shareholders of Power Great to Power Great or OEI as at 30 April 2010

• “Sale Share” the 1 share of US$1.00 in the share capital of Power Great as at the date of the Agreement

• “SFO”

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “SGM” the special general meeting of the Company to be convened on Monday, 25 July 2011 to consider and, if thought fit, approve the Proposed Alterations

– 4 –

DEFINITIONS

“Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “US$” United States dollar(s), the lawful currency of the United States of America

• for identification purposes only

– 5 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability) (Stock Code: 702)

Executive Directors: Mr. Kong Siu Tim Dr. Dai Xiaobing Mr. Wang Ziming Mr. Wan Tze Fan Terence

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Non-executive Director: Mr. Ni Zhenwei

Independent non-executive Directors:

Mr. Wong Kwok Chuen Peter Dr. Di Lingjun Dr. Wong Lung Tak Patrick

Head office and principal place of business in Hong Kong: Suite 3707-3708 West Tower, Shun Tak Centre 168-200 Connaught Road Central Hong Kong

8 July 2011

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION: AMENDMENTS OF TERMS OF THE CONVERTIBLE BONDS AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the circular of the Company dated 27 September 2010 (the “ 2010 Circular ”) relating to, among other things, the acquisition of the entire issued share capital of Power Great. Terms defined in the 2010 Circular shall have the same meanings when used herein unless the context otherwise requires.

On 15 November 2010, the Group completed the acquisition of the entire issued share capital of Power Great. The consideration for the Sale Share and the Sale Loan was satisfied by, among others, issuing of the Convertible Bonds in the aggregate principal amount of HK$780,000,000 with the rights to convert into 1,560,000,000 Shares at an initial conversion price of HK$0.50 per Share. On 18 November 2010, the Convertible Bonds were issued by the Company to Glow Shine Limited, Smart Force Group Limited and Wai Tech Limited, all of which were subsidiaries of Ocean Glory. The conversion period of the Convertible Bonds shall commence on and including 18 November 2011, being the first anniversary of the date of issue of the Convertible Bonds, up to and including the date which is 7 days prior to the Maturity Date. For further details of the Convertible Bonds, please refer to the 2010 Circular.

– 6 –

LETTER FROM THE BOARD

On 9 May 2011, Wai Tech Limited transferred its Convertible Bonds in the aggregate principal amounts of HK$425,000,000 to several transferees. After such transfers, the Convertible Bonds were currently held by seven Bondholders.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, one of the Bondholders the entire equity interests of which is wholly and beneficially owned by Mr. King, and Mr. King is the Chief Executive Officer of the Company. Saved as disclosed, each of the Bondholders and their respective ultimate beneficial owners are Independent Third Parties and are independent of each other Bondholders who/which have entered into the Deeds respectively.

On 7 June 2011, the Board announced that the Company and five Bondholders, collectively holding 75% of the entire outstanding principal amount of the Convertible Bonds, entered into the Deeds to alter and restate the terms of the Convertible Bonds.

The purpose of this circular is to provide you with details of the Proposed Alterations, the recommendation of the Independent Board Committee, the advice from Mansion House to the Independent Board Committee and the Independent Shareholders in relation to the Proposed Alterations and to provide you with the notice of the SGM.

THE DEEDS

Date: 7 June 2011

Parties: (i) Company; and

(ii) each of the five Bondholders including Wai Tech Limited and four individuals collectively holding 75% of the entire outstanding principal amount of the Convertible Bonds

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Wai Tech Limited, one of the Bondholders, the entire equity interests of which is wholly and beneficially owned by Mr. King, and Mr. King is the Chief Executive Officer of the Company. Wai Tech Limited is principally engaged in investment holding. Saved as disclosed, each of the relevant Bondholders and their respective ultimate beneficial owners are Independent Third Parties and are independent of each other Bondholders who/which have entered into the Deeds respectively.

Principal terms of the Deeds

Pursuant to the Deeds, the Company shall alter and restate the terms of the Convertible Bonds to the effect that upon the restatement of the Convertible Bonds, the conversion period of the Restated Convertible Bonds shall commence on the date of issue of the Restated Convertible Bonds as oppose to the first anniversary after the date of issue of the Convertible Bonds.

Apart from the Proposed Alterations, the remaining terms and conditions of the Convertible Bonds remain intact and unchanged.

– 7 –

LETTER FROM THE BOARD

The Proposed Alterations were arrived at after arm’s length negotiations between the relevant Bondholders and the Company.

Conditions precedent

The Proposed Alterations will be subject to:

• (a) the passing by the Independent Shareholders at the SGM to be convened and held of the necessary resolutions to approve the Proposed Alterations;

• (b) the approval from the Stock Exchange of the Proposed Alterations in accordance with Rule 28.05 of the Listing Rules and the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Restated Convertible Bonds;

• (c) all necessary consents and approvals required to be obtained on the part of the Company and the Bondholders in respect of the Proposed Alterations having been obtained; and

• (d) the entering into of an agreement in writing, in accordance with the terms and conditions of the instrument of the Convertible Bonds, between the Company and the Bondholders holding not less than 75% of the aggregate principal amount of the Convertible Bonds for the Proposed Alterations.

The conditions are not waivable and as at the Latest Practicable Date, condition (d) has been fulfilled. If all of the conditions have not been satisfied on or before 12:00 noon on 31 July 2011, or such later date as the Company and the relevant Bondholders may agree, the Deed shall cease and determine, and thereafter neither party to the Deed shall have any obligations and liabilities towards each.

At the Latest Practicable Date, condition precedent (d) has been fulfilled. The Proposed Alterations are equally enforceable to the all Bondholders.

The Proposed Alterations shall take place on the date falling on the next Business Day after the fulfilment of the conditions or such later date as may be agreed between the Company and the Bondholders.

REASONS FOR THE PROPOSED ALTERATIONS

The Group is principally engaged in exploitation and sale of crude oil and natural gas and exploration, development and production of coalbed methane in China.

Pursuant to the Agreement, the conversion period (the “ Original Conversion Period ”) of the Convertible Bonds shall commence on and including 18 November 2011, being the first anniversary of the date of issue of the Convertible Bonds up to and including the date which is 7 days prior to the Maturity Date. The reason for the Original Conversion Period was to avoid an immediate dilution effect on the then issued share capital of the Company upon completion of the Acquisition.

– 8 –

LETTER FROM THE BOARD

The Board is of the view that the Proposed Alterations will provide a motivation and incentive to the Bondholders to convert the Convertible Bonds into Shares at an earlier time and with such conversion, the shareholding base and capital base of the Company would be further strengthened which, in turn, may increase the liquidity of the shares in the market and may facilitate any possible fund raising exercises of the Company should suitable opportunity arises in the future. As at the Latest Practicable Date, the Company did not have any specific fund raising plan. In the event of any fund raising activities is to be conducted by the Company, further announcement will be made to the Shareholders in compliance with the Listing Rules.

The initial conversion price of HK$0.50 per Share represents:

• (a) a premium of approximately 4.17% over the closing price of HK$0.48 per Share as quoted on the Stock Exchange upon the signing of the Deeds; and

• (b) a premium of approximately 14.94% over the closing price of HK$0.435 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

As at the Latest Practicable Date, about five out of the seven Bondholders have indicated to the Company their intentions to immediate convert all or part of the Convertible Bonds at the initial conversion price upon the Proposed Alteration becomes effective. Given the initial conversion price of HK$0.50 represents a premium to the recent prevailing market price of the Shares, the indications received from the Bondholders to convert the Convertible Bonds early signify their support to the Group and their confidence in the future prospects of the Group.

In addition, compared with the Original Conversion Period which will only start on 18 November 2011, assuming the SGM will take place on 25 July 2011 and the Proposed Alteration will become effective on 26 July 2011, the Bondholders will be allowed to exercise the conversion rights attaching to the Convertible Bonds for at least about four months earlier than the Original Conversion Period. Assuming further that the Bondholders would exercise the conversion right earlier within such period, the shareholders base and the capital base of the Company would be strengthened and accordingly facilitating any possible fund raising exercises should suitable opportunity arises.

In light of the above, the Board believes that Proposed Alterations are fair and reasonable and will be in the interests of the Company and the Shareholders as a whole. In addition, the Directors are of the view that the Proposed Alterations will not pose any significant negative impact on the operations of the Group. The Company has applied to the Stock Exchange for its approval of the Proposed Alterations in accordance with Rule 28.05 of the Listing Rules.

– 9 –

LETTER FROM THE BOARD

CHANGES IN SHAREHOLDING STRUCTURE

Assuming there being no other change in the shareholding structure of the Company, the following table sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; and, for illustrative purpose, the shareholding structure upon full conversion of the Convertible Bonds.

Shareholders Kong Siu Tim_(Note 1) Dai Xiaobing(Note 1) Wang Ziming(Note 1) Wan Tze Fan Terence(Note 1) Mr. King(Note 2) Mandolin Fund Pte Limited (Note 3) _Public Shareholders Other Existing Bondholders (save for Mr. King) Other public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 40,500,000 0.44 480,000,000 5.21 105,000,000 1.14 30,660,000 0.33 — — 1,300,000,000 14.12 356,428,571 3.87 6,894,489,133 74.89 9,207,077,704 100.00	Assuming full conversion of the Convertible Bonds Number of Shares Approximate % 40,500,000 0.38 480,000,000 4.46 105,000,000 0.98 30,660,000 0.28 320,000,000 2.97 1,300,000,000 12.07 1,596,428,571 14.83 6,894,489,133 64.03 10,767,077,704 100.00	Assuming full conversion of the Convertible Bonds Number of Shares Approximate % 40,500,000 0.38 480,000,000 4.46 105,000,000 0.98 30,660,000 0.28 320,000,000 2.97 1,300,000,000 12.07 1,596,428,571 14.83 6,894,489,133 64.03 10,767,077,704 100.00
			100.00

Notes:

1. Mr. Kong Siu Tim, Dr. Dai Xiaobing, Mr. Wang Ziming and Mr. Wan Tze Fan Terence are Directors of the Company.

2. Mr. King is the Chief Executive Officer of the Company.

3. Mandolin Fund Pte Limited is a wholly owned subsidiary of Richard Chandler Capital Corporation Pte Limited which is in turn a wholly owned subsidiary of Richard Chandler Capital Corporation. Richard Chandler Capital Corporation is wholly owned by Cosimo Management Limited as trustee of a trust of which Mr. Richard Chandler is the settlor. Pursuant to the SFO, Richard Chandler Capital Corporation Pte Limited, Richard Chandler Capital Corporation, Cosimo Management Limited and Mr. Richard Chandler as settlor are taken to be interested in the Shares held by Mandolin Fund Pte Limited.

PROGRESS OF COALBED METHANE PROJECT IN SANJIAO BLOCK

On 15 November 2011, the Company completed the acquisition of the entire interest of Power Great, whose material asset is the 70% participating interest in the coalbed methane properties (“ CBM Project ”) located in the Sanjiao Block of Shanxi and Shaanxi Provinces in the PRC. There have been some significant progresses for the CBM Project subsequent to the Completion. As disclosed in the announcement of the Company dated 26 January 2011, the Expert Review Group of the State Reserve

– 10 –

LETTER FROM THE BOARD

Committee of the PRC has approved and endorsed the report of the proven reserve (in accordance with the relevant Chinese standards) of the CBM Project of not less than 43.5 billion cubic meters which is the core document for formulating the Overall Development Program. As of 30 June 2011, there were 35 horizontal wells and 14 vertical wells completed respectively. Among which, 26 horizontal wells and 10 vertical wells are ready for production.

Currently, a compress natural gas (“ CNG ”) station with daily processing capacity of 30,000 cubic meters has been set up. Upon the finalization of the terms of the sale and purchase agreement (the “ Sale and Purchase Agreement ”) for CBM (as disclosed in the announcement of the Company dated 24 June 2011), it is ready for commercial sales by the end of July this year. Further, the extension works of this existing CNG station is also ongoing. The extension of the existing CNG station is expected to be completed by the end of September this year. By that time, the daily processing capacity of the entire CNG station will reach 150,000 cubic meters.

In relation to the construction of the gas pipeline in Shanxi Province, a local state-owned enterprise has commenced the construction of gas pipeline from Linxian to Lishi since April 2011, which is the first phase of “Linxian-Liulin-Linfen” gas pipeline. The length of gas pipeline is 130 kilometers with annual transportation capacity of 1.09 billion cubic meters. The advantage of the location of the pipeline is its proximity to the Sanjiao Block which is approximately 20 kilometers east of the field. The pipeline construction is expected to be completed in the fourth quarter of this year for gas distribution.

LISTING RULES IMPLICATION

As one of the Bondholders is wholly and beneficially owned by Mr. King and Mr. King is the Chief Executive Officer of the Company, pursuant to Chapter 14A of the Listing Rules, the Bondholder is a connected person of the Company. The Proposed Alterations constitutes a non-exempted connected transaction on the part of the Company under the Listing Rules and is subject to reporting, announcement and approval from Independent Shareholders requirements.

Pursuant to the Listing Rules, the resolution proposed at the SGM will be taken by way of poll and an announcement will be made after the SGM on the results of the SGM.

The Proposed Alterations are subject to, among others, the approval by the Independent Shareholders at the SGM. Each of the Bondholders, Mr. King and their associates are required to abstain from voting at the SGM to approve the Proposed Alterations.

INDEPENDENT BOARD COMMITTEE

Independent Board Committee comprising all the independent non-executive Directors will be formed to advise the Independent Shareholders as to the fairness and reasonableness of the Proposed Alterations. An independent financial adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in this regards.

– 11 –

LETTER FROM THE BOARD

Independent Board Committee comprising Mr. Wong Kwok Chuen Peter, Dr. Di Lingjun and Dr. Wong Lung Tak Patrick, all being the independent non-executive Directors, has been formed to advise the Independent Shareholders as to the fairness and reasonableness of the Proposed Alterations. Mansion House has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

SGM

Any vote of the Shareholders at the SGM will be taken by poll for resolution in relation to the Proposed Alterations.

A notice convening the SGM to be held at Macau Jockey Club, 1/F., Function Room, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong on Monday, 25 July 2011 at 2:30 p.m. is set out on pages 26 to 27 of this circular.

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, there is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon any Shareholder; and (ii) no obligation or entitlement of any Shareholder as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting rights in respect of its Shares to a third party, either generally or on a caseby-case basis.

As far as the Company is aware of after having made all reasonable enquiries, as at the Latest Practicable Date, Smart Force Group Limited and Mr. Fang De Sheng, both Bondholders, hold 3.33% and 0.54% interest of the Company respectively. To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the other Bondholders do not have any interest in the Company. Accordingly, two Bondholders were required to abstain from voting at the SGM pursuant to the Listing Rules. None of the Directors has any material interest in the Proposed Alterations and the transactions contemplated under the Deeds.

At the SGM, ordinary resolution will be proposed to approve the Proposed Alterations. A form of proxy for use at the SGM is also enclosed with this circular. To be valid, the enclosed form of proxy, together with any power of attorney or other authority under which it is signed must be completed in accordance with the instructions printed thereon and delivered to the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjourned meeting. The completion and return of the form of proxy will not preclude you from attending and voting at the SGM or any adjourned meeting in person if you so wish.

RECOMMENDATIONS

The Board considers that the terms of the Proposed Alterations are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution as set out in the notice of SGM.

– 12 –

LETTER FROM THE BOARD

Your attention is drawn to (i) the letter from the Independent Board Committee set out on page 14 of this circular which contains its recommendation to the Independent Shareholders as to voting at the SGM in relation to the Proposed Alterations; and (ii) the letter from Mansion House, which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to Proposed Alterations and the principal factors and reasons considered by it in arriving at its opinions. The text of the letter from Mansion House is set out on pages 15 to 20 of this circular.

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the Proposed Alterations are entered into on normal commercial terms, and in the ordinary and usual course of business of the Group and that the terms of the Proposed Alterations are fair and reasonable and in the interests of the Group so far as the Independent Shareholders are concerned. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM in relation to the Proposed Alterations.

GENERAL

Your attention is drawn to the general information set out in the appendix to this circular.

By order of the Board Sino Oil and Gas Holdings Limited Dai Xiaobing Executive Director

– 13 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability) (Stock Code: 702)

8 July 2011

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION: AMENDMENTS OF TERMS OF THE CONVERTIBLE BONDS

We refer to the circular dated 8 July 2011 issued by the Company (the “ Circular ”), of which this letter forms part. Terms used in this letter shall bear the same meanings as given to them in the Circular unless the context otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee to advise you the terms of the Proposed Alterations whether such terms are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole and how to vote on resolutions regarding the Proposed Alterations.

Mansion House Securities (F.E.) Limited has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Proposed Alterations are fair and reasonable so far as the Independent Shareholders are concerned, whether such terms are in the interests of the Company and the Independent Shareholders as a whole and how to vote on resolution regarding the Proposed Alterations. Details of its advice, together with the principal factors taken into consideration in arriving at such advice, is set out on pages 15 and 20 of the Circular.

Your attention is also drawn to the letter from the Board set out on pages 6 to 13 of the Circular and the additional information set out in the appendix of the Circular.

Having considered the terms of the Proposed Alterations and the advice of Mansion House Securities (F.E.) Limited, we are of the opinion that the terms of the Proposed Alterations are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the Proposed Alterations.

Yours faithfully, the Independent Board Committee

Di Lingjun Independent non-executive Director

Wong Kwok Chuen Peter Wong Lung Tak Patrick Independent Independent non-executive Director non-executive Director

– 14 –

LETTER FROM MANSION HOUSE

The following is the text of the letter of advice to the Independent Board Committee and the Independent Shareholders from Mansion House Securities (F.E.) Limited dated 8 July 2011 in respect of the Deeds in relation to the Proposed Alterations for the purpose of this circular.

Mansion House Securities (F.E.) Limited

Unit 1102-03, 11/F., Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong

8 July 2011

To the Independent Board Committee and the Independent Shareholders of Sino Oil and Gas Holdings Limited

Dear Sirs,

CONNECTED TRANSACTION: AMENDMENTS OF TERMS OF THE CONVERTIBLE BONDS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Deeds in relation to the Proposed Alterations, details of which are set out in the letter from the Board (the “ Board’s Letter ”) in the circular to the Shareholders dated 8 July 2011 (the “ Circular ”), of which this letter forms part. Unless otherwise stated, terms used in this letter have the same meanings as those defined in the Circular.

On 7 June 2011, the Company and five Bondholders collectively holding 75% of the entire outstanding principal amount of the Convertible Bonds entered into the Deeds, pursuant to which the Company shall alter and restate the terms of the Convertible Bonds to the effect that upon the restatement of the Convertible Bonds, the conversion period of the Restated Convertible Bonds shall commence on the date of issue of the Restated Convertible Bonds as oppose to the first anniversary after the date of issue of the Convertible Bonds.

As stated in the Circular, as one of the Bondholders is wholly and beneficially owned by Mr. King and Mr. King is the Chief Executive Officer of the Company, pursuant to Chapter 14A of the Listing Rules, the Bondholder is a connected person of the Company. The Proposed Alterations constitute a non-exempted connected transaction on the part of the Company under the Listing Rules and is subject to reporting, announcement and approval from Independent Shareholders requirements.

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether the Proposed Alterations are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM MANSION HOUSE

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Company and the Directors. We have no reason to believe that any information and representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any material facts the omission of which would render the information provided and the representations made to us untrue, inaccurate or misleading. We have assumed that all information, representations and opinions contained or referred to in the Circular, which have been provided by the Company and the Directors and for which they are solely and wholly responsible, were true and accurate at the time they were made and continue to be so as at the date hereof.

The Directors collectively and severally accept full responsibility for the accuracy of the information contained in the Circular. The Directors have confirmed, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading. We consider that we have reviewed sufficient information to satisfy ourselves that we have reasonable basis to assess the fairness and reasonableness of the Proposed Alterations in order to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to form a reasonable basis for our opinion. We have not, however, conducted any independent verification of the information provided, nor have we carried out any in-depth investigation into the business, affairs and prospects of the Group or the markets in which it operate or the Bondholders.

We have not studied, investigated nor verified the validity of all legal aspects of, and procedural aspects for, the Proposed Alterations. We have further assumed that all material governmental, regulatory or other consents, rights, waivers, authorisations, licenses, clearances and approvals necessary for the effectiveness and implementation of the Proposed Alterations have been or will be obtained and will not be withdrawn without any adverse effect on the Group, the assets and liabilities of the Group or the contemplated benefits to the Group as derived from the Proposed Alterations.

Our opinion is necessarily based upon the financial, economic (including exchange rates and interest rates), market, regulatory and other conditions as they exist on, and the facts, information, representations and opinions made available to us as of the Latest Practicable Date. Our opinion does not in any manner address the Company’s own decision to proceed with the Proposed Alterations. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein, which may come or be brought to our attention after the Latest Practicable Date.

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LETTER FROM MANSION HOUSE

PRINCIPAL FACTORS AND REASONS CONSIDERED

The principal factors and reasons we have taken into account in giving our advice to the Independent Board Committee and the Independent Shareholders are set out below:

Background and principal terms of the Deeds

The Group is principally engaged in exploitation and sale of crude oil and natural gas and exploration, development and production of coalbed methane in China. On 15 November 2010, the Group completed the acquisition of the entire issued share capital of Power Great. The consideration for the Sale Share and the Sale Loan was satisfied by, among others, issuing of the Convertible Bonds in the aggregate principal amount of HK$780,000,000 with the rights to convert into 1,560,000,000 Shares at an initial conversion price of HK$0.50 per Share. On 18 November 2010, the Convertible Bonds were issued by the Company to Glow Shine Limited, Smart Force Group Limited and Wai Tech Limited, all of which were subsidiaries of Ocean Glory. The conversion period of the Convertible Bonds shall commence on and including 18 November 2011, being the first anniversary of the date of issue of the Convertible Bonds, up to and including the date which is 7 days prior to the Maturity Date. For further details of the Convertible Bonds, please refer to the circular of the Company dated 27 September 2010. As stated in the Board’s Letter, the reason for the Original Conversion Period was to avoid an immediate dilution effect on the then issued share capital of the Company upon completion of the Acquisition. On 9 May 2011, Wai Tech Limited had transferred its Convertible Bonds in the aggregate principal amounts of HK$425,000,000 to several transferees. After such transfers, the Convertible Bonds were currently held by seven Bondholders.

Pursuant to the Deeds, the Company shall alter and restate the terms of the Convertible Bonds to the effect that upon restatement of the Convertible Bonds, the conversion period of the Restated Convertible Bonds shall commence on the date of issue of the Restated Convertible Bonds as oppose to the first anniversary after the date of issue of the Convertible Bonds. Apart from the Proposed Alterations, the remaining terms and conditions of the Convertible Bonds remain intact and unchanged.

As stated in the Board’s Letter, the Board is of the view that the Proposed Alterations will provide a motivation and incentive to the Bondholders to convert the Convertible Bonds into Shares at an earlier time and with such conversion, the shareholding base and capital base of the Company would be further strengthened which, in turn, may increase the liquidity of the shares in the market and may facilitate any possible fund raising exercises of the Company should suitable opportunity arises in the future. The Board believes that the Proposed Alterations will be in the interests of the Company and the Shareholders as a whole and the Directors are of the view that the Proposed Alterations will not pose any significant impact on the operations of the Group.

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LETTER FROM MANSION HOUSE

Potential dilution on existing shareholdings of the Company

Given the Proposed Alterations involve alterations and restatement of the Convertible Bonds to the effect that the conversion period of the Restated Convertible Bonds shall commence on the date of issue of the Restated Convertible Bonds as oppose to the first anniversary after the date of issue of the Convertible Bonds, the Proposed Alterations may result in an earlier conversion of the Convertible Bonds, and thus may cause an immediate reduction in the principal amount of the Convertible Bonds and an immediate dilution on the existing shareholdings of the Company. Other than the possible immediate reduction in the principal amount of the Convertible Bonds and the possible immediate dilution on the existing shareholdings of the Company, we consider that the Proposed Alterations will not incur any material effects so far as the Group and the Shareholders are concerned, nor will pose any significant impact on the operations of the Group.

Furthermore as note from the Board’s Letter, as at the Latest Practicable Date, about five out of the seven Bondholders have indicated to the Company their intentions to immediate convert all or part of the Convertible Bonds at the initial conversion price upon the Proposed Alterations become effective. Given the initial conversion price of HK$0.50 represents a premium to the recent prevailing market price of the Shares, the indications received from the Bondholders to convert the Convertible Bonds early signify their support to the Group and their confidence in the future prospects of the Group. Accordingly, the Proposed Alterations are likely to cause an immediate dilution on the existing shareholdings of the Company. Notwithstanding the reason for the Original Conversion Period was to avoid an immediate dilution effect on the then issued share capital of the Company upon completion of the Acquisition, we consider that given some of the Bondholders’ indicated intentions to immediately convert all or part of the Convertible Bonds upon the Proposed Alterations become effective, in case of any such conversion of the Convertible Bonds, the principal amount of the Convertible Bonds and the possible cash outflow of the Company for redemption of the Convertible Bonds at maturity by cash at the option of the Company would be reduced accordingly, and thus the Proposed Alterations are in the interests of the Company and the Shareholders as a whole.

The total number of 1,560,000,000 Shares falling to be issued upon conversion of the Convertible Bonds at the initial conversion price of HK$0.50 per Share in full represent (i) approximately 16.9% of the issued share capital of the Company of 9,207,077,704 Shares as at the Latest Practicable Date; and (ii) approximately 14.5% of the issued share capital of the Company of 10,767,077,704 Shares as enlarged by the conversion of the Convertible Bonds at the initial conversion price of HK$0.50 per Share in full. Save for the possible earlier conversion of the Convertible Bonds and thus the possible earlier dilution on the existing shareholdings of the Company, the Proposed Alterations do not alter any other terms in relation to the conversion of the Convertible Bonds. As such, the extent of potential dilution on the existing shareholdings of the Company brought out by the Convertible Bonds as a result of the Proposed Alterations would remain unchanged. For illustrative purpose only, assuming there being no other change in the shareholding structure of the Company, the following table sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) upon full conversion of the Convertible Bonds.

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LETTER FROM MANSION HOUSE

Shareholders Kong Siu Tim_(Note 1) Dai Xiaobing(Note 1) Wang Ziming(Note 1) Wan Tze Fan Terence(Note 1) Mr. King(Note 2) Mandolin Fund Pte Limited (Note 3) _Public Shareholders Other Existing Bondholders (save for Mr. King) Other public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 40,500,000 0.44 480,000,000 5.21 105,000,000 1.14 30,660,000 0.33 — — 1,300,000,000 14.12 356,428,571 3.87 6,894,489,133 74.89 9,207,077,704 100.00	Assuming full conversion of the Convertible Bonds Number of Shares Approximate % 40,500,000 0.38 480,000,000 4.46 105,000,000 0.98 30,660,000 0.28 320,000,000 2.97 1,300,000,000 12.07 1,596,428,571 14.83 6,894,489,133 64.03 10,767,077,704 100.00	Assuming full conversion of the Convertible Bonds Number of Shares Approximate % 40,500,000 0.38 480,000,000 4.46 105,000,000 0.98 30,660,000 0.28 320,000,000 2.97 1,300,000,000 12.07 1,596,428,571 14.83 6,894,489,133 64.03 10,767,077,704 100.00
			100.00

Notes:

1. Mr. Kong Siu Tim, Dr. Dai Xiaobing, Mr. Wang Ziming and Mr. Wan Tze Fan Terence are Directors of the Company.

2. Mr. King is the Chief Executive Officer of the Company.

3. Mandolin Fund Pte Limited is a wholly owned subsidiary of Richard Chandler Capital Corporation Pte Limited which is in turn a wholly owned subsidiary of Richard Chandler Capital Corporation. Richard Chandler Capital Corporation is wholly owned by Cosimo Management Limited as trustee of a trust of which Mr. Richard Chandler is the settlor. Pursuant to the SFO, Richard Chandler Capital Corporation Pte Limited, Richard Chandler Capital Corporation, Cosimo Management Limited and Mr. Richard Chandler as settlor are taken to be interested in the Shares held by Mandolin Fund Pte Limited.

The above shareholding structure is shown for illustrative purpose only as the Bondholder(s) may from time to time (a) purchase and/or dispose of any Shares, and/or transfer or assign the Convertible Bonds to any party provided that pursuant to the terms of the Convertible Bonds, the Convertible Bonds may not be transferred, without the prior consent of the Company (i) to any connected persons of the Company other than a person who is an associate of the Bondholder(s); or (ii) to any person who is not a direct or indirect shareholder of the Bondholder(s) on the date of transfer form; and/or (b) convert the Convertible Bonds in whole or in part into Shares, provided that pursuant to the terms of the Convertible Bonds, no Convertible Bonds may be converted to the extent that following such exercise (i) the minimum 25% public float requirement of the Company as required under the Listing Rules cannot be satisfied; or (ii) a holder of the Convertible Bonds and parties acting in concert with it for the purposes of the Hong Kong Code on Takeovers and Mergers (the “ Takeovers Code ”) will incur any obligation to make any mandatory offer under Rule 26 of the Takeovers Code.

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LETTER FROM MANSION HOUSE

Notwithstanding the possible earlier conversion of the Convertible Bonds and thus the possible earlier dilution on the existing shareholdings of the Company, given (a) the Proposed Alterations will provide a motivation and incentive to the Bondholders to convert the Convertible Bonds into Shares at an earlier time and with such conversion, the shareholding base and capital base of the Company would be further strengthened which, in turn, may increase the liquidity of the shares in the market and may facilitate any possible fund raising exercises of the Company should suitable opportunity arises in the future; (b) the Proposed Alterations will not incur material effects so far as the Group and the Shareholders are concerned other than the possible immediate reduction in the principal amount of the Convertible Bonds and the possible immediate dilution on the existing shareholdings of the Company; (c) the Proposed Alterations do not alter any other terms in relation to the conversion of the Convertible Bonds, such that the extent of potential dilution on existing shareholdings of the Company brought about by the Convertible Bonds as a result of the Proposed Alterations would remain unchanged; and (d) in case of any conversion of the Convertible Bonds, the principal amount of the Convertible Bonds and the possible cash outflow of the Company for redemption of the Convertible Bonds at maturity by cash at the option of the Company would be reduced accordingly, we consider that the Proposed Alterations are in the interests of the Company and the Shareholders as whole.

Convertible bonds issued by other companies listed on the Stock Exchange

In assessing whether the Proposed Alterations are on normal commercial terms and fair and reasonable, we have reviewed recent proposed issuances of the convertible bonds announced by other companies listed on the Stock Exchange for the one month period prior to the date of the Deeds up to the Latest Practicable Date (the “ Proposed CB Issues ”), and take note of the fact that the proposed issuances of convertible bonds by other companies listed on the Stock Exchange with conversion period commencing immediately after the issue date of the relevant convertible bond are not uncommon in the market. Out of the 17 Proposed CB Issues identified, 12 of which are with conversion period commencing immediately upon the date of issuance of the relevant convertible bonds. As such, we consider that the Proposed Alterations would not result in any abnormity regarding the conversion period of the Convertible Bonds which deviate from market practice, and are on normal commercial terms and fair and reasonable.

RECOMMENDATION

Taking into account the principal factors and reasons mentioned above, we are of the view that the Proposed Alterations are in the interests of the Company and the Shareholders as a whole, on normal commercial terms, and fair and reasonable. Accordingly, we advise the Independent Shareholders and the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the relevant resolution(s) to be proposed at the SGM to approve the Proposed Alterations.

For and on behalf of

Mansion House Securities (F.E.) Limited Angelina Kwan Chief Executive Officer

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GENERAL INFORMATION

APPENDIX

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 Group. 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 chief executive’s interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares or debentures (if any) of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), as recorded in the register maintained by the Company pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “ Model Code ”) were as follows:

• (i) Long positions in the Shares

Name of Director	Nature of interest	Number of Shares held
Kong Siu Tim	Beneficial owner	40,500,000
Dai Xiaobing	Beneficial owner	480,000,000
Wang Ziming	Interest of controlled	5,000,000
	corporation
	Beneficial owner	100,000,000
Wan Tze Fan Terence	Beneficial owner	30,660,000

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GENERAL INFORMATION

APPENDIX

• (ii) Long positions in share options of the Company

				Exercise
	Number of	Date of		price per	Nature of
Name of Director	options held	grant	Exercise period	share	interest
				HK$
Kong Siu Tim	17,000,000	22.08.2007	22.08.2007 -	0.375	Beneficial
			05.03.2012		owner
	5,000,000	22.04.2010	22.04.2010 -	0.390
			05.03.2012
Wan Tze Fan Terence	10,000,000	22.08.2007	22.08.2007 -	0.375	Beneficial
			05.03.2012		owner
	3,000,000	21.08.2008	21.08.2008 -	0.180
			05.03.2012
Ni Zhenwei	4,000,000	22.08.2007	22.08.2007 -	0.375	Beneficial
			05.03.2012		owner
	2,000,000	21.08.2008	21.08.2008 -	0.180
			05.03.2012
	2,000,000	22.04.2010	22.04.2010 -	0.390
			05.03.2012
Wong Kwok	4,000,000	22.08.2007	22.08.2007 -	0.375	Beneficial
Chuen Peter			05.03.2012		owner
	2,000,000	21.08.2008	21.08.2008 -	0.180
			05.03.2012
	2,000,000	22.04.2010	22.04.2010 -	0.390
			05.03.2012

(b) Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, the following persons, not being a Director or chief executive of the Company, had an interest in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO, the details of which are set out below:

Long position in the shares and underlying shares of the Company

					Percentage of
				Total number	shares and
			Number of	of shares and	underlying
		Number of	underlying	underlying	shares to
Name of shareholder	Nature of interest	shares held	shares held	shares held	issued shares
Mandolin Fund Pte Limited	Beneficial owner	1,300,000,000	0	1,300,000,000	14.12%
(Note 1)
Smart Force Group	Beneficial owner	306,428,571	306,428,572	612,857,143	6.66%
Limited_(Note 2)_

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GENERAL INFORMATION

APPENDIX

Notes:

1. Mandolin Fund Pte Limited is a wholly owned subsidiary of Richard Chandler Capital Corporation Pte Limited which is in turn a wholly owned subsidiary of Richard Chandler Capital Corporation. Richard Chandler Capital Corporation is wholly owned by Cosimo Management Limited as trustee of a trust of which Mr. Richard Chandler is the settlor. Pursuant to the SFO, Richard Chandler Capital Corporation Pte Limited, Richard Chandler Capital Corporation, Cosimo Management Limited and Mr. Richard Chandler as settlor are taken to be interested in the Shares held by Mandolin Fund Pte Limited.

2. Smart Force Group Limited owns 306,428,571 shares of the Company and Convertible Bonds in the principal amount of HK$153,214,286 due in 2013 not carrying any interest with right to convert the Convertible Bonds into shares of the Company at a conversion price of HK$0.50 per share. Based on the conversion price of HK$0.50 per share, a maximum number of 306,428,572 shares may be allotted and issued upon exercise of the conversion rights attached to the Convertible Bonds in full. The Convertible Bonds give rise to an interest in 306,428,572 underlying shares of the Company of Smart Force Group Limited.

Smart Force Group Limited is wholly and beneficially owned by Dr. Yang Luwu. Accordingly, Dr. Yang Luwu is deemed to be interested in the Shares and underlying shares of the Company held by Smart Force Group Limited.

3. DIRECTORS’ SERVICE CONTRACTS

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

4. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had, or had had, any direct or indirect interest in any assets which had been or were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2010, the date to which the latest published audited financial statements of the Company were make up. None of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which was subsisting at the Latest Practicable Date which was significant in relation to the business of the Group.

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective associates had any interest in business which competes, or is likely to compete, either directly or indirectly, with the business of the Group.

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GENERAL INFORMATION

APPENDIX

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2010, the date to which the latest published audited financial statements of the Company were made up.

7. EXPERT AND CONSENT

Mansion House has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter(s) and/or references to its name in the form and context in which it appears as at the Latest Practicable Date.

The following is the qualification of the expert who has provided its advice or opinions, which are contained in this circular:

Name

Qualification

Mansion House A licensed corporation under SFO to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance), type 7 (providing automated trading services) and type 9 (asset management) regulated activities

As at the Latest Practicable Date, Mansion House was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Group nor did it have any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited financial statements of the Company were made up (i.e. 31 December 2010), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection at the Company’s head office and principal place of business in Hong Kong at Suite 3707-3708, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong during normal business hours on any Business Day from the date of this circular up to and including the date of the SGM:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the Deeds;

• (c) the letter from the Independent Board Committee, the text of which is set out on page 14 to this circular;

• (d) the letter of advice from Mansion House to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 15 to 20 to this circular; and

• (e) this circular.

9. MISCELLANEOUS

• (a) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.

• (b) The head office and principal place of business of the Company in Hong Kong is Suite 3707-3708, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong.

• (c) The company secretary of the Company is Mr. Wan Tze Fan Terence who is a fellow member of the Hong Kong Institute of Certified Public Accountants.

• (d) The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (e) The English text of this circular and accompanying form of proxy shall prevail over the Chinese text.

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NOTICE OF SGM

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(Incorporated in Bermuda with limited liability) (Stock Code: 702)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of Sino Oil and Gas Holdings Limited (the “ Company ”) will be held at Macau Jockey Club, 1/F., Function Room, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong on Monday, 25 July 2011 at 2:30 p.m. for the purpose of considering and, if thought fit, passing with or without amendment, the following resolution of the Company:

ORDINARY RESOLUTION

“ THAT subject to the fulfillment of the deeds (the “ Deeds ”) (a copy of each of which have been produced to the SGM marked “A” and signed by the chairman of the SGM for the purpose of identification) all dated 7 June 2011 entered into between the Company and each of the five holders of the convertible bonds (the “ Convertible Bonds ”) in the principal amount of HK$780,000,000, issued by the Company in relation to the alteration and restatement of the terms of the Convertible Bonds,

• (a) the Deeds and all the transactions contemplated thereunder and all other matters in connection herewith and incidental thereto, be and are hereby approved, confirmed and ratified;

• (b) the issue and the creation of the amended and restated Convertible Bonds in accordance with the terms and conditions of the Deeds be and are hereby approved; and

• (c) any one or more of the directors of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents which he/they consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of and giving effect to the Deeds and the transactions contemplated thereunder.”

By order of the Board Sino Oil and Gas Holdings Limited Wan Tze Fan Terence Company Secretary

Hong Kong, 8 July 2011

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NOTICE OF SGM

Registered Office: Head office and principal place of Clarendon House business in Hong Kong: 2 Church Street Suite 3707-3708 Hamilton HM11 West Tower, Shun Tak Centre Bermuda 168-200 Connaught Road Central Hong Kong

Notes:

1. Any member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. In order to be valid, the form of proxy must be duly lodged at the Company’s branch registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong together with a power of attorney or other authority, if any, under which it is duly signed or a notarially certified copy of that power of attorney or authority, not less than 48 hours before the time for holding the meeting or any adjourned meeting.

3. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the above meeting or any adjournment thereof, should he so wish, and in such event, the form of proxy shall be deemed to be revoked.

4. Any voting at the SGM shall be taken by poll.

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