COSL Announces 2004 Interim Results

[August 24, 2004 Hong Kong] China Oilfield Services Limited ( COSL ; stock code: 2883), the leading oilfield services provider in the offshore China market, announced its interim results for the six months ended June 30, 2004. For the first half of 2004, COSL s total turnover increased by 25.

1% to RMB 1,796.7 million. Turnover for COSL s four business segments, drilling services, well services, marine support and transportation services and geophysical services, were RMB 798.4 million, RMB 394.3 million, RMB 365.4 million and RMB 238.6 million, respectively. Among the four business segments, well services recorded a significant growth of 46.

9% in turnover. Total profit from operations grew by 12.5% to RMB 423.7 million. Overall profit attributable to shareholders amounted to RMB 453.1 million, representing an increase of 38.6%.

Mr. Yuan Guangyu, CEO and President of COSL, stated, The exploration and development activities offshore China remain active. The demand for drilling activities and well services increased substantially in the first half of 2004. Apart from the strong demand for our oilfield services, the increased rate in directional drilling, logging and cementing assignments also contributed to the turnover growth.

Together with the introduction of new technologies and tools, which enhanced our operational efficiency and utilization rate, we are delighted to have achieved the impressive interim esults.

Turnover from drilling services increased by 26.3% to RMB 798.4 million (2003: RMB 632.1 million) in the first half of 2004. During the period under review, market demand for drilling activities increased substantially. While the number of exploration wells fell by 17.5%, to 33 wells (2003: 40 wells) in the first half of 2004, the number of development wells drilled increased by 63.

2%, to 93 wells (2003: 57 wells) during the same period. The drilling rigs operated for a total of 2,300 days, an increase of 543 days compared to the same period last year. Average utilization rate remained at approximately 100% in first half of 2004.

The Company s well services achieved strong growth in the first half of 2004. Turnover from well services amounted to RMB 394.3 million, representing an increase of RMB 125.9 million, or 46.9%, compared to the turnover of RMB 268.4 million in the same period of 2003. This remarkable growth was due to the dynamic exploration and development activities in offshore China, as well as the introduction of latest technology and tools in the operation assignments.

However, the growth in turnover of well services was slower than the increase in work volume, as most of the well services concentrated in the shallower part of Bohai Bay during the period under review.