THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 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. (Incorporated in the People s Republic of China as a joint stock limited liability company) (Stock Code: 2883) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS RE-ELECTION OF DIRECTOR AND AMENDMENTS TO THE ARTICLES OF ASSOCIATION Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders A letter from the Board is set out on pages 4 to 13 of this circular and a letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 14 to 15 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 16 to 29 of this circular. A notice convening an EGM to be held at 10:00 a.m. on Friday, 20 December 2013, at Meeting Room I+II, JW Marriott Shenzhen, 6005 Shennan Boulevord, Futian District, Shenzhen, Guangdong, P.R.C. is set out on page 35 to 38 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 29 November November 2013

2 CONTENTS Page Definitions... 1 Letter from the Board... 4 Letter from the Independent Board Committee Letter from Platinum Appendix General information Notice of EGM i

3 DEFINITIONS In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise: 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; Articles of Association associates Board Company CNOOC CNOOC Group Continuing Connected Transactions Director(s) Machinery Leasing, Equipment, Material and Utilities Services EGM Group the articles of association of the Company; has the same meaning as given to it under the Listing Rules; the board of Directors; 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; 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 a company listed in PRC; CNOOC and its subsidiaries, excluding the Group; the transactions contemplated under the Master Agreement; the director(s) of the Company; 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; the extraordinary general meeting of the Company to be held at 10:00 a.m. on Friday, 20 December 2013 at Meeting Room I+II, JW Marriott Shenzhen, 6005 Shennan Boulevord, Futian District, Shenzhen, Guangdong, P.R.C., or any adjournment thereof; the Company and its subsidiaries; 1

4 DEFINITIONS 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; HK$ Hong Kong Independent Board Committee Independent Financial Adviser or Platinum Independent Shareholders Latest Practicable Date Listing Rules Hong Kong dollar, the lawful currency of Hong Kong; the Hong Kong Special Administrative Region of the PRC; 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; 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 cap amounts in relation to the Continuing Connected Transactions; the shareholders of the Company other than CNOOC and its associates; 13 November 2013, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular; the Rules Governing the Listing of Securities on the Stock Exchange; Master Agreement the master agreement entered into between the Company and CNOOC on 5 November 2013; Oilfield Services PRC the provision of offshore oilfield services by the Group to the CNOOC Group under the Master Agreement; the People s Republic of China; Property Services the leasing of certain properties in relation to the Group s operations from CNOOC under the Master Agreement; 2

5 DEFINITIONS RMB SFO Shares Shareholders Stock Exchange substantial shareholder Renminbi, the lawful currency of the PRC; the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong); 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; holders of the Shares; The Stock Exchange of Hong Kong Limited; has the same meaning ascribed to it under the Listing Rules; and % per cent. 3

6 LETTER FROM THE BOARD (Incorporated in the People s Republic of China as a joint stock limited liability company) (Stock Code: 2883) Board of Directors: Liu Jian (Chairman)* Li Yong Li Feilong Zeng Quan* Tsui Yiu Wa** Fong Wo, Felix** Chen Quansheng** * Non-executive Director ** Independent non-executive Director Legal address in the PRC: Hebei Road Haiyang New and Hi-Tech Development Zone Tanggu, Tianjin The PRC Registered Office in Hong Kong: 65/F, Bank of China Tower 1 Garden Road Hong Kong 14 November 2013 To the Shareholders Dear Sir/Madam, RENEWAL OF CONTINUING CONNECTED TRANSACTIONS RE-ELECTION OF DIRECTOR AND AMENDMENTS TO THE ARTICLES OF ASSOCIATION INTRODUCTION Reference is made to the announcement of the Company dated 25 October On 5 November 2013, the Company entered the Master Agreement with CNOOC in respect of the Continuing Connected Transactions. As the aggregate annual amount of the Continuing Connected Transactions is expected to exceed the 5% threshold on an annual basis, the Continuing Connected Transactions will be subjected to the approval of the Independent Shareholders under Rule 14A.35 of the Listing Rules. Reference is also made to the announcement of the Company dated 29 October 2013 in relation to the proposed amendments to the Articles of Association. 4

7 LETTER FROM THE BOARD The purpose of this circular is to: (i) (ii) provide the Shareholders with details of the Master Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions; set out the opinion of the Independent Financial Adviser in respect of the Master Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions; (iii) set out the recommendation of the Independent Board Committee in respect of the Master Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions; (iv) provide you with details of Mr. Li Feilong, an executive Director to be re-elect at the EGM; (v) provide you with details of the proposed amendments to the Articles of Association; and (vi) give you notice of the EGM. CONTINUING CONNECTED TRANSACTIONS On 5 November 2010, CNOOC and the Company entered into a master agreement in respect of certain non-exempt continuing connected transactions of the Group for a fixed term of three financial years ending 31 December 2013 (the 2010 Agreement ). Details of the transactions contemplated under the 2010 Agreement were disclosed in the announcement and circular of the Company dated 27 October 2010 and 15 November 2010, respectively. The transactions under the 2010 Agreement were approved by the independent shareholders at the extraordinary general meeting held on 22 December As the 2010 Agreement is due to expire on 31 December 2013, it is proposed that the Master Agreement be entered into to govern the Continuing Connected Transactions. THE MASTER AGREEMENT Date : 5 November 2013 Parties : The Company CNOOC CNOOC is a substantial shareholder of the Company holding approximately 53.62% of the issued share capital of the Company as at the Latest Practicable Date. Accordingly, the entering into of the Master Agreement constitutes continuing connected transactions for the Company under the Listing Rules. 5

8 LETTER FROM THE BOARD 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 : The Master Agreement has a fixed term of three financial years ending on 31 December Condition : The Master Agreement is subject to approval by the Independent Shareholders. Price : 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. Save for the provision of utilities from the CNOOC Group to the Group which the prices of such supplies are under the guidance of State-quoted price, the Continuing Connected Transactions under the Master Agreement are primarily determined by market price or through arm s length negotiations between the parties. In determining such prices, the Company adopts a 3-tier mechanism of (i) a tendering process which promotes market competition to obtain best available rate; (ii) a price comparison with independent vendors in the event that tier (i) is not available; and (iii) on arm s length negotiation based on historical comparable transactions if both tier (i) and tier (ii) are not available. In 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 determining the prices of purchases by the Group, the Group will either undergo a tendering process or when no tendering was made for the provision of machinery leasing, equipment and materials by the CNOOC Group, the Group will compare the prices and terms of supply of that of the CNOOC Group against those available from independent vendors. The prices for the provision of Property Services are determined by reference to the leasing of similar properties from nearby locations. 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 to/from third parties. 6

9 LETTER FROM THE BOARD To ensure that the considerations for the Continuing Connected Transactions are fair and reasonable and on normal commercial terms, the Company has adopted the following supervision and internal control procedures: (i) (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. The Company has also commenced internal audit of the connected transactions of the Company. As at the Latest Practicable Date, internal audits for the three years ended 31 December 2012 and the nine months ended 30 September 2013 have been completed. The Company will continue to carry out annual internal audit of its continuing connected transactions to ensure that such transactions were entered into in accordance with the terms and conditions of the relevant agreements and that the pricing policy of the Company have been complied with. 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 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 (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. 7

10 LETTER FROM THE BOARD (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. It is proposed that the cap amounts of the Continuing Connected Transactions for each of the financial years ending 31 December 2016 will not exceed the followings: RMB million RMB million RMB million Oilfield Services 24,925 27,824 29,827 Machinery Leasing, Equipment, Material and Utilities Services 2,136 2,385 2,557 Property Services The cap amounts were determined with reference to the historical transactional amounts between the CNOOC Group and the Group for the two years ended 31 December 2012 and the 6 months ended 30 June 2013, and the anticipated increases in business volume between the CNOOC Group and the Group for the three financial years ending 31 December 2016 due to the increase in offshore oil exploration activities of the CNOOC Group and the commissioning of new equipment of the Group during the period. 8

11 LETTER FROM THE BOARD The historical transaction amounts between the CNOOC Group and the Group for the two financial years ended 31 December 2012 and the 6 months ended 30 June 2013 were as follows: Type of transactions For the year ended 31 December 2011 Amount RMB million For the year ended 31 December 2012 Amount RMB million For the 6 months ended 30 June 2013 Amount* RMB million Oilfield Services: Actual caps approved 16,264 19,101 22,873 (for the entire year of 2013) Actual amount 12,050 15,243 7,437 Equipment, Material and Utilities Services: Actual caps approved 1,049 1,232 1,475 (for the entire year of 2013) Actual amount 808 1, Property Services: Actual caps approved (for the entire year of 2013) Actual amount * unaudited figures As at the Latest Practicable Date, the annual caps in relation to the continuing connected transactions under the 2010 Agreement have not been exceeded and it is not expected that any of the annual caps of the 2010 Agreement will be exceeded for the year ending 31 December Reasons for the Continuing Connected Transactions CNOOC is the largest offshore oil producers in the PRC. The Company, including its predecessors, has been providing Oilfield Services to CNOOC and its associates since In addition, the CNOOC Group has also 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 the Continuing Connected Transactions with CNOOC, as it would ensure regular sales to and a stable source of supply of equipment, materials and utilities from the largest offshore oil corporation in the PRC. 9

12 LETTER FROM THE BOARD The properties leased from CNOOC 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. Listing Rules Implication The Company is principally engaged in the provision of offshore oilfield services. CNOOC is a substantial shareholder, and currently holds approximately 53.62% in the issued share capital, of the Company. Accordingly, the entering into of the Master Agreement between the Company and CNOOC constitutes connected transactions of the Company under the Listing Rules. As the aggregate annual amount of the Continuing Connected Transactions under the Master Agreement is expected to exceed the 5% threshold under Rule 14A.34 of the Listing Rules, the Continuing Connected Transactions will be subject to the reporting, announcement and Independent Shareholders approval requirements under Rule 14A.35 of the Listing Rules. The Directors consider that the Continuing Connected Transactions will be entered into in the usual and ordinary course of businesses of the Group and the terms of the Continuing Connected Transactions have been negotiated and will be conducted on an arm s length basis and on normal commercial terms. The Directors are of the view that as far as the Independent Shareholders are concerned, the terms of the Master Agreements are fair and reasonable and in the interests of the Group and the Independent Shareholders as a whole. Mr. Liu Jian, Mr. Zeng Quan, Mr. Li Yong and Mr. Li Feilong are considered to be interested in the transaction by virtue of their connections with CNOOC and have abstained from voting for the Board resolution to approve the Master Agreement. The Company will seek approval from the Independent Shareholders of the Master Agreement and the proposed cap amounts under the Master Agreement in relation to the Continuing Connected Transactions in accordance with the requirements of the Listing Rules. The voting at the EGM will be by poll where CNOOC and its associates will abstain from voting for the resolution to be proposed to approve the Master Agreement and the Continuing Connected Transactions. An Independent Board Committee comprising the independent non-executive Directors has been formed to advise the Independent Shareholders on the terms of the Master Agreement and Platinum has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the terms of the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions. 10

13 LETTER FROM THE BOARD RE-ELECTION OF DIRECTOR The term of appointment of Mr. Li Feilong as an executive Director will expire on 21 December The Board proposed to re-elect Mr. Li as an executive Director at the EGM. The biographical details of Mr. Li Feilong are set out below: Mr. Li Feilong, aged 49, graduated from China University of Petroleum in 1986 with a Bachelor s 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 an audit manager and audit director in the Audit Department. From 1999 to 2001, Mr. Li served as the head of the Accounting/Finance/ Taxation Team of the IPO Office and the Finance Manager of Hong Kong Office of CNOOC Limited, a company listed on the main board of the Stock Exchange (Stock code: 0883). From 2001 to 2003, he served as the Assistant Controller of the Financial Management Department of CNOOC Limited and has become the Controller since 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. In 2007, Mr. Li was appointed as a member of Financial Accounting Standards Advisory Council by the Trustees of the Financial Accounting Foundation. In 2010, he was appointed as a member of the International Financial Reporting Standards Interpretations Committee by the Trustees of International Financial Reporting Standards Foundation. On 16 September 2010, Mr. Li Feilong was appointed as the Executive Vice President and CFO of the Company. The appointment of Mr. Li as an executive Director will be for a term of three years, and Mr. Li s annual remuneration will be determined with reference to his duties and responsibilities with the Company as well as the Company s remuneration policy. Subject to the approval at the EGM, Mr. Li s remuneration will be determined in accordance with the relevant requirements of the Company in relation to remuneration of its executive Directors. The Company will disclose the status on which the relevant Directors receive their remuneration in the Company within the reporting period in the Company s annual report. Except as stated above, Mr. Li has not held any directorships in other listed public companies and other major appointment and qualifications during the last three years preceding the date of this circular. Further, Mr. Li does not have any relationship with any director, senior management or substantial or controlling shareholder of the Company. As at the date of this circular, Mr. Li is holding 50,000 H Shares. Mr. Li will abstain from voting at the EGM on the proposed ordinary resolution relating to his appointment as an executive director of the Company. Save as disclosed herein, there are no other matters relating to the election of Mr. Li that need to be brought to the attention of the Shareholders nor is there any information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules. 11

14 LETTER FROM THE BOARD AMENDMENTS TO THE ARTICLES OF ASSOCIATION The Board proposed to amend the Articles of Association to bring it in line with the current status of the Company. The proposed amendments to the Articles of Association are to amend the scope of business under Article 11 of the Articles of Association in relation to the effective period of transportation by high-speed passenger liner along Tianjin water area from until 30 June 2013 to until 1 April 2018 and add general cargo transportation to the authorized operating items of the Company. The amendments will come into effect upon (i) the passing of a special resolution at the EGM to approve the amendments, and (ii) the obtaining of the approval and registration of the amendments by the relevant government and regulatory authorities in the PRC. EGM A notice convening the EGM to be held at 10:00 a.m. on Friday, 20 December 2013 at Meeting Room I+II, JW Marriott Shenzhen, 6005 Shennan Boulevord, Futian District, Shenzhen, Guangdong, P.R.C. is set out on page 35 to 38 of this circular. 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 29 November RECOMMENDATION Your attention is drawn to the letter from the Independent Board Committee set out on page 14 to 15 of this circular which contains its recommendation to the Independent Shareholders on the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions. Your attention is also drawn to the letter of advice from Platinum which contains, amongst other matters, its advice to the Independent Board Committee and the Independent Shareholders in relation to the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions. The letter from Platinum is set out on pages 16 to 29 of this circular. 12

15 LETTER FROM THE BOARD The Directors consider that the Master Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions, the re-election of Mr. Li Feilong as an executive Director, and the proposed amendments to the Articles of Association of the Company are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders and the Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM. Your attention is also drawn to the general information set out in the appendix of this circular. By Order of the Board China Oilfield Services Limited Yang Haijiang Company Secretary 13

16 LETTER FROM THE INDEPENDENT BOARD COMMITTEE (Incorporated in the People s Republic of China as a joint stock limited liability company) (Stock Code: 2883) To the Independent Shareholders Dear Sir or Madam, 14 November 2013 RENEWAL OF CONTINUING CONNECTED TRANSACTIONS We refer to the circular of the Company to the Shareholders dated 14 November 2013 (the Circular ), in which this letter forms a part. Unless the context requires otherwise, capitalized terms used in this letter will have the same meanings given to them in the section headed Definitions of the Circular. We have been authorised by the Board to form the Independent Board Committee to advise the Independent Shareholders on whether the terms of the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions 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. We wish to draw your attention to the letter of advice from Platinum Securities Company Limited ( Platinum ), the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the terms of the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions as set out on pages 16 to 29 of the Circular and the letter from the Board set out on pages 4 to 13 of the Circular. Having considered, among other matters, the factors and reasons considered by, and the opinion of Platinum as stated in its letter of advice, we consider that the terms of the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and 14

17 LETTER FROM THE INDEPENDENT BOARD COMMITTEE the Shareholders as a whole and accordingly recommend the Independent Shareholders to vote in favour of the resolution in relation to the Master Agreement and the relevant cap amounts under the Master Agreement in relation to the Continuing Connected Transactions to be proposed at the EGM. Yours faithfully, For and on behalf of The Independent Board Committee of China Oilfield Services Limited Tsui Yiu Wa Fong Wo, Felix Chen Quansheng Independent Non-executive Directors 15

18 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. To the Independent Board Committee and the Independent Shareholders Dear Sir or Madam, 14 November 2013 RENEWAL OF CONTINUING CONNECTED TRANSACTIONS 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 14 November 2013 (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 25 October 2013 (the Announcement ); (iii) the circular of the Company dated 15 November 2010 (the 2010 Circular ); (iv) the audited annual report of the Company for the financial year ended 31 December 2012 (the 2012 Annual Report ); and (v) the unaudited interim report for the six months ended 30 June 2013 of the Company (the 2013 Interim Report ). 16

19 LETTER FROM PLATINUM 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. Tsui Yiu Wa, Mr. Fong Wo, Felix, and Mr. Chen Quansheng, 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 5 November 2013, the Company entered into the Master Agreement with CNOOC in respect of the Continuing Connected Transactions. CNOOC is a substantial 17

20 LETTER FROM PLATINUM shareholder of, and currently holds approximately 53.62% of the issued share capital, of the Company. Accordingly, the entering into of 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 Disposals (a) Provision by the Group of the Oilfield Services to the CNOOC Group The Company is principally engaged in the provision of offshore oilfield services and the Company is a leading integrated oilfield services provider in the PRC offshore market. 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 RMB million RMB million Total revenue of the Group 18,426 22,105 Oilfield Services Actual amount 12,050 15,243 Actual amount as a percentage of total revenue of the Group 65% 69% As stated in the letter from the Board in the Circular, CNOOC is the largest offshore oil producers in the PRC. The Company, including its predecessors, has been providing Oilfield Services to CNOOC and its associates since 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 69% of the total revenue of the Group for the two financial years ended 31 December We are of the view that the CNOOC Group is the largest customer of the Group. 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 largest customer, which is a dominant player in the PRC offshore oil industry. 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. 18

21 LETTER FROM PLATINUM (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 CNOOC, 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 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. 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 CNOOC Group will also provide the Group 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. 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 CNOOC 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. 19

22 LETTER FROM PLATINUM 3. Principal terms of the Master Agreement Set out below are the principal terms of the Master Agreement: Date : 5 November 2013 Parties : The Company 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 : The Master Agreement has a fixed term of three financial years ending on 31 December Condition : The Master Agreement is subject to approval by the Independent Shareholders. Price : 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. 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 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

23 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 2010, 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 2013 (the 2010 Agreement ). Details of the transactions contemplated under the 2010 Agreement were disclosed in the announcement and circular of the Company dated 27 October 2010 and 15 November 2010, respectively. The transactions under the 2010 Agreement were approved by the independent shareholders at the extraordinary general meeting held on 22 December As the 2010 Agreement is due to expire on 31 December 2013, it is proposed that the Master Agreement be entered into to govern the Continuing Connected Transactions. 21

24 LETTER FROM PLATINUM The historical transaction amounts between the CNOOC Group and the Group for the two financial years ended 31 December 2012 and the 6 months ended 30 June 2013 were as follows: Exhibit 2 Historical transaction amounts Type of transactions For the year ended 31 December 2011 Amount RMB million For the year ended 31 December 2012 Amount RMB million For the 6 months ended 30 June 2013 Amount* RMB million Oilfield Services: Actual caps approved 16,264 19,101 22,873 (for the entire year of 2013) Actual amount 12,050 15,243 7,437 Equipment, Material and Utilities Services: Actual caps approved 1,049 1,232 1,475 (for the entire year of 2013) Actual amount 808 1, Property Services: Actual caps approved (for the entire year of 2013) Actual amount * unaudited figures 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 80%, 93% and 55% of the existing annual caps during the two years ended 31 December 2012 and the six months ended 30 June 2013, respectively. 5. Basis of consideration 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: (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 22

25 LETTER FROM PLATINUM (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. We have discussed with the management of the Company on the above-mentioned price determination basis. We consider that: (1) PRC government sets the relevant prices for utilities such as oil, gas, water and electricity, from time to time, and it is required for the Group to follow such State-quoted price; (2) 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 internally is a normal business practice; or (3) 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. As such, we are of the view that the above-mentioned price determination basis is fair and reasonable. (a) Provision by the Group of the Oilfield Services to the CNOOC Group After discussion with the management of the Company, we understand that the pricing for the provision of the Oilfield Services to the CNOOC Group is mainly determined by an arm s length negotiation based on historical comparable transactions and price comparison with independent vendors. During each negotiation process, the Group would prepare its negotiation strategy based on past experience and determine the price on the basis of the location, scope, amount, duration and technology complexity of services to be provided by the Group. 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, an independent market intelligence information provider. We consider IHS-Petrodata is an internationally well-known information provider in the oil and gas industry and its data is commonly used by the industry players. 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 We note, from the sample collection we have reviewed, each price was determined by the marketing department of the Group on the basis as described in the paragraph above. In addition, we note, from the sample collection we have reviewed, each contract was reviewed, when appropriate, by the risk control departments before the underlying contract was entered into. As such, we consider that the Group has devoted reasonable human resources to ensure the pricing policy of the Group could be implemented. 23

26 LETTER FROM PLATINUM 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 oil, gas, electricity and water. We are of the view that such pricing determination basis is fair and reasonable since it is regulated by governmental policies of the PRC. After discussion with the management of the Company, we understand that the pricing for purchases by the Group in relation to machinery leasing, equipment and material is determined by the market price through: either a tendering process; or when no tendering was made for the provision of machinery leasing, equipment and materials by the CNOOC Group, the Group will compare the prices and terms of supply of that of the CNOOC Group against those available from independent vendors of services of similar kind; or if no independent vendor is available, the pricing is determined through arm s length negotiations based on pricing of historical comparable transactions with the CNOOC Group. We consider it is prudent for the management of the Company to set up the relevant pricing policy based on the 3-tier mechanism, hence: (i) a tendering process which promotes market competition to obtain best available rate; (ii) a price comparison with independent vendors in the event that tier (i) is not available; and (iii) an arm s length negotiation based on historical comparable transactions if both tier (i) and tier (ii) are not available. 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 machinery leasing, equipment and material by the Group. The sample collection was gathered randomly on a monthly basis from January to October We note, from the sample collection we have reviewed, each purchase was determined by the procurement department of the Group in accordance with the 3-tier pricing policy as described in the paragraph above. In addition, we note, from the sample collection we have reviewed, each purchase was evaluated, when appropriate, by the risk control departments before the underlying contract was entered into. 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. 24