#1COSL COSL Investor Presentation May 2008 COSL#2Disclaimer www.cosl.com.cn COSL The information contained in our presentation is intended solely for your personal reference. In addition, such information contains projections and forward-looking statements that reflect the Company's current views with respect to future events and financial performance. These views are based on assumptions subject to various risks. No assurance can be given that future events will occur, that projections will be achieved, or that the Company's assumptions are correct. Actual results may differ materially from those projected. 2#32. Company Overview Company Outlook 3 www.cosl.com.cn COSL#4www.cosl.com.cn COSL A Unique Integrated Oilfield Service Provider Drilling Revenue Breakdown* 44% 25% Well services 15% 16% Integrated well services 12 jack-ups + 3 semi-submersibles +2 onshore drilling rigs+4 module rigs Marine Support Profit Breakdown* 73 working vessels+4 oil tankers+ 5 chemical carriers * For the year ended 31 Dec, 2007 53% 14% 19% 4 14% COSL Geophysical 719 8 seismic vessels + 4 survey vessels#5Dominant offshore China www.cosl.com.cn COSL Offshore China Beijing 0 100 200 300 km Tianjin Market Share in Offshore China Markets Korea Bohai Bay 90% ChevronTexaco ConocoPhillips East China Shanghai Sea 60% China Husky Energy ngzho Hong SEALINGTON devon ENERGY CORPORATION 30% Absolute Dominance >60% >70% >80% Kong ConocoPhillips 0% Eastern South Drilling China Sea Well Services MS&T Geophysical Western South China devon ENERGY CORPORATION Philippines For the period ended 1Q2008 ■ COSL Others Sea All-round IPM offshore oilfield services provider with leading position in offshore China markets 5#6www.cosl.com.cn COSL Successfully Penetrate into Overseas Markets Existing Markets Overseas Target Markets Sustain: Leading position in offshore China markets Consolidate: South-East Asian markets Reinforce: Develop Middle East, Gulf of Mexico, Russia and Africa markets Realize: Parallel development for domestic and international markets 6#7RMB Mn 10000 8000 6000 www.cosl.com.cn COSL Company Performance Since Listing Revenue 9242 RMB Mn 3000 Operating Profit 2827 I 4929 3942 4000 3153 2813 2000 6524 2500 2000 1500 1000 2504.6 850 692 550 483 500 1392 1021 0 0 2002 2003 2004 2005 2006 2007 1Q2008 2002 2003 2004 2005 2006 2007 1Q2008 Net Profit Operating Profit Margin RMB Mn 3000 2500 2000 1500 % 50 40 2238 10 30 1128 20 20 1000 891.3 821 701 466 500 354 10 10 21.9 17.7 18 18.1 17.8 31.4 41.7 0 2002 2003 2004 2005 2006 2007 1Q2008 0 2002 2003 2004 2005 2006 2007 ' 1Q2008 COSL's operating profit and net profit has grown by 5.8 times and 6.3 times since listing#8www.cosl.com.cn COSL Company Profitability Since Listing RMB Mn 25000 Total Asset 20000 15000 9664 10000 9141 7958 8231 5000 % do ROA & ROE 25 23089 20 20 15 13130 13.6 19.9 12.4 10.8 10.3 9.9 10 8.7 8.1 8.1 7.3 5.7 15.8 5 0 0 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 ROE COSL's total asset has grown by 1.9 times since listing 8 ROA#9www.cosl.com.cn COSL Operating Results Hit Record High (cont'd) Competitive cost advantage (RMB Mm) Repair and Employee compensation costs YoY growth = 24.3% 1,123 318 937 maintenance costs Consumption of supplies, materials, 357 fuels, services and 2,525 others Subcontracting 1,935 expenses 357 Operating lease 206 366 expenses 313 102 Selling, general and 81 administrative 1,042 900 expenses Depreciation 274 387 Other expenses 2006 2007 9 Although revenue and operating profit increased significantly, operating cost grew by a moderate 24.3% Increases in operating cost were mainly due to business expansion, full capacity utilization and increased expenses on equipment and staff headcount We have the confidence to maintain growth in both top. line and bottom line#10www.cosl.com.cn COSL Steady Growth in Overseas Business Overseas revenue keep growing Overseas markets adding momentum RMB mn 679 (27.7%) RMB Mn By end of 1Q2008 1800 1500 20% 18% 16% 14% 1200 12% 900 10% 8% 600 6% 4% 300 Globalization strategy 2% 0 0% marked initial success 2003 2004 2005 2006 2007 Overseas revenue Overseas/total Drilling services grew by new businesses, development in overseas market and increase in daily rate Well service grow with the increase in operation volume Marine support and transportation services driven by in daily rate increase, and increase in operation volume of utility vessels and chemical tankers Geophysical services has increased by COSL718 in Myanmar's significant increase in income PNOC National Oil Company ANIOC WOODSIDE PEMEX DAEWOO INTERNATIONAL Genting North Drilling Co. 10#11www.cosl.com.cn COSL Positive Recognition from the Capital Market STANDARD POOR'S COSL was named a Top-30 stock with highest investment potential by Standard & Poor's for three consecutive years between 2005 and 2007 China Enterprise Confederation China Enterprise Directors Association THE WFL F IRIRIAI MUNDELL TOYO 東洋証券 大公国际资信评估有限公司 DAGONG GLOBAL CREDIT RATING CO.,LTD China Enterprise Confederation and China Enterprise Directors Association Named Mr. Yuan Guangyu, CEO and President, the "Most Watched Entrepreneur for 2006" A Top-100 Most-respected listed Company in China in 2007 Recommended as Top 8 golden stocks Corporate bond credit rating: AAA Long-term credit rating: AAA Chinese Academy of Social Sciences International Investment Research Center The highest investment value listed company in China 2007 11#12www.cosl.com.cn COSL Continuous Emphasis on QHSE COSL's OSHA score further improved to 0.25 (0.32 in 2006) Unit output energy dissipation was 0.0703, down 14.6% y-o-y; Unit value-add dissipation. was 0.1116, down 18.7% y-o-y Saved 10,804 tonnes of standard coal, met energy saving targets for the year OSHA Health: The foundation for our corporate success QHSE Safety: Our persistent promise 1.00 0.80 International standard:0.75 Quality: In pursuit of high quality 0.60 0.45 0.40 0.32 0.29 0.27 0.22 0.25 0.20 0.00 2002 2003 2004 2005 2006 2007 12 Environment: Be a responsible international citizen#132. Company Overview Company Outlook 113 13 www.cosl.com.cn COSL#14www.cosl.com.cn COSL International Oil Prices Hike New Heights Trend of global demand on crude oil, E&P and oil prices 125 Projected Demand Growth at 1.6% per year 300 World Capacity Excess Capacity 250 100 75 50 World Demand 25 E&P Expenditure 200 150 100 Oil Price $/B 50 0 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Data source: BP\IEA\EIA International oil prices are expected to climb 1.6% per year with the surging E&P expenditure, fuelled by the growing demand of the global market. 14 E&P Expenditures $ Billion#15www.cosl.com.cn COSL Steady Increase in Crude Oil Demand World demand for crude oil China demand for crude oil 100 90 82.5 CAGR: 1.8% 83.9 84.9 85.8 80 77.1 77.8 79.3 70 400 CAGR: 8.1% 346 323 300 293 300 252 159 60 60 229 139 217 119 50 54.9 56.4 57.0 57.5 117 53.3 50 52.4 52.7 83 200 53 62 40 30 6.5 6.7 7.2 7.5 100 20 4.7 5 5.6 164 167 176 170 18 184 187 10 20.0 20.1 20.4 21.1 20.8 20.7 20.8 0 0 2001 2002 2003 2004 2005 2006 2007 2001 2002 2003 2004 2005 2006 2007 ■USA China Other Domestic Production Net Import Source: IEA 15 Source: CEIC, China Petroleum and Chemical Industry Association#16140,000 120,000 100,000 80,000 60,000 40,000 20,000 www.cosl.com.cn COSL Bright Future for Oil and Gas Exploration Continuing Increase in World Investments in Marine Oil and Gas World investments in marine oil&gas exploration and operations are expected to increase to US$144b per annum on average in next 10 years. 0 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E ■ САРЕХ Source: Energyfiles Ltd. ■ ОРЕХ Average investments in deep water operations will exceed US$15B per annum. Deep waters and ultra deep waters will continue to be hot exploration spots for world oil and gas. Investments will grow faster in West Africa, Brazil, Gulf of Mexico and Asia Pacific regions. Investments in Marine oil and gas in Asia Pacific in 2008 will increase 65% from the levels in 2002. • Exploration activities are seen to kick off in emerging marine regions including Southeast Asia. Source: Oil.IN-EN.com 16#17Goals of COSL Near-term goal www.cosl.com.cn COSL An oilfield service provider with strong competences in the international market 2010 Long-term goal Become a top-notch international oilfield service providers 2020 Accelerate development of integrated capabilities. Comprehensively enhance professional capabilities • Increase investments in R&D to enhance COSL's technological competitiveness Plans ⚫ Explore new business opportunities new oilfield production services • Expand scope of service, implement global development strategies Expand facilities, upgrade service capability ⚫ Strengthen deep water operation capability ⚫ Achieve breakthroughs in technology, capacity expansion and capability upgrades through capital market operations including M&A 17#18Four Core Strategies www.cosl.com.cn COSL A unique publicly-listed integrated oilfield service provider Technology-driven Cost Competitiveness Integration Global Operation Strategic positioning: Expert in conventional technologies Keen follower in advanced applications Enabler of highly efficient operations Contributor to cost reduction Pioneer in integrated services Participant in global competition Partner in win-win development Servant for shareholder value 18#19www.cosl.com.cn COSL CAPEX to Introduce New Equipment CAPEX since listing: in excess of RMB 10 billion RMB Mil' 5500 4400 3300 2200 1100 0 2002 2003 2004 2005 2006 2007 2008 19#20Increase New Capacity Drilling Services 2008 2009 www.cosl.com.cn COSL 2010 2011 COSL942 to operate in 2H; 4 module rigs operate for six more months; 5 onshore rigs commence operation Jack-up COSL936 will commence operation by year end. 4 onshore rigs have half year more revenue. Jack-up COSL937 to operate; Four 200-feet jack-up rigs to operate in 2010 and 2011 Manage the 3000m deep water drilling rig invested by parent company in Mid 2011 Well Services R&D, building, procure equipment like cementing pump, ELIS, liftboat etc. R&D and procure tools for MWD, acidizing and crushing MS&T Services 9 new supporting vessels will commence operation in 2H 9 new supporting vessels to operate in 1H. 2 high-powered deep water vessels will commence operation by year end 16 offshore engineering supporting vessels to be delivered respectively in 2010 and 2011 Geophysical Services One 8-streamer seismic vessel start operation in April 20 20 One 12-streamer seismic vessel will commence operation 1 deep water suvey vessel will commence operation#21One Stop Solution Exploration Stage www.cosl.com.cn COSL Development Stage Production Stage Drilling Well Services Marine Support and Transportation Geophysical COSL - An oilfield services company offering integrated services spanning across drilling, development and production 21#22www.cosl.com.cn COSL BF11 Increase Work Throughput ACFON-S A CF01-3 COM- CFON-1 YC0-1 FH- OKI CKI CH CF 어 LFU-3 HIGH HING HIN 0843 LO161 TH L Ma LF1314 HTH HH Uptrend in CAPEX and OPEX of oil companies on oilfield exploration CNOOC announced discovery of 10 new oil and gas reserves in Nov 2007 Numerous market opportunities in different stages of oilfield production Besides increase in work throughput of logging, directional drilling, cementing and well completion, acidizing, crushing, screen pipe production activities are expected to grow ATE A B PH-14 P 22 Source: CNOOC Group annual report#23www.cosl.com.cn COSL Service Prices Have Room to Increase Jack-up: USD/Day 80,000 60,000 US$78,337/day 40,000 20,000 2002 2003 2004 2005 2006 2007 Semi-submersible: USD/Day 160,000 120,000 80,000 40,000 0 2002 2003 2004 2005 2006 US$142,302/day 2007 Utilization to remain high due to strong demand, saturated capacity, good customer relationship and tight schedule management#24www.cosl.com.cn COSL Explore New markets, New businesses Expand foothold in overseas markets Targeted Southeast Asia, Middle East, Gulf of Mexico, Russia and Africa Penetrate into onshore markets Expand into onshore services, leveraging our strength in the offshore market. Consolidate existing market share Tap the deep water segment Expand presence in the deep water segment following footsteps of oil companies Secure first-mover advantages in new markets and new businesses 24#25www.cosl.com.cn COSL Explore New markets, New businesses (cont'd) COSL-LR7001 commenced drilling 25 COBL COR#26Accelerate Technology R&D Leapfrog Development www.cosl.com.cn COSL COSL's application of technologies Introduced proprietary ELIS logging system into domestic and overseas markets Established the first joint laboratory Introduced cementing services to Xinjiang ⚫ Proprietary "Bohai low-density-high-strength well cementing technology widely applied Integrated Innovation Market- Talent oriented oriented COSL's technology-driven strategy 26 Low-Density, Conventional Cement High-Strength Cement#27www.cosl.com.cn COSL Well-geared for Challenges in Deep Water COSL's deep water development strategies Well equipped in deep water facilities ⚫two high-power deep water working vessel one 12-streamer seismic vessel ■ One 3000m deep water drilling rig invested by parent company will under operation One deep water survey vessel Well prepared in technology R&D ⚫ ASDD technology increases the depth of the third generation submersible rigs to 1,500m Well collaborated in human resources ◆ On-job training enables our staff experienced in deep water operation ATLANTIS 45 ASDD To start the well testing in 2Q08 Upgrade deep water operation from 500m to 1500m PSC WITH WILL 27 Independent#28Thank you COSL. 我们必须做得更好 WE MUST DO BETTER