COSL to Build Second 400' Jackup Rig

China Oilfield Services Limited has entered an agreement with Dalian New Shipbuilding Heavy Industry Company Limited, a subsidiary of China Shipbuilding Industry Corporation, to construct a second 400' jackup.

On June 30, 2005, COSL signed a Cooperation Framework Agreement with DNS for the construction of a second JU2000 Enhanced Style drilling unit. According to the Cooperation Framework Agreement, on the condition that the construction schedule will not be affected, both COSL and DNS have rights to come up with an optimized design based upon as-built drawings of the first jack-up rig which has been under construction since March 2004. The proposal will be implemented upon mutual consent of both parties.

DNS will be the prime contractor for the second jackup construction project, responsible for EPCI (engineering, procurement, construction, installation and commissioning) with a total lump sum (excluding VAT) of approximately US $147 million. As per the construction schedule, the jackup will be delivered by the end of December 2007.

Mr. Yuan Guangyu, CEO of COSL, stated, "In view of the increasing demand for energy in global markets and to cater to the demand for offshore oil and gas exploration and production as well as to capture the immense opportunities from overseas development, we endeavor to seize this golden opportunity to increase injection in enhancing our drilling equipment. We are confident that the launch of the construction project will further fortify our integrated equipment capacity, improve our drilling fleet structure and ultimately, strengthen our competitiveness in the international markets."

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