China Oilfield Services to Build New Jackup

China Oilfield Services Limited has decided to build a new jackup drilling rig which can drill in water depths up to 400 feet. The new rig is intended to meet anticipated demand for COSL's drilling services. The Company plans to initiate the building program in the near future and will solicit bids from international companies for the rig's design and from domestic shipyards for its construction. The total cost of the new rig will depend on its design specifications and actual construction costs. The newbuild jackup rig is expected to begin operations by the end of 2005.

COSL originally planned to purchase two second-hand jackup rigs by the end of 2004. In the current market conditions, however, COSL has not been able to find any suitable second-hand rigs for a reasonable price. Depending on the drilling rig market conditions and demand for its drilling services in 2004, COSL may still consider acquiring a second-hand jackup rig, upgrading one of its existing rigs or leasing a rig from another company.