COSL Signs New Contract with Kerr-McGee

China Oilfield Services Limited has signed a new service contract with Kerr-McGee China Petroleum Ltd. (KMCPL) for the CFD 11-1/2 oilfield of the Caofeidian 04/36 Block in the Bohai Bay.

The drilling services contract, which totals approximately US$80 million, includes cementing, drilling fluids, directional drilling, sand-prevention perforation, logging while drilling and other related services. Around 70% of the contract amount will go to COSL and the remaining amount will go to other subcontractors including Baker Hughes Inc. and MI. Pursuant to the contract, the overall development plan includes more than 60 wells, with drilling operations starting in October 2003.

"Bundling a package of oilfield services has been one of our strategies since our reorganization and allows us to offer more technical services to our customers along with our drilling services," said Yuan Guangyu, President and COO of COSL. He continued, "We plan to use our drilling rigs as a platform to grow our other business segments; this is an important part of our company's future development. We intend to fully leverage our position as an integrated oilfield services provider to offer our customers more services. KMCPL has always been one of our most important clients and this contract lasting over 30 months will provide us with another opportunity to serve KMCPL. As we always tell ourselves, we must continually strive to improve our services and products." "Engaging in a bundled services contract with one oilfield services company will allow us to take advantage of management and operational efficiencies, resulting in lower operating costs," said Jim Kleckner, Kerr-McGee vice president of China operations.