Major Shareholder:

• CNOOC ¡V 65.0% interest

Company Subsidiaries:

• China Offshore Thales Geosolutions (50.0%): Survery and exploration services
• CNOOC-OYIS Well Completion Services Ltd (50.0%): Well Completion Services Ltd
• China Finance Bohai Geoservices Ltd (50.0%): Logging services
• China Petroleum Logginh-Atlas Cooperation services Company (50.0%): Logging services
• Tianjin Jinhong Petro-Chemical company Ltd (50.0%): drilling fluids manufacturing
• China Nanhai- Magcobar Mod Corporation (50.0%): Drilling fluid services

The Company is the leading provider of oilfield services in the offshore China market. The Company's services cover each phase of the exploration, development, and production of offshore oil and natural gas. The Company offers its services separately and on an integrated project basis. The Company's operations are divided into four segments: drilling services, well services, marine support and transportation services, and geophysical services.

The Company is the leading provider of drilling services to the offshore China market. As of June 30, 2002, the Company owned and operated a fleet of 12 drilling rigs, including nine jackups and three semi-submersibles. The Company has been drilling since 1967, and has increased its drilling activity, in terms of wells drilled, at a compound annual growth rate of 17.8% over the last five years. Drilling is the Company's largest business segment, and for the year ended December 31, 2001, accounted for 41.6% of the Company's turnover.

To support its drilling services, the Company offers a full range of well services, including logging and downhole services. Well services accounted for 25.3% of the Company's turnover for the year ended December 31, 2001.

The Company owns and operates the largest and most diverse fleet of marine support vessels offshore China. The Company's fleet includes six oil tankers and 55 offshore support vessels as of June 30, 2002. Marine support and transportation accounted for 20.2% of the Company's turnover for the year ended December 31, 2001.

The Company also offers geophysical services for offshore oil and natural gas exploration projects, including offshore seismic data collection, marine geotech surveying, and data processing. For the year ended December 31, 2001, geophysical services accounted for 13% of the Company's turnover.

The Directors believe that the Group has the following competitive advantages:

• The Company has the leading position in its core market of offshore China
• The Company stands to benefit from growing demand for oilfield services offshore China
• The Company provides integrated offshore oilfield services across exploration, development, and production activities
• The Company provides its services under and competitive cost structure
• The Company has an experienced management and skilled technical team

• Demand for the Company's services, the prices it charges for these services, its profit margins, and its cash flow depend on oil and gas industry activity and expenditure levels that are directly affected by trends in oil and natural gas prices
• The Company's business, results of operations, and financial condition depend in large part on its relationship with CNOOC Limited.
• Since the Company has only recently been consolidated into a single operating entity, its business operations are subject to some measure of uncertainty
• The execution of the Company's capital expenditure plan is subject to some uncertainty
• The Company's well services and geophysical businesses rely heavily on technology that is subject to rapid and significant change and some of this technology may be owned by the Company's competitors

The Company intends to solidify its leading market position offshore China and selectively pursue opportunities to expand its operations outside the PRC. The implementation of its strategy consists of five main components:

Further integration of service lines. Further integration of the Company's drilling, well, marine support and transportation, and geophysical service lines will enable it to offer its customers a more convenient and cost efficient platform of oilfield services. The Company intends to further coordinate the marketing efforts of its four main business lines and to strengthen its Integrated Project Management Program. The Company believes this strategy will improve its operating margins and differentiate it from its competitors.

Increase technical capabilities. Increasing the Company's technical capabilities will strengthen its competitiveness in certain areas and enable it to perform additional services for its customers

Strengthen and expand client relationships. Strengthening and expanding the Company's client relationships will enable it to solidify its market position in China and facilitate its expansion into overseas markets. In particular, the Company intends to continue focusing on serving its largest customers, CNOOC Limited and its PSC partners operation offshore China. The Company also plans to being targeting market opportunities in shallow water offshore China and additional customers located onshore China.

Selectively pursue international opportunities. Focusing it's international marketing efforts on oil and natural gas projects operated by its current customers and in less developed offshore markets will enable the Company to expand its level of international business activities. The Company believes that this strategy will help diversify its revenue streams and improve its operating margins.

The net proceeds from the Offerings, after deducting the related expenses, are estimated to amount to approximately HK$1787.2 million (based on the offer price HK$1.55 per share). The Group at present intends to apply the net proceeds as follows: