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  • Designed and produced by : Equity Financial Press Limited www.equitygroup.com.hkThis annual report is printed on recyclable paper

    AN

    NU

    AL R

    EP

    OR

    T 2013

    ANNUAL REPORT 2013

  • COMPANY OVERVIEW

    China Oilfield Services Limited (the Company, the Group or COSL), listed on Hong Kong Stock Exchange (HK stock code: 2883) and Shanghai Stock Exchange (Shanghai stock code: 601808), is the leading integrated oilfield services provider in the offshore China market. Its services cover each phase of offshore oil and gas exploration, development and production.

    COMPANY BUSINESS

    Its four core business segments are geophysical and surveying services, drilling services, well services, marine support and transportation services. COSL not only provides services of single operations for the customers, but also offers integrated package and turnkey services; COSLs business activities are conducted not only in offshore China, but also in South East Asia, Middle East, Europe, Australia, North and South America and Africa. During the course of business, the Company is committed to minimizing the impact to the environment and to sustainable development, so as to achieve a win-win situation for shareholders, clients, and staff and business partners.

    BUSINESS PERFORMANCE

    In 2013, the Company maintained a strong operation and financial performance. Besides, COSL performed well in a more extensive operation aspect, including social and environment aspect, with performance fulfilling our targets. Details are set out in the financial report and Social Responsibility Report.

    STRATEGIC TARGET

    COSL aims at becoming an international first-class oilfield services company, insists on sustainable operation model and creates short-term to long-term economic, social and environmental value for stakeholders.

    CORPORATE GOVERNANCE

    The governance structure of COSL not only includes those set out in the Corporate Governance Code of Hong Kong Stock Exchange, the PRC Company Ordinance and the Articles of Association of the Company, but also our more stricter and self-established standards.

    PROSPECT

    The sea is an important reserve for oil and gas resources. The global offshore oil and gas exploration, development and production remain active. The Company has laid a solid foundation in offshore China, South East Asia, North sea, Middle East, Gulf of Mexico, Australia and other regions, which provides a sturdy platform for continuous business development.

    Challenges and risks we are exposing vary with regions, mostly related to the nature of the oilfield service industry, including uncertain political and legal environment as well as the risks coming from deep-water and overseas operation. However, by virtue of the considerable experience in offshore oilfield services, the knowledge of Chinas offshore markets, initially established international market layout and growing business reputation, together with the strict risk management strategy, COSL is confident in seizing market opportunities to cope with future business challenges and to reward our shareholders with continuous and stable growth.

    Company Profile

  • 1. Company Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

    2. Milestones of 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

    3. 2013 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

    4. Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

    5. Chairmans Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

    6. Chief Executive Officers Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

    7. Management Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

    8. Corporate Governance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

    9. Summary of General Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

    10. Social Responsibility Report 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

    11. Directors, Supervisors, Senior Management and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

    12. Report of the Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

    13. Supervisory Committee Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

    14. Significant Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

    15. Independent Auditors Report and Financial Statements Prepared in accordance with Hong Kong

    Financial Reporting Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

    16. Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

    17. Documents for Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

    18. Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217

    CONTENT

    DOMESTIC BUSINESS

    Maintaining the market leader position in offshore oilfield service and providing geophysical and surveying services, drilling services, well services and marine support and transportation services, revenue sourced from China in 2013 amounted to RMB18.47 billion, representing 67.5% of the total revenue.

    INTERNATIONAL BUSINESS

    In 2013, the international business of the Company continues its growth and it has been rooted in four major regional international markets. Revenue sourced from the international business in 2013 amounted to RMB8.9 billion, representing 32.5% of the total revenue.

    Asia-pacific region: including Indonesia, Pakistan, Thailand, Singapore and Australia etc.

    Businesses involve geophysical services, drilling, well completion, logging, directional drilling, cementing well, drilling fluids and well work-over services.

    Middle East region: including Iraq and United Arab Emirates etc.

    Businesses involve drilling, logging, directional drilling, cementing well, drilling fluids, well completion and well work-over services.

    America region: including Mexico and USA etc.

    Business involve drilling services.

    Europe region: including Norway and UK etc.

    Businesses involve drilling services and accommodation rigs.

    Business Overview

  • Milestones of 2013

    CHINA OILFIELD SERVICES LIMITED ANNUAL REPORT 20132

    JanuaryEmilio Lozoya Austin, the president of Petrleos Mexicanos (PEMEX), visited COSLConfidence and highly appreciated the quality management in safety production and equipment management of the rig.

    FebruaryCOSLBoss rig passed the strict assessment under the latest standard implemented by BP in 2013 and provided drilling services to BP in the sea area of Indonesia.

    MarchAt the work meetings of Sanya Maritime Rescue Centre of Hainan province, the Zhanjiang operating company of the Company was awarded the advanced unit in marine salvage 2012.

    NH7 officially commenced drilling activities which was the first operation of such rig since it joined the drilling segment. It symbolized that such rig was moving forward to the drilling operation stages after dry leasing.

    COSLPromoter commenced drilling activities and executed the operation contract with Statoil for a term of 8 years.

    MayCDE (COSL Drilling Europe AS) took the first place in Statoils comprehensive rating of all drilling contractors during the period from September 2012 to March 2013.

    JuneThe construction of HYSY721, a 12-streamer deep-water geophysical vessel, was officially commenced in Shanghai Shipyard Co., Ltd. by the Company.

    Our multiple thermal fluid for offshore viscous oil recovery technology gained success in the testing of very viscous oil in Bohai which provided efficient means of development and technical direction for the application and development of offshore viscous oil.

    JulyElectro Magnetic Resonance Logs Tools (EMRT), which was researched and developed independently by the Company, successfully completed its first operation in the eastern area of South China Sea, providing a solid foundation for the comprehensive promotion and application of ELIS high-end logging equipment.

    The construction of 3000HP module rigs project was officially commenced in Wison Heavy Industry.

  • CHINA OILFIELD SERVICES LIMITED ANNUAL REPORT 2013 3

    Milestones of 2013 (Continued)

    AugustThe operation base of Shanxi Gas was officially launched which further enhanced the support for the technical services of coalbed methane business.

    The list of outstanding talents (6 people) and leading talents in scientific and technical innovation (72 people) in the Ten Thousand Talent Plan of China is first announced. Feng Yongren, the Chi

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