China Oilfield Services Limited 2010 Third Quarter Report

In the first three quarters of 2010, China Oilfield Services Limited (the Group) achieved an operating revenue of RMB13,630.3 million, which represented a rise of 0.8% compared to RMB13,525.1 million in the same period of last year (January – September)

Since the operation contract of 1 semi-submersible drilling rig under construction was cancelled in the same period of last year, the Group reversed the related deferred revenue of RMB1,073.1 million. Excluding this impact, the operating revenue of the period increased by 9.5% compared with the same period of last year). Net profit is RMB3,429.2 million, which represented an increase of 22.2% compared with the same period of last year.

As at 30 September 2010, the Group operated and managed a total of 27 drilling rigs, 2 accommodation rigs, 4 module rigs and 6 land drilling rigs. In the first three quarters of 2010, the operating days of the drilling rigs were 6,730 days, representing an increase of 616 days compared with the same period of last year. The main reasons are that, firstly, 2 jack-up drilling rigs (COSL936/COSL937) which commenced operation in the current period increased operating days by 506 days, and secondly, the operation efficiency of CDE Group was enhanced and that the 2 jack-up drilling rigs which commenced operation last year operated in full current period, this increased the operating days by 345 days. Moreover, operating days were reduced by 235 days due to the increase in the number of days of repair and maintenance in the current period.

The 4 module rigs for clients in the Mexico Gulf operated normally as per schedule. 1,084 days of operation were achieved during the period, and the calendar day utilization rate reached 99.3%. The 6 land drilling rigs operating in the land drilling markets of Libya and China brought a total of 1,575 operating days, and the calendar day utilization rate reached 96.2%.

As at 30 September 2010, the Group’s fleet of offshore operating vessels comprised an aggregate of 78 utility vessels, 3 oil tankers and 5 chemical carriers. The aggregate operating days of the fleet were 20,089 days in the first three quarters, representing a decrease of 424 days compared with the same period of last year. This is mainly due to the disposal of the vessels which were expired in service duration since the third quarter of last year, which resulted in a decrease of 1,092 operating days. The standby vessels and the workover support barges increase the operating days by 662 days, while the decrease in maintenance of platform supply vessels resulted in an increase of 6 operating days.

Operating revenue of the Well services segment increased compared with the same period of last year thanks to the business development and the increase of operation.

In the Geophysical services segment, due to the transformation of a 2D collection vessel into a submarine cable’s source vessel and the decreased market demand for 2D data collection, the 2D collection volume decreased by 20.9% as compared with the same period of last year. It also resulted in the decrease of 2D data processing volume. A growth of 17.4% was recorded for the 3D data collection business, reaching 10,813 km2 thanks to the overseas operation of COSL719. Data processing business grew steadily, representing an increase of 5.0% as compared with the same period of last year. In addition, the Group added a new submarine cable collection business during the period, its operation volume in the first three quarters was 303 km2.

(1 Chinese yuan = 0.149671 U.S. dollars)

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Source: COSL, October  28, 2010;