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IPO Singapore stock : China Oilfield Technology offers 211.6 million shares at S$0.60 each on SGX Mainboard

SINGAPORE - 5 October 2007 - China Oilfield Technology Services Group Limited, ("China Oilfield Technology"), a "one-stop" customised solutions provider of integrated tertiary oil recovery equipment and technology to enhance the extraction of oil in the Daqing oilfield region of the PRC, announced today it has registered its final prospectus with the Monetary Authority of Singapore in conjunction with its proposed listing on the Mainboard of the Singapore Exchange Securities Trading Limited ("SGX-ST").

Its initial public offering ("IPO") of 211,607,000 shares at S$0.60 each (the "Shares") opens at 9.00 am on 8 October 2007 and closes at 12.00 noon on 15 October 2007. Trading of China Oilfield Technology's Shares, in board lots of 1,000 Shares each, is expected to commence on 17 October 2007.

HL Bank is the Manager, Underwriter and Placement Agent for the IPO. Kim Eng Securities Pte. Ltd. is the Principal Sub-Placement Agent.

Of the 211,607,000 Shares on offer, 127,500,000 are New Shares and 84,107,000 are Vendor Shares. The IPO comprises 3,228,000 Offer Shares that are available for public subscription, and 208,379,000 Shares by way of placement.

Representing 29.04% of China Oilfield Technology's post-Invitation enlarged share capital of 728,595,000 Shares, the Shares are being offered at a pre dilution price earnings ratio of 18.39 times, based on the Group's audited net earnings of RMB97.7 million for the financial year ended 31 December 2006.

Use of Proceeds
The net proceeds of approximately S$71.4 million will be used as follows:
(a) Enhance its research and development capabilities
(i) S$3.0 million for further research and development of its alkaline surfactant-polymer ("ASP") injection technology
(ii) S$3.0 million for further research and development of ASP residual liquid treatment technology and related chemical agents
(b) S$24 million to expand its production capacity
(c) S$4 million to expand its sales and marketing network in the PRC and overseas markets
(d) S$37.4 million as general working capital

About China Oilfield Technology Services Group Limited
Based in Heilongjiang Province's Daqing oilfield region, one of the largest oilfields in the PRC, China Oilfield Technology's core activities lie in the research, development, manufacture and sales of customised integrated equipment and products that are used in enhancing the extraction of crude oil.

With a strong emphasis on research and development ("R&D") and product quality, China Oilfield Technology incorporates proprietary technology in tertiary oil recovery, and provides practical and cost effective technical solutions to cater to its customers' needs. Backed by 40 full-time R&D personnel, the Group has developed various patented oil extraction equipment and technology over the years.

The Group has production facilities located in Daqing City, Heilongjiang Province of the PRC, and R&D facilities located in Beijing and Daqing City.

In October 2004, China Oilfield Technology acquired a 348,792-sqm site for the construction of a new production complex, Dafeng Industrial Park, in the Third Zone of Hi-Tech Development Zone, Daqing City. The first phase of the Park is targeted to be completed by end 2007.

Product Range
The Group has a wide range of tertiary oil recovery products, which can be divided into three segments:
(i) Enhanced Oil Recovery;
(ii) Environmental Protection; and
(iii) Energy Saving and Others

All of China Oilfield Technology's products are sold directly to PRC oil extraction companies operating in Daqing oilfield, which is one of the first oilfields to adopt tertiary oil recovery technology in the PRC.

There are three main phases of oil recovery:
i) Primary oil recovery - Uses natural pressure of the reservoir to push crude oil to the surface, and allows about 5% to 10% of the oil in the reservoir to be extracted.
ii) Secondary oil recovery - Pressurised gas and water are used to drive the residual crude oil and gas to the surface wells, and allows an additional 25% to 30% of the oil in the reservoir to be extracted.
iii) Tertiary oil recovery - Different materials are injected to improve the flow between oil, gas and rock, and to recover crude oil remaining after the primary and secondary oil recovery phases, and allows an additional 20% to 30% of the oil in the reservoir to be extracted.

China Oilfield Technology provides customised equipment and technical solutions incorporating its proprietary technology and techniques in tertiary oil recovery to enhance the extraction of oil. There are various tertiary oil recovery techniques. China Oilfield Technology focuses on chemical flooding, or the injection of chemicals such as alkali or polymer into the oil reservoirs. In the PRC, chemical flooding, particularly polymer flooding and ASP injection, is the preferred tertiary oil recovery technique due to technical and economic considerations.

Industry Prospects
Said Mr Gao Yanming, China Oilfield Technology's founder and Executive Chairman: "Thanks to China's strong economic growth, China continues to be a net importer of oil because of its strong appetite for oil, and this is in spite of it being one of the largest oil producing countries in the world! In order to sustain the output of oil extracted from its existing oilfields, China needs to employ tertiary oil recovery methods as some of its major oilfields are mature and at the secondary stage. China Oilfield Technology is well positioned to capitalise on the opportunities this offers as we have the proven track record. Daqing oilfield is one of the first oilfields to adopt tertiary oil recovery technology in the PRC."

In a report published by PetroChina Company Limited dated 3 April 2007, Daqing Oilfield Co., Ltd., which is wholly-owned by PetroChina Company Limited, announced its plan to extend the use of tertiary oil recovery techniques in more than 80% of its oil extraction sites in its oilfields in the Daqing region in the next 15 to 20 years.

By the end of 2006, tertiary oil recovery in Daqing oilfield had reached an output of more than 10 million tonnes per year, accounting for about 25% of the total crude oil output in Daqing oilfield.

Other oilfields in the PRC, such as Shengli, Changqing and Xinjiang, are expected to expand the scale of their tertiary oil recovery processes as their oilfields approach maturity.

"We believe that the majority of PRC oilfields have not commenced tertiary oil recovery technology. Given the limited supply of crude oil resources in the PRC, as well as a growing focus on improving the oil recovery rate and extending the production life of oilfields, tertiary oil recovery is expected to play an increasingly important role in the near future," said Mr Gao.

"Leveraging on China Oilfield's established record in tertiary oil recovery in Daqing, we believe that this listing will further enhance our credibility and reputation in the industry to enable us to expand our business to attract potential customers both in the domestic market as well as in new overseas markets," he added.

Financial Highlights
Fuelled by the demand for tertiary oil recovery, China Oilfield Technology's revenue has grown from approximately RMB49.7 million in FY2004 to approximately RMB149.4 million in FY2006. The Group's net profit grew from RMB17.7 million in FY2004 to RMB97.7 million in FY2006.

In the first five months of FY2007 ("FP2007"), the Group posted a revenue of RMB34.3 million (compared to RMB29.8 million in FP2006), and net profit of RMB17.4 million (compared to RMB12.4 million in FP2006). A major portion of the Group's sales are typically recognised in the second half of the year.

As at 31 May 2007, the Group has secured confirmed sales orders amounting to approximately RMB93.7 million, which are usually fulfilled within six months.