Semi-annual Special Report of Offshore Oil Engineering Co., Ltd. on Deposit and Actual Use of Raised Funds in 2014

Special Notes

The Board of Directors and all directors of the Company pledge that the announcement contains no false records, misleading statements or major omissions, and bear joint and several liabilities for the authenticity, accuracy and integrity of the announcement.

I. Basic Information about the Raised Funds

(I) Amount of actually raised funds and time of being credited into account

Approved by China Securities Regulatory Commission (CSRC) in the Reply of Approving Private Placements of Offshore Oil Engineering Co., Ltd. (CSRC Permit [2013] No. 1180), Offshore Oil Engineering Co., Ltd. (hereinafter referred to as "the Company") issued 531,914,800.00 RMB ordinary shares (A-share) in the mode of private placement, with issuance price of RMB 6.58 per share and funds raised amounting to RMB 3,499,999,384.00. After underwriting fee of RMB 27,123,995.07 was deducted, RMB 1,772,875,388.93 in the remaining raised funds of RMB 3,472,875,388.93 have been deposited in the Company's special account for raised funds in Beijing Deshengmen Branch of Bank of Communications and the other RMB 1,700,000,000.00 deposited in the Company's special account for raised funds in Tianjin Binhai Branch of Bank of China on September 27, 2013. Besides, the accumulative attorney and accountant fees and registration fee payable due to the private placement amount to RMB 1,379,191.48. With underwriting fee and other accumulative issuance expenses of the Company deducted, net amount of the raised funds is RMB 3,471,496,197.45.

Shinewing Certified Public Accountants (Special General Partner) has verified payment condition of the above-stated raised funds and issued Capital Verification Report (No. XYZH/2013A7012). Refer to Announcement on Private Placements Results, i.e. Equity Change disclosed by the Company on October 11, 2013 for details.

(II) Amount of funds used in the first half of 2014 and current balance

Up to June 30, 2014, use and balance of raised funds of the Company are as follows:

Items / Amount (RMB)
Net amount of raised funds / 3,471,496,197.45
Balance of account for raised funds at the end of 2013 / 272,234,258.70
Minus: amount of raised funds used in the first half of 2014 / 1,642,799,558.31
Including: Raised funds for purchasing bank financial products / 1,400,000,000.00
Raised funds directly invested in relevant financed projects / 242,799,558.31
Plus: net amount of interest income with commission charge, etc. deducted / 1,144,019.13
Recovered principal of financial products / 1,520,000,000.00
Recovered income from financial products / 34,475,769.04
Equal to: balance of account for raised funds / 185,054,488.56

II. Management of raised funds

(I) Management of raised funds in strict accordance with regulations

To standardize the management and use of raised funds of the Company, the Company formulated the Procedure for Management and Use of Raised Funds of Offshore Oil Engineering Co., Ltd. (hereinafter referred to as "the Procedure") based on Company Law of the People's Republic of China, Securities Law of the People's Republic of China, Measures for the Administration of Securities Issuance by Listed Companies, Rules Governing Listing of Stocks on Shanghai Stock Exchange, Measures for the Administration of Raised Funds of Companies Listed in Shanghai Stock Exchange (Revised in 2013)and other relevant laws, regulations and normative documents as well as the provisions and requirements in Articles of Offshore Oil Engineering Co., Ltd. and in combination with actual situation of the Company. The Procedure has been deliberated and approved in the 2nd Temporary General Shareholders' Meeting in 2013 and specifies that the raised funds shall be deposited in special account and the Company must fulfil approval formalities for use of the raised funds in strict accordance with funds management rules of the Company. Investing idle raised funds in products shall be deliberated and approved by the Board of Directors, with explicit consent given by independent directors, Board of Supervisors and sponsor institution.

(II) Information about implementation subject of raised funds

Net funds raised through non-public offering of stocks this time is completely used for Zhuhai deepwater offshore engineering equipment manufacturing base project, and the project will be implemented by the wholly-owned subsidiary of the Company Offshore Oil Engineering (Zhuhai) Co., Ltd. (hereinafter referred to as "COOEC Zhuhai").

(III) Special storage of raised funds

By June 30, 2014, specific storage of the raised funds is as follows:

Unit: RMB

Company name / Deposit bank / Bank account / Balance
Raised funds / Interest income / Investment income / Total
The Company / Beijing Deshengmen Branch of Bank of Communications Limited / 110060211018010049142 / 495,858.05 / 707,946.15 / 22,068,493.15 / 23,272,297.35
The Company / Tianjin Binhai Sea Sub-branch of Bank of China Limited / 270073124727 / - / 676,890.57 / - / 676,890.57
COOEC Zhuhai / Zhuhai Branch of Bank of Communications Limited / 444000091018170125583 / 147,195,967.27 / 1,502,057.48 / 12,407,275.89 / 161,105,300.64
Total / 147,691,825.32 / 2,886,894.20 / 34,475,769.04 / 185,054,488.56

(IV) Tripartite authorities of raised funds

To standardize management on raised funds of the Company and protect rights and interests of the investors, the Company signed Three-party Supervision Agreement on Special Storage of Raised Funds with Tianjin Binhai Branch of Bank of China Limited, Beijing Deshengmen Branch of Bank of Communications Limited and China International Capital Corporation Limited (the sponsor institution or principal underwriter) on October 20, 2013 according to provisions in Regulatory Guidelines for Listed Companies No. 2- Regulatory Requirements for the Management and Use of the Funds Raised by Listed Companies of CSRC, Measures for the Administration of Raised Funds of Companies Listed in Shanghai Stock Exchange (Revised in 2013) of Shanghai Stock Exchange and Procedure for Management and Use of Raised Funds of Offshore Oil Engineering Co., Ltd.; meanwhile, as implementation subject of the invested projects, COOEC Zhuhai (the wholly-owned subsidiary of the Company) signed Three-party Supervision Agreement on Special Storage of Raised Funds with Zhuhai Branch of Bank of Communications Limited and China International Capital Corporation Limited.

Three-party supervision agreement specifies rights and obligations of all parties, of which the content has no significant difference with the model of the Shanghai Stock Exchange. Thus there is no problem in implementation of the agreement.

III. Use of raised funds in the first half year of 2014

(I) Use of funds in invested projects

In the first half year of 2014, funds actually used in Zhuhai deepwater offshore engineering equipment manufacturing base project is RMB 242,799,600. See the table below:

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Comparison Table for Use of the Raised Funds in the First Half Year of 2014

Unit: RMB 10,000

Net amount of raised funds / 347,149.62 / Total amount of raised funds invested in the first half year / 24,279.96
Total amount of raised funds for other purposes in the report period / 0.00 / Accumulative total amount of raised funds invested / 105,280.40
Accumulative total amount of raised funds for other purposes / 0.00
Proportion of accumulative total amount of raised funds for other purposes / 0.00%
Committed investment projects and use of super-raised funds / Changed items (including partially changed items) / Total amount of raised funds committed to be invested / Total amount of investment after adjustment / Committed amount invested by the end of the period (1) / Amount invested in the year / Accumulated amount invested by the end of the period (2) / Difference between accumulated amount and committed amount invested by the end of the period (3) ＝ (2) - (1) / Investment progress by the end of the period (%) (4) ＝ (2) / (1) / Date when the project reaching serviceable condition scheduled / Actual income in the first half year / Whether to meet the estimated income / With significant change in feasibility of the project or not
Committed investment projects
1. Zhuhai deepwater offshore engineering equipment manufacturing base project / None / 347,149.62 / 347,149.62 / 347,149.62 / 24,279.96 / 105,280.40 / 241,869.22 / 30.33 / Progress of Phase I is 96% up to the end of the report period. / -570.00 / Phase I has not been put into service completely. / No
Subtotal of committed investment projects / - / 347,149.62 / 347,149.62 / 347,149.62 / 24,279.96 / 105,280.40 / 241,869.22 / 30.33 / - / - / - / -
Situations and causes for not meeting the schedule or the estimated income (by specific project) / None
Statement on significant change in feasibility of the project / No significant change in feasibility of the project
Upfront investment and replacement of invested projects / COOEC Zhuhai (the wholly-owned subsidiary of the Company) invested owned funds of RMB 680,148,596.54 before fund-raising, and the funds have been completely replaced by raised funds in 2013.
Temporary supplement for current assets with idle raised funds / None
Cash management on idle raised funds and investment in related products of the funds / Raised funds unused will be stored in three-party supervision account and used for purchasing principal-guaranteed bank financial products.
Permanent supplement for current assets or repayment of bank loans with super-raised funds / None
Balance amount of raised funds and causes / None
Other use of the raised funds / None

Note: According to non-public A-share stock plan of the Company, the raised funds will all be used for Zhuhai deepwater offshore engineering equipment manufacturing base project after deducting issue expenses. Committed amount invested by the end of the period, viz. net amount of raised funds is RMB 3,471,496,200.

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(II) Upfront investment and replacement of invested projects

There is no replacement of self-raised funds invested in invested projects in advance by raised funds in the first half year of 2014.

(III) Temporary supplement for current assets with idle raised funds

There is no temporary supplement for current assets with idle raised funds in the Company.

(IV) Cash management on idle raised funds and investment in related products of the funds

COOEC Zhuhai purchased financial products "Win to Fortune, with daily increase in interest rate for 176 days" of the Zhuhai Branch of Bank of Communications Limited with RMB 200 million of temporary idle raised funds on March 6, 2014, with expected annual yield of 5.00%, in the period from March 6, 2014 to August 29, 2014.

COOEC Zhuhai purchased financial products "Win to Fortune, with daily increase in interest rate for 91 days" of the Beijing Deshengmen Branch of Bank of Communications Limited with RMB 900 million of temporary idle raised funds on May 15, 2014, with expected annual yield of 5.10%, in the period from May 16, 2014 to August 15, 2014.

COOEC Zhuhai purchased financial products "Win to Fortune, with daily increase in interest rate for 87 days" of the Zhuhai Branch of Bank of Communications Limited with RMB 300 million of temporary idle raised funds on May 26, 2014, with expected annual yield of 4.90%, in the period from May 27, 2014 to August 22, 2014.

By June 30, 2014, balance of the Company's temporary idle raised funds idle for purchasing financial products is RMB 2.271 billion, and all the above financial products are principal-guaranteed.

(V) Other situations in use of raised funds

There is no other situation in use of raised funds of the Company.

IV. Change in Use of Funds in Invested Projects

There is no change in invested projects of the Company.

V. Problems in Use and Disclosure of Raised Funds

There is no failure in timely, truthful, accurate and complete disclosure of relevant information about raised funds disclosed by the Company, and no violation in storage, use and management of raised funds.

The announcement is hereby given.

Board of Directors of Offshore Oil Engineering Co., Ltd.

August 28, 2014

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