China Oilfield Serviced Limited (HKG:2883) announced that on 14 January 2012 at approximately 2:00 p.m., there was an incident with "HYSY 682", a vessel of the Company being constructed by Wuchang Shipbuilding Industry Company Ltd., at the Nantong Wharf of the Shipyard which resulted in a leak in the hold of HYSY 682 and led to the grounding of the vessel.

The Company and the Shipyard are investigating the cause of the incident and the Company is actively assisting the Shipyard in taking remedial actions. That
incident has not created any environmental pollution.

HYSY 682 is a deep water AHTS vessel and is being built at a cost of RMB740 million. The Company has taken out full insurance on HYSY 682 and the Company has initiated claim procedures in relation to the incident in accordance with the insurance policy for the vessel.

In addition, in accordance with the construction contract for the vessel, the Shipyard will be responsible for the safe keeping of the vessel prior to its delivery. In case of losses or damages to the vessel, the Shipyard will be
held liable for the relevant losses.

The Company does not consider that the incident will have any material adverse effect on the financial position or operation of the Company.