HALCYONCAPITALLIMITED
澧盛资本有限公司
#11/F，8WyndhamStreet，Central，HongKong
否港中照共减街8流11日
9November2022
To:lheIndependentBoardConnitleeundllheIndependennShareloldern
DearSirs，
CONTINUINGCONNECTEDTRANSACTIONS
ENTERINGINTOTHEMASTERSERVICESFRAMEWORKAGREEMENT
INTRODUCTION
WerefertoourappointmentastheindependentfinancialadvisertoadvisetheIndependentBoard
CommitteeandtheIndependentShareholdersinrespectoftheFrameworkAgreementandthe(ransactions
contemplatedthereunder(includingtheProposedAnnualCaps).DetailsoftheFrameworkAgreementand
theProposedAnnualCapsinrespectofthelransactionscontemplatedthereunder(the“Transactions”)are
setoutintheletterfromtheBoardcontainedinthecircularoftheCompanytotheShareholdersdated9
November2022awhichthisletterformspart.Unlessthecontextotherwiserequires，
November2022(the“Cireular”)，ofwhichthisletterformspart.Unlessthecontextotherwiserequires，
capitalizedtermsusedinthislettershallhavethesamemeaningasthosedefinedintheCircular.
AsoftheLatestPracticableDate，CNOOCanditsassociatesholdinaggregate2,410,849,300Shares
71,7
oftheCompany，whichamountstoapproximately50.53%oftotalissuedSharesoftheCompany，andisthe
controllingshareholderoftheCompany.ByvirtueofCNOOC’sshareholdingintheCompany，CNOOCis
thereforeaconnectedpersonoftheCompanyundertheHongKongListingRules，andtheenteringintothe
FrameworkAgreementandtheTransactionsconstituteecontinuingconnectedtransactionsoftheCompany
pursuanttoChapter14AoftheHongKongListingRules.
AstheapplicablepercentageratiosinrespectoftheFrameworkAgreementareonanannualbasis
over5%，theFrameworkAgreement(includingtheProposedAnnualCaps)andtheTransactionswillbe
subjecttothereporting，announcement，annualreviewandIndependentShareholders'approvalrequirements
underChapter14AoftheHongKongListingRules.
PursuanttotheHongKongListingRules，CNOOCanditsassociateswillabstainfromvotingonall
resolutionsrelatingtotheTransactionstobeproposed，consideredandvotedonattheSecondEGM.
TheIndependentBoardCommitteecomprisingalltheindependentnon-executiveDirectors，namely
Ms.ChiuLaiKucn，Susanna，Messrs.KwokLamKwong，LarryandYaoXin，hasbccncstablishcdto
advisetheIndependentShareholdersastowhetherthetermsoftheFrameworkAgreement(includingthe
ProposedAnnualCaps)andtheTransactionsarefairandreasonablesofarastheIndependentShareholders
areconcernedandareintheinterestoftheCompanyandtheIndependentShareholdersasawholeandhow
BoardCommitteeandtheIndependentShareholdersinthisregard.
HALCYONCAPITALLIMITED
真11/F，8Wyndham鑽盛资本有限公司Street，Central，HongKong
Inthelasttwoyearsfromthedateofourappointmentwehavenootherrelationshipswithorinterests
intheCompanyandanyotherpartiesthatcouldreasonablyberegardedasrelevanttoourindependence.
Apartfromthenormalprofessionalfccspaid/payabletousinconncctionwithourappointmcnt、no
atrangementsexistwherebywehadreceivedanyfeesorhenefitsfromtheCompanyoranyotherparty1o
thetransactions，thereforewesuchrelationshipwouldnotaffectourindependence.Weare
(hereforeindependentunderRule13.84oftheHongKongListingRulestoactastheIndependentFinancial
AdvisertotheIndependentBoardCommitteeandtheIndependentShareholdersinconnectionwiththe
Transactions.
BASISOFOUROPINION
Informulatingouropinion，wehavereliedontheinformation，financialinformationandfacts
suppliedtousandrepresentationsexpressedbytheexecutiveDirectorsand/orthemanagementoflhe
Companyandhaveassumedthatallsuchinformation，financialinformationandfactsandany
representationsmadetousorreferredtointheannouncementoftheCompanydated27Ocober2022
andtheCircular，forwhichtheyarefullyresponsible，aretrue.accurateandcompleteasatthetimethey
weremadeandasatthedalehereofandmadealterdueandcarefulinquirybytheexecutiveDirectorsand/
orthcmanagemcntofthcCompany.WehavebeenadvisedbythccxccutivcDirectorsand/orthe
managementoftheCompanythatallrelevantinformationhasbeensuppliedtousandthatnomaterialfacts
havebeenomittedfromtheinformationsuppliedandrepresentationsexpressedtous.Wehavealsoreliedon
crtaininformationavailabletothepublicandhaveassumedsuchinformationtobeaccurateandreliablc.
Wehavenoreasontodouhtthecompleteness，truthoraccuracyoftheinformationandfactsprovidedand
wearenotawareofanyfactsorcircumsanceswhichwouldrendersuchinformationprovidedand
representationsmadelousuntrue，inaccurateormisleading.
Ourreviewandanalyseswerebasedupon，amongothers，theinformationprovidedbytheCompany，
aspermittedundertherelevantrulesandregulations，includingtheFrameworkAgreementandcertain
publishedinformationiromthepublicdomain.WehavealsodiscussedwiththeexecutiveDirectorsand/or
themanagcmcntofthcCompanywithrespccttothetermsofandreasonsfortheTransactions(includingthc
ProposedAnnualCaps)andconsideredthatwehavereviewedsufficientinformationtoreachaninformed
viewandtoprovideareasonablebasisforouropinion.Wehavenot，however，conductedanyindependent
verificationoftheinformationnorhaveweconductedanyformofin-depthinvestigationintolhebusinesses，
affairs，financialpositionorprospectsoftheGroup，CNOOCGroup，andeachoftheirrespectiveassociates，
andthepartiesinvolvedintheTransactions.
PRINCIPALFACTORSANDREASONSCONSIDERED
InarrivingatourrecommendationsinrespectoftheTransactions(includingtheProposedAnnual
Caps)，wchaveconsideredthefollowingprincipalfactorsandreasons:
1.BackgroundtoandreasonsfortheenteringintooftheFrameworkAgreement
TheCompanyisajointstockcompanyincorporatedinthePRCwithlimitedliabilityandislistedon
bothHongKongStockExchangeandShanghaiStockExchange.TheCompanyisoneoftheleading
integratedoilfieldservicesprovidersintheworld.Itsservicescovereachphaseofoilandgasexploration，
developmentandproduction.
2-
注(()
HALCYONCAPITALLIMITED
鐵盛資本有限公司
11/F，8WyndhamStreet，Central，HongKong
善港中总总减18流11傻
CNOOC，astate-ownedenterpriseincorporatedunderthelawsofthePRC，whoisthelargestoffshore
promincntcorcbusiness，acompletcindustrialchainandbusincssspreadingacross40countricsandrcgions.
TheprincipalhusinessesofCNOOCincludeoilandgasexplorationanddevelopment，engineeringand
technicalservices，refiningandmarketing，naturalgasanddpowergeneration，financialservicesand
integratedoperationservicesandnewenergyservices.CNOoCGroup’scoreoperationareasareBohai，
WesternSouthChinasSea，EasternSouthChinaSeaandEastChinaSeainoffshorePRC.Foroverseas、
CNOOCGrouphasoilandgasassetsinAsia，Africa，NorthAmerica，SouthAmerica，OceaniaandEurope.
TheCompany.includingilspredecessors，hasbeenprovidingOilfieldServicestoCNOOCandils
associatessincc1982.Inaddition，thcCNOOCGrouphasalsosincc1982bccnprovidingMachincry
Leasing，KineticEnergy，MaterialandOtherAncillaryServicestotheGroupaswellasleasingcertain
betweenCNOOCGroupandtheGroup，relevantframeworkagreementshavebeenenteredintoandrenewed
everythreeyearsorsupplementedwhennecessarythereafter.Asthelatesteffectiveagreementinplace，the
CurrentFrameworkAgreement，willexpirebytheendof2022,on27October2022,theCompanyandthe
CNOOCenteredintotheFrameworkAgreementtocontinuetogoverntheon-goingconnectedtransactions
withtheCNOOCGroupandaswellastosetannualcapsforthccomingthrccycarscnding31Dcccmber
2025.
ThecxecutivcDircctorsconsidcrcdthatthcFramcworkAgrccmcntprovidcsflcxibility，butnotan
obligation，totheGrouportotheCNOOCGrouptoengageeachotherintheirrespectivebusinessoperation
whenevertheirrespectivemanagementconsiderappropriate.Furthermore，theexecutiveDirectorsareofthe
viewthat，givenCNOOCGrouphadbeenco-operatingwiththeGroupsince1982andasCNOOCisthe
largestoffshoreoilandgasproducerandoperatorinthePRC，holdingthedominantpositioninoffshoreoil
andgasproductioninthePRCwhichistheprincipalmarketofheCompanyhasbeenprovidingstable
demandfortheGroup'sOilfieldServicesandCNOOCGroupladalsobeenprovidingastablesourceof
supplyofMachineryLeasing，KineticEnergy，MaterialandOtherAncillaryServicestotheGroup，we
concurwiththeCompanythat，itisinthcintercstofthcCompanytocontinuouslyenterintothc
TransactionswithCNOOC.
Furthermore，giventhepropertiesleasedfromtheCNOOCGroupareessentialtotheGroup’s
operations.Thus，weconcurwiththeCompanythatitisintheinterestoftheCompanytocontinuewiththe
PropertyServices，asrelocatingtoalternativepremiseswouldbecostlyandcouidleadtointerruptiontothe
Group，soperations.
HavingconsideredthattheTransactionsbetweentheGroupandCNOOCGrouphaveheenandwill
becarriedoutintheirrespectiveordinaryandusualcourseofbusiness，weconsideredthattheenteringinto
oftheFramcworkAgreemcntisintheordinaryandusualcourscofbusincssofthcGroupandisinthe
interestsoftheCompanyandShareholdersasawhole.
2.PrincipaltermsoftheFrameworkAgreement
On27October2022,theCompanyandCNOOCenteredintotheFrameworkAgreement.Setout
belowaretheprincipaltermsoftheFrameworkAgreement:
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HALCYONCAPITALLIMITED
鐘盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
是港中单成街8涨11额
DetailsoftheIransaction
ThctermsofthcFramcworkAgrccmcnthavcbccnrcachcdaftcrarm’s-lcngthncgotiation
betweentheCompanyandCNOOC.PursuanttotheFrameworkAgreement，theCompanyandthe
CNOOCGrouphaveagreedtotheprovisionofthefollowingservicesbetweenlheparties:
(a)ProvisionbytheGrouupoftheoilfieldServicestotheCNOOCGroup
TheGroup，anditspredecessors，hasbeenprovidingsuchoilfieldservicestotheCNOOC
Groupsince1982.PursuanttotheFrameworkAgreement，theGroupwillcontinueloprovidethe
OilficldScrviccstothcCNOOCGroupinrclationtoitsoilandgascxploration，dcvclopmentand
productionactivities.
(b)ProuisionbytheCNOOCGrouupoflheMachinery.Leasing，KineticEnergy，Materialand
OtherAncillaryServicestotheGroup
Inthepast.theCNOOCGrouphasbeenprovidingtheGroupwithwarehousingandstorage.
supplyandtransportationofmatcrials，communication，wharfscrviccs，constructionscrviccs，mcdical
monitoring，Inaintenanceandrepairservices，cateringservices，insurancearrangements，labour
scrviccs，cncrgyscryiccs.machincrylcssinc:andvchiclclcasing.PursuanttothcFramcwork
Agreement，theCNOOCGroupwillcontinuetoprovidetheGroupwithsuchservices.
(c)ProvisionbylheCNOOCGrouupoflhePropertyServiceslotheGroup
TheGrouphasleasedcertainpropertiesfromtheCNOOCGroupforoffice，livingquarters，
canteenandproductionpremises'uses.PursuanttotheFrameworkAgreement，theCNOOCGroup
willcontinuetoleasethepropertiestotheGroupandprovidetheGroupwithpropertyadministration
scrviccs.
Ternandtermination
UponapprovalbytheShareholdersattheSecondEGM，theFrameworkAgreementwilltake
effectfromlJanuary2023foratermofthreeyearsandwillexpireon3lDecember2025.
Implementationagreelnentsandpayments
TheCompanyandeachsubsidiaryoftheCompanymay，fromtimetotimeandasnecessary，
cntcrintoscparatcimplemcntationagrccmcntforcachspccifictransactioncontcmplatcdundcrthc
FrameworkAgreementwithCNOoCandeachsubsidiaryofCNOOC.Eachimplementation
agreementwillsetoutthespecificationsforthetransaction.Theimplementationagreementsprovide
fortheprovisionofserviceascontemplatedbytheFrameworkAgreement，andassuch，theydonot
constitutenewcategoriesofconnectedtransactions.Anysuchimplementationagreementwillstay
withintheboundsoftheFrameworkAgreementandtheannualcaps.
-4-
HALCYONCAPITALLIMITED
鐵盛資本有限公司
11/F，8WyndhamStreet，Central，HongKong
香营中总号减8普11额
AllpaymentsmadepursuanttotheFrameworkAgreementanditsimplementationagreements
willbeincash.
ProposedAnnuualCaps
FortermsregardingtheProposedAnnualCaps，pleaserefertothesectionheaded“4.Basis可
lheProposedAnnuualCaps”below.
3.Pricingpoliciesandinternaleontrol
Thebasisofdeterminingthcpricesforthecontinuingconnectcdtransactionswillbeinaccordancc
with:(1)theState-quotedprice(includinglocalgovernment-quotedprice)，ifthepricingofsucha
IransactionisgovernedbythepricingpoliciesofthePRC；(2)acomparablemarketprice(ascompared
againstlocal，nationalorinternationalprice)，iftheIransactionisnotgovernedbythepricingpoliciesofthe
PRC；or(3)byagreementbetweenthepartiesbasedonpricesnolessfavourableto/fromthirdpartiesor
(a)ProvisionbytheGroupoftheOiljieldServicestotheCNOOCGrottp
TheGroupistheleadingproviderofoilfieldservicesintheoffshoreChina.FortheOilfield
ScrviccsprovidedbytheGrouptothcCNOOCGroup，thepriccsarcmainlydetermincdthrough
arm's-lengthnegotiationwithreferencetointernationaloilpricesandmarketpricesofoilfield
servicesthatarereleasedbymajorconsultancyinstitutionssuchasIHSMarkit(www.ihsmarkit.com)，
Clarkson(www.crsl.com)andRigzone(www.rigzone.com).IHSMarkitandClarksonprovide
informationandanalysistosupportthedecision-makingprocessofbusinessesandgovernmentsina
numberofindustries，whileRigzonemainlyprovideinformationrelatedtotheoil&gasindustry.In
offshoreoil&gassector，IHSMarkit，ClarksonandRigzoneprovideregionalmarketdataon
equipmentofdrillingcompanies，contractterms，operators，operatingareasandblocks、dailyrates、
cstimatedprojcctvolumeandhistoricoperationconditions.IHSMarkitandClarksonupdatcthcir
dataonmonthlybasis，whileRigzoneupdatesitsdatatimelywhenobtainingnewdrillingrig
contract.IHSMarkitandClarksonpublishanumberofwell-knownindustryreportssuchasIHS
MarkitPetrodataWorldRigForecast，IHSMarkitPetrodataSeismicQuarterlyReport，Clarkson
offshoreDrillingRigMonthlyandClarksonOffshoreIntelligenceMonthly.Thepricesforlhe
OilfieldServicesprovidedbytheGrouptotheCNOOCGrouparemainlydeterminedaccordingto
theaveragepriceofthepricespublishedbytheabove-mentionedinstitutionsduringthelast12
monthsfornearbyorsimilarareaswhichthcGroupopcratcat，andwillbcadjustcdina±10%rangc
withreferencetohistoricaltransactionsandcurrentmarketsupplyanddemandcondition.When
determiningcontractpricesfortheOilfieldServicesspprovidedtotheCNOOCGroup，theCompany
willconsidcrspccificconditionsofcontract，includingfunctionsofspccificcquipment，dcpthof
water，complexityofoperationandtermofcontract，etc.aswellasmarketdemandandhistorical
Iransactionprices.TheComrpanywillensurethatthepricesarefairandreasonableandintheinterest
oftheCompanyandtheShareholdersasawhole.
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HALCYONCAPITALLIMITED
鐘盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
香港中第已通街8第11桶
(b)ProvisionbylheCNOOCGroupoflheMachineryLeasing，KineticEnergy，Materialand
OtherAncillaryServicestolheGroup
FortheprovisionofutilitiesbytheCNOOCGrouptotheGroup，includingwater，powerand
gas，thepricesareunderthe，guidanceofState-quoledpricepromulgatedbyNDRC.Suchpricesare
updatedbyNDRCfromtimetotimeandarepublishedonwebsitesofPricingBureaus.
FortheprovisionoftheMachineryLeasing，KineticEnergy，MaterialandOtherAncillary
Servicesotherthanutilities，thepricesareprimarilydeterminedbymarketpricc.Indeterminingsuch
prices，theCompanywillundergoatenderingprocesswhichpromoiesmarketcompetitiontoobtain
bcstavailablcratc.Thctcndcringproccssisorganizcdstrictlyfollowingthcrcquircmcntsundcrthc
TenderingandBiddingLawofthePRC.Inalypicalprocurementprocedure，theCompanyinvitesnot
lessthanthreebidderstosubmititsfeeproposalandcommercialproposalbeforethedesignated
deadline.TheprocurementdepartmentoftheCompanythatisseparatedfromandindependentof
otherdepartmentswillcompareproposalsandmakedecision.
However，fortheprovisionoftheMachineryLeasingandEquipmentbytheCNOOCGroupto
thcGroup，ductothcnaturcofthcindustryandinspccialcircumstanccs，onlytheCNOOCGrouphas
oilfieldservicemachinesandequipmentthatcansatisfyspecialoperationconditionsincertain
offshoreareasofChina.Inthiscase，atenderingprocessisnotfeasible，andtheCompanywillensure
thatthcpriccwillnotbchighcrthanthcavcragcpriccfromthrccindcpendcntthird-partyproviders
forcomparahleequipmentobtainedbytheCompanythroughinquiry.TheCompanywillalso
considerthespecificconditionsofthecontract，includingthefunctionofspecificequipment，water
AccordingtotheCompany，sprocurementpolicy，inadditiontotheofferofsameormore
favourabletermsbythecounterpartyinatransaction，theCompanywillalsoconsiderotherfactors，
includingthecorporatebackgroundofthecounterparty；itsreputationandreliability；itsabilitylo
conductthctransactioninaccordanccwiththctcrmsofthccontract；anditsundcrstandingofthe
Company’sneeds，inordertomaximisetheCompany，sinterestinthetransaction，andatthesame
timetoreducetheCompany，stimeandcostsoftransaction.
TheprocurementdepartmentoftheCompanywhichisseparatedfromandindependentof
otherdepartmentsisresponsibleforcomparingnolessthanthreeotherindependentthird-party
providerswhohavecomparableequipmentlothatofCNOOCGroupandensuretheaverageprice
fromtheotherindcpcndcntthird-partyprovidcrswouldbclessfavourablctothcpriccsoffcredby
CNOOCGrouptotheCompany.Takingintoconsiderationtheahovemechanism，weconsiderthat
thepriceofferedbyCNOOCGroupisonnormalcommercialtermandfairandreasonablesofaras
thcIndcpcndcntSharcholdcrsarcconccrncd.
(c)ProvisionbytheCNOOCGrottpfthePropertyServicestotheGroup
FortheprovisionofthePropertyServicesbytheCNOOCGrouptotheGroup，thepricesare
primarilydeterminedbymarketprice.TheCompanywillhaveregardtothethenprevailingmarket
rentforsimilartypesofpropertiesinthenearbylocationsand/orconsultnotlessthanthreereputable
localrealestateagentsforbenchmarksofassessment.Wherenocomparablemarketpricecanbe
HALCYONCAPITALLIMITED
鐵盛資本有限公司
11/F，8WyndhamStreet，Central，HongKong
香注中信减计8就117
takenasareference，theGroupwill，havingtakenintoaccountthelocation，scope.scaleandtermof
thetransactionandhistoricalcomparabletransactions，determinethepriceoftherelevanttransaction
bascdonarm，slcngthncgotiationsandontermswhicharcnolcssavourablcfromthirdpartics.
Furthermore，wehavealsoreviewedtheletterissuedbytheauditoroftheCompanyregarding
thecontinuingconnectedIransactionoftheCompanyfortheyearended31December2021,pursuant
towhichnothinghascometotheattentionoftheauditoroftheCompanythatthecontinuing
connectedtransactionswerenot，inallmaterialrespects，inaccordancewiththepricingpoliciesofthe
Company.
(d)InternalcontrolreviewontheTransactions
AsstatedintheAnnualReportoftheCompanyfor(heyearended31December2020and
2021,theindependentnon-executiveDirectorshavereviewedthecontinuingconnectedtransactions
fortherespectiveyearsandhaveconfirmedthattheindependentnon-executiveDirectorshave
reviewedtheabovetransactionsandlaveconfirmedthat:(i)thetransactionswereenteredinto
betweentheGroupandtheconnectedpersonsortheirrespectiveassociates(whereapplicable)inthe
ordinaryandusualcourseofbusinessoftheGroup；(i)thctransactionswcreentcrcdintoonnormal
commercialtermsorbetter；(ii)thetransactionswereexecutedinaccordancewiththerelevant
agreemenlsgoverningsuchtransactions，ontermsthatarefairandreasonableandintheinterestsof
thcsharcholdcrsasawholc；and(iv)theabovetransactionswerecntcredintowiththcannual
aggregatevaluewithintherelevantannualcapofeachcategory.
Furthermore，Ernst&Young，theCompany’sauditor，hasbeenengagedtoreportonthe
Group'scontinuingconnectedtransactionsforinaccordancewithHongKongStandardonAssurance
Engagements3000AssuranceEngagementsOtherThanAuditsorReviewsofHistoricalFinancial
InformationandwithreferencetoPracticeNote740Auditor’sLetteronContinuingConnected
TransactionsundertheHongKongListingRulesissuedbytheHongKongInstituteoliCertilied
PublicAccountants.Ernst&Younghasissucdthcirletter(acopyofthcauditors'lctterhasalsobccn
providedbytheCompanytotheStockExchange)containingtheirfindingsandconclusionsinrespect
ofthecontinuingconnectedtransactionsasdisclosedbelowbytheGroupinaccordancewithRule
14A.56oftheHongKongListingRules:
a)nothinghascometotheirattentionthatcausesthemtobelievethatthedisclosedcontinuing
connectedtransactionshavenotbeenapprovedbytheBoard；
b)fortransactionsinvolvingtheprovisionofgoodsorservicesbytheGroup，nothinghascome
totheirattentionthatcausesthemlobelievethatthetransactionswerenot，inallmaterial
rcspccts，inaccordanccwiththepricingpolicicsofthcGroup；
c)nothinghascometotheirattentionthatcausesthemtobelievethatthetransactionswerenot
enteredinto，inallmaterialrespects，inaccordancewiththerelevantagreementsgoverning
suchtransactions；and
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HALCYONCAPITALLIMITED
鑽盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
否准中增息减街8益11日
d)withrespecttotheaggregateamountofeachoflhecontinuingconnectedtransaction，nothing
hascometotheirattentionthatcausesthemtobelievethatthedisclosedcontinuingconnected
IransactionshavccxcccdedtheannualcapassctbytheCompany.
Wehavealsoreviewedcertaincontinuingconnectedtransactionsdocumentsenteredintoin
2020,2021andduringthefirsteightmonthsof2022,includingbutnotlimitedtopricelistas
stipulatedinsalescontracts，pricinganalysismemorandumsaswellaslenderresultpriceanalysisof
varioustypesofprocurementtransactionsofwhichsuchdocumentsformpartofthesales，
procurementortenderdocumentsoftheGroup，asthecasemaybe.
asstipulatedintherespectivesalescontractswerewithintherangesofthemarketpricesasstatedin
thethenlatestIHSreport.IHSreportareissuedonamonthlybasiswhichprovideinformationonthe
latestestimatedmarketpricesforoilfieldservices.
Forawardingcontractbywayoflender，wealsonoticehatdespiteCNOOCGroup
participatedinthctendcr，thecontractwasawardcdtothelowestpricetcnderparticipant，whichwas
anindependentthirdparty.
Pursuanttotheabovcmcntioncd(ransactionsdocumentsandrelevantcxplanationfromthc
Management，wenotedthatthepriceofferedto/byCNOOCGrouparenolessfavourabletothe
Takingintoaccounttheabove-mentionedmeasureincludingtheinternalcontrolarrangements
asdisclosedinthe“LetterFromtheBoard”ofthisCircular，weconcurredwiththeBoard’sviewthat
thereareadequatepricingandreviewproceduresinplaceforgoverningon-goingtransactionsto
ensurethepricingtermsarenolessfavorablefromthirdpartiesandappropriatemeasuresareinplace
tocnsurethatthcTransactionwillbeconductcdonnormalcommercialtcrmsandlosafcguardthc
interestsoftheIndependentShareholders.
4.BasisoftheProposedAnnualCaps
TheTransactionsaresubjecttotheHongKongListingRules'requirementsandconditionsasfurther
discussedunderthesectionheaded“5.ReportingrequirementsandconditionsoftheTransactions”below.
Inparticular，thcTransactionsarealsosubjecttothcProposcdAnnualCapsasdiscusscdbclow.
InassessingthereasonablenessoftheProposedAnnualCaps，wehavediscussedwiththe
managcmentoftheGrouponthebasisandassumptionsundcrlyingtheanticipatcdvolumcofbusiness
transactionsbetweentheGroupandCNOOCGroup(includingpricing)pursuanttolheFramework
AgreemententeredintobetweentheCompanyandCNOOCforthepurposeofdeterminingtheProposed
AnnualCaps.
8-
HALCYONCAPITALLIMITED
澧盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
否港中项息减街8.11级
(i)Reuiewofthehistoricalfigures
SctoutbclowarcthchistoricaltransactionsamountsbctwcenthcGroupandCNOOCGroup
forthe(woyearsended31December2020and2021andforthe6monthsended30June2022:
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HALCYONCAPITALLIMITED
鑽盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
营地中增2减街8就11桶
pro-rata)
Duringthcpasttwoandahalfycars，impactedbymultiplcfactorssuchasthccontinuous
lingeringoftheglobalCOVID-I9pandemic，fluctuationintheinternationaloilandgasindustry，and
acceleratedtransformationoftheenergyindustry，oilcompaniesremainprudentintheinvestmentin
oilandgasexplorationanddevelopmentaswellastheoverstupplyoftheinternationaloilfieldservice
markethaslimitedimprovementandintensecompetitionininternationaloilfieldservicemarket，the
Group’sutilizationrateofthehistoricalannualcapsregardingtheprovisionoftheOilfieldServices
totheCNOOCGroupbytheGroupcontinuedtodeclinefrom54.1%fortheyearended31December
2020t037.7%forthesixmonthsended30June2022.
Asaresultof(i)thedeclineinprovisionofOilfieldServicestoCNOOCGroup；(ii)oilprice
lluctuationin2020and2021；and(ii)pursuanttothe202lannualreportoftheGroup，theGroup
hadadoptcdacostlcadcrshipstratcgy，inwhich，thcGroupwouldcnhanccthcabilityofcostcontrol
andthereforeresultedalowerdemandforohtainingMachineryLeasing，KineticEnergy，Materialand
OtherAncillaryServicesaswellasPropertyServicesfromCNOOCGroupandthereforeresultedin
lowutilizationrateforthehistoricalannualcapsinrespectofprovisionbytheCNOOCGroupofthe
MachineryLeasing，KineticEnergy，MaterialandOtherAncillaryServicestotheGroupandthe
provisionbytheCNOOCGroupofthePropertyServicestotheGroup.
(ii)AssessmentoftheProposedAnnualCaps
WhenassessingthereasonablenessoftheProposedAnnualCaps，wehavediscussedwiththe
managementaboutthebasisandassurumptionsunderlyingtheprojectionoftheProposedAnnualCaps.
SetoutbelowaretheProposedAnnualCapsbeingproposedfortheTransactionsforthethreeyears
ending31December2023，2024and2025:
-10-
HALCYONCAPITALLIMITED
鑽盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
香港中的息成街8流110
Accordingtothe“LetterFromtheBoard”ofthisCircular，theCompanyisoftheviewthatthe
historicaltransactionamountsofthecontinuingconnectedtransactionsbeingsignificantlylowerthan
theexistingannualcapsforthethreeyearsended/ending31December2020,2021and2022couldbe
saidtobeattributabletotheCompany，scostcontrolmanagementcapacityandtheimpactcausedby
thcPandcmic.Notwithstandingthatthescfactorscouldbcsaidtobcrclevantatthematerialtimcs
duetoitsspecificsetofcircumstances(inparticularthePandemicimpact)，theyarenottheonly
factorsthattheCompanyshouldbetakingintoaccountwhendeterminingtheproposedannualcaps
ofthecontinuingconnectedtransactionsforthenextthreeyears.
Inestimatingtheappliedlimitsforthethreeyearsending31December2023,2024and2025,
theProposedAnnualCapsofthecontinuingconnectedtransactionsweredeterminedbytheCompany
withreferencetoabasketoffactorsincluding(i)thehistoricaltransactionamountsbetweenthe
CNOOCGroupandtheGroupforthetwoyearsended31December2020and2021andthesix
monthsended30June2022(withaparticularconsiderationovertheeffectivenessandefficiencyof
theCompany'scostcontrolmanagementandtheimpactcausedbythePandemicatthematerial
timcs)，(ii)thcinvestmcntconsidcrationsofthcglobaloilficldscrviccsindustryinthcpost-cpidcmic
era，(ii)theanticipatedbusinessvolumebetweentheCNOOCGroupandtheGroupforthethree
historicalpercentageofrevenuegeneratedfromtheCNOOCGroup，and(b)therevenueforecastsfor
lhenextthreeyearsending31December2023,2024and2025basedontheexistingservicesoffered
currentefficiencyofoperation(representingareductionof5%overthepreviousestimation).
ThetransactionamountsoftheTransactionsarecloselylinkedtooilpricesandcapital
expenditureoftheCNOOCGroupinexplorationandproductionactivitiesinoffshoreChina.During
theyears2021and2022,theinternationaloilpricefluctuatedupwardinthefourthquarterof2021
withtheinfluenceofgeopoliticalconflict，andremainedaboveUSD70.Theinternationaloilprice
increasedsharplyby55%inthefirstquarterof2022ascomparedwiththebeginningof2022,
followedbyaslowingriseofapproximately5%inthesecondlquarterof2022.Accordingtothe
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HALCYONCAPITALLIMITED
鐘盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
否港中总:减18就11桶
estimationinEIA’sshort-termenergyforecastinSeptember2022,theBrentoilpricewillbe
USDI04.21/bblfortheyear2022andUSD96.91/bblfortheyear2023,beingstableafterfeaturinga
slowbutstcadydownwardadjusument.Followingthcrisingoilpriccstoarelativclyhighlcvcl，thc
growthrateofcapitalexpenditureinupstreamoilexplorationandproductionisalsoexpectedtopeak
in2023andremainstablethereafter.
AccordingtoRystad’sdata，theglobalexpenditureinoffshoreexplorationanddevelopment
hasincreasedby21%year-on-yearin2022withgrowthexpectedtoreachapeakin2024andremain
basicallystablelhereafter.Alongwiththecontinuousadjustmentofcapitalexpenditureinthe
internationalmarket，theCNOOCGroupappropriatelyincreasetheiroverseasinvestmentinlhe
futurc.Inconsidcrationofthc“Scvcn-ycarActionIpan.fthcCNOOCGroupandCNOOC’s
operationarrangementto“increasereserveandpromoteproduction”，itisexpectedthatthedomestic
andoverseasoperationvolumeoftheCompanyfromtheCNOOCGroupwillincreasestablyinthe
nextthreeyears.Therefore，themarketanticipatesthatoilpriceswilladjustathighlevelduringthe
nextthreeyears，andcapitalexofiheCNOOCGroupinexplorationandproduction
activitiesinoffshoreChinawillincreasefirstandthentendtobestable.
ThcCompanyhasrcvicwcdpastpcrformanccofthcindustry，includingthcpcrformanccofthc
Company，speersandtheindustryreportspublishedbyIHSMarkit，andtheCompanyisoftheview
thattheCompanyhasbeenpreparedforthesteadygrowthofthebusinessvolume.Therefore，the
historicaltransactionamountsforthclwoycarscndcd3lDcccmbcr2020and202landsixmonths
ended30June2022asawholearevaluableindicatorsforfuturetransactionamountsduringthenext
Ihreeyears，andtheanticipatedbusinessvolumebetweentheCNOOCGroupandtheGroupforthe
yearsending31December2023,2024and2025willalsoincreaseslowlyandbecomestablewhichis
inlinewiththecapitalexpenditureoftheCNOOCGroup.Theyearonyeargrowthrateofthe
ProposedAnnualCapsforthethreeyearsending3lDecember2023,2024and2025isalso
consistentwiththeexpectedtrendofoilpricesandthecapitalexpenditureoftheCNOOCGroup.
Additionally，thcCompanycstimatcsthatitsrcvcnuesfromothcrcustomcrswillalsoincrcasc
duringthenextthreeyears.TheprovisionbytheGroupoftheOilfieldServicestotheCNOOC
Groupin2021representedapproximately86%ofthetotalrevenueoftheGroup.SincetheOilfield
ServiceshavebeenthemaincontributortotheGroup’srevenue，theProposedAnnualCapsandthe
actualhistoricallransactionamountsbeingatasimilarpercentageagainstthetotalrevenueofthe
AnnualCaps.Consideringthe“Seven-YearActionPlan”andlhefuturecapitalexpenditure
cxpcctationofthcCNOOCGroup，itiscstimatedthatthcpcrccntageofrcvenucfromthe
Transactionsduringthethreeyears2023to2025willbeslightlyhigherthanthatoftheyear2022.
Therefore，a86%ofrevenuecontribution，representinganincreaseascomparedwitha84%
contributionbythcTransactionsinthctotalrcvcnueinthcfirsthalfof2022,willbcusedforthc
estimationofthepercentagecontributionoftheannualcaps.
WehavenotedfromBloombergonLhedataavailableofthepeersoftheCompanythat，in
2020and2021theGroup’srevenuefluctuationhasbeenlessthanthepeers'averagewhileinthefirst
halfof2022,theGroup，srevenuegrowthratewasalsohigherthantheaveragegrowthrateofthe
peers.Inviewofsuch，weconcurwiththeManagementthatestimatingasteadygrowthisappropriate
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HALCYONCAPITALLIMITED
鐘盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
否港中增减计8年110
Companyhavebeenrecordingrevenuegrowthforthesixmonthsended30June2022,whichcould
beoneoftheindicatorshowingapossiblerecoveryofoilfieldindustryandhence，itisappropriateto
cstimatcthatdcmandfromothcrcustomcrsmayalsoincreascaccordingly.
AsforthecostoftheTransactions，consideringthattheCompany’sproductionandoperation
modelwillnotfacesignificantchangeandthatthepercentageoflolalcostaccountedfromthe
MachineryLeasing，KineticEnergy.MaterialandOtherAncillaryServicesaswellastheProperty
ServicesprovidedbytheCNOOCGrouptotheGroupwillremainrelativelystable，theCompany
expectsthatthepercentageofcostsfromtheTransactionsinthetotalcostoftheGroupwillnot
encounteranymajorchanges.Therelore，theCompany，havingtakenintoaccounttheimpactoloil
pricconthccostofrawmaterialsinprojcctingthecostofTransactionsforthcncxtthrecycars，
estimatesthatpercentageofthecostfromtheTransactionstototalcostsoftheGroupfrom2023to
2025willbe8%(theaveragepercentagefrom2020tothefirsthalfof2022was7%).
Inaddition，basedontheaveragehistoricalpercentageofthecostfrompropertylease-related
TransactionsinthetotalcostfromtheTransactionsfrom2020tothefirsthalfof2022,being8%，the
Companyestimatedthatthecostfrompropertylease-relatedTransactionswillbel0%ofthetotal
costfromthcTransactionsforthcfollowingthrecycars、
Thedetailedbasisofcalculatingthe15%bufferisbasedonthehistoricaldataoftherevenue
CNOOChaveanoticeableamountoffluctuationforthepastfewyearswhichimpliesthatthefuture
revenuecanalsobevolatile.Inaddition，thefluctuationofoilpricewillalsosignificantlyaffectthe
revenueandcostoftheCompanyandCNOOCasexplainedabove.
AlthoughtheCompanyestimatedthatthefutureoilpriceremainedrelativelystable，future
globalgeopoliticaluncertaintiesstillhaveanimpactontheenergysecurityandcapitalexpenditurein
globalenergymarketcontinuedtomaintainatahighlevel，thusresultinginanexpectedincreasein
salcs.Thcrcforc，thcCompanyhassctsuchbuffcrtoallowthcCompanytohavcflcxibilitytocatcrto
theexpansionofnewenergybusinessandincreaseinoperationvolumewithoutbeingaggressiveand
overlyoptimistic.
(a)ProvisionbytheGroupoftheOilfieldServicestolheCNOOCGroup
WhencalculatingtheProposedAnnualCapsoftheGroupforprovisionbytheGroupo
thcOilficldScrviccstothcCNOOCGroup，thcGroupcstimatcdthcrcvcnucforthcthrcc
yearsending3lDecember2025timesanestimatedpercentageofrevenuetobecontrihutedhy
provisionofOilfieldServicestotheCNOOCGroupanda15%buffer.
WehaveexaminedthehistoricalamountsofrevenuegeneratedfromtheOilfield
ServicestotheCNOOCGroupascomparedwiththelotalrevenuesoftheGroupinthebelow:
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通)()
HALCYONCAPITALLIMITED
鐵盛資本有限公司
11/F，8WyndhamStreet，Central，HongKong
香港中总，减街8就110
WcnotcthatthchistoricaltransactionamountsofrcvcnuccontributcdbyCNOOC
Grouprepresentapproximately74.8%,86.1%and84.0%ofthetotalrevenueoftheGroupfor
theyearended3lDecember2020and2021andforthesixmonthsended30June2022
respectively.SincetheOilfieldServiceshavebeenthemaincontributortotheGroup’s
revenue，assuch，theProposedAnnualCapsandtheactualhistoricaltransactionamounts
beingatasimilarpercentageagainstthetotalrevenueoftherespectiveperiodisanappropriate
basistoassessthefairnessandreasonablenessoftheProposedAnnualCaps.Weconsiderthat
thcpcrccntagcofapproximatcly86.1%asapplicdbythcCompanyforthccstimationofthc
percentagecontributionoftheProposedAnnualCapsinthenextthreeyearstotheGroup's
totalrevenuewhichiscomparabletothe84.0%recordedduringthesixmonthsended30June
2022andrepresentingthesamelevelofcontributionin2021tobeanappropriateestimate.
Intermsofestimatedrevenues，for2023themanagementestimatedagrowthbasedon
the2022annualestimatedrevenuefigureofwhichtookintoaccounttheactualfinancial
resultsofthefirsthalfof2022andaccordingtothemanagement，the2022annualestimate
revenuehavealsofactoredintherevenuetobecontributedfromindicatedordersofCNOOC
Groupforthesecondhalfof2022andfortheyearending3lDecember2024and2025,the
managementlurtherestimatedaslightgrowthof5%.
InassessingtheyearonyeargrowthestimatedbytheGroupforthethreeyearsending
31December2023,2024and2025respectively，wehave:
(i)notedfromtheresultannouncementoftheGroupforthesixmonthsended30
June2022that，inlhefirsthalfof2022，theoffshoreoilandgasindustry
graduallyrecovered，andthemarketdemandfordrillingrigsincreased.The
Companycontinucdtoconsolidatcthcfoundationofsafcproduction，improvcd
theequipmentmanagementcapabilityinthewholelifecycle，activelyresponded
tothegovernment'scalltostrengthenreservesandproduction，continuously
plannedandexpandedoverseasmarkets，andcomprehensivelyimprovedthe
operationandmanagementcapabilityofwhichtheGroupachievedagrowthin
revenuefortheCompany’sdrillingservicessegmentof16.3%andtheoverall
revenueoftheGroupintheiirsthalfol2022increased19.4%；
14
HALCYONCAPITALLIMITED
鐵盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
香港中项，减街8流11额
(ii)asnotedfromRystad，sdata，theglobalexpenditureinoffshoreexplorationhas
increasedby21%in2022withgrowthexpectedtograduallyreachesapeakin
2024；and
(ii)crudeoilpricewhichhaveadirectrelationshiptotheGroup，srevenue，despite
beingvolatile，haverecordanincreaseinaverageprice，wenotedfrom
2022beingUSD89.09barrel，representinganincreaseof56.0%；
InvicwofthcabovcrccovcrynotcdfromthcGroup’sopcrationandthcoilmarkct，wc
concurwiththemanagementthat，theestimatedincreaseinrevenueoftheGrouptobe
acceplable.
(b)ProvisionbytheCNooCGrottpoftheMachineryLeasing，KineticEnergy，Material
andOtherAncillaryServicestotheGrop
WhcncalculatingthcProposcdAnnualCapsofthcGroupforprovisionCNOOCGroup
oftheMachineryLeasing，KineticEnergy，MaterialandOtherAncillaryServicestotheGroup，
theGroupestimatedthetotalcostoftheGroupforthethreeyearsending3lDecember2025
timcsancstimatcd1pcrccntagcofcosttobcincurrcdinrcspcctofscrviccsprovidcdby
CNOOCGroupas8%oftheestimatedtotalcostoftheGroupwithanadditionalbufferof
15%.
Pursuanttothemanagement，theCompany’soperationmodelwillnotfacesignificant
changebasedontheCompany，srecentdevelopmentplanandthatthecostfromtheMachinery
Leasing，KineticEnergy，MaterialandOtherAncillaryServiceswillrermainrelativelystablein
lermsoltheproportiontothelotalcostoftheGroup，henceitisexpectedthatthepercentage
ofcostspayablctoCNOOCGroupinrcspcctofthcTransactionsinproportiontothctotalcost
oftheGroupwillnotencounteranysubstantialchanges.Wealsonotedthatanincreaseinthe
Group’srevenuewilllikelyC11SCcorrespondingincregsetheamountofMachinery
Leasing，KineticEnergy，MaterialandOtherAncillaryServicesdemandedbytheGroup.
Ascostwouldingenerallyincreaseinlinewiththeincreaseinrevenue，theGroup
estimatedthatthetotalcostoftheGroupinthenextthreeyearswillincreaseatasimilar
magnitudcasthccstimatcdincrcascinrevcnueinthenextthreeycars.
WehavereviewedthecostofprovisionoftheMachineryLeasing，KineticEnergy，
MatcrialandOthcrAncillaryScrviccstothcGroupbyCNOOCGrouptothctotalcostofthc
GroupfortheperiodfromlJanuary2018to30June2022:
15-
HALCYONCAPITALLIMITED
鑽盛資本有限公司
11/F，8WyndhamStreet，Central，HongKong
告港中总减街8711楼
FromtheabovetablewenotedthatthecostcontributedbyCNOOCGroup’s(including
butnotlimitedto，provisionoftheMachincryLcasing，KincticEncrgy，MatcrialandOther
AncillaryServices)totheGroupaccountedforaround7.0%to8.1%ofthetotalcostofthe
Groupinthepastfourfullfinancialyearsandaccountedfor6.7%duringthesixmonthsended
30June2022.Givensuchpercentageofcostcontributionhavebeenstablebetweenaround
7.0%to8.1%,weconsiderapplying8.0%inestimatingtheProposedAnnualCapsfor
contributionofcostbyCNOOCGroup’sprovisionoftheMachineryLeasing，KineticEnergy，
MaterialandOtherAncillaryServicestobeappropriate.
Furthermore，whenestimatingthetotalcostoftheGroupinthecomingthreeyears，the
Grouphavealsofactoredinthepotentialinflationinmaterials，costofrawmaterialbroughtby
operationvolume，oilprice，utilities，aswellaslabourcost，ofwhichweconcurwiththe
managementtobereasonablegeneralestimatesforcalculatingannualcaps.
(c)ProvisionbytheCNOOCGrollpofthePropertyServicestotheGroulp
AsdiscussedwiththemanagementanincreaseintheGroup’srevenuewilllikelycause
acorrespondingincreaseinthesizeoftheofficeandworkingspacedemandedbytheGroup.
Basedontheaveragehistoricalpercentageof.thecostfrompropertylease-relatedtransactions
inthetotalcostfromthcTransactionsduringthcperiodsfrom2018to202lrangedfrom4.7%
t010.0%.Asmentionedabove，asthemanagementdonotconsiderachangeincoststructure
astheCompany’soperationmodelwillnotfacesignificantchangebasedontheCompany，s
recentdevelopmentplan.Asbyfactoringinthepotentialinflationoflandpriceaswellas
10.0%ratio，(beingthehighestratiointhepastfouryears)inestimatingtheProposedAnnual
Capsforprovisionol.PropertyServicestotheGroupbyCNOOCGroupisacceptable.
(山)The15%bujer.forlheProposedAnuualCaps
Thedetailedbasisofcalculatingthe15%bufferisbasedonthehistoricaldataofthe
CompanyandCNOOChaveanoticeableamountoffluctuationforthepastfewyearswhich
impliesthatthefuturerevenuecanalsobevolatile.Inaddition，thelluctuationoloilpricewill
-16
HALCYONCAPITALLIMITED
鑽盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
香港中总共成行8就11级
alsosignificantlyaffecttherevenueandcostoftheCompanyandCNOOCasexplainedabove.
lluctuationof85.8%betwccnthchighcstandlowcstpriccinthcpasttwclvcmonthsfrom27
October2022(thedateofannouncementinrelationtotheenteringintotheFramework
Agreement)，wethereforeconcurwiththemanagementthatsettingsuchbuffertoallowthe
Companytohaveflexibilitytocatertotheexpansionofnewenergybusinessandincreasein
operationfromboththeprovisionofservicesorreceivingofservicesorgoodsperspective
from/toCNOOCGroupinthefuturethreeyears.
Havingconsideredalltheabovefactorsincludingthebasisfromwhichtheexecutive
DircctorshavcdctcrmincdthcProposcdAnnualCaps，wcconsidcrthcProposcdAnnualCaps
forthethreeyearsending3lDecember2025arefairandreasonahle.
5.ReportingrequirementsandconditionsoftheTransactions
PursuanttoRules14A.55to14A.59oftheHongKongListingRules，theTransactionaresubjectto
thefollowingannualreviewrequirements:
(a)eachyeartheindependentnon-executiveDirectorsmustreviewtheTransactionsandconfirm
(i)intheordinaryandusualcourseofhusinessoftheGroup；
(ii)onnormalcommercialtermsorbetter；and
(iii)inaccordancewiththerelevantagreementsgoverningthemontermsthatarefairand
reasonableandintheinterestsoftheShareholdersasawhole；
(b)cachycarthcauditorsoftheCompany(currently，Ernst&Young)mustprovidcalettcrtothe
Board(withacopyprovidedtotheStockExchangeatleasttenbusinessdayspriortothebulk
printingoftheCompany，sannualreport)confirmingwhetheranythinghascometothe
Board’sattentionthatcausesthemtobelievethattheTransactions:
(i)havenotreceivedtheapprovaloftheBoard；
(ii)arcnotinaccordanccwiththcpricingpolicicsofthcGroup(ifapplicablc)；
(iii)havenotbeenenteredintoinaccordancewiththerelevantagreementsgoverningthe
Transactions；and
(iv)haveexceededtheProposedAnnualCaps；
(c)theCompanyshallallow，andshallprocuretherelevantcounterpartiestotheTransactionsto
allow，theCompany，sauditorssufficientaccesstotheirrecordsforthepurposeofthe
17-
HALCYONCAPITALLIMITED
鏡盛资本有限公司
11/F，8WyndhamStreet，Central，HongKong
香港中项计减行8需11额
(d)IheCompanyshallpromptlynotifytheStockExchangeandpublishanannouncementin
accordancewiththeHongKongListingRulesifitknowsorhasreasonlobelievethatthe
indcpcndcntnon-cxccutivcDirectorsand/orauditorsofthcCompanywillnotbeableto
confirmthematterssetoutinparagraphs(a)and/or(b)respectively.TheStockExchangemay
requiretheCompanytore-complywiththeannouncementandshareholders'approval
requirementsandmayyimposeadditionalconditions.
thevalueoftheTransactionsbyoftheProposedAnnualCaps:and(ii)theongoingreviewbytlhe
independentnon-executiveDirectorsandauditorsoftheCompanyofthetermsoftheTransactionsandthe
ProposcdAnnualCapsnotbcingcxcccdcd，wcarcofthcvicwthatappropriatemcasurcswillbcinplaccto
monitortheconductoftheTransactionsandassisttosafeguardtheinterestsoftheIndependent
Shareholders.
RECOMMENDATION
Havingconsideredtheaboveprincipallactorsandreasons，weconsiderhat(i)thetermsofthe
FramcworkAgrccmcntandthcTransactionsarcinthcordinaryandusualcourscofbusincssofthcGroup，
onnormalcommercialterms，andintheinterestsoftheCompanyandtheShareholdersasawholeandare
fairandreasonablesofarastheIndependentShareholdersareconcerned；and(i)theProposedAnnualCaps
arcfairandrcasonablcsofarasthcCompanyandthcIndcpcndcntSharcholdersarcconccrncdandinthc
interestsoftheCompanyandtheShareholdersasawhole.
Accordingly，wewouldrecommendtheIndependentShareholders，andadvisetheIndependentBoard
CommilteetorecommendtheIndependentShareholderstovoteinfavouroftheordinaryresolutionin
respectoftheFrameworkAgreement(includingtheProposedAnnualCaps)andtheTransactionsatthe
SecondEGM.
Yoursfaithfully，
Forandonbehalfof
HALCYONCAPITALLIMITED
TerryChu
ManagingDireclor
Mr.TerryChuisapersonlicensedundertheSFOtocarryoultypel(dealinginsecrities)andlype
ofHalcyonCapitalLimitedandhasover22yearsofexperienceincorporatefinanceindustry.
18-
