Corporate Presentation

Nov 2011

2

Disclaimer

This presentation is for reference purposes only. This presentation is prepared by Honghua Group Limited

(“Honghua” or “the Group”) for business communications and general reference of the Group and shall not

constitute in whole or in part any offer to purchase or subscription for shares in Honghua or any of its

subsidiaries. The presentation shall not form any basis for any offer or commitment of any person(s)

receiving it. Please consult a professional advisor prior to use or reliance on any relevant data. The

presentation is an introduction only and shall not form a full description of the business, and current or past

performance of the Group. The information and data presented or contained in these materials is subject to

change without notice and its accuracy is not guaranteed.

No representation or warranty, expressed or implied, is made on this presentation. The Group accepts no

liability arising from the use of or reliance on any information (whether financial or other data) presented or

contained in this presentation.

No one shall in any way modify, copy, publicly display, publish or distribute such materials or otherwise use

the materials for any public or commercial purposes without the prior written consent of the Group.

Disclaimer

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1

2

3

4

Who Are We

What Are Our Growth Plans

Contents

Our Production Capacity

Our Advanced Products

4

Who Are We 1

5

2008.3 Completed IPO listing on the

Main Board of HKEx

(Stock Code: HK196)

Establish

Develop

Restructure

Listing

2004 Implemented globalization strategies and established US subsidiary

2005 Exported the first “Made-in-China” DBS trailer rig to the US

1997 Established Sichuan Oil Guanghan Honghua Co., Ltd.

1998 Successfully developed the first 7,000 meter

mechanical rig in China

2000 Invented and sold the first DBS rig in China

2006 Established Sichuan Honghua Petroleum Equipment Co., Ltd.

and completed restructuring

2007 Established Honghua Group Limited, CNOOC and Nabors became

strategic investors

Company History

10-year Leap

Expand

2010 Established Honghua Oil & Gas Engineering Services Ltd. and entered into the oil and

gas engineering services 2009 Established Honghua

Offshore Oil & Gas Equipment (Jiangsu) Co., Ltd.

and entered into the offshore equipment industry

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COOS: Strategic investor; a subsidiary of CNOOC (One of the largest state-owned oil companies and the largest offshore rig manufacturer in the PRC)

Ally Giant: Controlling shareholder and its affiliates (Management)

Nabors: Strategic investor and the largest land drilling rig manufacturer in North America

As of 30 May, 2011

Shareholding Structure

7

Company Structure

50%

100%

85% 80% 100% 80%

100%

Honghua (HH) Group Limited

Egyptian

Petroleum HH

Rig Manufacturing

Shareholder Co.

Honghua

Russia Ltd.

Production base of land rigs

and components & parts

Honghua International

Co., Ltd.

Sichuan Honghua

Youxin Petroleum

Machinery Co., Ltd.

Chengdu Hongtian

Electronic Drive

Engineering Co., Ltd.

International sales

and procurement

Production base of

controlling & heat

preservation system

Production base of

electronic transmit

system

Honghua

Ukraine Ltd.

100%

Sichuan Honghua

Petroleum Equipment

Co., Ltd.

Honghua Golden

Coast Equipment

FZE

Honghua Oil & Gas

Engineering

Services Ltd.

Honghua

Holdings Ltd.

50% 100% 100%

80%

Honghua

America,

LLC

Honghua Offshore Oil & Gas

Equipment

(Jiangsu) Co.,Ltd

Offshore equipment production base

Overseas subsidiaries

8

Financial Highlights

(RMB MM)

502

2182

3164

4738

1962 1878

32

464583

512

-128 -184

1169

2336

3931

7784

6584

5995

-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2005 2006 2007 2008 2009 2010

Revenue

Profit

Total Assets

15.4%

29.3%17.6%

19.1%

16.9%

1.7%

China Europe & Central Asia

Middle East North America

South & Southeast Asia Others

2010

2009

12.8%

34.5%39.6%

10.5% 1.9%0.7%

China Europe & Central Asia

Middle East North America

South & Southeast Asia Others

Base on revenue of the Group

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2 Our Production

Capacity

10

Manufacturing Capacity

Honghua’s Production Base in Guanghan：

•covers an area of about 666,000 m2 and has more than 2,000 employees

•annual production capacity of 120 units of drilling rigs

•contains an 80,000 square meter assembly and testing site in which 16 rig units can be

assembled at the same time

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Land Drilling Equipment Production Base-

Sichuan Honghua Petroleum Equipment Co., Ltd.

Rig Parts Assembly Workshop

• Honghua possesses a first-

class workshop specializing in

welding, machining, forging

and assembly;

• Providing high quality parts

such as masts, hoisting

system parts, rotation system

parts, high & low pressure

mud system parts and

auxiliary system parts for rigs.

Assembly Workshop

3D Warehouse

CNC Machining Center

12

Land Drilling Equipment Production Base-

Hongtian Electronic Drive Engineering Co., Ltd.

总装调试车间

• Manufactures and assembles

electrical equipment, including:

VFD systems, SCR systems,

MCC device, drilling motors,

well-site circuit and lighting

systems, etc.

• Covers an area of 63270m2 and

has 500 staff and 160

technicians

总装调试车间

Cabinet Assembly Plant

Laser Cutting Machine Motor Experimental Platform

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Land Drilling Equipment Production Base-

Honghua Youxin Petroleum Machinery Co., Ltd.

• covers an area of 99900 m2 and has 800 Staff,

• produces mud tanks, solid control equipment, drilling floor tools, mud manifolds

and camps, etc.

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Subsidiary

Representative Offices

North America

South America

Europe

Africa

Uzbekistan Asia

Indonesia

Australia

Pakistan

UAE Egypt USA

China

Ukraine

Azerbaijan

Kazakhstan

Venezuela

India

Brazil

South East Asia

Russia

Well-established Global Network

Close to our customer and market

Established Network:

•Subsidiaries: 6

•Representative offices: 8

Sales and Procurement-

Honghua International Co., Ltd.

Office in Sichuan

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Overseas Subsidiaries

Honghua Russia Ltd.

• The parts distribution centre in Irkutsk has commenced operations.

• Four services points and parts and components warehouses.

Egyptian Petroleum HH Rig Manufacturing Shareholder Co.

• Facilitates services development in Middle-East

• Assembly and maintenance centre in free trade zone of Jebel Ali, Dubai will be put in use soon.

Honghua America,

LLC

• U.S. assembly base has obtained API (4F) and started assembly and refurbishment business for U.S. clients.

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Efficiency and Quality Management

Enhancement in Management

• Enhance production progress through ERP

• Implement strict cost control

• Strengthen supplies and materials management

• Reinforce process optimization, maximize utilization of raw materials

Improvement of Quality Control System

• API certificate

• Det Norske Veritas (DNV) management system certification

• Constantly modify and optimize quality control system

• Reduce problems in shipment

• Increase customer satisfaction

Strengthening of Staff Training

• Provide training in quality system

• Deliver specialized training, such as Action Learning

• Provide management enhancement training

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17

Official Audit Initial Audit Pre-audit

May, 2011

DNV audited in Jan.

Pending for:

ISO14001:2004 OHSAS18001:2007

June, 2010

DNV audited

Internal Rectification

Dec, 2010

To be audit by DNV

Manual, Procedure

and Practice doc

Establish a comprehensive safety culture in Honghua

HSE Overview

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3 Our Advanced

Products

19

0

1,000

2,000

3,000

4,000

5,000

6,000

Jan/09 Apr/09 Jul/09 Oct/09 Jan/10 Apr/10 Jul/10 Oct/10 Jan/11 Apr/11

New High of

International Rig

Count Carrying

into 2011

Source: Schlumberger

0

20

40

60

80

100

120

140

160

Jan 02, 2008 Jul 02, 2008 Jan 02, 2009 Jul 02, 2009 Jan 02, 2010 Jul 02, 2010 Jan 02, 2011 Source: EIA

2008-2011 WTI Oil Price

International Rig Counts

High oil price drives

the international rig

activity

Industry Background

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Land Drilling Products

Diversified range of products and complete drilling equipment solutions

Compre-

hensive

Product

Line

Diversified

Depth

Full Range

of New

Efficient

Components Hooks

Drawworks Mud

Pumps

Swivels

Mechanical rigs

AC VFD

(DBS) rigs

DC SCR

rigs

Offshore Drilling

Package

Trailer (Truck-

Mounted) rigs

Top

Drives

Arctic/

Desert DC

rigs

Depth: 1,000m（500hp） Depth: 9,000m(4,000hp)

Motors

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Major Rig Components

1. Crown block

2. Rig mast (derrick)

3. Travelling block

4. Hook

5. Swivel

6. Mud (drilling fluid) line

7. Drawworks

8. Rotary table

9. Control cabin

10. Drill floor

11. Substructure

12. Drill pipe (rod)

13. Blow out preventer (BOP)

14. AC VF drive system

15. Diesel engines

16. Mud pumps

17. Solids control system

Note: This diagram is for illustrative purposes

only; it is neither complete nor to scale.

Generally, raw materials for rigs

accounted for over 80% of rig cost.

Among raw materials, major components

include electric motors system, diesel

generator, top drive, solids control system,

as well as steel.

84.5%

6.7%1.4%

1.9% 5.5%Raw Materials

Labor Cost

Contractors

Depreciation

Other Manufacture Cost

Land Rig Cost Structure

Based on 2010 Financial Data

Renowned Customers

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• Digital control of major functions

• CNC constant pressure automatic

drilling

• Dynamic braking

• Program-controlled drilling

automation

• Touch screen control

• Digitalized electronic driller

• Unified lifting of derrick and base

• Stepwise skidding rigs

Innovative features applied to our made-in-China rig:

Honghua’s Innovative DBS Drilling Rig

In-house design and production of digital variable frequency DBS rig

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R&D Overview

The first manufacturer to apply AC VF technology in drilling rigs in China

• Three R&D institutes dedicated to development in various segments including land drilling

products, offshore equipment and production technologies

• Over 390 R&D personnel in Chengdu, Guanghan and Shanghai R&D Centres

• So far, 117 patent applications accumulated patents filed to the Chinese State Intellectual

Property Office.

• the R&D results are directly applied to new products

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R&D - Design Capability

New Products Advantages

Coiled Tubing

Rigs (Fig.1)

Occupy less space, suitable for operations in

restricted area or offshore platform

Enhanced drilling speed and safety for tubing

workover and down-hole operation

Highly automatic operation to decrease cost by

1/3 to 1/2 compared with conventional rigs

Direct Top-drives

(Fig.2 &3)

Simplified structure, no need for lubrication

system, less maintenance points, low fault rate

High reliability and long operation life

Planetary

Transmission

Drawworks (Fig.4)

Modularized design with simple and compact

structure, 30%~50% lighter in weight.

Safe, reliable and with long service life

Direct-drive Mud

Pumps (Fig.5)

Smaller size, light weight, and less noise

Suitable for offshore platform operation

1

2 3

4

5

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New Products Advantages

Quintuple Mud

Pumps

Compact, weight less 5~8t;

High output pressure and flow rate;

Using two size liners meeting all pressure and

flow rate requirements;

Running more smoothly;

With direct drive motor control, no need shear

pin and pulsation damper

Automation tools Pipe deck crane, Power catwalk, Pipe racking

machine, Power mouse hole, etc.

Jack-up Platform

9000m Drilling

Modules

Large rig cantilever to meet cluster drilling

Highly automatic and intelligentized, extend

working efficiency

R&D-Design Capability

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New Products Advantages

Fracturing

Equipment -

6000HP Fracturing

Pump

DBS AC variable frequency system allows flow

and pressure stepless adjustment

Double pumps for direct input to well head

Simple installation and small size

Super Single Pipe

Rigs

High mobility

Small well-site area

Short drilling cycle

Simple operation

Rack and Pinion

Rigs

Simple structure

Less transport modules

Smaller size

Rapid transport and installation

R&D-Design Capability

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New Development in Electric Systems

Driller’s Cabin and Rig

Information system

Wellsite Record Drilling

Integrated System

Driller Operation Simulation

System

Drilling Equipment

Remote Controlling

System

• All-round development in land drilling, offshore

drilling platform and special electric motors

• Rise in added value of machines

• Strengthening competitiveness in digitally-

controlled rigs via simple operation, training and

monitoring to create a stable customer base

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4 What Are Our

Growth Plans?

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Strategic Transition

Manufacturing of Heavy Duty

Equipment

Oilfield Engineering

Services

Prudently enter the energy exploration segment

Offshore

Land Enhance ability for

worldwide trade and logistics

Business integration to

create synergies

Strive to develop diverse product mix

Development of Oil and Gas Resources

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Business Opportunities in Unconventional Natural Gas

IEA estimated that global natural gas consumption will rise from 3 trillion cubic meters in 2007 to 4.3 trillion cubic meters in 2030.

In 2010, shale gas accounted for 23% of the total production volume of natural gas in the U.S.

Natural Gas Development

Favorable Factors

for Unconventional

Gas Development

In China, 12th Five-Year Plan encourages exploration of clean energy, including shale gas and coalbed methane. The planned production of natural gas will reach 260 billion cubic meters with 25% annual growth rate during the Five-Year Plan period.

The state-owned Sichuan Provincial Energy Investment Group was established in early 2011 and planned to participate in exploration of gas resources such as shale gas.

Global

Domestic

In early 2011, the PRC Government announced the first-time tender of mining right for shale gas fields.

According to preliminary estimation of the U.S., China has shale gas reserves of about 100 trillion cubic meters and coverable reserves of 26 trillion cubic meters. Yet, capital input in shale gas exploration in China is still limited.

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Business Opportunities in Unconventional

Natural Gas

Unconventional Gas Related Business Development

Use of innovative ideas to drive the development of advanced shale gas exploration equipment and solutions.

Honghua

Honghua has intelligent rig designs, strong production capability and the advantage of one-stop shale gas related product development.

Products include coiled tubing rigs, super single pipe rigs, 6000HP pressure pumps and flexible water tanks.

To search for cooperation opportunities with enterprises in the field of energy exploration and enter into new energy development business by investing in small to medium size energy companies experienced in shale gas exploration.

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New Business: Oil & Gas Engineering Services

• Entry into the first oil and gas engineering

services agreement worth about US$10

million in Kazakhstan

• Providing an expert engineering team and

an in-house designed 7000-meter drilling

rig

• Services planned to start in 2011 for a

period of about 9 months

Oil & Gas Engineering Services

• Motivating business diversification, expanding income sources and enhancing synergistic development

• Promoting rigs and related products through provision of oil and gas drilling related engineering services

Advantages from the New Business

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Expansion of Oil and Gas Engineering Services

Utilize existing advantages

& resources, increase

revenue sources

Advantages

Facility Utilization

Personnel with drilling

experience

R&D of new product and

on-site inspection

Coordination with resource sector,

customized services for

oil and gas exploration

Stretch industry chains,

diversify risks

Facilitate

equipment industry

Support development in

oil and gas energy sector

Offshore drilling service contract Small-mid sized oil field turnkey projects

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Offshore Production Base in Jiangsu Qidong

Honghua Offshore

Production Base

Surrounding

Region

Length of

coastline

1,770 M

2,000mu

Area

Investment

1.98billion (first stage)

4,000~6,000 staff

Annual production of 6

units of drilling platform

Equipment

manufacturers

& Contractors

Our experienced expert team :

• Feng Qi- previously worked in

Sembcorp, Singapore

• Xiang Yi- previously worked in Yantai

Raffles

• Guo Peijun- previously worked in

COSCO Shipyard Group Co., Ltd.

• Zhang Tingzhong- previously worked

in Keppel Offshore and

Marine,Singapore

• Sha Huizhong- previously worked in

Jinhai Heavy Industry Co.Ltd.

• Zhu Guofeng - previously worked in

Jinhai Heavy Industry co.Ltd.

Qidong, Jiangsu

close to

Shanghai

Location

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Innovative Offshore Production Base

The world’s largest mobile combined crane with 21,600-ton lifting capacity .

Innovative technology of “land construction of offshore equipment”, which shortens the production cycle of entire rig platform.

New technical processes - from generating solutions to integral lifting of jack-up into water and assembly of the semi’s topside and hull structure.

One-stop service ranging from drilling packages, electric systems and hull structure designs, fabrication and commissioning.

Infrastructure construction has been completed. Subsequent to approval from the Development and Reform Commission of Jiangsu, the construction of production facilities will begin.

Simulated Diagram of the Offshore Production Base

Simulated Diagram of “ Honghai No.1” Mobile Combined Crane

Digitalized Production

Assembly & Launch of

Rigs

Plant Production of

Outfitting

Land Construction

of Hulls Progressive Production

Line Production Flow of Offshore Equipment Production

Technology of construction and launching

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Honghua No.1Jack-up Rig (HHJ-1) (400’)

Cantilever with large reach of 75 feet high load of 1,180tons;

Fully customized as per customer’s requirements;

Living quarter (accommodate 110 person) meeting UK HSE;

Initial design was approved by ABS.

Honghua No.1 Submersible Rig (HHS-1)(10,000’)

6th generation semi-submersible, DP3 drilling rig;

Drill depth to 50,000’ in ultra-deep waters of up to 10,000’;

Dynamic positioning system;

High performance drilling equipment.

Innovative Offshore Production Base

Thank You!

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Contact Information:

Honghua Group Ltd.

Tel: +86 28 8601 5242

Fax: +86 28 8601 3847

Email: ir@hhcp.com.cn

Website: www.hh-gltd.com

Address: 99 East Road Information Park, Jinniu

District, Chengdu, Sichuan 610036 PRC