China Oil & Gas announced a dual‐track restructuring that combines a Very Substantial Disposal (VSD) with a Very Substantial Acquisition (VSA) through a share-swap agreement signed on 29 April 2026 with Shenzhen-listed Shandong Shengli (000407.SZ).

Transaction Structure and Value • Sellers – wholly/partly owned subsidiaries China Oil Investment, Tiandalitong and CCNG – will transfer four city-gas assets to Shandong Shengli:  1) 100% of China Oil Zhuhai  2) 100% of Tiandashengtong  3) 51% of Nantong Oil  4) 40% of Ganhe China Oil

• Total consideration: RMB 1.75 billion, split into:  – Share consideration: RMB 1.60 billion, settled by 521.23 million new A-shares of Shandong Shengli at RMB 3.06 per share (37.20% of enlarged capital).  – Cash consideration: RMB 155.90 million.

Post-Deal Ownership • China Oil & Gas’s effective stake in Shandong Shengli will rise from 22.16% to 51.11%, turning Shandong Shengli into a non-wholly-owned subsidiary. • The issued share capital of Shandong Shengli will expand from 880.08 million to 1.40 billion shares. • All four target companies will be consolidated under Shandong Shengli, with three becoming wholly owned and Ganhe China Oil becoming 80%-owned.

Pricing and Valuation • Issue price of RMB 3.06 per Consideration Share equals 80% of the 20-, 60- and 120-day VWAPs and stands at a 36.91% discount to Shandong Shengli’s closing price of RMB 4.85 on 29 April 2026. • Valuation adopted a market-based approach referencing nine comparable PRC gas utilities, adjusted for lack-of-marketability discounts.

Performance Commitments & Compensation • Sellers guaranteed aggregate audited net profits for each target over the year of completion plus two subsequent years. Example committed figures for 2026–2028:  – Nantong Oil (51% stake): RMB 69.68 million, RMB 71.87 million, RMB 72.80 million. • If annual actual profit falls below 90% of target, sellers must compensate primarily by returning Shandong Shengli shares; any shortfall converts to cash. Total liability capped at consideration received. • New Consideration Shares are locked up for 36 months, extendable by six months if post-deal price underperforms the issue price.

Financial Impact on China Oil & Gas • Disposal of target assets is treated as an equity transaction with no P&L impact. • Step-acquisition accounting for Shandong Shengli may lead to a re-measurement loss; based on 31 Dec 2025 data, management estimates a potential HKD 160 million loss (subject to final completion‐date valuation). • Cash proceeds of RMB 155.90 million earmarked: RMB 100.00 million to settle seller tax liabilities; RMB 55.90 million for group working capital. • Consolidation of Shandong Shengli expected to strengthen group scale in natural-gas value chain and align with national clean-energy objectives.

Regulatory & Approval Process • The VSD exceeds the 75% size test; the VSA exceeds 100%, classifying both as very substantial transactions under HKEX Chapter 14. • Completion is contingent on shareholder approvals at a special general meeting (SGM) to be convened by 14 May 2026, regulatory clearances from the Hong Kong Stock Exchange, Shenzhen Stock Exchange, CSRC, and Chinese antitrust authorities, among others.

Investor Caution Execution of the share-swap agreement is subject to multiple non-waivable conditions precedent. The company warns that the transactions may or may not proceed and advises shareholders and investors to exercise caution when dealing in China Oil & Gas securities.