China Oilfield Services Limited ("COSL") has announced its unaudited results for the six months ended June 30, 2009.
During the first half of 2009, COSL achieved a revenue of RMB7.81 billion, representing an increase of 53.0% from the same period last year, of which the overseas business generated a revenue of RMB1.85 billion, an increase of 45.1% from the same period last year.
Mr. Liu Jian, CEO of COSL, said, "In the first half of 2009, the average price of the U.S. West Texas Intermediate (WTI) was US$51.5 per barrel, representing a decrease of 48% compared with the average price in 2008. The low oil price had a significant impact on the oilfield services industry as there were pressures on day rates and equipment utilization rates. As demands are generally driven by the impact of the government's investment, the 2009 GDP in China is expected to be maintained at 8%. China's investment in energy development continues to maintain a growth trend."
On drilling services, through the integration of CDE group (in September 2008, COSL acquired Awilco Offshore ASA, which is known as COSL Drilling Europe AS, "CDE" after the acquisition), COSL's drilling capacity has been significantly enhanced. Compared with the first half of 2008, the Company added 9 jackup drilling rigs (including 8 drilling rigs from CDE group and COSL942 which started operation in September 2008), 2 accommodation rigs and 4 land drilling rigs during the period.
As of June 30, 2009, the Company operated and managed a total of 24 drilling rigs (of which 21 are jackup drilling rigs (1 leased) and 3 are semisubmersible drilling rigs), 2 accommodation rigs, 4 module rigs and 6 land drilling rigs.
Out of the 24 drilling rigs that the Company operated and managed (including 1 leased jack-up rig), 14 were located in Bohai Bay, China, 5 were located in South China Sea, 1 was located at offshore Indonesia, 1 was located at offshore Australia and 1 each were located at offshore Tunisia and offshore Saudi Arabia respectively and 1 foreign rig was managed by the Company.
The operation days of jackup drilling rigs were 3,471 days, the operation days of semi-submersible drilling rigs were 540 days and the total operation days were 4,011 days, an increase of 1,598 days from 2,413 days in the same period last year. The operation days of jackup drilling rigs increased by 1,604 days compared with the same period last year mainly due to the addition of 1,134 operation days contributed by the 8 drilling rigs from the acquired CDE group and the 181 operation days contributed by COSL942 which commenced operation in September 2008. In addition, the number of operation days increased by 289 days which was the net impact of the decrease in maintenance days for jackup drilling rigs and the intercalary month in 2008.
The operation days of the semi-submersible rigs fleet decreased by 6 days compared with the same period last year, mainly due to the 3 repair days of NH6 during the period and there were no repairs during the same period last year. In addition, 3 operation days were due to the intercalary month in 2008. Due to the decrease in maintenance for drilling rigs, the average calendar day utilization rate of the fleet in the first half of the year was 96.3%, an increase of 7.9% compared with the same period last year, of which the average calendar day utilization rate of the jack-up rigs was 95.8% and 99.4% for the semi-submersible rigs.
Moreover, the 4 module rigs that provided drilling services for clients in the Mexico Gulf achieved 708 operation days during the first half of the year, and a calendar day utilization rate of 97.8%. The 5 land drilling rigs operating in Libya and the 1 land drilling rig operating in China brought 947 operation days, with both the calendar day utilization rate and the available day utilization rate reaching 100.0%.
During the first half of 2009, the average day rate of drilling rigs was US$135,000/day (US$/RMB conversion rate was 1:6.8319 on 30 June 2009), which represented a 15.4% increase from US$117,000/day from the same period last year (US$/RMB conversion rate was 1:6.8591 on 30 June 2008). The average day rate for jack-up rigs was US$126,000/day, which represented a 24.8% increase from US$101,000/day for the same period last year, and the average day rate for semi-submersible rigs was US$188,000/day, which represented a 9.9% increase from US$171,000/day of the same period last year.
On well services, during first half of 2009 the Company had strengthened its market development with well cementing and well completion services entering the domestic onshore oilfield market, the directional drilling had expanded to overseas market and the self-developed ELIS logging equipment had completed its first full set sales. During the first half of the year, Cross-line Dipole Array Acoustic Logging Tool (EXDT) was formally incorporated into the ELIS logging system, which enhanced the service capabilities of the ELIS system. The Company’s self-developed Enhanced Resistivity Micro-Imager (ERMI) had succeeded in experimental well testing for electrical imaging in the Liaohe Oilfield, which closed the Company's gap of the logging technology in high-end electronic imaging.
On geophysical services, affected by factors such as decrease in surveying and development activities of oil and gas companies, the Company's geophysical services business declined significantly. 21,597 km of 2D seismic data collections were completed, a decrease of 19.6% from the same period last year and 5,060 sq. km. of 3D seismic data collections were completed, a decrease of 24.9% from the same period last year.
On marine support and transportation services, COSL's 84 working vessels operated a total of 13,194 days during the first half of the year, representing an increase of 1,341 days from the same period last year. The calendar day utilization rate was 92.0%, representing a decrease of 4.0% compared to the same period last year. In addition, COSL leased 5 platform supply vessels from the joint venture company, Eastern Marine Services Ltd., and operated accumulative 881 days during the first half of the year and the calendar day utilization rate was 97.3%, representing an increase of 2.4% compared to the same period last year. Gross transportation volume of oil tankers for the period was 561,000 tons, a 14.5% increase from the 490,000 tons in the same period last year. Transportation volume of chemical carriers was 406,000 tons, a decrease of 29.1% from 573,000 tons in the same period last year, mainly due to decreased transportation volume of leased chemical carriers.
Mr. Liu concluded, "Looking into the second half of 2009, the oilfield services industry will be faced with higher pressures due to the lagging effect of the impact from the economic recession and lower oil prices. We will continue to exert our advantage, consolidate the existing market and expand the new market. We will strengthen our sense of crisis and cost control, implement cost inspection and analysis control measures and develop our internal capabilities. We will strengthen our technology research and development to increase our production and service capacity. We will also optimize our debt structure and continue the post-integration of CDE. For facilities, in the second half of the year we expect that two 350-feet drilling rigs will be completed and four utility vessels will commence operation in the second half of the year. All these will further expand our capacities.
"We will strive for greater values for shareholders and achieve an all-win situation among shareholders, customers, employees and business partners."