COSL Announces 2006 Interim Results
China Oilfield Services Limited ("COSL" or "the Company"; stock code: 2883), the leading integrated oilfield services provider in the offshore China market, announced its interim results for the six months ended June 30, 2006.
During the period under review, turnover amounted to RMB2,863.5 million, representing an increase of 20.7% as compared with the same period last year. Three of the Company's four business segments, namely drilling services, marine support and transportation services, and geophysical services achieved significant growth with turnover increasing by 28.6%, 14.6%, and 56.3%, respectively. Turnover from overseas operations amounted to RMB568.9 million, increasing by 178.0% compared with the same period last year and accounting for 20.0% of the total revenue of the Company. Net profit for the six months ended June 30, 2006 amounted to RMB670.3 million, representing an increase of 20.6% from that of RMB555.9 million recorded in the same period last year. The Company has received a tax refund of RMB176.0 million for advanced technology enterprise from the tax authority.
Commenting on the 2006 interim results, Mr. Yuan Guangyu, CEO and President of the Company, said, "During the period, oil prices remained high, stimulating exploration and development activities of oil and natural gas. Oil services statistics indicated promising prospects. Driven by our overseas operations of semi-submersible rigs and robust exploration and development activities in offshore China, drilling services recorded significant growth. The newly built 400-feet jack-up rig "COSL 941" commenced operation in late-June, greatly strengthening our capabilities to meet the demand for drilling rigs in offshore China and worldwide. In exploring overseas markets, the Company has expanded operations into 11 countries and regions including Indonesia, Myanmar, the Philippines and Australia, and has expanded its influence in these regions."
During the period under review, turnover from drilling services amounted to RMB1,364.4 million, representing an increase of 28.6%. In the first half of 2006, demand for drilling activities in offshore China remained strong, driven by the overseas operations of two semi-submersible rigs "Nanhai 2 (NH2)" and "Nanhai 6 (NH6)", average day rate for drilling rigs was up by 43.6% over the same period last year to US$61,653/day. Utilization rates on available days of both jack-up rigs and semi-submersible rigs reached 100%, up by 0.6% and 2.0%, respectively, over the same period last year.
In the first half of 2006, the overseas operating area of our drilling rigs continued to expand. Semi-submersible rigs "NH2" and "NH6" were deployed to Myanmar and Australia respectively to drill wells. During the period, "NH2" secured a 3-month rig service contract in the Natuna sea of Indonesia. The Company had been actively expanding into other related drilling services. After securing a contract to provide platform management service to Northern Drilling Company of Iran in January, we secured a contract to provide Workover Pulling Unit (WPU) senior management personnel for BR Energy in Malaysia. In addition to providing clients with operation and management services, the Company has also been providing clients with relevant maintenance and training on QHSE (Quality, Health, Safety and Environment) system management.
Turnover from well services amounted to RMB606.7 million in the first half of 2006, representing a decrease of RMB19.6 million, or 3%, compared to RMB626.3 million over the same period last year. This decrease was mainly attributable to a decrease in the trading of commodities not produced by the Company. Excluding this factor, well services recorded a 14.0% increase in revenue over the same period last year.
During the period under review, turnover from marine support and transportation services amounted to RMB489.9 million, representing an increase of RMB62.3million, or 14.6%, compared to RMB427.6 million over the same period last year. The marine support and transportation fleet maintained a high utilization rate during the period, with 11,632 operating days up by 1.6% from the 11,444 days in the same period last year. Utilization rate based on available days grew to 94.5% from 93.1% in the same period last year, while the number of days for marine support vessels maintenance decreased by 152 days. In the first half of the year, the average day rate of our fleet grew by 7.0% over the same period last year to reach US$0.92/kilowatt per day. Strong demand in the chemicals marine transportation market raised related revenue by 27.6% as compared with the same period last year.
Turnover from geophysical services amounted to RMB402.5 million in the first half of 2006, representing an increase of RMB144.9 million, or 56.3%, compared to RMB257.6 million over the same period last year. Three geophysical vessels operated in East Africa and Indonesia in the first half of 2006, increasing overseas operations by 269% compared with the same period last year. Collection of 2D seismic data totalled 30,229 km, up by 9,362 km or 44.9%, from 20,867 km in the same period last year. The 6-streamer seismic vessel "COSL718", which commenced operation in the first half of the year, maintained highly efficient operations and contributed to the collection of 3,494 km2 of 3D seismic data, up by 1,263 km2 or 56.6%, from 2,231 km2 in the same period last year.
Mr. Yuan concluded, "Global exploration and development activities in relation to oil and natural gas fields are expected to continue with the trend of strong growth in the second half of this year. We are confident in our leading position in offshore China and are dedicated to opening up overseas markets with comprehensive oilfield services to regions and countries including Southeast Asia and Australia. In view of this, the utilization rate of our fleet is expected to remain at a high level. With new facilities such as drilling rigs and seismic vessels commencing operation, our capacity will be further enhanced. In the meantime, we are expanding our facilities with emphasis on aspects such as technological innovation to further improve our efficiency and contribute to stable annual growth."
China Oilfield Services Limited ("COSL", stock code: 2883) is the leading integrated oilfield services provider in the offshore China market. Its services cover each phase of offshore oil and gas exploration, development and production. Its four business segments are drilling services, well services, marine support and transportation services and geophysical services. COSL has been listed on the Main Board of the Stock Exchange of Hong Kong Limited since November 20, 2002. Since March 26, 2004, COSL's stocks can be traded by means of Level I unlisted American Depositary Receipts at OTC (over-the-counter) market in the United States. The ticker symbol is CHOLY.
As at June 30 2006, COSL operated 15 drilling rigs, including 11 jack-ups and three semi-submersibles while operating one leased jack-up rig. In addition, COSL owns and operates the largest and most diverse fleets in offshore China, including 68 support vessels and five oil tankers, one chemical vessel, seven seismic vessels, and four geotech survey vessels. It also has a vast array of modern facilities and equipment for logging, drilling fluids, directional drilling, cementing, well completion and well work-over services.
The majority of COSL's business activities are conducted offshore China, with the other activities extending to different regions of the world such as North and South America, the Middle East, offshore Africa and offshore Europe. COSL and its worldwide employees are dedicated to providing premier quality services, while adhering to the highest health, safety and environmental standards. COSL has obtained the ISO 9000 and ISM (International Safety Management) certifications. COSL also plans to obtain certifications under the ISO 14000 environmental management standard as well as the OSHA 18000 occupational health and safety standards.
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