COSL Notes '09 Financial Results
China Oilfield Services announced its annual results for the year ended December 31, 2009.
In 2009, in response to challenges posed by the global financial crisis and downturns in the oilfield services industry, the Group sought opportunities to expand into overseas markets while exhausting possibilities in the domestic market in an effort to reinforce its industry leadership position and maintain utilization rates of its large-scale equipment at high levels. The Group's revenue rose 47.2% from the previous year to RMB17,878.7 million while profit from operations grew 23.1% year on year to RMB4,468.1 million. Earnings per share were RMB69.75 cents, up from RMB69.01 cents in the previous year. The Board of Directors has recommended payment of a final dividend of RMB14 cents. Since the Group paid no interim dividend for the six months ended June 30, 2009, the total payout for the full year remained RMB14 cents (2008: RMB14 cents).
Commenting on the results for the year, Mr. Fu Chengyu, the Chairman of the Group, said, "In 2009 against a backdrop of the sweeping impact of the global financial crisis, the investments in global oil and natural gas exploration experienced declines for the first time in 10 years. The survey results of the International Energy Agency (IEA) showed that investments by the top 50 oil companies in the world in 2009 decreased by 14% from 2008. The reduction in upstream investments affected the whole oilfield services sector. In 2009, the global drilling rig market total contract signing rate was down by 9.1%, and the average day rate of drilling rigs was down by 28.4% year on year. Thanks to the proactive stimulus package and macroeconomic adjustment policies implemented by China's Government, as well as the increased capital expenditures of oil companies in offshore China, the industry continued to report strong momentum in exploration and production activities in offshore China."
In the Drilling Segment, COSL operated a total of 23 jackup drilling rigs and achieved 7,089 operation days, up 2,533 days from the previous year due to the additional operation days of the fleet inherited from the CDE acquisition and a reduction in number of days spent in repair and maintenance for the existing fleet; 4 semi-submersibles that operated 1,066 days, down 32 days due to 29 days spent for maintenance and 3 fewer operating days were available during 2009 as there was a leap month in 2008. During the year the whole drilling rig fleet saw its utilization rate added 2.3 percentage points to 95.0%.
In terms of service fees, in 2009 the average day rate of drilling rigs (including CDE) was about US $134,000/day (USD/RMB conversion rate was 1:6.8282 on December 31, 2009), up 3.9% from about US $129,000/day from the previous year (USD/RMB conversion rate was 1:6.8346 on December 28, 2008).
In the Well Services Segment, in 2009 this segment adhered to objectives of "Enhancement of technical services value added capability, speed up development and commercialization of the technological research and development which are on par with the well services, gradual improvement of the relevant professional and diversified well services chain" and continued to provide services such as logging, drilling and completion fluids, directional drilling, cementing, well workover and well completion etc. The cementing and well completion services entered into the domestic onshore oilfield market, the directional drilling project services entered into the overseas market. The ELIS logging equipment that we developed was sold to external customers on a full set basis for the first time.
In the Marine Support and Transportation Services Segment, the Group's self-owned fleet achieved 27,702 operating days, up 4,076 days year on year because 13 new vessels were added to the fleet while the 8 new vessels which commenced operation during the second half of the previous year operated for the whole year in 2009. Due to the low utilization of the newly added vessels, the calendar-day utilization rate for the self-owned fleet was 93.4%, down 1.4 percentage points year on year.
In the Geophysical Segment, as international oil prices stayed at low levels due to the global financial crisis, oil companies reduced their investments in upstream survey operations. The Group's geophysical seismic data collection business bore the blunt. 2D seismic data collection volume for the year was 33,900 km, down 15,548 km year on year due to shrinking demand and repair and upgrade enhancement works on two vessels. 3D seismic data collection volume was 10,394 km2, down 3,198 km2 year on year due to difficult market conditions and vessels moored for repair and maintenance. The operation volume of data processing services did not record a substantial decline thanks to the stable domestic market. 2D data processing volume for the year was 22,588 km, down 3.5% year on year while 3D data processing volume stood at 7,951km2, down 5.1% year on year.
Integrated Project Management, as one of the Group's four core strategies, bucked the industry's downtrend during the year. The integrated services project has been initially launched into overseas markets where COSL provides services such as drilling, logging, mud, well cementing and oil testing etc.
In terms of Overseas Business Expansion, by the end of 2009, COSL had already operated over 30 overseas projects in 16 countries and regions around the world with an aggregate turnover of RMB4 989.0 million (including recognition of deferred income of RMB1,073.1 million), up 63.9% from the previous year. Overseas revenue contributed 27.9% to the Group's total.
Mr. Fu concluded, "Looking forward to 2010, the recovery of the global economy is expected to be weak, while uncertainties still surround, and the economic environment remains complicated. The "World Economic Situation and Prospects 2010" published by the United Nations forecasts the global economy to grow 2.4% in 2010. The pace of economic recovery of developed economies will be slow, while developing economies will become the major momentum driven global economic growth, with China's economy in 2010 being forecasted to grow 8.8%. The world economy will continue a positive recovery trend, yet instabilities and uncertainties still exist, thus restraining the economic development. The business development environment facing the oilfield servicing sector is still very difficult.
"Faced with a complex 2010, COSL will continue to consolidate its presence in the domestic market, develop overseas markets to ensure stable growth in revenue, enhance technology research and development and technological pool, develop deep-water services capability as well as strengthen risk control and cost management, so as to achieve continuous healthy development. We will further enhance service capabilities and shoulder our social responsibilities, while maximizing shareholder value and develop an all-win situation for our shareholders, customers, staff and business partners."
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