2007 annual results - cosl · psv vessels 11 standby vessels 38 oil tankers 4 chemical vessels 5...
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11
2007 Annual ResultsMarch 2008
22
Disclaimer
The information contained in our presentation is intended solely for your personal reference. In addition, such information contains projections and forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. These views are based on assumptions subject to various risks. No assurance can be given that future events will occur, that projections will be achieved, or that the Company’s assumptions are correct. Actual results may differ materially from those projected.
33
3.3. Company OutlookCompany Outlook
2.2. Review of the Review of the Four Core Four Core SegmentsSegments
1.1. Company OverviewCompany Overview
44
COSL’s Investment HighlightsUnparalleled competitive edge in
the offshore oilfield service industry
Integrated supply chain
2
5
High quality clientele
3 Ongoing upgrading production facilities and capabilities
4
1
7 Hugh potential from new markets and new businesses
Sound financial performance
Stringent control on QHSE standards6
Excellent management team and productive corporate culture
55
Profit Breakdown
75 working vessels+4 oil tankers+5 chemical carriers
12 jack-ups + 3 semi-submersibles+1 onshore drilling rig+4 module rigs
16%15%
44% 25%
8 seismic vessels + 4 survey vessels
A A UUnique nique IIntegrated ntegrated OOilfield ilfield SService ervice PProviderroviderRevenue Breakdown
Integrated well services
DrillingDrilling Well servicesWell services
Marine SupportMarine Support GeophysicalGeophysical
19%14%
53%
14%
66
2007 Highlights: Continuous Improvements on Quality
1) Operating results hit record high
7) Fulfill social responsibility
2) Steady growth in overseas businesses
3) Financing activities hit new benchmarks
4) Positive recognition in capital market
5) Optimized and streamlined corporate management system
6) Continuous emphasis on QHSE
77
Operating Results Hit Record High
Revenue 6,365 9,008 41.5%
Operating profit 1,392 2,827 103.1%
9.5pp
Net profit 1,128 2,238 98.4%
Total assets 13,130 23,089 75.8%
92.1%
59.0%
210.0%
Interest-bearing debts 2,000 2,644 32.2%
Shareholders’ equity 8,619 17,225 99.8%
Operating profit margin 21.9% 31.4%
EPS (RMB fen) 28.23 54.24
Net operating cashflow 1,870 2,973.9
Cash & cash equivalents 2,309 8,766
Interest-bearing debts / Shareholders’ equity 23.2% 15.3%
(RMB mn, except per share data) 2006 2007 Change %
88
Operating Results Hit Record High (cont’d)
(RMB Mm)
Competitive cost advantageAlthough revenue and operating profit increased significantly, operating cost grew by a moderate 24.3%
Increases in operating cost were mainly due to business expansion, full capacity utilization and increasedexpenses on equipment and staff headcount
We have the confidence tomaintain growth in both top line and bottom line
Employee compensation costs Repair and maintenance costsConsumption of supplies, materials, fuels, services and othersSubcontracting expensesOperating lease expensesSelling, general and administrative expensesDepreciationOther expenses
YoY growth = 24.3%
387274
1,042900
10281
366313
357206
2,525
1,935
318
357
1,123
937
2006 2007
99
Steady Growth in Overseas Business
0
300
600
900
1200
1500
1800
2003 2004 2005 2006 20070%2%4%6%8%10%12%14%16%18%20%
1,645
(18.3%)
Breakdown of overseas revenue in 2007Breakdown of overseas revenue in 2007 Overseas markets adding momentumOverseas markets adding momentum
Breakthroughs achieved in drilling, well services and geophysical operations at overseas markets4 Mexico module rigs performed wellSuccessfully secured 4 Libya onshore drilling rig service contracts2-year cementing contract of geothermal wellservices with Philippines National Oil CompanyELIS operation successfully penetrated into Middle East and Indonesia
RMB mn RMB Mn
Overseas revenue Overseas/total
Globalization strategy
marked initial success
1010
Financing Activities Hit New Benchmarks
Successfully launched in May 2007 a RMB1.5 billion 15-year corporate bond, issued at a coupon rate of 4.48% or an annualized rate of 4.58%.
COCOSSLL was rated the highest AAA
Raised a net of RMB6.599 billion through issue of 500 million A Shares.
Trading in the A Shares debuted on 28 September 2007
COSL successfully raised funds to develop and strengthen its equipment capability and competitiveness
COCOSSL L successfully raised funds to develop and strengthen its successfully raised funds to develop and strengthen its equipment capability and competitivenessequipment capability and competitiveness
1111
Positive Recognition from the Capital Market
Corporate bond credit rating: AAALong-term credit rating: AAA
The highest investment value listed company in China 2007
COSL was named a Top-30 stock with highest investment potential by Standard & Poor‘s for three consecutive years between 2005 and 2007
China Enterprise Confederation and China Enterprise Directors AssociationNamed Mr. Yuan Guangyu, CEO and President, the “Most Watched Entrepreneur for 2006”
China Enterprise China Enterprise ConfederationConfederation
China Enterprise Directors China Enterprise Directors AssociationAssociation
A Top-100 Most-respected listed Company in China in 2007
Recommended as Top 8 golden stocks
Chinese Academy of Social Sciences
International Investment Research Center
1212
Continuous Emphasis on QHSE
Health:The foundation for
our corporate success
Environment:Be a responsible
international citizenQuality:
In pursuit of high quality
QHSEQHSE
Safety:Our persistent promise
COSL’s OSHA score further improved to 0.25 (0.32 in 2006)
Unit output energy dissipation was 0.0703, down 14.6% y-o-y; Unit value-add dissipationwas 0.1116, down 18.7% y-o-y
Saved 10,804 tonnes of standard coal, met energy saving targets for the year
0.25
0.45
0.22 0.27 0.29 0.32
0.00
0.20
0.40
0.60
0.80
1.00
2002 2003 2004 2005 2006 2007
International standard:0.75
OSHA
1313
Fulfill Social Responsibility
Cared for employees
Communicated corporate mission through cultural activities, to raise staff morale
Actively participated in charity activities
Donated two offshore oil schoolsDonated to Project HopeDonated to Mother Water Cellarsand Lifeline Express Projects and supported poverty alleviation and disaster relief campaigns
1414
3.3. Company OutlookCompany Outlook
Company OverviewCompany OverviewCompany Overview11..
2.2. Review of the Review of the Four Core Four Core SegmentsSegments
1515
(RM
B m
m)
2006 2007
2,645
1,808
1,043869
0
6,000
12,000
4422% growth in % growth in rrevenueevenue
42%
(RM
B m
m)
2006 2007
257.5%
89.9%
8.3%
123.8%666
391
409
538
1,489361
216150
0
1,500
3,000
103103% Operating % Operating pprofit rofit ggrowthrowth
DrillingWell Services
Marine SupportGeophysical
103%
Drilling: Scientific management of drilling capacity, increasing day rate
Well Services: Growth in service volume, self-developed technology began contribution
Marine Support: Service prices increased, new facilities commenced operation
Geophysical: The efficiency of single vessel increased, market expansion efforts yielded results
65.8%
31.8%
25.6%
48.3%
Businesses Experienced Rapid Growth
2,270
1,374
1,442
3,922
DrillingWell Services
Marine SupportGeophysical
1616
Analyzing Drilling Services
Source: Company data
100% 100%
60%
70%
80%
90%
100%
2006 2007
Jack
-up
100% 100%
60%
70%
80%
90%
100%
2006 2007
Sem
i-sub
mer
sibl
eavailable day utilization ratecalendar day utilization rate
Utilization Utilization rrateate
91.3%96.5%
84.9%
98.6%
5.2%
13.7%
Strong market demand, full capacityutilizationAs work-volume and price increased, drilling services saw revenue increase 48.3% year on year
New markets expansion(1) Expansion in both domestic and overseas markets
and onshore and offshore markets
(2) Revenue from overseas operation amounted to RMB1151.2 million, comprising 29.4% of the sector’s total
New facilities enhanced resultsCommencement of new facilities added growth momentum to the sector, e.g., 186 operating days were added as jack-up rig COSL941 commenced operation
1717
Analyzing Well Services
417
291
2006 2007
Source: Company data
19
Continuous new overseas markets expansion
(1) Signed a cementing service contract in the Philippines
(2) the sole operator of geothermal wellservices in the Philippines
(3) secured a logging service contract in Indonesia
Strong demand, growth in work volume
Gradually tapped into onshore market(1) Tapping onshore markets for cementing
(2) Opened new market opportunities in the Jidong oilfield
R&D, and product innovation started to contributing to revenue, service prices experienced increases
Revenue from wire loggingRevenue from wire logging
RMB mn43%
Proprietary Product
Innovation
Revenue from Revenue from well well workoverworkover serviceservice
Source: Company data
RMB mn26.1% 544
456
2006 2007
1818
Analyzing MS&T
Vessels Types Quantity
AHTS vessels 21
Utility vessels 5
PSV vessels 11
Standby vessels 38
Oil tankers 4
Chemical vessels 5
Total 84
Growth in work volume, upgrading of equipment capabilities
(1) Owned and operated the largest and the most comprehensive offshore support and transportation fleet in China.
(2) Owns 70 various working vessels, and rented 5 working vessels on long term leases, and owned 4 oil tankers and 5 chemical vessels.
(3) These vessels mainly operated in offshore China
Orderly management of safety measures to build resilience in operation
Effective cost control
1919
Analyzing Geophysical Services
Source: Company data
3D Geophysical 3D Geophysical sserviceservices
processing collection
sq.km.
sq.km.35.8%
32.1%
Strong market demandVolume of 3D seismic data collected rose 32.1%year-on-year to 9,694 sq.km..
Efficiency of single vessel enhanced significantly6-streamer COSL718 collected 3,878 sq. km of 3D seismic data, hitting a new record in acreage collected by a single vessel
Effectively arranged facilities for domestic and overseas operationsSuccessfully arranged 6 sailings abroad
Rearranged 2D and 3D operations to maximize efficiencySome 2-D vessels switched to collect 3D seismic data
5,686
4,187
2006 2007
9,694
7,337
2006 2007
2020
3.3. Company OutlookCompany Outlook
Company OverviewCompany OverviewCompany Overview11..
2.2. Review of the Review of the Four Core Four Core SegmentsSegments
2121
International oil prices as quoted on the NYMEX hovered between US$55 and US$70 during 1H2007, and started to climb thereafter to break through US$110.International oil prices as quoted on the NYMEX hovered between International oil prices as quoted on the NYMEX hovered between US$55 and US$55 and
US$70 during 1H2007, and started to climb thereafter to break thUS$70 during 1H2007, and started to climb thereafter to break through US$110.rough US$110.
International Oil Prices Hit New Highs
2222
Steady Increase in Crude Oil Demand
China U.S.A. Others
Expected
y-o-y Growth
Total Consumption
million barrels/Day
Source:EIA Short-term Energy Outlook
186 190
163 170
217.51232.5
253.51
292.07 299.86322.52
350360
183.68180.84
164.83 170.29 170.44 174.73
138.84119.02117.34
83.0762.21
52.68
0
100
200
300
400
2001 2002 2003 2004 2005 2006 2007E 2008E
Domestic Production Net I mport
CAGR:6.5%
Source:China Petroleum and Chemical Industry Data Express
World demand for crude oilWorld demand for crude oil China demand for crude oilChina demand for crude oil
2323
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E
CAPEX OPEX
Continuing Increase in World Investments in Marine Oil and Gas
Continuing Increase in World Investments in Marine Oil and Gas
Bright Future for Oil and Gas Exploration
World investments in marine oil&gas exploration and operations are expected to increase to US$144bper annum on average in next 10 years.
Average investments in deep water operations will exceed US$15B per annum. Deep waters and ultra deep waters will continue to be hot exploration spots for world oil and gas.
Investments will grow faster in West Africa, Brazil, Gulf of Mexico and Asia Pacific regions. Investments in Marine oil and gas in Asia Pacific in 2008 will increase 65% from the levels in 2002.
Exploration activities are seen to kick off in emerging marine regions including Southeast Asia.
Source: Energyfiles Ltd. Source: Oil.IN-EN.com
2424
Goals of COSL
20202020
20102010
Near-term goalNearNear--term goalterm goal Long-term goalLongLong--term goalterm goal
Become a top-notch international oilfield service providers
Become a topBecome a top--notch international notch international oilfield service providersoilfield service providers
An oilfield service provider with strong competences in the
international market
An oilfield service provider with An oilfield service provider with strong competences in the strong competences in the
international marketinternational market
Accelerate development of integrated capabilities. Comprehensively enhance professional capabilities
Explore new business opportunities new oilfield production services
PlansPlansExpand facilities, upgrade service capability Strengthen deep water operation capability
Increase investments in R&D to enhance COSL’s technological competitiveness
Expand scope of service, implement global development strategies
Achieve breakthroughs in technology, capacity expansion and capability upgrades through capital market operations including M&A
2525
Four Core Strategies
TechnologyTechnology--drivendriven Cost CompetitivenessCost Competitiveness IntegrationIntegration GGloballobal OperationOperation
A unique publicly-listed integrated oilfield service providerA unique publiclyA unique publicly--listed integrated oilfield service providerlisted integrated oilfield service provider
Strategic positioning: Expert in conventional technologiesKeen follower in advanced applicationsEnabler of highly efficient operationsContributor to cost reduction Pioneer in integrated servicesParticipant in global competitionPartner in win-win developmentServant for shareholder value
2626
Major Performance Drivers in 2008
11 Introduce new equipmentIntroduce new equipmentIntroduce new equipment
22 Increase work throughputIncrease work throughputIncrease work throughput
33 Raise prices of servicesRaise prices of servicesRaise prices of services
44
55 Accelerate technology R&DAccelerate technology R&DAccelerate technology R&D
Explore new markets, new businessesExplore new markets, new businessesExplore new markets, new businesses
Ongoing Improvements in Operations and Production
2727
CAPEX since listingCAPEX since listing: in excess of RMB 10 billion: in excess of RMB 10 billion
RMB Mil’
Business Driver in 2008: Introduce New Equipment
0
1100
2200
3300
4400
5500
2002 2003 2004 2005 2006 2007 2008
2828
2010201020082008COSL942 to operate in 2H; 4 module rigs operate for six more months; 5 onshore rigs will commence operation in China and other countries
R&D, building, procure equipment like cementing pump, ELIS, liftboat etc.
9 new supporting vessels will commence operation in 2H
One 8-streamer seismic vessel start operation in April
20092009Jack-up COSL936 will commence operation by year end. 4 onshore rigs have half year more revenue contribution
R&D and procure tools for MWD, acidizing and crushing
9 new supporting vessels to operate in 1H. 2 high-powered deep water vessels will commence operation by year end
Jack-up COSL937 to operate; Four 200-feet jack-up rigs to operate in 2010 and 2011
One 12-streamer seismic vessel will commence operation
Drilling Services
Well Services
MS&TServices
Geophysical Services
Business Driver in 2008: Introduce New Equipment (cont’d)
16 offshore engineering supporting vessels to bedelivered respectively in 2010 and 2011
20112011
Operate the 3000m deep water drilling rig invested by parent company in 2011
1 high power deep water working vesselwill commence operation
2929
COSL COSL –– An oilfield services company offering integrated services An oilfield services company offering integrated services spanning across drilling, development and productionspanning across drilling, development and production
Exploration Stage
Production Stage
y
Development Stage
GeophysicalMarine Support and TransportationDrilling Well Services
Business Driver in 2008: Increase Work Throughput
3030
Business Driver in 2008: Increase Work Throughput (cont’d)
Numerous market opportunities in different stages of oilfield production
Besides increase in work throughput of logging, directional drilling, cementing and well completion, acidizing, crushing, screen pipe production activities are expected to grow
Uptrend in CAPEX and OPEX of oil companies on oilfield exploration
CNOOC announced discovery of 10 new oil and gas reserves in Nov 2007
Source: CNOOC Group annual report
3131
Jack-up: USD/Day
Semi-submersible:USD/Day
Business Driver in 2008: Raise Services Prices
Utilization to remain high due to strong demand, saturated capacity, good customer relationship and tight schedule management
Utilization to remain high due to strong demand, saturated capacUtilization to remain high due to strong demand, saturated capacity, ity, good customer relationship and tight schedule managementgood customer relationship and tight schedule management
20,000
40,000
60,000
80,000
2002 2003 2004 2005 2006 2007
US$78,337/day
US$142,302/day
0
40,000
80,000
120,000
160,000
2002 2003 2004 2005 2006 2007
3232
Tap the deep water segment
Expand foothold in overseas
markets
Targeted Southeast Asia, Middle East, Gulf of Mexico, Russia and Africa
Expand into onshore services, leveraging our strength in the offshore market.
Expand presence in the deep water segment following footsteps of oil companies
Consolidate existing
market share
Secure first-mover advantages in
new markets and new businesses
Business Driver in 2008: Explore New markets, New businesses
Penetrate into onshore markets
3333
COSL-LR7001 commenced drilling
Business Driver in 2008: Explore New markets, New businesses (cont’d)
3434
MarketMarket--orientedoriented
COCOSSLL’’s technologys technology--driven strategydriven strategy
Integrated Integrated InnovationInnovation
LeapfrogLeapfrogDevelopmentDevelopment
TalentTalentorientedoriented
Business Driver in 2008: Accelerate Technology R&D
Introduced proprietary ELIS logging system into domestic and overseas marketsEstablished the first joint laboratoryIntroduced cementing services to XinjiangProprietary “Bohai low-density-high-strength well cementing technology widely applied
COSL’s application of technologiesCOSL’s application of technologies
ConventionalCement
Low-Density,High-Strength
Cement
3535
Business Driver in 2008: Accelerate Technology R&D (cont’d)
Obtained 23 patents in 2007 Owned 78 valid patents by year endObtained 23 patents in 2007 Owned 78 valid patents by year end
ELIS-I completed operations in Bohai Sea, Indonesia and Middle East regions;
FCT (Formation Characteristics Tools)engineering research made a breakthrough
Application of new positive gel drilling fluids system, non-fluorescence drilling fluids system, acidizing technology, nitrogen foam stimulation technology, cross-linking water plugging workover fluids and water absorbent gelationworkover fluids
3636
ASDD
To start the well testing in 2Q08
Upgrade deep water operation from 500m to 1500m
PSC
Independent
Joint venture with 3rd party
Intensify training for deep water operation skills
To operate deep water drilling rigs invested by CNOOC Group
To invest in deep water facilities construction
Business Driver in 2008: Accelerate Technology R&D (cont’d)
3737
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