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China Oilfield Services Limited
May 2009
11
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.
22
Agenda
Company Background1
Results Review 20082
3Company Outlook 2009 3
33
Company Profile
The leading integrated oilfield services provider in offshore China, with more than 20 years E&P experience.
Listed in Hong Kong under the ticker 2883 since 2002, listed in Shanghai under the ticker 601808 since 2007
Keeping dominant position in offshore China market, while exploring global market with competitive edge.
44
As a Leading Integrated Oilfield Services Provider …
Profit Breakdown
Over 80 working vessels + 3 oil tankers + 5 chemical carriers
20 jack-ups + 3 semis + 2 accommodation rigs + 6 land rigs + 4
module rigs
60%
21%7%12%
8 seismic vessels + 4 comprehensive offshore survey vessels
Revenue Breakdown
Integrated well services
62%
18%8%12%
Well ServicesWell Services
GeophysicalGeophysicalMarine Support & Transportation (MS&T)
Marine Support & Transportation (MS&T)
DrillingDrilling
•Facilities figures are based on 1Q2009
55
… Leading Position in China, with Solid Customer Base
0%
20%
40%
60%
80%
100%
D rilling W ell
S ervices
M S & T G eophysical
COSL Others
60%70%
80%
ROCKOILROCKOIL
PNOC
___________________________1. As at 31 December 2008.
Shares in Offshore China Market1Shares in Offshore China Market1 Selected high-quality domestic and PSC clientsSelected high-quality domestic and PSC clients
Selected well-known international clientsSelected well-known international clients
Abs
olut
e C
ompe
titiv
e Ed
ge
66
2,726 3,0623,824
4,789
6,365
12,143
9,008
0
2000
4000
6000
8000
10000
12000
14000
2002 2003 2004 2005 2006 2007 2008
02-08 CAGR 28%
02-08 CAGR 28%
(RMB mn)
RevenueRevenue
354466
702821
1,128
3,102
2,238
0
500
1000
1500
2000
2500
3000
3500
2002 2003 2004 2005 2006 2007 2008
02-08 CAGR 42%
02-08 CAGR 42%
(RMB mn)
Net profitNet profit
Sound Track Records
77
7,150
5,833
3,465
2,715
2,071
3,250
1,004
4,410
2,580
1,321
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2005 2006 2007 2008 2009E
COSL CDE
(RMB mn)
69%
31%
Overseas
Domestic
CAPEX to Satisfy Increasing Demand
CAPEX since listingCAPEX since listing Domestic & overseas CAPEX breakdown in 2009Domestic & overseas CAPEX breakdown in 2009Domestic & overseas CAPEX breakdown in 2009
88
Agenda
Company Background1
Results Review 20082
3Company Outlook 2009 3
99
Global Macro-economy in Doldrums in 2008
Slowdown in global economic growthSlowdown in global economic growth Fluctuation of Intl’ Oil PriceFluctuation of Intl’ Oil Price
0
20
40
60
80
100
120
140
160
Jan-08 Mar-08 May-08 Jun-08 Aug-08 Oct-08 Dec-08
WTI Crude Oil Price
USD/Barrel
147.27
32.405.3% 4.9% 5.1% 5.0%
3.7%
16.8%
10.2% 10.7%
13.0%
9.0%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2004 2005 2006 2007 2008
Grow th Rate for World GDP Grow th Rate for China GDP
International crude oil prices have been fluctuating substantially, price went up to hit historical high at US$147.27/barrel in mid-2008, but then quickly plunged to a 5-year low during the second half. Average WTI crude price in 2008 was US$99.9/barrel
Source:IMF,National Bureau of Statistics of China
Global financial crisis triggered by the sub-prime crisis in the US has significantly eroded real economies around the world.Developed countries slipped into recessions, and economic growth in emerging countries and other developing countries also experienced acute declines.
China’s economic growth slowed down by 4 pp year-on-year
Source: Bloomberg
1010
2008 Results Overview
in RMB mn 2008 2007 Change%
Revenue 12,142.9 9,008.0 34.8%
Operating profit 3,630.5 2,827.4 28.4%
Operating profit margin 29.90% 31.39% 1.49pp
Net profit 3,102.2 2,237.6 38.6%
EPS (RMB cent) 69. 01 54.24 27.2%
Net operating cashflow 4,037.8 2,964.3 36.2%
Cash & cash equivalents 4,295.5 6,797.1 36.8%
Total assets 56,587.1 23,089.1 145.1%
Total debts 36,789.3 5,864.0 527.4%
Shareholders’ equity 19,797.8 17,225.0 14.9%
ROE 16.80% 19.86% 3.06 ppTotal liability / Total assets 65.00% 25.40% 39.60 ppTotal debts / equity 142.20% 15.35% 126.85 pp
1111
9,242
12,430
2007 2008
+313
5mn,
34.8%
OOverseas verseas businesses businesses spanning in 2spanning in 211 countries and countries and regions, regions, generating generating RMB3,040 RMB3,040 mnmn in in revenue, uprevenue, up 85%85%yy--oo--yy
Driving Factors for Revenue Growth
12,14312,143
9,0089,008
RMB mn
M&A
Price
Workvolume
Newfacilities
Regionalcontribution
Drivingfactor
Segmental contribution
China(55%)
Overseas(45%)
Geophysical(14%)
MS&T( 8%)
Well Services(15%)
Drilling(63%)
1212
Rapid Growth in Four Core Segments(R
MB
mn)
2007 2008
3,922
2,270
1,3741,442
0
6,000
12,000
34.8%
(RM
B m
n)2007 2008
2.3%
20.0%
20.5%
42.2%1,489
471
491
551
2,118391409538
0
3,500
7,000
DrillingWell Services
MS&TGeophysical
28.4%30.2%
17.4%
20.4%
51.0%
2,733
1,614
1,877
5,920
DrillingWell Services
MS&TGeophysical
34.8% growth in revenue34.8% growth in revenue 28.4% growth in operating profit28.4% growth in operating profit
1313
Highlights in Four Core SegmentsWell ServicesWell Services
GeophysicalGeophysicalMarine Support & TransportationMarine Support & Transportation
DrillingDrilling
The world’s 8th largest drilling fleet in operation
High utilization rate of drilling fleet: Calendar day utilization rate 91.1% for jack-ups, 100% for semis: both achieved available day utilization rate of 100%
Price grew steadily : Average day-revenue for jack-ups was US$116,000, up 48.7% yoy. US$179,000 for semis, up 26.1%.
Outstanding contribution from overseas operations and well-developed onshore businesses
Operations in the domestic market approaching full capacity
Introduced new services in overseas operations, such as directional drilling technical support for overseas clients
Revenue contributions from proprietary technologies (ELIS,FCT, etc)
Obtained 38 patents in 2008, of which 9 are innovation patents, boosting the total no. of patents to 117, of which 34 are innovation patents
Boasts largest & most comprehensive offshore support and transportation fleet in China
- lowered costs by procuring facilities domestically
- leased facilities from external sources to meet demand when in-house equipment were inadequate
Service rates grew steadily
High utilization rate: average available day utilization rate was 99.3%, calendar day utilization rate was 94.8%
Strong domestic demand
Continuous breakthroughs in overseas operation
Highly efficient operations from new vessels, data collection saw volume increased
- Asia’s most advanced 8-streamer survey vessel COSL719 commenced operation in March, completed 3D Data collection volume aggregating 3,113 sq.km.
1414
CDE Integration Progress
Principles of IntegrationPrinciples of Integration
Smooth transition, retaining core personnel
Streamline CDE’s corporate structure and lower administrative cost
Positioning for both short and long term, taking international dimensions into consideration
Phase I (completed) :Before completion, established a preliminary integration plan
Phase II (completed):Implemented and concluded the preliminary plan within 100 days
after completion, developed a long-term integration plan
Phase III:Implement the long-term integration plan within the first 1-2 years
Adjust company organization structure
Stabilize core team. establish mechanisms in compensation, motivation and evaluation
Decide on management approach and procedures
Complete integration on financial reporting systems
Facilitate construction of semis
Key Integration highlightsKey Integration highlights
A th
ree-
phas
e in
tegr
atio
n
1515
Significant Upgrading of Operation Capabilities after Integration
1 1
6 5 4 53
42
1
302468
10
Less/equal to 250 feet Approx.300 feet 375 feet 400 feet less/equal to 1500 feet 2500 feet 5000 feet (Option) 10000 feet
Existing Under construction
Range of operating depths of COSLCOSL’’s s drilling rigs
Jack-up
Comparable average fleet age of major players
___________________________
Source: ODS report as at Feb 2009. Platforms consist of jack-ups, semis and drillships, excluding platform under construction
___________________________
Source: Company report
Semi
(No. of rigs)
Age in Years
6542
1543
27 31 22 20 15 8
53
11
302
123 1 7
14
31 2
3
132
5646 45 41
3122 22 18 18
2
0
30
60
90
120
150
Tran
soce
an
Nob
le
Dia
mon
dO
ffsho
re
ENSC
O
Prid
e
Her
cule
rsO
ffsho
re
Row
an
CO
SL
Aba
nO
ffsho
re
Sead
rill
Jack-ups Semi-submersibles Drillships
No.8
The world’s 8th largest drilling service provider
19
2223
25 26
29
0
5
10
15
20
25
30
COSL Ensco Transocean Pride Noble Diamond
1616
Continuous Improvement on QHSE
COSL’s OSHA (score on the record) was 0.26, maintaining a low level by industry standards
COSL achieved an outstanding environmental protection record with no pollution accident (e.g. oil spillage) in 2008
0.25 0.26
0.45
0.220.27 0.29
0.32
0.00
0.20
0.40
0.60
0.80
2002 2003 2004 2005 2006 2007 2008
OSHA
Health:The foundation for
our corporate success
Environment:Be a responsible
international citizen
Quality:In pursuit of high quality
QHSEQHSE
Safety:Our persistent promise
1717
Fulfilling Social Responsibilities
Extended care to the society and staff members; launched regular “Giving Warmth and Love” and other activities for the poor and distressed
Established a COSL Academy of Technology aiming at nurturing talents to become professionals, enhancing the current training curriculum
The Company and its staff actively participated in public welfare activities
Donations for relief of earthquake-stricken people in Wenchuan, Sichuan aggregated RMB26.4 million
Donated RMB12 million in Hope Schools in Hainan Province
Improved the management of COSL Hope Schools in Mancheng and Luanping
1818
Agenda
Company Background1
Results Review 20082
3Company Outlook 2009 3
1919
Opportunities to Come With Challenges in the Oilfield Services Market in 2009
As the economy and the oil price remained sluggish and global supply for drilling platforms increases, competition for contracts is expected to intensify. Global day rates for jack-ups has already been declining, and that of semis are under pressure as well Due to its clientele and geographical reach, COSL’s day rates are more resilient to risks than that of its international peers
Source: Upstream, Bloomberg
Remark: Day rate index of 1 Jan 2004=100
Source:Report by ODS-PETRODATA., Feb 2009
Jack-up: ODS predicted the global demand/supply ratio of jack-ups will be 86.8% in 2009 and 85.4% in 2010 Semi: ODS predicted slight shortage of deep-water capacities in 2009, continuing into 2010 with a demand/ supply ratio at 100.4%Steady growth in demand for drilling in the offshore market in China
Declining global demand for drilling equipmentDeclining global demand for drilling equipment Downward pressure on global day ratesDownward pressure on global day rates
0
200
400
600
800
1000
1200
04/01 05/01 06/01 07/01 08/01 09/0130
50
70
90
110
130
150Day Rate Index (LHS) WTI (RHS) US$/bbl92%
95%97%
95% 94%92% 91%
400
450
500
550
600
650
700
2004 2005 2006 Dec-08 Jan-09 Dec-09 201060%
65%
70%
75%
80%
85%
90%
95%
100%
Global offshore rig usage (vessels)Demand to supply ratio(%)
2020
0.0
6.0
12.0
18.0
Husky(South
east Asia)
Anadarko BG G roup CNOOC Woodside ConocoPhillips
PEMEX
2008P 2009E
Demand for Oil and Gas Exploration Services from China Continued to Grow
Source: The mentioned oil companies
China’s rapid economic development created strong demand for energy with CAGR averaged 7% between 2001 and 2008, while the country meets 50% of its crude oil demand with imports. With demand being maintained at high levels, investments in oil and gas exploration will sustain
Brisk exploration activities are seen in offshore China; Major COSL clients are keeping their CAPEX for 2009 intact or slightly higher than previous levels
CNOOC expects not to reduce investments in its major businesses in the next 3 years. Its CAPEX in 2009 will reach USD 6.77b, 19% higher than last year, of which no less than 97% will be appropriated to exploration, exploitation and production CAPEX. Projected CAPEX of PetroChina in 2009 will be same as 2008, at RMB200b annually in the next few years
(USD billion)
Barclay Capital concluded after surveying 357 oil and gas companies that “global investment in oil and gas exploration in 2009 will amount to a total of USD400b, 12% lower than USD454b in 2008”
Some of the COSL’s major clientsSome of the COSL’s major clients
CAPEX of some of COSL’s clients in 2009CAPEX of some of COSL’s clients in 2009
2121
1
2
4
5
New Capacity streaming inNew Capacity streaming in
High facility utilization ratesHigh facility utilization rates
Ongoing overseas explorationOngoing overseas exploration
Drivers for COSL’s Sustainable Development in 2009
Accountable management teamAccountable management team
3 Acquisition synergiesAcquisition synergies
2222
COSL’s New Equipment in 2009
Drilling servicesDrilling services
Well servicesWell services MS&TMS&T
1
COSL
Well services equipment such as ELIS and FCT 2 liftboats to be built
To partially complete building 18 utility vessels in 6 caegoriesCompleted building and delivery of the Indonesian barge project
375ft Jack-up rig COSL Confidence commenced operationA 400ft jack-up rig COSL Strike to be delievedA 350ft jack-up rig to be delievedA 200ft jack-up rig to be delieved
2323
High facility utilization rates2
4,228
1,080
4,556
1,098
1,442
751184
0
2,000
4,000
6,000
8,000
10,000
12,000
2007 2008 2009EJack-ups Semi-submersibles module rigs Land rigs Accomodation platform
Surge in operating days of drilling rigsSurge in operating days of drilling rigsWell services index
642
24,229 23,626
1,742
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2007 2008 2009E
Self-own vessels Leased vessels
Days
9,64913,592
49,448
37,810
800
10,800
20,800
30,800
40,800
2007 2008 2009E
3D data collection 2D data collection
Sq km
Rapid growth of work volume of well servicesRapid growth of work volume of well services
Sustained growth of MS &TSustained growth of MS &T Expansion in work volume of geophysical servicesExpansion in work volume of geophysical services
100
141
0
20
40
60
80
100
120
140
160
2007 2008 2009E
Remarks: Well services volumn index in 2007=100
2424
Synergies from Acquisition3
Integrated services improved
COSL concentrates on providing clients with high value-added and integrated oilfield services. COSL will capitalize on the high quality drilling equipment of CDE to increase market share and explore cross-selling opportunities, enabling all business segments to grow . COSL will benefit from different segments and stages of the industry and its overall competitiveness will be enhanced
COSL concentrates on providing clients with high value-added and integrated oilfield services. COSL will capitalize on the high quality drilling equipment of CDE to increase market share and explore cross-selling opportunities, enabling all business segments to grow . COSL will benefit from different segments and stages of the industry and its overall competitiveness will be enhanced
Leading position in offshore China market ensured
Drilling rigs of CDE will operate in offshore China after acquisition and the leading position of COSL in this market is consolidated. Meanwhile, the work volume of cementing and drilling mud will be quickly improved. More vessels for MS&T will be needed to meet the demand for standby services, transportation, etc.
Drilling rigs of CDE will operate in offshore China after acquisition and the leading position of COSL in this market is consolidated. Meanwhile, the work volume of cementing and drilling mud will be quickly improved. More vessels for MS&T will be needed to meet the demand for standby services, transportation, etc.
Cost structure optimized
COSL will continue to implement a core cost-oriented strategy and optimize its cost structure in areas of operation, merchandising, R&D, administration, finance, human resources and maintenance in order to ensure further business development
COSL will continue to implement a core cost-oriented strategy and optimize its cost structure in areas of operation, merchandising, R&D, administration, finance, human resources and maintenance in order to ensure further business development
Operational efficiency enhanced
Following the acquisition, COSL will see competitive edges of its units better complement one another to optimize the efficiency on asset utilisation, and further enhance operational efficiency, quality of work as well as profitability
Following the acquisition, COSL will see competitive edges of its units better complement one another to optimize the efficiency on asset utilisation, and further enhance operational efficiency, quality of work as well as profitability
2525
233 436
1,1041,645
3,043
-
1,000
2,000
3,000
4,000
5,000
2004 2005 2006 2007 2008 2009E
Ongoing Overseas Development4
Ongoing overseas expansion into 21countries and regions
- Consolidate operation in SE Asia and Gulf of Mexico
- Accelerate business development efforts in the Middle East, Russia and Africa
Leveraging the business platform of CDE, especially in the high-end market in North Sea
Explore new business opportunities and explore new service offerings
ChinaVietnam
Norway
Australia
Gulf of Mexico
Indonesia
Operating regions overseas
Revenue from overseas businessRevenue from overseas business
Geographical distribution of businessGeographical distribution of business
RMB mn
2626
Highly Qualified Management Team
Extensive managerial experience in Chinese oilfield services industry
25 years of experience in servicing international oil companies
Outstanding managerial efficiency and performance
10 years of experience in international operation
2005 — Best CFO in Asian Oil Industry
2003 — Named one of the 10 Best Managed Companies
2006 — Entrepreneur of the Year中国企业联合会中国企业联合会
中国企业家协会中国企业家协会
2007 —one of the top 100 listed companies in China by value
2008 —one of the 25 stocks with the best performance in Greater China in 2008
2005-2007—one of the 30 stocks with highest investment potential
Rich industrial and managerial experience Rich industrial and managerial experience Extensive recognition in industryExtensive recognition in industry
5
2727
1Q 2009 Results Review
RMB mn 1Q2009 1Q2008 Change%
Revenue 3,928.6 2,503.6 56.9%
Net profit 960.2 891.3 7.7%
EPS (RMB cent) 21 20 5.0%
Interest bearing debt 4,981 2,244 120%
Gearing ratio 140% 14.6%
Note: All above data are prepared in accordance with PRC accounting standards.
2828
Thank You!