COSL Investor Presentation
May 2008
1
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.
2
1.
Company Overview
2.
Company Outlook
3
A Unique Integrated Oilfield Service Provider
Drilling
Revenue Breakdown*
25%
44%
16%
15%
12 jack-ups + 3 semi-submersibles
+2 onshore drilling rigs+4 module rigs
Marine Support
Well services
Integrated well services
Profit Breakdown*
Geophysical
53%
14%
19%
14%
73 working vessels+4 oil tankers+
5 chemical carriers
* For the year ended 31 Dec, 2007
8 seismic vessels + 4 survey vessels
4
Dominant offshore China
Offshore China Beijing
0 100 200 300 km
Market Share in Offshore China Markets
Tianjin
Korea
Bohai
Bay
90%
Shanghai
East
China
Sea
Absolute Dominance
China
60%
30%
>60%
>70%
>80%
Well
Services
MS&T
Geophysical
Guangzhou
Hong
Kong
0%
Drilling
Eastern South
China Sea
Western
South
China
Sea
Philippines
For the period
ended 1Q2008
COSL
Others
All-round IPM offshore oilfield services provider with leading position in
offshore China markets
5
Successfully Penetrate into Overseas Markets
Existing Markets
Overseas Target
Markets
Sustain: Leading position in
offshore China markets
Consolidate: South-East
Asian markets
Reinforce: Develop Middle East, Gulf of Mexico,
Russia and Africa markets
Realize: Parallel development for domestic and
international markets
6
Company Performance Since Listing
Revenue
RMB Mn
10000
Operating Profit
RMB Mn
3000
9242
2827
2500
8000
6524
2000
6000
4929
1392
1500
3942
4000
2813
1021
3153
2504.6
1000
850
692
2000
500
0
483
550
2002
2003
0
2002
2003
2004
2005
2006
2007
1Q2008
2005
2006
2007
1Q2008
Operating Profit Margin
Net Profit
RMB Mn
2004
3000
% 50
41.7
2500
40
2238
31.4
2000
30
1500
21.9
1128
1000
701
500
354
20
17.7
18
18.1
17.8
2002
2003
2004
2005
891.3
821
466
10
0
0
2002
2003
2004
2005
2006
2007
1Q2008
2006
2007
1Q2008
COSL’s operating profit and net profit has7 grown by 5.8 times and 6.3 times since listing
Company Profitability Since Listing
Total Asset
ROA & ROE
RMB Mn
%
25000
25
23089
15000
10000
19.9
20
20000
15
13130
7958
8231
9141
13.6
12.4
10.3
9664
10
8.1
8.1
7.3
5.7
10.8
9.9
8.7
5.8
5
5000
0
0
2002
2003
2004
2005
2006
2002
2007
2003
2004
2005
ROE
COSL’s total asset has grown by 1.9 times since listing
8
2006
ROA
2007
Operating Results Hit Record High (cont’d)
Competitive cost advantage
‹ Although revenue and
operating profit increased
significantly, operating cost
grew by a moderate 24.3%
(RMB Mm)
Yo
%
24.3
=
th
row
g
Y
1,123
Employee
compensation costs
Repair and
maintenance costs
Consumption of
supplies, materials,
fuels, services and
others
Subcontracting
expenses
Operating lease
expenses
Selling, general and
administrative
expenses
Depreciation
Other expenses
318
937
357
2,525
1,935
357
366
102
206
313
81
900
1,042
387
274
2006
2007
9
‹ Increases in operating cost
were mainly due to business
expansion, full capacity
utilization and increased
expenses on equipment and
staff headcount
‹ We have the confidence to
maintain growth in both top
line and bottom line
Steady Growth in Overseas Business
Overseas markets adding momentum
Overseas revenue keep growing
RMB mn
•
By end of 1Q2008
RMB Mn
20%
1800
18%
1500
16%
14%
1200
679
12%
900
(27.7%)
10%
8%
600
6%
4%
300
2%
Globalization strategy
marked initial success
0
0%
2003
2004
Overseas revenue
‹
‹
‹
‹
Drilling services grew by new businesses, development
in overseas market and increase in daily rate
Well service grow with the increase in operation volume
Marine support and transportation services driven by in
daily rate increase, and increase in operation volume of
utility vessels and chemical tankers
Geophysical services has increased by COSL718 in
Myanmar’s significant increase in income
10
2005
2006
2007
Overseas/total
Positive Recognition from the Capital Market
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
China Enterprise Directors
Association
China Enterprise Confederation and China Enterprise Directors Association
Named Mr. Yuan Guangyu, CEO and President, the “Most Watched
Entrepreneur for 2006”
A Top-100 Most-respected listed Company in China in 2007
Recommended as Top 8 golden stocks
Corporate bond credit rating: AAA
Long-term credit rating: AAA
Chinese Academy of
Social Sciences
International Investment
Research Center
The highest investment value listed company in China 2007
11
Continuous Emphasis on QHSE
‹
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 dissipation
was 0.1116, down 18.7% y-o-y
‹
Saved 10,804 tonnes of standard coal, met
energy saving targets for the year
Health:
The foundation for
our corporate success
Safety:
Our persistent promise
QHSE
OSHA
1.00
Quality:
In pursuit of
high quality
International standard:0.75
0.80
0.60
0.45
0.40
0.22
0.27
0.29
2004
2005
0.32
0.25
0.20
0.00
2002
2003
2006
2007
12
Environment:
Be a responsible
international citizen
1.
Company Overview
2.
Company Outlook
13
International Oil Prices Hike New Heights
Trend of global demand on crude oil, E&P and oil prices
International
h the
Internationaloil
oilprices
pricesare
areexpected
expectedto
toclimb
climb1.6%
1.6%per
peryear
yearwit
with
thesurging
surgingE&P
E&P
expenditure,
fuelled
by
the
growing
demand
of
the
global
market.
expenditure, fuelled by the growing demand of the global market.
14
Steady Increase in Crude Oil Demand
World
World demand
demand for
for crude
crude oil
oil
100
90
80
77.1
77.8
79.3
C
：1
R
G
A
82.5
China
China demand
demand for
for crude
crude oil
oil
.8%
83.9
400
84.9
85.8
C
300
70
.1%
346
323
293
300
117
119
252
60
54.9
57.0
56.4
217
57.5
52.4
52.7
53.3
5
5.6
6.7
7.2
7.5
4.7
6.5
20
10
20.0
20.1
20.4
21.1
20.8
20.7
20.8
50
：8
R
G
A
200
139
229
159
83
53
62
164
167
170
176
181
184
187
2001
2002
2003
2004
2005
2006
2007
40
30
100
0
0
2001
2002
USA
2003
2004
China
2005
2006
2007
Domestic Production
O ther
Source：IEA
Net I mport
Source：CEIC, China Petroleum and Chemical Industry Association
15
Bright Future for Oil and Gas Exploration
Continuing
Continuing Increase
Increase in
in World
World
Investments
Investments in
in Marine
Marine Oil
Oil and
and Gas
Gas
World investments in marine oil&gas exploration and
operations are expected to increase to US$144b
per annum on average in next 10 years.
140,000
120,000
Average investments in deep water operations will
exceed US$15B per annum. Deep waters and ultra
100,000
deep waters will continue to be hot exploration spots
for world oil and gas.
80,000
Investments will grow faster in West Africa, Brazil,
60,000
Gulf of Mexico and Asia Pacific regions.
Investments in Marine oil and gas in Asia Pacific in
40,000
2008 will increase 65% from the levels in 2002.
20,000
Exploration activities are seen to kick off in
emerging marine regions including Southeast Asia.
0
2002
2003
2004
2005
CAPEX
Source: Energyfiles Ltd.
2006
2007E 2008E 2009E 2010E
OPEX
16
Source: Oil.IN-EN.com
Goals of COSL
Near
-term goal
Near-term
goal
Long
-term goal
Long-term
goal
Become a top
top-notch
-notch international
oilfield service providers
An oilfield service provider with
strong competences in the
international market
2020
2010
Plans
Accelerate development of integrated
Explore new business opportunities new
Expand facilities, upgrade service capability
capabilities. Comprehensively enhance
oilfield production services
Strengthen deep water operation capability
professional capabilities
Increase investments in R&D to enhance
Expand scope of service, implement global
COSL’s technological competitiveness
development strategies
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Achieve breakthroughs in technology,
capacity expansion and capability upgrades
through capital market operations including
M&A
Four Core Strategies
A
-listed integrated
A unique
unique publicly
publicly-listed
integrated oilfield
oilfield service
service provider
provider
Technology-driven
Cost Competitiveness
Integration
Strategic positioning: Expert in conventional technologies
Keen follower in advanced applications
Enabler of highly efficient operations
Contributor to cost reduction
Pioneer in integrated services
Participant in global competition
Partner in win-win development
Servant for shareholder value
18
Global Operation
CAPEX to Introduce New Equipment
CAPEX since listing: in excess of RMB 10 billion
RMB Mil’
5500
4400
3300
2200
1100
0
2002
2003
2004
2005
19
2006
2007
2008
Increase New Capacity
2008
2009
2010
Drilling
Services
COSL942 to operate in
2H; 4 module rigs
operate for six more
months; 5 onshore
rigs commence
operation
Jack-up COSL936
will commence
operation by year
end. 4 onshore rigs
have half year more
revenue.
Jack-up COSL937 to
operate; Four 200-feet
jack-up rigs to operate
in 2010 and 2011
Well
Services
R&D, building,
procure equipment
like cementing pump,
ELIS, liftboat etc.
R&D and procure
tools for MWD,
acidizing and
crushing
MS&T
Services
9 new supporting
vessels will
commence operation
in 2H
9 new supporting
vessels to operate in
1H. 2 high-powered
deep water vessels will
commence operation
by year end
Geophysical
Services
20
Manage the 3000m
deep water drilling rig
invested by parent
company in Mid 2011
16 offshore
engineering supporting
vessels to be
delivered respectively
in 2010 and 2011
One 12-streamer
seismic vessel will
commence operation
One 8-streamer
seismic vessel start
operation in April
2011
1 deep water suvey
vessel will commence
operation
One Stop Solution
Exploration Stage
y
Development Stage
Production Stage
Drilling
Marine Support
and Transportation
Well Services
Geophysical
COSL – An oilfield services company offering integrated services
spanning across drilling, development and production
21
Increase Work Throughput
‹ Uptrend in CAPEX and OPEX of oil
companies on oilfield exploration
‹ CNOOC announced discovery of 10
new oil and gas reserves in Nov 2007
‹ 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
Source: CNOOC Group annual report
22
Service Prices Have Room to Increase
Jack-up: USD/Day
US$78,337/day
80,000
60,000
40,000
20,000
2002
2003
2004
2005
2006
2007
Semi-submersible：USD/Day
US$142,302/day
160,000
120,000
80,000
40,000
0
2002
2003
2004
2005
2006
2007
Utilization
ity,
Utilizationto
toremain
remainhigh
highdue
dueto
tostrong
strongdemand,
demand,saturated
saturatedcapac
capacity,
good
goodcustomer
customerrelationship
relationshipand
andtight
tightschedule
schedulemanagement
management
23
Explore New markets, New businesses
Expand foothold
in overseas
markets
Targeted Southeast Asia, Middle East, Gulf
of Mexico, Russia and Africa
Consolidate
existing
market share
Penetrate into
onshore markets
Expand into onshore services, leveraging
our strength in the offshore market.
Secure first-mover
advantages in
new markets and
new businesses
Tap the deep
water segment
Expand presence in the deep water segment
following footsteps of oil companies
24
Explore New markets, New businesses (cont’d)
COSL-LR7001 commenced
drilling
25
Accelerate Technology R&D
COSL’s
COSL’s application
application of
of technologies
technologies
Introduced proprietary ELIS logging system
into domestic and overseas markets
Leapfrog
Development
Established the first joint laboratory
Introduced cementing services to Xinjiang
Proprietary “Bohai low-density-high-strength
well cementing technology widely applied
Integrated
Innovation
Marketoriented
Talent
oriented
COSL’s technology-driven strategy
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Conventional
Cement
Low-Density,
High-Strength
Cement
Well-geared for Challenges in Deep Water
COSL’s
COSL’s deep
deep water
water development
development strategies
strategies
‹ Well equipped in deep water facilities
two high-power deep water working vessel
one 12-streamer seismic vessel
One 3000m deep water drilling rig invested
by parent company will under operation
ASDD
One deep water survey vessel
‹ To start the well testing in 2Q08
‹ Well prepared in technology R&D
ASDD technology increases the depth of the
‹ Upgrade deep water operation
from 500m to 1500m
third generation submersible rigs to 1,500m
‹ Well collaborated in human resources
On-job training enables our staff
PSC
experienced in deep water operation
Independent
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Thank you
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