Disclaimer
The information contained in this presentation is intended solely for your
own reference only. In addition, the information includes 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. Past track record cannot be used as guidance for
future performances.
2
Market Environment
4
Source: IHS report
Global Utilization Rates of Drilling Rigs
In 2016, international oil prices remained at low levels, oil and gas companies' CAPEX decreased for 2 consecutive years
The oilfield services industry was experiencing overcapacity and significant declined in service workload and price
CAPEX of Upstream Oil Companies
Source: Barclays report
Annual Financial Performance1
RMB(mn) 2016 2015
Revenue 15,085.5 23,174.2
Operating Profit (11,367.7) 1,631.5
Net Profit (Incl. Impairment) (11,459.5) 1,108.7
Net Profit (Excl. Impairment) (3,186.7) 2,881.1
1. All above financial data are from the audited financial report prepared by the Company under HKFRS.2. Available cash includes cash equivalents and available-for-sale financial assets.
Distribution policy for 2016:0.05 yuan per share
Sufficient cash available2 : RMB13.1 bn
Debt-to-capital ratio of 50.9%
RMB(mn) 2016 2015
Total Assets 80,544.1 93,525.1
Total Liabilities 45,247.7 46,696.4
Shareholders’ Equity 35,296.4 46,828.7
5
Segments Performance
Drilling
33 jack-ups
11 semi-subs
2 accommodation rigs
5 module rigs
Well Services
Logging, drilling and
completion fluids,
directional drilling,
cementing, completion,
well workover, etc.
Marine Support
85 self-owned
utility vessels
34 utility vessels
managed
Geophysical and Surveying
7 seismic vessels (46
streamers)
6 surveying vessels
1 ocean bottom
cable team
Operation Capacity
(n
o. o
f rigs)
9 6 8 4 3 4 19
<=250 300<=375
400<=1,500
2,500
<=5,500Including rig under construction: 1*5000ft semi-sub HYSY982Remarks: as of March 2, 2017
6
(W
ate
r dep
th: fe
et)
Business Strategies
Secure the core clients in offshore China, maintained or enhanced the market share
Reduce CAPEX substantially, and maintain robust financial strengths and healthy cash flow
Boost business expansion efforts and expand the scale of IPM businesses in the international market
Improve efficiency and cost competitiveness through cost reduction measures
Set mid to Long term targets:
50% revenue contribution of domestic and international market ;
50% revenue contribution of technology and equipment segment .
7
Operating Performance
(Cu
mu
lativ
e n
o. o
f pate
nts)
Patents Increased
2012 2013 2014 2015 2016
463
621
763
943
1076
2015 2016
52.7%
56.3%
Ratio of equipment under the age of 10 years
Ratio of equipment under the age of 20 years
70.9%75.3%
2015 2016
(Percentage)
Equipment Configurations Optimized
Technology Segment Outperformed
68%
32%
Domestic International
Revenue contribution and change
Drilling
Marine Support
Geophysical and Surveying
Well Services
Unit:pcs
8
Domestic Market
01 02
03 04
Market shares
100%
Drilling WellServices
MarineSupport
Geophysical and Surveying
Consolidated the leading presence
in offshore market
Market Breakthroughs
Provided bundled drilling services for Shell
HYSY721 to provide marine 3D seismic acquisition services to SK
Enrich customer & service type
Laid underwater cable for China Telecom
Provided large-scale structure towing services for Guangzhou Shipyard
Expanded the offshore wind power exploration and new energy deep-water exploration business
Applied proprietary R&D results
Cement slurry system successfully won the bidding of Shell
Organic blockage system increased the Company's revenue
9
Breakthrough in International Markets
128 new contracts: 10 of which are worth over RMB100 million
4 new markets: Far East, Oman, Saudi and Gabon
11 new clients : Pan American Energy, DNO, ROSGEO, Spectrum, etc.
IPM contract: Petrofac and Shell, etc.
China
Remarks: blue icons mark the business coverage while yellow icons mark the newly entered markets10
COSL Seeker completed a HTHP operation in Indonesia ( 2016 )
HYSY937 has won a long-term project with SAKA ( 2016 ~ )
NH9 has won the bidding of the Kangean drilling project(2017~)
HYSY718 and HYSY720 completed high-density 3D seismic survey project respectively ( 2016 )
Southeast Asia
Far East
Americas
COSL Rival has obtained the ConocoPhillips contract and won the bidding of its follow-up operations (2017~)
Middle East
COSL Superior and COSL Craft have won contracts ( 2016~ )
COSL Strike has awarded a contract from DNO in Oman (2017~)
Europe
Won integrated service contract from Pan American Energy(2017~)
Africa
Obtained a 3D seismic survey contract from Spectrum, which was the first time to conduct geophysical survey in West Africa(2017~)
Well Services segment has won the Tropic IPM service contract (2017~)
Well Services segment has won the high-end directional drilling contract(2016~)
NH8 and NH9 completed their first projects in the Far East ( 2016 )
NH8 has won bidding contract (2017~)
HYSY685 successfully completed vessel support services project in harsh area(2016)
Awarded an drilling contract from SIRIUS PETROLEUM (2017~)
International Presence
11
R&D Commercialization
Well Services: steady progress of
industrialization of D+W system
Output value of self-developed LWD
System and RSS System reached tens of
millions yuan
Geophysical and Surveying:
high-precise seismic equipment achieved
commercial operation
China's first set of deep-water high-
precise seismic acquisition equipment
Well Services:
HT-FLOW drilling fluid helped to
obtain the Indonesia BD project
Successfully developed HT-FLOW drilling
fluid system and met the needs of high-temp,
high-density and high-acid gas operations
Well Services:
filled gaps in fracture-filling sand
control technology
Fracture-filling sand control technology
has been successfully put into use, which
fills gaps in offshore China
Technology Segment
12
Cost Control
Effectively Variable Costs Reduced
Optimized storage resources: Terminated
tenancy for idle factories
Reduced rental expense: Terminated charter
for HYSY935
Reduced material cost
Reduced repair and maintenance expenses:
Conducted more maintenance using in-
house resources
Reduced other operating expense:
Suppressed administrative expense, retired
aged equipment
Subcontractor costs Materials consumption
Rental and charter costs
Repair costs
42% 17%
13%12%
13
Major Variable Cost Breakdown
QHSE and Charity
Excellent OSHA safety management ensured high-quality
operations
Maritime rescue
• Participated in maritime rescues for 22 times, rescued 17 vessels in distress,
rescued 33 people in distress
Effectively promoted environmental protection
• Actively to participate in public environmental activities
Actively made charitable contributions
• Built Hope Primary Schools
• Cared for autistic children
Excellent OSHA Index
0.46
0.22
0.27
0.29
0.32
0.25
0.26
0.23
0.2
0.19
0.24
0.180.08
0.070.1
0
0.1
0.2
0.3
0.4
0.5
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
According to OSHA, coefficient 1 is equivalent to one accident per 200,000 man-hours
14
Brand Recognition
Continuously improving market competitiveness
37 honors obtained in domestic and overseas markets
• Awarded the only “Well Emerging Partner”by Shell in 2016
• HYSY937 won the Best Contractor Performance Award from SAKA for two consecutive years
• HYSY981 received “China Quality Awards”
• Statoil's first-ever “Perfect Well” recognition went to “COSL Promoter”
Ensure high quality and High efficiency operations
Equipment aging coefficient 73%, aged average 11.9 years
To meet requirements of various waters and customers
Dispose of low-efficiency assets, retire or write off obsolete equipment
Many vessels passed the performance test with “zero defect” in equipment inspection and zero operational downtime
15
The Board of Supervisors won the “Top 50 Proactive Board of Supervisors of Listed Companies” organized by China Association for Public Companies, Shanghai Stock Exchange and Shenzhen Stock Exchange
Awarded “Best Board of Directors of China Listed Companies - Main Board” and “Best New Media Operators of China Listed Companies” by Securities Times.
July 2016, various awards including “Best Investor Relations Company” by Institutional Investor
Enlisted in “China Top 500 Innovative A Share Listed Companies Index” and received the “2016 PurpleGold Innovation Award”
Constituent stock of Heng Sheng (China A) Corporate Sustainability Index; and constituent stock of Heng Sheng Corporate Sustainability Benchmark Index
Awards and Recognitions
The Company’s annual report won the Gold Award of "2016 Spotlight Awards", “Top 100 Communications Materials of 2016”, Gold Award of "Vision Awards" and many other honors
16
Oil price is expected to rise gradually from 2017 to 2020
Recovery in oil prices will drive up capital investment
1
2
5
Further maximize synergies and cost advantages among
different segments. Prudent financial policy.
The CAPEX of CNOOC in 2017 is RMB 60 billion to 70 billion
Not only owing China's offshore markets, CNOOC has also joined multiple projects globally
The Company's workload and partial service prices are expected to rise up at different levels
Over the mid-to-long term, oil and gas will still be an important part of
the energetic structure
3
Industry Overview
18
Growth Drivers
Leading market
share in offshore
China market
Excellent equipment
management
capability
Unique integrated
business model
Flexible business
model promotes
development of
new international
markets
Continue to
expand the scale
of self-developed
technology
applications
Staff stability enables
sustainable
development
19
Market Expansion
Long-term Strategic Partners
Enhance presence in six regions
Penglai 19-9 oil field
Enping 23-1 oil fields
Weizhou 12-2 oil field phase II
Uganda project
……
Northern Europe
the Americas
Middle East
Southeast Asia
Far East
Australia and Africa
Drilling services – provide quality services with more flexible
business model
Well services – expand market size of technology segment
and explore IPM services opportunities
Marine support – keep up with the Company's integrated
services, strive for breakthroughs
Geophysical and surveying – gradually expand the scale of
international market 20
Oilfield Production and Reservoir Protection Technology
Production technology: new blockage removal systems and expand the application in mature field
Reservoir Protection Technology: make field applications plans to solve the technical challlenge of workover fluid in sensitive reservoir
Serialization and Industrialization of Technology Products
D+W System: gradually promote industrial application and serialization of sizes and functions
Well completion tools: high-pressure, high-temp and corrosion-resistant well completion tools serialization to form over 70 kinds of well completion tools with self-owned intellectual property right
Technology in Equipment segment
Geophysical and surveying: industrialization of a complete set of equipment and speed up the cable control and positioning technology applications to provide support to the development of seismic acquisition technology
Drilling services: Improve self-developed drilling equipment research and development capabilities and enhance the "cost-leading capability"
Acceleration Technology Development
21
Prudent Financial Policy
Company Moody's S&P Fitch
Oilfie
ldS
erv
ices
Schlumberger A1 (Stable) AA-(Stable) -
Halliburton Baa1(Neg) BBB+(Stable) -
Baker Hughes Baa1(Stable) A(Stable) -
Weatherford B3(Neg) B+(Neg) CCC
COSL Baa1(Neg) BBB(Stable) A(Stable)
Offsh
ore
drillin
g
Diamond Ba2(Stable) BB+(Neg) -
Ensco B1(Stable) BB(Neg) -
Noble B1(Stable) BB-(Neg) -
Rowan B1(Stable) B+(Neg) -
Transocean B2(Stable) BB-(Neg) B+(Neg)
Seadrill Caa2(Neg) CCC+(Neg) -
22
Strictly control the CAPEX
Continuously optimize the debts structure, ensurethe liquidity of RMB and USD fundraising channels
Cash flows are abundant in the short-to-mid term
Top rated in the industry
Strictly control the cost and enhance the delicacymanagement level
Debt ratio in accordance with the Company'sdevelopment
CAPEX
Unit: RMB
2015
6.7 billion
2016
3.5-4.5 billion
Remarks: long-term unamortized expenses is not included
2017 2018E
~2.5 billion
Operating
Drilling Rig2017
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecLocation
Do
mestic
14 Jack-ups
2 Jack-ups(NH1/HYSY932)
2 Jack-ups(HYSY941/HYSY942)
1 Jack-up(Kaixuan)
2 Semi-subs(NH2/NH5)
1 Semi-sub(Prospector)
1Semi-sub(NH7)
1Semi-sub(NH9) -
1Semi-sub(HYSY981)
Inte
rnatio
nal
3 Jack-ups(Superior/Craft/Hunter)
2 Jack-ups(HYSY936/HYSY937)
1 Jack-up(Strike)
2 Jack-ups(Boss/Power)
1 Jack-up(Seeker)
1 Semi-sub(Promoter)
1 Semi-sub(NH8)
1 Semi-sub(NH6)
23
Rig Operation Status(15th Mar 2017)
Remarks: 1 Semi-sub (Pioneer and 5 Jack-ups(Force/Gift/HYSY943/Gulf Driller Ⅰ/Confidence) are in bidding or negotiation processes. The follow-on contract of Innovator is in negotiation process.
Jack-up Semi-sub
Full-year contract coverage
Full-year contract coverage
Full-year contract coverage
Full-year contract coverage
The leading
integrated
oilfield services
provider in
offshore China
and Asia-Pacific
RegionExperienced
and high
efficiency
management
team, leading
in safety
indicators
Integrated
business
model with
cost
advantage
Competitive
specialized
services
Prudent
financial
policies and
healthy
financial status
1
2
3
4
5
6
Conclusion
50%
50%
Mid and long term
50%
50%
24
Domestic Income
International Income
Equipment Segment
Technology Segment
Mid and long term
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