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The technical services sector compromises two main services providers, COSL and COOEC. The two companies are capable of providing services for offshore oil and gas development in seismic, drilling, wellhead services and engineering and construction.
Thanks to the vigorous oil and gas exploration and development activities offshore China, the service companies achieved fast and efficient growth. With significant improvement in technology, equipment and experiences, they also achieved aggressive expansion of business overseas.
We elevated our goal to develop COSL into a world-class oilfield services company in 2006. In order to achieve this goal, we have strived our best to meet the demand of customers and implement the strategies to enhance technology, lower costs and achieve internationalization and integration. COSL aims to provide its customers in China and overseas with safe and efficient services which are environment friendly and of high quality. It hopes to realize fast and healthy organic growth and at the same time achieve a win-win situation between the company and its shareholders, customers, employees as well as partners.
Oilfield Services
COSL is the leading oilfield services provider in offshore China with 30 years of experience. It has four major business segments including drilling services, well services, marine support and shipping services, as well as geophysical services, covering each phase of oil and gas exploration, development and production. It was listed in Hong Kong in November 2002 and its stock started trading by means of level I unlisted ADR (ticker symbol: CHOLY) in the U.S. in March 2004.
COSL has realized continuous and stable growth since public listing. Its sales and operating income achieved CAGR of 22% and 30% respectively. In 2006, its sales reached RMB 6.36 billion and income was RMB 1.39 billion, increasing by 32.9% and 63.7% over the previous year.
The company continued to substantially expand its overseas market. Its sales from the overseas market reached RMB 1.1 billion, and the proportion of sales from overseas increased from 9% in 2005 to 17% in 2006. COSL¡¯s three rigs and other exploration fleets provided services to clients in Indonesia, Australia and Myanmar, etc. Its satisfactory service quality has received recognition from clients. It has expanded its operations to 13 countries and its brand awareness kept rising in the market.
COSL has the largest offshore operating fleet in China, with over 100 vessels including rigs, seismic survey vessel, multi-functional vessels and oil tankers, etc. In 2006, the 400-foot drilling rig COSL 941, 6-cable geophysical survey vessel COSL 718 and multi-functional vessel COSL 671 joined operation, further enhancing the operating capability of the company. It also achieved important progress in development of in-house technologies including the Enhanced Logging Image System (ELIS) and successfully applied them in offshore operations. At the end of 2006, the company owned 62 patents.
The outstanding performance and transparent corporate governance won applause from the capital market. Share price of the company rose 74% in the year and its market capitalization reached HK$ 21.6 billion. Under the belief that ¡°We have to do better,¡± COSL continued its strategies to enhance technology, lower costs and achieved internationalization and integration. It aims to provide its customers in China and overseas with safe and efficient services that are environment friendly and of high quality. It hopes to realize fast and healthy organic growth and at the same time achieve a win-win situation between the company and its shareholders, customers, employees as well as partners, so as to develop a competitive oilfield service company in the world.
Offshore Engineering and Construction
COOEC is the largest engineering and construction company for designing, onshore fabrication and offshore installation and maintenance for oil and gas exploration and production offshore China. It was listed in Shanghai Stock Exchange (Code: 600583) in February 2002.
COOEC provides services for oil companies operating in offshore China, and has expanded its business to the Middle East, Southeast Asia and South Korea, etc. Its clients include CNOOC Limited, Shell, BP, Total, Mitsubishi and Hyundai, and its outstanding service quality has won wide recognition. Almost 20 of its projects have received National Science and Technology Progress Awards. The onshore terminal project of Yacheng 13-1 gas field was awarded with the Luban Award, the highest prize to honor quality excellence in architecture and construction in China.
COOEC aims to become an energy construction company. It focused on the enhancement of fundamentalities of the company in 2006. It had 28 ongoing projects and they all underwent smooth progress. It completed 10 projects in the past year and 6 of them were ahead of schedule.
The company made continuous progress in safety management. According to the statistics standards of USA Occupation Safety and Health Monitoring Bureau (OHSA), despite the 25% increase in project hours, the rate of loss in number of workdays in COOEC dropped from 0.43 in 2005 to 0.2 in 2006.
In 2006, the operating performance of COOEC was further improved and it realized sales of RMB4.97 billion, representing a rise of 16.68%. Net income reached RMB 747 million, increasing by 27.68% as compared with the previous year. The company also had eye-catching performance in the stock market. Its stock closed at RMB 34.67 on December 31, 2006, increasing by 235.26% from the previous year. Its market value increased from RMB 10.19 billion in 2005 to RMB 27.46 billion in 2006.
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