Oilfield services group targets profit growth of at least 20pc
China Oilfield Services Ltd (COSL), the dominant provider of services to the offshore China oil and gas industry, expects profit to grow at an annual rate of least 20 per cent in the next few years, as it increases investment to as much as 3.5 billion yuan this year.
The sister firm of offshore oil and gas producer CNOOC has a three-pronged strategy of capacity expansion, drilling rate increases and technology breakthroughs to achieve the earnings goal, CLSA analyst Gordon Kwan quoted chief financial officer Zhong Hua as saying in a luncheon organised by the brokerage for its clients on Tuesday.
A company spokeswoman confirmed the profit growth target, saying this would be aided by a planned three billion to 3.5 billion yuan of capital expenditure this year, up from an estimated spending of 2.8 billion yuan last year. She would not elaborate.
Mainland oil companies have been using their windfall earnings from record oil prices to raise their drilling spending in the past few years to explore for more reserves and develop previously unprofitable oilfields.
CNOOC, the oilfield service provider's largest customer, increased its drilling spending to 17.46 billion yuan in 2005 from 4.34 billion yuan in 2001.
At the same time, tight global drilling rigs supply has sent rental rates of drilling vessels soaring. COSL's drilling rates averaged US$43,500 a day in 2005, up 13.18 per cent from 2004.