COSL doubles income on higher drilling rates

PUBLISHED : Thursday, 30 October, 2008, 12:00am
UPDATED : Thursday, 30 October, 2008, 12:00am

China Oilfield Services Ltd (COSL), the mainland's dominant offshore drilling services provider, has posted a 101.2 per cent year-on-year jump in third-quarter profit because of higher drilling and service charges.

Net profit for the quarter rose to 1.21 billion yuan (HK$1.38 billion) from 604.15 million yuan in the year-earlier period. Turnover increased 28.4 per cent to 3.09 billion yuan.

For the first nine months, net profit rose 61.7 per cent to 2.75 billion yuan. This compared with a 53 per cent growth forecast by CLSA head of China energy research Gordon Kwan.

The number of operating days for the company's drilling rigs slipped 7.3 per cent to 3,722 because of the upgrading of a rig and longer maintenance periods for some vessels, COSL said.

This offset the benefit from the commissioning of a new rig and more calendar days in the nine-month period, it added.

COSL did not disclose its third-quarter drilling rates.

First-half average rates surged 41.4 per cent year on year to US$117,120 per day.

In a research note, Mr Kwan said the credit crisis and falling oil prices had not yet affected drilling, but were likely do so. International drilling rates had peaked and might only be raised to reflect inflation, he added.

However, he expected COSL's drilling rates to rise 15 per cent on average in the next three years. COSL's rates have lagged international levels because of lower labour costs.

'Demand for drilling rigs will remain high in China because of CNOOC's pursuit of 7 per cent to 11 per cent oil and gas production growth in the coming five years,' Mr Kwan wrote.

Yang Hua, chief financial officer of COSL's largest customer, its sister firm CNOOC, this week said his company would not cut its capital expenditure this year.

It would continue to expand exploration and production activities in the next few years though oil prices have dropped by more 50 per cent from their peak in July.

Solid outlook

Experts say mainland demand for drilling rigs will remain strong

Net profit in the third quarter soared 101.2 per cent from a year ago to, in yuan: 1.21b yuan




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