COSL sees earnings jump 17pc in first quarter

China Oilfield Services attributes improved results to higher drilling demand

PUBLISHED : Wednesday, 30 April, 2014, 1:31am
UPDATED : Wednesday, 30 April, 2014, 1:31am

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China Oilfield Services Ltd, the nation's dominant oil and gas drilling services provider, posted a 17 per cent rise in first-quarter net profit on the back of higher drilling volume.

Net profit for the three months to March was 1.41 billion yuan (HK$1.74 billion), compared with 1.2 billion yuan in the same period last year.

The first-quarter gain is 19.3 per cent of the 7.32 billion yuan average full-year profit estimate of 28 analysts polled by Bloomberg.

The company made a net profit of 6.72 billion yuan last year.

Revenue rose 18 per cent in the first quarter to 6.75 billion yuan as the state-backed firm ramped up drilling capacity.

It added a new rig during the period, while four rigs commissioned last year also contributed to growth.

The total operating days of its rigs rose 5.6 per cent to 3,061.

Operating profit grew 21 per cent to 1.69 billion yuan.

Barclays' analysts said in a research report last month COSL, a sister company of CNOOC - the mainland's dominant offshore oil and gas producer - had a positive earnings outlook this year despite weak overseas market conditions because of greater capacity supply.

They said COSL had secured 90 per cent of this year's orders, limiting its exposure to any softening of the market.

The analysts pointed out that three of the four additional rigs to be deployed this year were high-specification jack-up rigs operating in the Middle East and Southeast Asia, which will boost its average drilling rate.

"Despite its lack of deep-water assets relative to its Western peers, we view the strong demand for mid-deepwater assets offshore China as a positive driver for COSL's business and growth strategy," the analysts said in the report.

CNOOC's plan to raise drilling and new oil and gas fields construction spending by 26 per cent this year would bode well for COSL's revenue growth, they added.

COSL shares yesterday closed 1.68 per cent lower at HK$18.70.