Demand for oil drilling rigs, which generally lags growth in demand for oil, is showing signs of picking up, according to the chief of Honghua Group, the world's second-largest maker of land-based drilling rigs.
'The recovery is not just talk. We have seen action,' said Honghua chairman and chief executive Zhang Mi. 'We are seeing the kind of quarterly new order flows we saw in 2007 and the first half of last year, especially in July and August.'
But the green shoots of revival would be too late to rescue the group's bottom line in the second half, added Zhang, who reported to shareholders last week that Honghua suffered a disappointing 55.4 per cent year-on-year fall in net profit to 56.11 million yuan (HK$63.68 million) in the first half.
Since then, however, the Sichuan province-based oil rig and component maker had received more than US$200 million worth of new orders and was in discussions with customers on potential orders worth a similar amount, Zhang said.
According to United States oilfield services firm Baker Hughes, the number of active drilling rigs in North America rebounded from a low of 876 in June to 1,009 in the first week of this month. The number had peaked at 2,031 in September last year.
Outside the US, however, the fall in rig counts has been more moderate.
While the rebound in the international oil price had played a role in improving demand for rigs, government support had also helped, Zhang said.