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SINOPEC OILFIELD SERVICE CORPORATION
中石化石油工程技术服务股份有限公司SINOPEC OILFIELD SERVICE CORPORATION
2019 Annual Results Presentation
March, 2020
SINOPEC OILFIELD SERVICE CORPORATION
Disclaimer
⚫ The information contained in this document has not been independently verified. No representation or warranty
expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or
correctness of such information or opinions contained herein. The information contained in this document should be
considered in the context of the circumstances prevailing at the time, is subject to change without notice and has not
been, and will not be, updated solely to reflect material developments which may occur after the date of the
presentation. It is not the Company’s intention to provide, and you may not rely on these materials as providing, a
complete or comprehensive analysis of the Company, or its financial or trading position or prospects. Neither of the
Company nor any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or
otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in
connection with this document.
⚫ This document contains statements that reflect the Company’s current beliefs and expectations about the future as of
the respective dates indicated herein. These forward-looking statements are based on a number of assumptions about
the Company’s operations and factors beyond the Company’s control and are subject to significant risks and
uncertainties, and accordingly, actual results may differ materially from those described in these forward-looking
statements. The Company undertakes no obligation to update these forward-looking statements for any events or
developments including the occurrence of unanticipated events that occur subsequent to such dates.
⚫ This document does not constitute, in whole or in part, an offer for subscription or for sale or invitation to purchase or
subscribe for any shares of Sinopec Corp., Sinopec Oilfield Service Corporation and related companies on any
exchanges. No part of this document shall form the basis of or be relied upon in connection with any contract or
commitment whatsoever.
Section 1: Operations in 2019
Section 2: Financials in 2019
Section 3: 2020 Outlook
Table of Contents
Section 1: Operations in 2019
SINOPEC OILFIELD SERVICE CORPORATION 4
Overview
• Fuling Shale Gas: the first successful commercial shale gas project outside North America
• Puguang Gas Field: the largest marine-facies high-sulphur gas field in China
• Shengli Oil Field: one of the largest oilfield with complex reservoir in China
• Tahe Oil Field: marine carbonate reservoir
• Yuanba Gas Field: the deepest marine-facies reservoir in China
• North Ordos Oil and Gas Field: the first horizontal well demonstration area in China
• Shunbei Oil and Gas Field: the deepest oil and gas field in Asia (Generally Over 8,000m )
国家优质工程金质奖
Geophysics Drilling Engineering Logging and Mud Logging Downhole Operation Engineering Construction
Strong R&D Capability
• 74 professor-level researchers
• 1,558 senior researchers
• 3,428 research, design, laboratory and
• development staff
• 3 research institutes
• 3 design companies
• 46 professional technical institutes
FirstPrize
National Science and Technology Progress
Award 2017
High-Efficiency Exploration and
Development in Fuling Large-scale
Marine Shale Gas Field
National Science and Technology ProgressAward 2012&2013
Technologies for safe and efficient
development of extra-large ultra-deep high
acid gas fields & industrial applications
Special Prize
Rich Experiences
国家优质工程金质奖
• Geophysics: 69 sets of seismic equipment, 175 sets of vibroseis, 324,800 collector• Drilling: 692 onshore drilling rigs, of which 294 capable for 7000m+ depth drilling, and 14
offshore drilling platforms
• Logging: 135 image logging systems, 464 sets of comprehensive logging instrument• Downhole operation: 148 sets of type-2500 and type-3000 fracturing vehicles, 119 sets of
workover rigs with power higher than 750 HP, 6 offshore operation platforms
Advanced Equipment
SINOPEC OILFIELD SERVICE CORPORATION
-10,590
142 914
-14,000
-9,000
-4,000
1,000
2017 2018 2019
Overall Operation
54.1
71.3
64.3
20
30
40
50
60
70
80
90
100
2017 2018 2019
5
( USD/Barrel )
Annual Average Brent Oil Price
Net Profit of 2019 (ASBE)
( RMB Million )
Operating Revenue of 2019
( RMB Million )
0
20,000
40,000
60,000
80,000
2017 2018 2019
48,594
58,409
69,870
SINOPEC OILFIELD SERVICE CORPORATION
736
869
999
2017 2018 2019
15.0%
20,683 24,309
27,804
2017 2018 2019
14.4%
666 747
931
2017 2018 2019
24.6%
22,155
30,279
18,903
2017 2018 2019
-37.6%
13,686 13,44114,103
2017 2018 2019
11,900
14,500
17,100
2017 2018 2019
17.9%
6
5,144
5,954
6,876
2017 2018 2019
15.5%
4.9%
2D Seismic(Km) 3D Seismic(Km2)
Geophysics Drilling Engineering
Drilling Footage(10,000 m)
Logging & Mud Logging
Standard Meter for Logging(10,000 m)
Mud Logging Footage(10,000 m)
Downhole Operation(Well Times)
Downhole Operation
Completed Contract(RMB Million)
Engineering Construction
Performance by Segments
SINOPEC OILFIELD SERVICE CORPORATION
市场开拓
7
⚫ Overseas Market➢ Middle East:Singed new wellbore contracts valued USD
1.17 billion in Saudi Arabia, 2 rigs enter gas well servicemarket, 6 drilling rigs obtained unconventional business firsttime, and signed S84 3D geophysical exploration projectscontracts valued USD 176 million and MIP pipeline projectof USD 265 million. In Kuwait, entered the field of deep welldrilling and workover, comprehensive logging, and drillingbit services, and signed 2 deep well workover rigs and 7logging teams service projects
➢ South America:In Ecuador, signed contracts with WAYRAfor 41 wells drilling projects, with total contract valued ofUSD 98 million , Cumulative new contract value of USD 180million
➢ Africa and Others:In Algeria, signed 3 geophysical dataacquisition projects of USD 140 million
⚫ Domestic Sinopec Market
➢ Provided service in key capacityconstruction projects such asWeirong shale gas, Fuling shalegas, Shunbei oil & gas field, tightgas in Ordos, gas field in westSichuan and mature oil field ineastern China
➢ Won contracts in Qingdao-Nanjing gas pipeline project,valued 4 billion RMB
➢ Promoted the cooperativedevelopment of difficult-to-develop reserves, and increasedcrude production by about118,000 tons
⚫ Domestic non-Sinopec Market
➢ Gathered to CNPC, CNOOC and
other high-quality market, 55
rigs entered the PetroChina
southwest shale gas market.
➢ Made steady process in oil and
gas exploration market of China
Geological Survey Bureau and
Chinese Academy of Geological
Sciences
30,300
37,100 38,400
New Contracts Value
2017 2018 2019
Domestic SINOPEC Market
( RMB Million )
10,600 11,700
14,500
New Contracts Value
2017 2018 2019年
Domestic Non-SINOPEC Market
( RMB Million )
917 1413
1680
457
228
291
237
374
224
290
200180
2017 2018 2019
Middle East Africa Americas Others
1,901
2,2152,375
Overseas New Contracts Value
( USD Million )
SINOPEC OILFIELD SERVICE CORPORATION 8
Project Management
Downsizing Organization
Optimized team structure, and guidedadministration units to grassroots front-line units. Market-based and project-based employment methods were usedto supplement the frontline.
Integrated and cut 25 auxiliary grassroots units;
◼ Coordinated over 9,000 staffs transfers at all levels,effectively alleviating the contradiction of staff mismatch
◼ Redeployed 6 drilling rigs
Personnel in 3 tiers of administration units decreased by 10.4% YoY
Project Management
Asset Allocation and Leasing Center
Human Resources Allocation Center
Performance Incentives
Formed the project coordinationteams for western, northern andsouthwestern areas.
Increased the performance wagesproportion from 40% to 50%
Single-well/single-project evaluation+ linked evaluation mechanism
Deepening Reform
SINOPEC OILFIELD SERVICE CORPORATION
科技研发
9
◼ Patents: applied for 711 news patents home and abroad, 351 granted in 2019
◼ Set up 2 R&D centers (Shengli and Zhongyuan) and 10 technology centers (
Drilling well, MWD ect.)
◼ Successfully tested the self-developed drilling RSS and made breakthroughprogress
◼ Applied the jointly developed 185 ℃ high temperature MWD successfully inShunbei industrial zone
◼ New network imaging logging system, wideband acceleration detector, andnode seismic acquisition instrument reached the international advancedlevel
Improving R&D
System
Tackling key
Technology
Transformation
Of Scientific
Achievement
◼ Signed contracts with Saudi Aramco for hydrogen sulfide detection, coiledtubing and wellsite construction, and launched industrialization plan for theautomation of drilling rig strings
◼ Ecuador’s ILY project and Mexico’s EBANO comprehensive reservoirservice projects progressed steadily
Patents &
Awards
Section 2: Financials in 2019
SINOPEC OILFIELD SERVICE CORPORATION
62,089 60,905 62,069
-2,101
5,778 6,764
-20000
0
20000
40000
60000
80000
100000
2017 2018 2019
Total Assets Net Assets
-10,590
142 914
-21.8%
0.2% 1.3%
-25%
-20%
-15%
-10%
-5%
0%
5%
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
2017 2018 2019
Net Profit Net Profit Margin (Right Axis)
405
-2,940
1,377
-4000
-3000
-2000
-1000
0
1000
2000
2017 2018 2019
11
Main Financial Indicators
Operating Revenue Net Profit & MarginRMB Million
Operating Cash FlowRMB Million
Total Assets & Net AssetsRMB Million
28,370 37,221 40,490
7,238
8,048
16,400 12,986
13,140
12,980
0
20,000
40,000
60,000
80,000
2017 2018 2019
Domestic inside SINOPEC Domestic outside SINOPEC Overseas
26.7%
14.9%
58.4%
48,594
58,409
22.5%
63.7%
13.8%
69,870
18.6%
57.9%
23.5%
RMB Million
SINOPEC OILFIELD SERVICE CORPORATION
50,541 52,616
63,238
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Operating Cost
2017 2018 2019
-2,497
5,089 6,174
-5.14%
8.71%
8.84%
-10%
-5%
0%
5%
10%
-4,000
-2,000
0
2,000
4,000
6,000
8,000
2017 2018 2019
Gross Profit Gross Margin (Right axis)
1,412 1,186
8,872 9,570
0
5,000
10,000
15,000
2018 2019
Inventory Contract Assets
4.6%16,973 15,630
11,996
0
5,000
10,000
15,000
20,000
Accounts Receivable
2017 2018 2019
23.3% 10,284 10,756
12
20.2%
Operating CostRMB Million
Accounts Receivable
RMB Million
Profitability , Receivables and Inventory
Inventory & Contract Assets
RMB Million
RMB MillionGross Profit & Margin
SINOPEC OILFIELD SERVICE CORPORATION
五大业务板块收入和毛利分析
Operating Revenue
3,9805,132
4,220
2017 2018 2019
Gross Profit Margin%of Total Revenue
24,719 29,88336,488
2017 2018 2019
(RMB Million)
94%
6%
48%
52%
96%
4%
89%
11%
77%
23%
5.6%
7.7%
5.1%
0%
5%
10%
2017 2018 2019
-7.2%
8.6%
9.2%
-10%
-5%
0%
5%
10%
15%
2017 2018 2019
-14.0%
1.9%
20.8%
-20%
-10%
0%
10%
20%
30%
2017 2018 2019
-7.9%
9.6%5.7%
-10%
-5%
0%
5%
10%
15%
2017 2018 2019
-5.5%
8.9%6.3%
-10%
-5%
0%
5%
10%
2017 2018 2019
1,811 2,0062,503
2017 2018 2019
4,189 5,6447,657
2017 2018 2019
11,852 13,13316,382
2017 2018 2019
-333
541 440
2017 2018 2019
-1,788
2,581 3,346
2017 2018 2019
-651
1,173 1,039
2017 2018 2019
Gross Profit
Geophysics
Drilling
Logging and Mud Logging
Engineering Construction
Downhole Operation
225
394
216
2017 2018 2019
-253
38
520
2017 2018 2019
13
(RMB Million)
SINOPEC OILFIELD SERVICE CORPORATION
Solvency
Structure of Assets and Liabilities
103.4%90.5%
89.1%
29.1% 31.4%35.6%
115.7%
74.6% 76.2%
0%
20%
40%
60%
80%
100%
120%
140%
2017 2018 2019
Debt to Assets Ratio
Interest Bearing Debt to Asset Ratio
Debt to Equity Ratio
Credit Facility from Financial Institutions
(Unit: RMB Billion)
21.2
8.8
22.3
Credit Line for loan from Sinopec Finance and SinopecCentury BrightBill and Guarantee line from Sinopec FinancialInstitutionsComprehensive Credit Line from Banks (Not for Loan)
Total:52.3
14
SINOPEC OILFIELD SERVICE CORPORATION
Costs Reduction in 2019
◼ The costs reduction in 2019 was 623 million yuan,
104% of the annual target
Capital Expenditure in 2019
◼ The 2019 CAPEX was 2.866 billion yuan,
mainly used for international market
development and equipment updating
740
1,520
2,866
2017 2018 2019
15
(Unit: RMB million)
Downtime
Costs
61%
Organization
Operating Costs
14%
External
Lease Costs
8%
Consumable
Materials Costs
5%
Other Productive
Consumption Costs
12%
Cost Reduction and Capital Expenditure
Section 3: 2020 Outlook
SINOPEC OILFIELD SERVICE CORPORATION
Industry Outlook
2020-2021 Brent Oil Price Outlook CAPEX Forecast for Major Upstream Companies
(Resource: reports from respective agencies)
11.6
15.5
20.6
13.4
9.3
25.2
33.9
11.9 13.6
16.8
20.2
13.4
9.3
31.5
34.2
12.0
2020 2021
(Unit: Billion USD)
⚫ The recovery of the world economy will slow down and world oil price is expected to fluctuate in the largerange
⚫ China’s economy will face an increased downward pressure, but the basic trend of long-term improvementand rigid growth in oil and gas demand will not change
⚫ Driven by the security of national energy strategy, the three major domestic oil companies are expected tocontinue to increase investment in upstream exploration and development. Oil companies have morestringent requirements for more qualified and efficient oil service business to increase production and reducecosts.
Ch
an
ges
in t
he o
il
serv
ice i
nd
ust
ry
(Unit:USD/barrel)
(Resource:Morgan Stanley)
17
2020 2021
http://www.google.co.uk/imgres?imgurl=http://www.businesscommand.co.uk/uploads/bp_logo_823200753158am.jpg&imgrefurl=http://www.businesscommand.co.uk/blog/07/01/2011/bp-oil-disaster-explained/&usg=__rncFfjMLOsl8T7OAJ3jdAANk1Hg=&h=602&w=960&sz=38&hl=en&start=1&zoom=1&tbnid=5eeDBLSSV7SExM:&tbnh=93&tbnw=148&ei=ZRtVTbrQD-qShAevrKHRDA&prev=/images?q=BP+logo&hl=en&safe=active&sa=N&gbv=2&tbs=isch:1&itbs=1
SINOPEC OILFIELD SERVICE CORPORATION
30,279
18,90317,700
2018 2019 2020
869999 1001
2018 2019 2020
0.2%
-6.4%
13,441 14,103
23,780
2018 2019 2020
68.6%
747
931 935
2018 2019 2020
24,30927,804 28,000
2018 2019 2020
14,500
17,100
15,000
2018 2019 2020
18
5,954
6,876 6,960
2018 2019 2020
1.2%-12.3%
Work Volume in 2020
Geophysics Drilling Engineering
2D Seismic(Km) 3D Seismic(Km2) Drilling Footage(10,000 m)
Logging & Mud Logging
Standard Meter for Logging(10,000 m)
Mud Logging Footage(10,000 m)
Downhole Operation(Well Times)
Completed Contract(RMB Million)
Downhole Operation Engineering Construction
0.7% 0.4%
SINOPEC OILFIELD SERVICE CORPORATION
Domestic Sinopec Market
DomesticNon-Sinopec Market
Overseas Market
371 384
396
2018 2019 2020
New Contract Value(100 million yuan)
22.123.7
22
2018 2019 2020
New Contract Value(100 million USD)
19
Market Development
117
145130
2018 2019 2020
New Contract Value(100 million yuan)
⚫ Provide quality services for oil exploration inTarim Basin, Eastern Fault, Jungar Basin andnatural gas exploration in Sichuan Basin andOrdos Basin
⚫ Provide efficient services in key industrialareas such as Shunbei ultra-deep oil andgas fields, Southwest natural gas, Ordostight oil and gas and deep shale gas insouthern Sichuan
⚫ Focus on the development of key pipelineprojects such as Qingdao-Nanjing,Qianjiang-Zhongyuan, Longkou-Linyi-Puyang , West line of Ordos-Anping-Cangzhou and Suyu external pipelineproject
⚫ Consolidate existing high-quality marketsof CNPC and CNOOC, and pay closeattention to the capacity construction ofkey areas such as PetroChina's southernSichuan shale gas, Tarim and Karamay, aswell as major exploration and developmentprojects such as CNOOC Bohai Bay, BeibuGulf, and South Yellow Sea project
⚫ Continuously strengthen strategiccooperation with key clients such as ChinaGeological Survey Bureau and YanchangGroup
⚫ Keep an eye on the national oil and gaspipeline market, and closely follow keycentral and local government gas, waterconservancy, and municipal projects
⚫ Consolidate and expand key markets such asSaudi Arabia, Kuwait, Ecuador, and Mexico
⚫ keep an eye on reservoir integrated serviceprojects in Ecuador, Kuwait, and Mexico
⚫ Taking the drilling business as the“Pioneer“ to introduce logging, cementingand completion, directional wells, drillingfluids, coiled tubing, fracturing and otherbusinesses to oversea high-end market
⚫ Focus on the engineering constructionmarkets in Saudi Arabia, Kenya, and Thailand.
SINOPEC OILFIELD SERVICE CORPORATION
Deepening Reform and Fine Management
20
◼ Focus on the development of core mainbusinesses, promote geophysicalexploration, strengthen wellbore business,and optimize engineering construction
◼ Enhance the development of high value-added technical service business
◼ Coordinate the development of emergingbusinesses
◼ Improve the project manager system,implement market-based remuneration,contract management and professionaldevelopment
◼ Further increase the personnel proportionfrom main business
Optimize resource integration
Optimize HR structure
◼ Optimize the market resources, establishand improve the market-oriented resourceallocation mechanism
◼ Optimize materials and equipmentresources through lease centers, andpromote unified management in key areas
◼ Optimize human resources and take HR asthe deployment center
◼ Optimize engineering technologyresources to establish and improvetechnology sharing mechanism
Optimize organization structure
◼ Integrate logging companies with smallscales and weak profitability
◼ Optimize and integrate related units inthe same area in the engineeringconstruction segment
◼ Promote internal integration of therelated geophysics branches
Optimize business structure
SINOPEC OILFIELD SERVICE CORPORATION 21
Improve eight
integrated
support
technologies
Continuously improve 8 sets of integrated technologies, includingintegrated shale gas, acid gas, deep oil and gas reservoirs, shallowsea oil and gas reservoirs, tight oil and gas reservoirs, coalbedmethane, E&P of mature oilfields in the East China, and geothermalresources development and utilization projects
Improve R&D System
Improve the construction of four R&D platforms continuously,cultivate offshore engineering technology centers, and promotethe constructions of key laboratories such as MWD, wellboreworking fluids, high temperature and high pressure oil and gastesting
Focus on core technologies
Accelerate the transformation
of results
Accelerate the promotion of RSS, new SINOLOG900 networkimage logging system, node seismic acquisition system, and theintegration of electrical control of long-distance pipelines andcomplex oil reservoir integrated technology
Focus on core technologies, break the technical bottlenecks,meet technical needs under complex working conditions such asultra-deep, high temperature/pressure, and small boreholes, andimprove core competitiveness
Enhancing Technology Innovation
SINOPEC OILFIELD SERVICE CORPORATION 22
Q&A
http://ssc.sinopec.com
Investors Relations
Tel:+86 10 5996 5998Fax:+86 10 5996 5997Mailbox:[email protected]