China Oilfield Svcs Ltd H

Dear ladies and gentlemen, investors and analysts, good afternoon. Thank you all for joining the 2025 Third Quarter Earnings Call of China Oil Fuel Surfaces Limited today. COSL, guided by the goal of building a world-class energy service company with Chinese characteristics, continuously optimizes resource allocation and enhances the efficiency of capital operations. It focuses on five major development strategies, technology-driven, cost-oriented, integration, internationalization, and regional development. The company is committed to optimizing the structure of large-scale equipment, continuously improving profitability, constantly breaking through and perfecting key core technologies, and enhancing the core competitiveness of oilfield services. In the face of a complex and volatile external environment, the company adheres to the goal of world-class standards, deepens and broadens strategic planning, and intensifies and refines the implementation of strategies. It promotes the coordinated development of production and operation, as well as reform and development in an all-rounded way. Also, the company presents a high-quality and sustainable development trend.

今天出席会议的管理层是公司首席财务官切吉先生。 今天发布会会分为两个部分。 首先,切吉先生将带领大家了解公司在2025年第三季度的业绩情况, 之后我们将开放提问环节。 接下来让我们把时间交给切吉先生。 Please allow me to introduce Mr.切吉, the Chief Financial Officer of the company.

Today's press conference is divided into two parts. First, Mr. Chair will lead us to understand the company's performance in the third quarter of 2025. Afterwards, we will open the question and answer session. Now, allow me to give the floor to Mr. Chair.

首先,感谢各位关注中海油服的投资界朋友。 下面由我给大家介绍一下中海油服2025年 In this stage of the industry, the global energy service market is uncertain and fluctuating. The price of oil has dropped and the market is shaking. In the face of a complex external environment, the company focuses on increasing the demand for production, continuing to supply equipment and technical double protection for high-quality coal and high-level production, and effectively enhancing the company's risk-resistant ability through full-scale, In the first three seasons of 2025, the company's operating income reached RMB348.54 billion, which increased by 3.5%. The total net profit reached RMB32.09 billion, which increased by 31.3%. In terms of the operation of the three major blocks, in the first three seasons of 2025, the brick-and-mortar blocks continued to deepen the management of the economy, to optimize the configuration of domestic and foreign market resources. The daily use rate is the same as the two-digit increase. The revenue of the board is significantly increased. The technical board promotes the technical system to further extend to the demand and demand levels. The main business line's workload is the same as the growth. The overall profit rate of the board is stable. The spread of the board continues to consolidate the leading advantage of domestic market share. The accumulated workload The company will continue to grasp domestic oil and gas increase production resources, overseas operating quality, economic management, technological innovation, risk prevention and control, and other key work. Thank you for your introduction. Now we will have a question and answer session.

In order to give more investors a chance to ask questions, please ask no more than two questions. Thank you for the management introduction.

Now we will proceed to the Q&A session to give more investors the opportunity to ask questions. Please limit your questions to no more than two per person. Before asking a question, please tell us who you are and what your company's name is. Please note that we will provide consecutive interpretation during the Q&A session. So we will allow some time for translation after you have asked your question as well. If you have a question, please press star 1.

下面我们有请第一位提问者, 他是来自美林证券的王一鸣。

We will now invite the first person to raise questions, who is from Mary Lynch. So my first question is about these two days we saw some oil companies in the Middle East. They have proposed that Shaka Amei actually notified them to restart some of their projects. Maybe it was the same as we stopped some of the contracts like last year. And then these two days we heard that there were about six projects restarted. So we would like to ask whether we have heard any similar news from China Ocean Post. Are we likely to have some turning points? to relocate to Seattle and Jinghai to do business, and then further increase our daily expenses or profit. Then my second question is more financial. We noticed that our effective tax rate in Q3 is actually a relatively large decline, whether it is the same or the same ratio. I would like to ask what factors caused the decline in our effective tax rate,

First of all, I would like to congratulate the company for achieving very good results for the third quarter of the year. I have two questions. First of all, I have heard some news about certain drilling rigs which will restart their operations, and I have heard that would involve six projects in total. Has the company heard such news? And if that is the case, if certain projects are about to be recommissioned, is it going to have a positive impact on your daily rate and also utilization rate overall? My second question is about the effective tax rate being reduced in the third quarter. I would like to understand the reasons behind that and do you have any forward-looking projections into the fourth quarter, or what is your projection for the next year concerning effective tax rate?

Thank you. 感谢你的提问。 我先回答第一个问题, 关于这个中东沙特拉美那边一些动向。 其实这个市场的传闻呢, 应该说在八月份开始, 据我所知,八月份开始就有所耳闻。 I think on the one hand, the company has not yet received the actual demand for land. I think what we need to do is, on the one hand, to maintain the efficiency and quality of the ship. On the other hand, we will also put our equipment Please translate.

Thank you very much for your questions. Allow me to first address the first question, which is relevant to the development in Middle East. Actually, beginning from the month of August, we have started receiving some news about certain activities, but to date, we do not have any well-established demand coming from that region. What we need to focus on at the moment is to ensure the high level of efficiency of our operations and at the same time make effective dynamic adjustments to the use of our equipment in the global front so as to optimize the utilization of our equipment instead of just focusing on one single region.

I mainly listed a few data for everyone to refer to. First of all, the effective tax rate of the entire company this year actually belongs to a return to normal level. I just looked at it for half a year, it was about 19% to less than 20%, a little bit more, and now it has accumulated to the third quarter, which is also about 20%, a little more. Now allow me to switch over to your second question and share some figures with you.

This year, overall speaking, the effective tax rate has returned to a normal level. Previously, it was between 19% and just below 20%. And now if we look at the level for the third quarter, it is slightly over 20%. So by comparing the figures from the third quarter to the previous time period, I would not say there are any major fluctuations.

但是我们也可以看到2024年前三季度有效税率确实已经到了高达将近28% So there is indeed a big change compared to last year. It should be said that there is indeed a big drop this year compared to last year. As I said just now, it has dropped to what we think is normal. I am also willing to share with you the reason for the decline. We made a preliminary analysis. The main reason is that we are proud of Norway. This year, through good work, The loss of the high-day fee has basically achieved a significant reduction. However, there is no corresponding increase in the fee. So this is almost... If we look at the interest rate, if we subtract 9 points, it will be almost 3.5 points. um um

So if you look at the figures for Q1 to Q3, which was around 28% in the year 2024, and compare that level with the level we see this year, yes, you may say there is a rather substantial change So what are the main reasons behind such a reduction in the effective tax rate? Well, I can offer some of my own thinking and analysis. I believe the major reason is in relation to what happened to the operations in Norway. We have enjoyed very good performance there with very high level of daily rate, and also the level of losses have been substantially reduced. At the same time, there was no increase in the profit tax, which is a very good news. So if you look at such situation, I can say that towards the, if you compare the first three quarters of last year and that is caused by the operations or special situation in Saudi Arabia, So I would not say that these are generalized trends, but rather I think such change or movements have been caused by certain special events or special activities instead.

我刚才举的两个例子呢,加起来大概是能够对应上我们同比这两个因素大概是降了五个点。 We are down from about 28.9 to 20. This is like saying that it has dropped by 8 or 9 points in total. What I said is about 5 points. It should be said that it is still more representative. Looking at the fourth quarter or the whole year, my personal judgment is that the first factor will definitely continue during the year. Another one, because it has returned to a normal effective rate level as a whole, so there will be no large-scale

So combining the two examples I have just given you, the impact would be a drive down of about five points. So if you look at the actual level, 28 to 29%, dropping to around 20%, that is a drop of eight to nine points. So looking ahead into the fourth quarter and also the full year, I would say that such elements would continue to play a role. And since our effective tax rate has already returned to the normal level, I can tell you I do not expect any substantial changes.

好的,谢谢管理层的回答。 那下面我们接入下一位提问者。

Let's introduce the next questioner, which is from Gu Yifan. Thank you. Thank you for the opportunity to ask the question.

I actually want to ask about your well-surfaced segments. In the first half, I have examined the figures for the profit situation. So I would like to ask, can you explain why in the third quarter the profit trend has shown such a direction? What do you expect the future profit margin to be looking ahead into the final quarter of the year, and also what is the projection for the full year?

Thank you for your question. To answer the first question, it should be said that the technical version of the company has achieved a significant improvement in both size and quality in the past three years, and has reached a certain level. This is One of the things I want to say is that the second one is that this year, the price of oil has indeed fallen, which has led to the weakening of the upper oil investment committee. We can also see that the entire investment in global maritime technical services is showing a decline of nearly 6%. So for Zhuhai Oil Company, the technical version Thank you very much for your question.

Allow me to first answer your first question. Well, I should say in relation to our well-surfaced segments, If you look at what has happened in the past three years, I should say that we have seen very good improvement in terms of our scale of operations and also the quality of our operations. And actually, I should say that we have already entered a phase of rapid development. So focusing on this year, we have seen the drop in oil prices, and that has caused a lowering of investment sentiment in the upstream. Overall investment reduction is about 6%. So to us, and particularly to the raw surfaces segment, I think this trend will continue.

另外我想说的是, 这种技术反块, 我们还是得以于国内的这种, The support of the huge workload, our revenue in the first three seasons, has dropped by about 3%. In fact, we believe that it is still better than the global decline. Specifically, the domestic decline is still basically controllable. Overseas, some business adjustments have caused some declines to be faster than domestic. Of course, there are some minor changes in business. In terms of profit, it is a bit lower, but our profit rate remains at more than 16%. It's a bit lower than that, but it's still a high position. In addition, we also got the situation of S&P, Bexels, and Harry Potter. In terms of their performance, in the first three seasons, their income has dropped by 3% and 4% in total. In terms of profits, Svendberg's income has dropped by 21.87%. Harry Potter's income has dropped by 53.46%. Baker's income has dropped by 5%. I should say, compared to them,

So when we talk about the technical settlement, we need to understand that it is still well supported by the huge amount of workload available on the domestic front. So while we see a slight decrease of 3% comparing the first quarter to the third quarter, we can say such a mild drop is still outperforming the global trend or the global situation. So when we talk about the drop in the domestic front, it is still well under control. And for the overseas performance, we do see a mild decline in our profit level. But still, our margin is standing at a relatively high level, which is more than 16%. So basically, we are doing quite well compared to our peers. And we see that from Q1 to Q3, there was a drop of 3% to 4%, but it is, comparatively speaking, better than the global situation and also some of the other major players in the market. For example, we can see that Harry Bolton has also suffered a decline of their performance by 53.1%, and they can hear dropped by 5%, and other peers are also suffering. So you can draw a comparison here and see we are actually doing quite well.

Regarding the future outlook, I think, first of all, We also had a conversation with the investors before. For Yufu, Yufu's future development, we still hope to expand overseas. The second one is the expansion overseas. We are still inclined to technology-based, deeper-level cooperation with the global IOC and NOC. Through Our mature technology and equipment output can continue to expand our market share to improve our overseas technology's profitability. Of course, there will be fluctuations. The competition is very intense. In the case of lower oil price investment reduction, this fluctuation of interest rates or So looking ahead into the future when it comes to the rail services segment, our future expectation is that we will expand our overseas operations.

In particular, we will focus our efforts on the technical front. We will enhance our collaboration with the IOC and AOC, and with our sophisticated technology and very outstanding equipment offering, we believe we can expand our market share and increase our profitability. Yes, we will continue to see fluctuations in the market, And yes, competition will continue to be fierce. And at the same time, we see a reduction in the sentiment of investment. But we will strive to improve ourselves and maintain all the operational indexes at a high level.

好的,谢谢管理层的回答。 下面我们接入下一位质问者。 Thank you very much.

Let's invite the next questioner from EAC. Thank you. But the interest rate has risen. Can you please share with us what is the reason behind this? In addition, I would like to ask what we think about the fourth quarter. For example, last year's fourth quarter, we saw a significant increase in revenue, but the profit was significantly reduced. Will there be such a situation in the fourth quarter of this year? Or does the company think that the fourth quarter of this year will still be in a state of continuous rise compared to the third quarter? Thank you.

Thank you for the opportunity to raise questions. I have two questions. First of all, I can see the revenue coming down in Q3, but the growth margin has gone up. Can you please explain why? Second question, if you look at the fourth quarter last year, the trend was a rising revenue, but a substantially dropping profit margin. So is that going to be the trend this year? What are your expectations?

Thank you for your question. It should be said that the progress of the current company's income, we feel that it may be slightly lower than before, but we think that the overall should still meet the expectations. The change in labor force, we think it may be because of the third quarter, Thank you very much for your question.

At the moment, if you look at the progress we are making with our revenue, yes, we do see a mild decline, but that is well within our expectation. And when it comes to the growth margin level, certain activities or elements have created impacts on us, especially in the third quarter, but the impact is not going to be as substantial as last year. So I would say together with some savings we have made on the portion of our financial expenses, I think things are well under control.

看第四季,其实也就是一年,看全年了。 首先,从游图的行业的惯例来看, 一般是收入会 It may be affected by the weather in the second half of the year. However, in the fourth quarter, the income may increase with the acceleration of the settlement. Some of the income may increase. But at the same time, there are some corresponding costs, such as labor costs. This is because there is still a limit on the total salary. So at the end of the year, there may be a bigger one. A bigger one than the whole year. This is the cost of labor. The company has also been working hard to do this. At the end of the year, the cost-benefit ratio. This kind of impact on our financial balance. In general, 我觉得一年下来,目前看,我们还是有信心能够继续保持适度的这种增长的态势。 回答完毕,谢谢。 So if we are to look ahead into the fourth quarter, that means we are examining the situation for the full year.

I would say this is a usual trend that happens in the road surfaces industry. In the second half of the year, the revenue level would normally be affected by poor weather, but because of the speeding up of account settling in the final quarter, we expect a slight increase for our revenue level. In relation to our cost factor, because of certain salary and wages limitations stipulated by the state, the cost going into salaries would take up a rather big portion of our overall cost. And all along, our company has been doing well, this balancing act involving our different cost elements. So at the moment, I can tell you we are still confident that the company will maintain a very good growth momentum.

好的,谢谢这位投资者的提问。 下面我们接入下一位投资者, 他是来自中金公司的闫贝娜。 请开始您的提问。 Let's invite the next questioner, 这是闫贝娜。 关主好,我有两个问题。 第一个就是关于我们技术板块的上半年, 有一些体系收费的一些变化。

In the past, we hoped that after the social change in Jiafang, the company could adjust the structure through some different efforts, and then recover the profits again. So, what are the new changes in this area? And then, is the influence of this area on profits gradually returned to the situation before the change? The second one is about South China Sea No. 8. Because South China Sea No. 8 has been working there for the first half of this year. Thank you very much for the opportunity.

I have two questions in total. The first one is concerning the fees you have collected and any changes in such trends for the first half comparing it with the second half. Do you have any major fluctuations that you can share with us on this front? And secondly, it is about South Sea Number 8. Concerning this vessel, I think it is supposed to be heading directly to Brazil in the first half of this year. So what is happening to the latest operations of this vessel, what is happening Especially considering the political people in Brazil, is it affecting our operations and services?

Thank you. 感谢你的提问,我会先回答第一个。 我想说的就几个点,第一呢,体系收费,某种意义上来讲,是未来国内给甲方提供服务的一个发展趋势。 So allow me to answer your first question, which is the systemic charges and fees.

I would say this is a new development trend in mainland China. And if you look at the performance on this front, comparing what happened last year, which was only a single digit, it has already increased to about 50% or so this year.

当然这个未来体系收费的占比是否一定要达到很高的比例, 这个可能还是要结合这种甲方作业的需求。 including the specific supply and demand situation, to make a decision. What we want to say is, first, the cost of the system for our technical version, the impact of the production value, is not very big, a few billion. Second, the short term will have some slight impact on our profits. But it's definitely not a one-to-one impact with a one-to-one production scale. We have been optimizing the composition and formula of raw materials for thousands of years to reduce our cost. In a sense, in the first half of the year, the work in this area, including the three-season, has still achieved great results. So in relation to what will happen in the future, will we maintain such a

big portion, it really depends on the actual situation on the site of our operations. Well, I would like to share a few points. First of all, concerning such fees or rates, they do not create any big impact on our technical segment. The extent is only about a few hundreds of millions. Secondly, the impact on the shorter term on our profit level is also quite small. So what we'll be doing is to optimize our raw materials combination to reduce our cost. And actually, we have achieved very good results on this front for the first three quarters of the year. So when it comes to the actual extent of such endeavors, it really depends on what is happening to our raw materials. we will need to continuously do our homework and do further development and make necessary timely adjustments. And sometimes when there are changes to the raw materials side, we may need to make adjustments for about a year or so.

总的来说,体系收费, I'll answer your second question. Nanba is currently in the 8th uh uh uh

So let me move on to your second question, which is about South Sea No. 8. The vessel is now currently in the stage of being inspected by the Brazilian party. So at this moment, there is no operation for this vessel, and the overall adjustment project will be completed once the inspection team is ready to collaborate with us on the adjustment front.

Let's invite the next questioner from Macquarie. Hello, Mr. Chie.

I'm Macquarie from Macquarie.

I have two questions. The first question is, in the third quarter, we see that the overall performance of our overall performance is still improving. Does this mean that when we were in the second quarter, these three meters in the North Sea did not have a full-fledged job? In the third quarter, will the workload be relatively full? This is a question about the three meters. Another question is about our financial expenses. We can see that the financial expenses of the third quarter of this year are also significantly improved compared to the previous year. I would like to ask about how we will deal with the loss of our US dollar debt in the future. Because this saves our financial expenses on the one hand, and on the other hand, the rise in RMB Thank you for the opportunity to raise questions.

I have two questions. The first question is about the drilling surfaces segment. I have heard that in the second quarter, there are actually no real operations in the North Sea. So can you please update us on what is happening? Is there some sort of saturation happening there? And my second question is about your finance cost. I can see some obvious improvements this year. So what is your plan for your USD debt? And also considering the recent appreciation of Renminbi, what is the outlook for next year?

好,感谢您提问。 第一个问题,总体来说其实, In Norway, in the 2nd and 3rd seasons, the ships in the 2nd and 3rd seasons, there are a few repairs in the first half of the year. There are a few repairs in the 3rd season, but they are all normal repairs within the plan. Thank you for your question.

Concerning the drilling services segment, what happened in Norway in the second and third quarter, I think various vessels have gone under certain repair work. And also speaking, such repair work is normal repair, well within our plan. So whether the repair activities have gone up or come down, everything is well inside our plan.

具体补充一下呢, 你比如说我们的Innovator 是在二季度有一个跨越的一个取证, 升级的一个取证。 我们的这个新网号, 在九月份有一个, I can give you some examples.

For example, our inner vapor in the second quarter is going through some repair work. And also the other vessel protector, there's a short period of repair in September. So for the fourth quarter, I would say all four vessels will go into normal operations.

对,包括在二季度的时候有一些这种日费的这种从低日费到高日费的切换。 所以总体来看,三季度的作业时间日费的平均水平应该还是比二季度要好,确实表现要好一点。

So you can see if compared the second quarter and the third quarter in relation to the fees, you may say that the performance in Q3 is much better compared to Q2.

第二个问题呢,我觉得应该总体来看呢,前三季度公司的财务费用, Please translate.

In relation to the second question, from the first quarter all the way into the third quarter, we have made substantial savings in terms of our finance cost because we have been actively managing our debt and optimizing our debt. For example, between June and July, we have repaid $1 billion U.S. debt, and we have also repaid other high-interest-bearing debt.

Thank you. We are also continuing to monitor the changes in the foreign financing market. We are also arranging to take the opportunity to obtain or exchange lower financing costs in the foreign financing market. As for RMB's rise or fall, first of all, its change in profits is indeed fluctuating. We can only say that the country's financial control strategy is also allowed to fluctuate within a certain range. Of course, So in relation to our overseas market changes, we will continue to keep a close eye on that.

And at the moment, we are making arrangements to swap out high-cost debt. Whether Renminbi is appreciating or depreciating its impact on our profit, well, I should say that there are real fluctuations involved. But based on the control mechanism of the state, a certain level or range of fluctuation is permitted.

So we will make our best effort in managing exchange rate risk so that they will not create any major impact on our operations. or in the economy, all or part of it. In short, all our goals are to maintain a stable financing scale and maintain the highest financing cost. In general, high interest rates become low interest rates, which brings us long-term profit.

So in relation to the wild surfaces segment, we are going to repay this mature debt of up to 3 billion RMB next year. By that time, we will decide with more details in relation to repayment of all the debt. And we will have the package or ultimate objective of optimizing our financial scale and also reducing our financial cost. We are swapping out the high interest debt for lower interest debt. So the benefits in the longer term from that front should be sufficient to offset anything on the depreciation side for the short-term currency changes.

好的,谢谢这位投资者的提问,也谢谢管理层的详细回答。 那我们由于时间的关系,下面我们接入最后一位投资者,他是来自长江证券的王领峰。 Thank you very much for the previous questions and our management answers.

Due to time constraints, we are now going to bring in the final question from Changjiang Securities.

Hello, Mr. Chieh. I'm Wang Lingfeng from Changjiang Securities. Thank you for the opportunity to ask a question. I have a question about our oil and gas technology section. So overseas colleagues may have a higher income than us at the same time. So I would also like to ask you to tell us about our oil and gas technology service section. What is the general ratio of our domestic and foreign and what are the different trends? And then in the future, we will focus on which areas or which areas to continue to achieve an increase in industry average level. Thank you.

Thank you very much for the opportunity. I only have one question, which is in relation to the wealth services segment. I can see that our peers have higher level of revenue. So I would like to ask for a breakdown in relation to our revenue comparing domestic operations with overseas operations. And can you tell me something about the future trends concerning such splits? And what will be the regions or areas of your focus looking ahead?

感谢你的这个提问。 你这个虽然只有一个问题, 但是还是蛮综合的。 我试着回答一下。 确实这个技术板块油服的, 我先讲一讲油服技术板块的特点啊, Its main feature is that it is mainly domestic. The domestic ratio should still be more than 80%. More than 80% overseas, it is about 1.5 billion. This is a scale. From the overall operating capacity, Thank you very much for that one question, but it's actually a very rich question, so I will do my best to answer that.

In relation to the wealth services segment, first of all, I would like to share a number of characteristics about this segment with you. It is focused on the domestic front. I think the portion here is over 80%, while the overseas operations, the scale, it is about $5 billion. Concerning profitability, it is around 16% to 17%. And overall speaking, profitability is stronger on the domestic front compared to the international operations.

第二个我想说的就是从我们目前的安排和发展的想法来看了, 还是刚才我回答别的问题也说了,就是油服的增长空间在海外。 So, in particular, I think oil and gas technology will continue to expand and consolidate the market share rate in Southeast Asia. At the same time, it will also get close to the Middle East market. Secondly, I would like to talk about our current arrangement and development.

Our well-surfaced segment, I think our future growth will be focused on the overseas operations and also on the technical front. I believe we will expand further and solidify our market share in Southeast Asia and also increase our level of competitiveness in the Middle East market. We have already seen some real results inside Middle East.

我再补充一些呢,就是跟大家做一个分享,就是从我们一到九月份已经锁定的海外合同来看,我们的技术类的合同同比是实现了一个将近47%的一个增长。 In addition, we are tied to the so-called integrated business of technology. Our increase has reached 255%. Of course, overall, our new overseas contract amount in September has increased by 36%. What I want to say is that the current new overseas contract I also want to add some personal sharing.

If you look at the first nine months, our locked overseas contract, In relation to technical contracts, there's a growth of 47%, and our bundled services have improved by 255%, and we have also 36% of new contracts signed. So if you look at the total sum for overall quality and also our ability of risk aversion, I can tell you we are making improvements on all fronts.

Thank you.

That's the end of my answer.

Thank you all for your questions and the detailed answers from our management. We appreciate your attention and support for the company. Due to time constraints, this call is coming to an end. If you have any further questions, please contact us at any time. This concludes our meeting. Thank you.