China Oilfield Svcs Ltd H

Good morning, investors and analysts. Welcome to the 2025 Annual Results Announcement of China Oil Fuel Services Limited. On behalf of the company, I would like to thank you all for taking the time to attend.

首先请让我介绍出席本次年度业绩发布会的董事会管理层代表,他们分别是

First, allow me to introduce the representatives from the Board of Directors and Management attending this event. They are Mr. Zhao Xuanqiang, Chairman and CEO. Ms. Qiu Laiqun, independent non-executive director. Mr. Sun Weizhou, Executive Vice President and Board Secretary. Mr. Tianqi, CFO. Zhonghai Oil Co., Ltd. is one of the world's largest comprehensive oil and gas service suppliers. It has a complete service chain and a powerful sea oil service equipment group. At the same time, it has a more complete research system and service guarantee system.

The company focuses on technology drive, revenue leading, integrated, internationalization, and regional development. During the 2014-2015 period, the key core technology public relations continued to break through, and the ability to increase and decrease the capacity of large equipment. Thank you very much.

China Oil Field Services is one of the world's largest integrated oil field service providers, boasting a comprehensive service chain and a robust fleet of offshore oil field service equipment, as well as a well-established R&D system and service support system. The company focuses on five key development strategies, technology-driven, cost leadership, integration, internationalization, and regional development. During the 14th five-year plan period, the company has achieved continuous breakthroughs in key core technologies, significantly enhanced the profitability of its large-scale equipment, and continuously strengthened its core competitiveness in oil field services. The company remains committed to re-establishing its cost advantage and strengthening its cost control capabilities. It is dedicated to deepening its expertise in the marine energy resources sector, firmly upholding the philosophy of creating value for clients. COSO excels at integrating its operations into clients' value chains to generate added value, thereby enhancing clients' investment efficiency and returns. Today's event is divided into two parts. First, Mr. Chieh-Chi, CFO, will present the 2025 annual results and the company's future development outlook, followed by a Q&A session. We now invite Mr. Chieh to take the floor.

Hello, dear guests. Welcome to the 2025 annual conference. Before the formal introduction, I would like to remind you to pay attention to the description of the material of this conference. The content of today's presentation is divided into two parts. First, I will report on the business situation of 2025 for investors and friends. Looking back at the entire year of 2025, the oil price of the International Bulletin rose sharply. In the year of 2026, many geopolitical factors affected the international oil price, which was clearly reflected. In the year of 2025, the international major oil companies, such as K-Pax, kept a slight increase overall, and the new energy transition strategy to slow down and delay low-carbon investment, and the逆周期试图增加上游勘探投资开发投入,夯实储量与产量基础, In terms of the international oil mining service industry, the use rate of the global self-sufficiency platform has dropped slightly, and the use rate of the service platform has risen steadily compared to the same period. In this context, in 2025, the company will be able to successfully achieve a 500-billion-yuan cross-examination of the operating income scale by promoting the work of Shillan. The annual operating income will be 502.8 billion RMB, and the net profit will be 40.6 billion yuan. respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% respectively increased by 4% and 19% The company's large-scale equipment utilization rate is above the international average. In terms of modules, the four major modules of the company in 2025 have a steady performance. The exclusive modules are pulled by overseas business and contribute the largest amount of profit. The management utilization rate of the modules is close to the two-digit recovery. The technical version of the revenue is optimized by the regional strategy and the payment model is diversified. In the short term, the same ratio will fall back, but the overall return rate remains at a relatively high level. In terms of global market share, the company's business lines such as drilling, logging, drilling and logging will speed up management level and cultivate internationalism. The industry has continued to improve its influence. Businesses such as logistics and security are gradually increasing to drive market control. Its market size and market share are still growing. In 2025, in terms of technology innovation applications, the company firmly grasps the position and fundamental support of technology-driven strategy. Technology innovation leads to industrial innovation. The company's overall technology coverage has increased to 83%. With the development, investment, transformation, and continuous improvement, from deep sea diamond industry technology breakthrough to deep sea equipment industrialization application expansion, from opening a new carbon-reducing path to the world's largest, most difficult maritime engineering work, the company's technical innovation is clearly releasing professional service value at a deep level. In terms of technical enterprise construction, The company's three-dimensional layout covers the technical integration of the water surface, the water center, the water bottom, and the ground, and promotes the self-development and industrialization of key core technologies, forming a comprehensive 72 core technology systems, 2,300 technical products, and a more complete energy service technology system, which has contributed to the company's high-speed development, and has contributed to the strong technological momentum and continued potential. In terms of digitalized renewable energy new technology, the company uses data resources to further digitalize, to further electrify and strengthen the resource system, and to accelerate the transformation of technology integrators and system service providers. In terms of cost management and control, in 2025, the company will fully consolidate the cost management advantage, break through with the improvement of management efficiency, and promote the improvement of cost. Through precise measurements, to improve the efficiency of various resources, Promote the efficiency of the company, continue to improve the efficiency of the company, and provide a new connotation for the reduction of the cost. In terms of integrated innovation, the domestic and foreign markets play a multi-business cooperation advantage. Domestic and foreign integrated income, the military-innovation rate is high. Overseas new contracts are greatly improved. Multi-business integrated cooperation shows professional service value. Domestic multi-business projects are significantly improved for the overall customer. In terms of internationalization progress, during the 14-5 period, the company actively expanded the overseas market with an internationalized vision, steadily expanding the internationalized version of the map. In the past five years, overseas income has achieved a revenue of 4.2 billion yuan. In the 15-5 period, the initial overseas revenue has reached nearly 150% increase. Overseas revenue has gradually increased every year. In terms of overseas new orders, In terms of regional development strategies, The company steadily promotes the 1 plus 2 plus n market pattern, expand the system, and continue to optimize the regional development layout. The market opening gradually turned into a deepening customer demand by cultivating the core national market and accurately matching technology and products. At the same time, it strengthens the awareness of the whole production chain and accelerates the formation of the market. The scale continues to expand and promote the company's business to a more diversified high-end development mindset. The company insists that safety first, prevention first, comprehensive management of safety management concept, and continue to promote the overall improvement of the safety management level, and provide green services and green wealth, and integrate the environmental concept of eco-environmental construction into the production and operation business, and build a green low-carbon development path that covers the whole business of oil fields and services, and cultivate the core competitiveness of low-carbon green as a strategy for environmental development. The company establishes professional ability and objective advantages, actively takes on social responsibility, actively carries out marine rescue, and persists on the vision and goal of people. Communicating, building, communicating, and promoting employee training, communication mechanism, system construction, employee care, and support system, constantly improve employee happiness and business cohesion, not only deepen employees' understanding of the value of marine ecology, but also encourage employees to use actual action to integrate into the regional ecological protection network. The company maintains high-end interaction with the capital market through multiple channels. The company's management transparency and market recognition have significantly improved. By insisting on the customer as the center, the management system and management ability are modernized as the main line, and the management system continues to improve management efficiency in the case of broken cases. Next, the second part of the exhibition introduces the company's future development prospects. In 2026, The company continues to focus on technology drive, cost leading, integrated, internationalization, regional development, five major development strategies, focusing on domestic and foreign markets, co-improvement, mutual promotion, continuing to promote technological innovation, focusing on business management, continuing to focus on global energy service needs, creating an international cooperation ecosystem, and accelerating the construction of the world's first-class energy and natural resources service company. The company persists in the role of technology drive, Zhuo Li cultivates national-level ocean equipment technology PR capabilities and product generation and upgrade capabilities. Zhuo Li builds a well-organized, structurally reasonable, and fully functional technology innovation platform. Zhuo Li evaluates the completeness of the company's technical system, its forward-looking and advancedness, and the scientific guidance, future research layout, and research service. At the same time, continue to accelerate the development of digitalization and artificial intelligence, actively explore and expand AI plus application, form the core of independent software, support the smart platform, and solve the problem as the output of digital technology and industrial ecology. Provide scientific basis for the development and production decision-making, improve the accuracy and efficiency of oil and gas field development, and design and promote smart oil and gas construction timetable. promote effective accumulation of all kinds of information, efficient circulation, promote the optimization of production management model, and improve the efficiency of resource configuration. In 2026, we will consolidate the cost-benefit advantage, focus on value creation, and optimize the core resource structure of the company. With the cost advantage, we will support the development of technology, the upgrade of the body, and the positive cycle of ecological cohesion and value increase. At the same time, we will build a system-based managing risk prevention mechanisms, and strengthening risk-resistant capabilities. In terms of integrated strategy, the future company will firmly show the new values of integrated co-operation, multi-dimensional exploration, horizontal integration of various business lines, and cross-border integration. At the same time, we will strengthen the energy and financial management of digitalization, and build up a comprehensive design, work, service, and product, horizontal, and make up the boundaries of each section, new integrated model, and more customers to form a stable strategic cooperation relationship, to achieve the upgrade from traditional service providers to value-added partners. In terms of internationalization of the company's operations, we insist on expanding the scale, structuring, and improving the co-structural structure. With a new perspective, new mechanism, and new method, we focus on the long-term market and core customer groups. By increasing the configuration of global resources and expanding the high-end market, as a key point, by ordering, resource, delivery, customer, four core components, efficiency improvement, drive overseas efficiency, stable growth. Concentrate on overseas 10 major customers, the future company will be in the global market, increase the market view of the industry's front-end, self-proclaimed high-end technology, strengthen the customer consistency of the high-end market, improve customer diversity, order continuity, and the strategic layout of the company, to build a dual-wheel drive model of independent technology output plus high-end customer-oriented operation to create value growth for customers through the period. The regional development strategy continues to strengthen the market layout of 1 plus 2 plus n, continue to enhance the key market operation efficiency and quality, accelerate the transformation of new market cooperation opportunities, and accelerate the construction of a operating management system that is suitable for global development. Finally, in 2026, The company will continue to promote high-quality development under the guidelines of technology drive, cost leading, integrated internationalization, regional development, and five major development strategies. The goal is to promote the company's high-quality development and use technology innovation as the core engine to optimize industrial layout, improve handling efficiency, strengthen digital energy, accelerate the development of solar energy resources and new production power. With higher-quality performance, we will create higher value for shareholders, customers, society, and all parties. Thank you again to all investors, analysts, and friends for their long-term support and understanding of the company. Next, please ask your questions. Thank you.

Thank you, President. Now let's move on to the Q&A session. In order to give more investors a chance to ask questions, please ask no more than two questions. Before you ask a question, please first introduce your agency and name. For questions and answers, please pass on the message to the mediator.

Please pay attention to the statement and leave it for half an hour. Thank you. Thank you, Mr. Tian. We will now move on to the Q&A session. To ensure that as many investors as possible have the opportunity to ask questions, please limit your questions to no more than two each. Before asking a question, please state your organization and your name. The consecutive interpreter will provide interpretation between Chinese and English for both questions and answers. Please allow sufficient time for the interpreter. Thank you. If you have a question, please raise your hand. Our colleagues will pass the microphone to you. Thank you.

Thank you.

Hello, I'm Da Dongyun from China International. I have a question about the Middle East. The Middle East conflict since March has had an impact on our technology segment and the business segment. Before the conflict, how many business platforms did we have in the Middle East? How many business platforms did we have in the Middle East? How many of them have been stopped? How is the current status? Thank you.

My question is about the Middle East. Right now, we are in the middle of the Middle East conflict, so I would like to know how much impact or what kind of impact has there been on your technology segment and on your drilling segment? And before the conflict in the Middle East, how many rigs or platforms were operating in the Middle East, and how many of them have been suspended because of the conflict? Thank you.

Thank you for your question. Let's ask our vice president, Sun Yat-sen, to answer this question.

Thank you for your question. Let me first introduce the current situation of our assets in the Middle East. Currently, in the Middle East, mainly in three countries, we have jobs. In Iraq, there are currently 23 refineries. including a series of oil-based, oil-based related equipment. Then in Shat, we have three self-sufficient platforms for work. In Kuwait, there are two self-sufficient platforms for work. Please translate.

Let me talk about our current operation and equipment being used in the Middle East. So we are now in basically three countries in the Middle East. First of all, in Iraq, we have 23 equipment for maintenance and also operations. And then in Saudi Arabia, we have three jacked-up rig or platform. In Kuwait, two jacked-up platforms.

So these five self-sufficient platforms have not been affected by the war, resulting in the suspension of work or the suspension of work. The PLA is still arranging work, which is also normal. But in Iraq, it involves our two or three sets of refurbishers and related businesses. Because Iraq is a integrated business in general. So due to the war, there are currently about three sets of refurbishers involved in the integrated business. In the near future, the work will be suspended. Thank you.

Regarding our five jet car rigs or platforms, there has been no impact on their operation. That means that there is no suspension or no termination of the operation of this equipment. As regards in the landlord side, well, they are still making arrangement in relation to the work and operations, and they are also continuing their payments of fees as well. However, in Iraq, in relation to the repair and maintenance machines and equipment, because in Iraq, basically, the business is integrated business, and so there have been three equipment and machines being affected by the integrated equipment suspension.

Thank you, Ms. Wang, for answering today's question. Let's move on to the next question. Hello, Manager Teng. I have a question.

Under the current geopolitical situation, what do you think about the oil price trend in 2020? In this situation, has the company made any adjustments to the global market? Thank you.

So first of all, my question is, under the current situation about geopolitics, well, how do you see the oil price trend in the year 2026? And also, I would like to know, given these circumstances, so what will be some adjustments or changes to your development plan? Thank you.

Thank you for your question. The price of oil is also a big problem. Our profession is not this profession. Share a little of my point of view. At present, it should be said that the overall supply and demand is still relatively superior to the production capacity. This demand is relatively weak in this period. So because The impact of geopolitical policy has caused the imbalance of the regional supply and demand, which has led to a change in the price of oil. We feel that this is the shock among the overall trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of the trend of I believe that the question or issue about oil price is a big issue.

And in fact, we are not an expert in this area, but I can still share a couple of points in my opinion. So first of all, in relation to the demand and supply situation, Right now, there is still an over or excess capacity, whereas demand is relatively weaker and softer. Under the influence of geopolitics, there is an imbalance or a lack of balance between demand and supply on a regional basis. And that had led to the volatility or changes in the oil price. But then the overall trend is not really changing. In the future, we are still cautiously optimistic, and we are not going to change our internationalization strategy as a result. And we believe that we will continue to benefit from the insight and experience that we have already accumulated from the previous five-year plan period.

尽管地缘政治对今年的油价造成很多影响, 很多人也都在对战争的发生时间长短、激烈程度有不同的意见。 But I think one thing in general is that every country does not want to fight. This is the general expectation of everyone. So how long will the war last? I don't think it will last very long, no matter how fast it ends. I think this is unpredictable and relatively strong. No one wants to fight. So for our international trend, in a short time, may have a certain impact, but for a long time, we have maintained that the international strategy will not change. Thank you.

Despite all the geopolitical changes and also fluctuations, so actually this year, because of that, oil price has been affected. So right now we are in the process of war. We don't know how long this war will last, and we don't know how intense or how severe this war is going to turn out. But then, of course, no country would like to see a war happening. We believe that this war may not really take a very, very long time, but we actually can't tell when it is going to end. So definitely our internationalization strategy as a whole will stay, but the trend of our internationalization will be subject to some impact. especially during the short term. But in the long term, the direction is going to remain the same.

Thank you for giving me a chance to ask a question. I am Li Jinglin from New York. In fact, I just want to ask about this part of our turning point. Because we all know that this is a heavy asset and a business with a relatively difficult profit. This year, the increase in our profit is very obvious. I would like to ask what the main reason is. From the two directions of domestic and foreign, what is the profit contribution of this section? My question is about the drilling rigs.

Actually, we have seen that there is an increase in profitability, so I want to understand the reasons behind the profitability growth. And regarding the domestic as well as overseas, In this segment, how much is the relative contribution from domestic and overseas business? And in the future, in the coming one year, what kind of breakthroughs can we expect in this particular business segment? Thank you.

Before answering your question, let's talk about three trends. The first trend is that the company's international strategy is increasing. This trend can be seen from our annual income and operating capacity. The second is that the trend of domestic production is still continuing. At the same time, in addition to the seven-year operation, there may be a new plan in the next ten years after the operation plan is completed. This is the independent development of domestic energy . . . . .

Before I answer your question, I would like to share with you three big trends. First of all, we have seen acceleration of our internationalization strategy. So this is reflected quite clearly if you refer to our revenue, our profit, and also our management work and efficiency. And the second trend is that the increase in production within our country So we have already completed the previous seven-year action plan, and very soon we are going to see the coming 10-year plan, which is a new one. And so we can see that there is a strengthening of domestic supply. And the third trend is that during the 14th five-year plan period, our company has been increasing utilization of large-scale equipment. And in fact, in the year 2025, all large-scale equipment has been put into use.

另外一个现象就是在2025年有两项并购案, 一个是ADS和Shelf之间的合并。 The other one is the recent merger of Translucent and another company. Our judgment is that the comprehensive capabilities of the bricklayer are improving. The difficulty level of the small bricklayer is getting weaker and weaker.

In the year 2025, there were two M&A projects. The first one is between ADS and Shell, and the second one is TransOcean and another company. So in relation to the rig and platform operation, we can see that the overall integrated capability and also bargaining power for the larger companies have increased. So it is getting more and more difficult for the smaller companies to survive well.

On the one hand, we can see that the use of large bricklayers is increasing, but there are many bricklayers that have stopped. So in the past two years, For the large contractors and companies, we can see that their profit margin is rising.

However, for the smaller contractors, many of their rigs and platforms have been suspended. So during the 15th five-year plan period in relation to large-scale equipment, we believe that it is in a tight, balanced situation. So we will put in more effort to acquire and integrate with the equipment of the smaller contractors.

In the future, the difficulty of developing resources for oil companies So in the future, we believe that the oil companies will see quite a lot of difficulties in relation to technical

development resources as well as spatial development. So they really need the more competent contractors with more capabilities and expertise to be able to deliver professional and expert services to them.

Okay, thank you.

Thank you for the three-time answer and thank you for the question. Now let's move on to the next question. Please give the microphone to the third panelist. Thank you.

Hello, Mr. Guan. I'm Mr. Liu from MobileStreetStreet. The first question I have is about the long-term version. I want to see if the market price of the long-term version in history is still relatively obvious. But I want to ask if the current pricing model has changed. What do you think of the trend of the long-term version in the future? This is the first question. The second question is, in the future, ... ... ... ...

The first question is about the marine support segment in relation to the vessels. So all along, it has been based on market or marketized pricing mechanism. So is there going to be any change to this pricing mechanism? And what will be the trend in the daily rates? The next question is, under the current situation and concern regarding energy security, many big oil companies, including CNOC, is expanding their work in terms of exploration. So when it comes to offshore oil fields in the coming few years, how much will be your capex? And then the third question is, given the decline in your gearing ratio, in the future, Are you going to increase dividend payout?

这三个问题都比较点中了我们业务发展的痛处 传播定价是一个老问题 这个定价问题已经持续了十几年 我们说只要是谈到定价问题 它就涉及到双方的事 . . . . . . . . . . Accurate matching resources as the second job. The third is internationalization. Use the certainty of your own work to solve the uncertainty of external pricing. So we think it's time to adjust the structure again. When you are nervous, sometimes you hope that the work is not so nervous. But we think it's a good time now. So we continue to expand on the basis of the crew, continue to adjust, let the demand determine this price. We think this can go a long way. The second is the trend of increasing production. In the future, I think the strength of this national energy autonomy will significantly increase in the near future. Now we consume about 7.5 to 7.6 tons of crude oil every year. So, in fact, the questions that you have asked have touched upon the pain points in our operation.

Regarding the pricing of vessels, this has been an old issue that has been dwelling for 10 odd years. Well, basically, this is a matter which two parties, both parties, have to reach an agreement. During the 15th five-year plan period, we have changed our strategies, and we are of the view that it is better to put higher requirements on ourselves than to making requests. with other parties. So first of all, given the current tight condition between demand and supply of resources, what we need to do is to change structure. So we want to change customer-based structure and also the structure of market revenue. We need to also make sure that we can achieve precise asset and resource allocation. And then we have to continue our internationalization strategy. So these are some strategies and measures to tackle this issue. So we are using the certainty of our own work to solve the uncertainty condition in terms of pricing. And then we are also expanding our fleet. We keep on making adjustments to our overall structure, hoping that demand can be used to determine pricing relatively more. So in the future, we can anticipate that the energy autonomy will be a more and more important strategy and policy of our country. So every year when it comes to consumption of oil, it amounted to 750 to 760 million tons, of which 500 million tons are imported So this is the current situation.

Let me answer your third question. I think first of all, about the optimization of debt, I think we still have three opportunities. One is that it is indeed a switch period for oil and gas storage debt. There will be some countdowns one after another. The second one is that it is true that there has been a drop in the dollar-high interest rate and the drop in the lower interest rate of the RMB. The third one is that Indeed, the scope of our currency use has also gradually become the focus of overseas use, including previous acquisitions, right? Now it is in the domestic, with domestic expenditure relatively taking the lead as the focus of this expenditure. So we think debt optimization is just in time to encounter a overlap of these three scenarios. Please reflect.

Let me answer your third question concerning optimization of our debts and liabilities. Basically, we now see three major opportunities. First of all, there is a swap in terms of our total existing debts because some of our debts are going to expire. And then the second point is that there is right now a gradual decline in terms of the high interest rates of U.S. dollar. And for RMB, interest rate is relatively lower, so there is a difference, an interest rate differential. And then, thirdly, in terms of the currency mix, in the past, basically, it is mainly about expenses overseas, because there were some M&As overseas, so foreign currencies were used for these transactions. And right now, actually, domestic expenses account for a bigger percentage. So that is also the third opportunity in relation to optimization of debts.

第二个我想跟大家分享就是, 目前看其实从二十四年开始筹备, 主要是为了应对二五年六月份和七月份陆续到期的十亿美元, 其实从二十四年下半年就开始统筹, After more than a year, including our mid-April, we successfully sent RMB50 billion of debt abroad for three years. The 1.95% interest rate is equivalent to a series of measures. At present, the company's debt size has shown a significant decline. The financing cost continues to go down. The main presentation is that

So actually, starting from 2024, we have been making plans and preparation for debt optimization. Because in June to July 2025, there was the expiry of USD 1 billion debt. And then actually in mid-March, we had already issued a 5 billion RMB debt at 1.95% interest rate for a tenor of three years. So overall speaking, we have decreased the scale of our debt and financing cost is also coming down. So what we have to do is that we need to continue to reduce the scale of our debt and optimize the structure.

There is no doubt that China will continue to increase this kind of equipment during the 15th. We will also continue to maintain this asset share rate stable and sustainable on this basis. Continue to surround this debt to do some. Make the company long-term development of this kind of arrangement. . . . .

During the 15 five-year plan period, we are going to increase our investment into equipment, and we want to make sure that our gearing ratio will maintain stable and sustainable. So in terms of our debts and liabilities, we are going to make arrangements by considering our overall long-term development. Regarding dividend, we have to consider the operational needs of our company, the company's future cash position in making decision. And then we also want to make sure that we can seize future development opportunities. But then if you look at our dividend payout in 2025, in fact, it is in a very good position.

Thank you for answering our questions. We will now move on to the next question. Let's ask our colleague to give us the second question. Thank you. I have two questions. The first is about the exchange rate loss. The exchange rate loss in the second half of last year was relatively high. What is the main reason for this? Let's take a look at some of the situations this year. So my first question is concerning exchange rate gain and loss.

So in the second half of the year, there was quite a large impact arising from that. So what are the reasons behind? My second question is about your technology segment. So in terms of the profit from this segment, so its share has been quite big all along. And last year, in the first half of the year, there was some change to that trend. Is there going to be or was there some improvement in the second half of the year? And in 2026, how much will be the profit margin? Thank you.

好,谢谢。 请我们这个公司副总裁孙维州先生来回答两个问题。 我回答那个技术方面这块的一个问题,好吧。 这个目前的话, During the period of 14.5, the technology department was able to continue to invest in the company and continue to strengthen the development system. So, looking back at 14.5, our investment from the beginning of 2021, 16 billion to 22 billion last year, right? This is

During the 14th five-year plan period, we have been continuously increasing our R&D expenses, and we have strengthened our R&D system as well. If you look at our R&D expenses every year, For example, in 2021, the amount was $1.6 billion, and last year, it had already risen to $2.2 billion. So, it accounted for 4% of our total revenue.

Then, the output ratio of KMT is also constantly improving. From 2021, about $1, the return is $2.5 to $2.5.

And in fact, the input-output ratio in relation to our R&D expenses and investment has been increasing. In 2021, it was 1 R&D to 2.5. In 2025, it was 1 to 3.1.

Then the technical coverage from 2021 Technology coverage in 2021, it was 59%. In 2025, 86%. So we are strengthening the overall strength of our technology segment.

In the 14 five-year plan period, Our revenue strength and also the contribution into total revenue and profit is also big and increasing. In 2025, from the technology segment, it accounted for 55% of revenue and 72% of profit.

海外的话,在十四五期间,随着我们技术实力的增强, For overseas business, during the 14th five-year plan, the strength of our technology segment has also been enhanced.

So the contribution to both revenue and profit has risen. In 2021, it accounted for 14% of total overseas revenue, and in 2025, 24%.

那么2025年技术板块营业利率 应然维持了一个大概16%左右的这么一个毛利的样子 应该说和同行相比 It has maintained certain advantages. Although it may have a slight decline in the same ratio, in fact, you have to eliminate some unprofitable losses, whether it is the post-sale version, the review, the set-up, and the oil and gas version. It should be said that the main version and the business line, its profit and loss rate is stable, even slightly rising. The only slight decline is the fixation of this version.

So if we look at the operating profit margin of the segment in 2025, it was 16%. We are better than other peers in the industry, even though there is some slight decline on a year-on-year basis. However, we also need to exclude the non-operating gains and losses. So for actually most of the segments, we saw very stable, even slight increased trend, with only the exception of the cementing segment.

近期我们获得了,在去年比,我们获得了泰国油的玄机, 合同额大概有800万美元的价值合同, 从某种角度也代表, China, China, China, China, China, China, China,

So at the end of last year, we won a contract with our Xuanzi, with a Thai petrol company. So the total contract value was 8 million USD. So this shows that our self-researched and developed technology has won international recognition. This is because of our R&D investment over the years, as well as the work that we have done to strengthen our overall R&D system.

同时的话,近期可能有些投资者也注意到, 我们的这个顾警业务在科威特, 是吧,获得了科威特国家石油授予的价值, 突破10个亿人民币的合同。 这些个技术板块在不同区域,不同国家, We believe that based on the market pattern of 1 plus 2 plus n that we have formed now, especially in China and overseas, We believe that 155, our technical version's profitability, market competitiveness, and the feedback from our company's development, including shareholders, should be increasing. Thank you.

Recently, perhaps you are also aware that we have also won a contract from the Kuwait National Petroleum Company. Total contract value was actually 400 million RMB in terms of contract value. So you can see that we have achieved breakthrough in different regions and also different countries with our technology segments. Our technology segment is such that our value has been released on a continuous basis, and our strength has been improving. We have won more and more recognition from customers. In the future, with our 1 plus 2 plus N market layout of our company, right now, in terms of our overseas business, we are in the five major continents in 13 countries. and we have 120 operations sites. So in terms of both profitability and also revenue and shareholder return, we are seeing future improvements.

我来回答关于汇率的问题。 应该说2025年整个全球的人民币对美元汇率波动还是非常大。 从年初7.1级, Then in April, it fell to 7.4. Then at the end of the year, from the second half of the year, it broke through 0.1 and rose to 6.9, 6.8, something like this. So it's true that this kind of high exchange rate and the general trend is that the rise of this kind of fluctuation has a certain pressure on the company's exchange rate loss. Please translate.

So in 2025, actually, we have seen fluctuations and volatility in the exchange rate of RMB. Last year, at the beginning of last year, it was in the range of around 7.1, and then in April, it became 7.4. Towards the end of the year, it was at 6.8, 6.9, roughly. So all these fluctuations have caused much impact to our exchange rate loss or gains.

In fact, we also look back at the period of 2014 and 2015. It should be said that the loss of the entire company during the period of 2014 and 2015 was basically a tie. But there is no doubt that in my impression, in 2022 or 2023, there will be a large amount of revenue and a large amount of loss in one year. But the overall period of 2014 and 2015 is an increase. The loss of the company is also maintained during a reasonable period. During the 14th five-year plan period, for our exchange rate loss, it was relatively flat.

In the year 2022 to 2023, in fact, there was a year when there was a big exchange rate gain, but then there was also another year with a big exchange rate loss. For our country, it is actually trying its best to maintain a reasonable range in relation to exchange rate fluctuations. And in the short run, we believe that there are challenges in terms of exchange rate gain or loss. But then in the long run, we are going to put in more effort to strengthen management of our exchange rates, loss and gain, and also enhance the position overall speaking.

最后呢,最后一点就是想说的是, 因为时间有限,就是简单从技术上去拆解一下的话, 其实一方面是因为国内, So this is a fluctuation. The other one is that we were just talking about debt reorganization and debt optimization. It was also mentioned that last year, some RMB debt was increased overseas, and then the US dollar debt was paid off. In fact, this part can simply be understood as my interest rate reduction. In fact, it is with mine. Because it has become the debt of RMB in foreign dollars. Its inflation is actually quite the same. Because my US dollar interest rate is high. It used to be 4%. I have now dropped to 2%. But the inflation rate of this person is actually a decrease of 2%. In fact, these two factors are complementary.

There's very limited time, so I can only briefly give some explanation to the technical dimension of this question. So on one hand, within mainland China, the expenses are mainly in RMB, but then when it comes to overseas business and also external payment, the usual habit is for USD to be used. So that's why we will be subject to impact from the fluctuations and volatility. So just now we answered a question about debt structure optimization. So last year we increased our RMB debt and we used them or used it to repay some of the high interest rate USD debt. So because as a result the interest rate has come down, because of this swap. Well, for USD debt, the interest rate was 4%, and we changed that into RMB debt at an interest rate of 2%. So there is this interest rate differential. But then at the same time, there is also depreciation in interest rate. So these two movements are offsetting each other.

Thank you, Director. Thank you for your answer. Due to time constraints, we will now answer the last question. Hello, everyone. I am Dong Bingxu from National Securities.

I would like to ask two questions. The first one is that we are seeing that the use rate of our company's diamond platform is very high overall. The supply and demand of these semi-autonomous diamond platform in the market is also high. I would like to ask if our company has any plans to build some new semi-autonomous diamond platform. I have two questions.

The first question is concerning your RIC platforms. Utilization rate has been high. And then we know that there is a tight demand and supply situation concerning the semi-submersible rigs. So do you have any plan to build new semi-submersible rigs? My second question is related to the technology segment. So we understand from the market that there is overseas development plan for this particular business segment. And now that there is the war and conflict in the Middle East region, so will this plan about achieving breakthrough in the Middle East be affected?

好,谢谢。第一个问题我来回答,第二个问题请我们公司总裁孙伟洲来回答。 关于这个公司的大型装备发展,从十四五应该说进入了很快的, This is called the close period. In 2015, we predicted that it would still be in a state of equilibrium. In 2015, we will start to study the high-efficiency and low-cost construction of this brick platform. We basically set the basic principle, which is to build a new brick platform with product-oriented thinking. This kind of productization is reflected in self-design, self-development, self-construction, and self-improvement. From platform construction to the control and completion of the industrial chain, it is one of our actual work. The construction of these platforms has four typical characteristics, which are super reliable, super efficient, super integrated, and super integrated. Then we think that after the real new platform is built, it will be a product that China and China will cultivate. To be able to replicate and promote to support our 15 and even 16 this equipment needs to build further improve our team's structure. Thank you. Welcome.

So, first of all, in relation to large-scale equipment, during the 14th five-year plan, we have seen a rapid development stage, and then we believe that in the 15th five-year plan, it would be in a tight balance or tight equilibrium position. So, we are actually... expediting our development and also R&D in this regard, hoping to achieve low cost construction and highly efficient construction as well. So our principle is one of productization. So we are going to capitalize on ourselves developed design, our own R&D, our self-construction, so in our platform and rig construction work. So we will make sure that we can come up with our own design and own research and development. And we believe that there are a few characteristics of the rigs and platforms that we develop and construct, namely that they are reliable, they are highly efficient, and also there would be a high degree of integration. So we believe that we are able to make quite a lot of improvement in such a way that all such equipment construction work can be replicated and can be further promoted so that they would be enough to support our future development for the coming five-year plan period.

Okay, let me answer the second question. Let me first talk about the technical version. During the past five years, the company's overseas market has changed. During 2014 and 2015, our overseas market, from the perspective of the regional market, has newly increased to the markets of Uganda, Kuwait, Brazil, Canada, Thailand, etc. In addition, in terms of customers, we have newly increased . . . . . So this diversification for us, its purpose is, on the one hand, our technology, our management has received the approval of customers. On the other hand, it is very important from our management point of view, our anti-risk ability has been exploded. There is another one, the second part, I want to talk about what we rely on to achieve this customer diversification and market diversification. So during the 14-5 period, it should be said that This company has identified five major strategies at the beginning of 2015. Technology drive, cost leading, integrated, internationalization, and regional development strategy. Among them, integrated and technology drive should be said to be the most important for us in the market competition abroad. ah, this plays a very important role. So, at present, our technical version and integrated version, in the comparison of overseas sales, are basically at 45%, at 40% to 50%. So, integrated business, technical version, plus equipment version, the diversification of business, also improves our market competitiveness, and balances the risks that our market brings. Ah,

So let me comment on our technology segment. During the 14th five-year plan period, we have seen changes in the overseas market. First of all, in terms of regions, we have newly added Uganda, Kuwait, Brazil, Canada, and Thailand. And then in terms of customers that we serve, we have also acquired new customers including Kuwait National Petro, customers in Saudi Arabia, in France, and also in the U.S. As I mentioned earlier, we are operating in the five major continents in 13 countries, and we have 120 operation sites. So we have already diversified our market and also our customer mix. This is also a good testimony that our technology and our management is well recognized by our customers. we are even better able to withstand and control risk. During the 14 five-year plan period, especially at the beginning of that period, we have already established our five major strategies, of which the strategy about being technology-driven and also the strategy of integration have helped us enhance our overall competitiveness, especially in our overseas market and overseas development. So these two strategies have already accounted for 40% to 50% of our revenue in the 14th five-year plan period. For these two strategies, integration and technology-driven, we have also diversified our businesses. And as a result, we have enhanced our overall competitiveness, and we are able to balance out market risk as well.

Finally, I think The war is temporary, but the current market and customers are diversified, and continuously diversified. In the development of our technology, our direction is clear, and competitiveness is constantly improving. We believe that with the market foundation that we have established, So

We are of the view that the war is going to be temporary in nature and also it is rather local in nature. And we will keep on diversifying our market as well as our customer base. Our development, our direction of technology development is already very clear. Competitiveness is improving. With the market foundation, technology foundation, and management foundation that we have already built,

We believe that our future development is going to get better and better.

Thank you, Mr. Zhao, for your question. As you mentioned, many overseas companies are doing industry integration, including us in 155, which is also to increase our equipment resources. So I also want to ask Mr. Zhao, what are our considerations? uh, uh, uh, Especially in recent years, our business model is not the same as the old-fashioned business model. For example, we signed a lot of long-term contracts in the North China Sea, and our daily fee has been fixed. But do we have a certain oil price link mechanism? For example, after our oil prices have risen significantly, do we have a mechanism to transfer some of the costs? Including the domestic market, The first question is about the optimization of structure.

So just now we heard from your answers that especially for overseas business, there is now industrial integration. And during the 15th five-year plan period, you are going to increase your equipment resources. So regarding this increase in equipment resources, I would like to know how you are going to do it. Are you going to consider new equipment resources within China or the mature equipment resources Or are you going to consider overseas M&A? I think this is related to the structure optimization between domestic and overseas that you have been talking about. And my next question is that your current business model is already different from your old past business model. You have already got the long-term agreement in place in the North Sea area. and the daily rates, daily fuel rates are sort of fixed. And is there any mechanism for the passing on of the oil price increase back to, for example, the oil companies and other companies? Because in the past, cost has been controllable, but now that there has been a big surge in oil price, is there any way that you can pass on such oil price increase impact? Thank you.

Okay, thank you for your question. Indeed, as you have noticed, 14.5, the way we obtain resources, rent, buy, build, transfer, this is relatively typical, right? Everyone knows about Zhonghai Oil's heavy assets. This also includes us. This is also part of our four actions. So as the company's internationalization ability improves, . . . . . . . . . . There are still some relatively cost-effective equipment in the market. We will still buy it in. Of course, the rent has been adjusted to a little later. Because now the proportion of the company's autonomous fleet also wants to expand it a little bit. Support the company's future growth Another one is the price transfer in the North China Sea. The price transfer mechanism is good, but our long-term judgment of the future oil price is a trend that goes from the middle to the bottom. So we think it's very difficult for customers. So now we want to get long-term contracts in the North China Sea because we have invested in a set of energy management systems. Thank you. Sorry, it's a bit long.

During the 14th five-year plan period, as we are increasing our large-scale equipment resources, basically there are four methods for us to do that, using self-construction, transfer, and purchase or acquisition. So right now, we are increasing our development in our internationalization strategies, And as mentioned earlier, the large-scale equipment capability within China is also rising. So earlier I mentioned the tight balance between resource, demand, and supply. So we have already commented on the self-construction of equipment. And for the buy or purchase strategy, we will consider that when we see resources with high value for money. And for leasing, it has to be left for a later stage because right now we believe that we are going to increase our self-owned vessel fleet in order to support our future development and growth. As regards the price pass-through mechanism for North Sea, if such a mechanism can be put in place, it is good. But then right now we believe that our customers also encounter much difficulty. We have got the long-term agreement signed for the North Sea region. It is actually because of the energy management system, and we are able to lower costs for the operators, and at the same time, we can enhance efficiency. So it is actually a win-win situation for both the operators as well as ourselves. So this is also one of our key competitiveness. when we operate in this particular segment.

Okay, let me say a few last words. This year is also the year of the closing of 14.5, which was last year. This year is also the year of the opening of 15. I should say, overall, during 14.5, the comprehensive strength, innovation ability, and management system of the company have achieved long-term progress. According to We have been able to see that China Oil has become a model of a world energy resource service company. So it should be said that after 14.5, it gave us more courage and confidence to continue to build China Oil into a world-class energy resource service company. Please translate.

This year is the final year of the 14th five-year plan period, and this year we will see the start of the 15th five-year plan period. During the 14th five-year plan period, our integrated overall capability, our innovation capability, and our management capabilities have improved significantly. And we have the confidence that we will be developed into a global energy, resources, and technology company. So we have a lot of courage and confidence in achieving this goal.

So we have a lot of courage and confidence in achieving this goal. So we have a lot of courage and confidence in achieving this goal. Our technical products and equipment products will all come together and emerge. The power and ability to drive this kind of product will gradually form. The third one is the development method switching. This development method reflects the typical characteristics of us from the element investment type to the knowledge succession type. The fourth one is the deepening reformation period. We did a lot of reform actions in 14 and 15. When it really came to 15, we entered a more detailed public relations stage. So the management of the company will continue under the leadership of the board of directors to build this Zhonghai oil and gas into a customer-friendly type, main business prominent type, efficiency priority type, value leading type organization. Thank you for your attention. Thank you for your time today. Thank you.

During the 15th five-year plan, we have actually got four main points in relation to our overall development. First of all, even though there has been some changes in our strategy, but then we have already consolidated and solidified many of our development strategies. So our future development is going to be centered around all these established strategies. So even though there is a lot of uncertainty in our development environment, but we will still be firmly adhering to our strategy. Secondly, we will rely on the drive from our technology and equipment products and services to continue our business development. The third point is that there would be some solidification and changes in our development methods and approaches. In the past, we focused a lot on the major elements input. And this is going to be changed into a knowledge-based approach. And then finally, we will deepen our reform. Many of our reform initiatives started in the 14 five-year plan period, and in the 15 five-year plan period, we are going to refine them. So under the leadership of our board of directors, we believe that we will see many friendly customers with very close relationship. We will be focusing on our core strategies and business segments. We will also center around our efficiency improvement and value improvement. So with all these, we believe that we can gradually develop ourselves into a first-rate global energy technology management company. Thank you all for spending time with us today.

Thank you.

Thank you for all the questions and answers. Thank you, investors, friends, for attending COSO's 2025 Annual Results Announcement today. The company will continue to maintain communication with you through various channels. Today's session is now concluded. Should any investors wish to engage in further dialogue, please feel free to contact our IR team. We look forward to seeing you again next time. Thank you.