China Oilfield Services (2883) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 23.7% to RMB44,042.2 million; profit for the year increased 31.3% to RMB3,282.6 million.

• Operating profit reached RMB4,855.2 million, up RMB2,131.8 million; all four business segments reported revenue and operating-profit growth.

• Higher operating volumes, offshore recovery and international growth supported results; well services made the largest revenue contribution.

• Annual new contracts reached a record high, supported by stronger overseas activity and integrated-service growth.

Financial highlights

• Profit before tax rose to RMB4,242.9 million from RMB2,981.5 million; profit for the year increased to RMB3,282.6 million from restated RMB2,499.2 million.

• Basic EPS was RMB0.6315 versus restated RMB0.4943; total assets were RMB83,245.8 million and total equity RMB42,256.1 million at year-end.

• EBITDA was RMB10.92 billion, up 23% YoY; gross profit was RMB4.24 billion and net profit attributable to shareholders was RMB3.01 billion.

• Operating expenses rose 18.9% to RMB39,496.7 million, below revenue growth; subcontracting costs increased 39.9% to RMB11,420.8 million.

• Operating cash inflow was RMB13,091.7 million, up 89.8%; the operating cash ratio increased 10.3 percentage points YoY.

Outlook and guidance

• 2024 capital expenditure is estimated at RMB7.4 billion, mainly for equipment, upgrades, technology R&D and base construction.

• Global upstream E&P capex is forecast at US$607.9 billion in 2024, up 5.7% YoY; offshore E&P capex is forecast to rise 19% and oilfield-services markets 7.1%.

• 2024 outlook anticipates continued market growth and higher domestic workload, with uncertainty in international oil prices; Brent is forecast at US$83/barrel under the IEA benchmark scenario.

• Priorities include technology, cost leadership, integrated services, internationalization, regional development and digital integration; integrated-business income targets are RMB5 billion+ in 2024 and RMB7 billion+ in 2025.