Financial Performance - Net profit attributable to shareholders decreased by 68.0% to CNY 231,703,000 year-on-year[5] - Operating revenue for the first nine months decreased by 2.5% to CNY 46,427,919,000 compared to the same period last year[5] - Basic earnings per share decreased by 68.4% to CNY 0.012 per share[6] - The weighted average return on net assets decreased by 8.41 percentage points to 3.37%[5] - Total operating revenue for Q3 2020 was 14,995,482 thousand RMB, a decrease of 13.5% compared to 17,343,907 thousand RMB in Q3 2019[22] - Net profit for Q3 2020 was -66,574 thousand RMB, compared to a net profit of 213,765 thousand RMB in Q3 2019, indicating a significant decline[22][23] - Basic earnings per share for Q3 2020 were -0.004 RMB, compared to 0.011 RMB in Q3 2019[23] - Total comprehensive income for the first three quarters of 2020 was CNY -15,815, compared to CNY -13,492 in the same period of 2019, indicating a decline of about 17.2%[25] Cash Flow - Net cash flow from operating activities decreased by 30.0% to CNY 628,588,000 year-on-year[5] - Cash flow from operating activities for the first three quarters of 2020 was CNY 42,910,576, down from CNY 47,286,692 in 2019, a decrease of about 9.0%[26] - Cash flow from operating activities in Q3 2020 was CNY 628,588, compared to CNY 897,769 in Q3 2019, reflecting a decline of approximately 30.0%[27] - The net increase in cash and cash equivalents for Q3 2020 was -11 million, resulting in a total cash balance of 159 million at the end of the period[29] - The beginning cash and cash equivalents balance was 170 million, indicating a decrease of 11 million during the quarter[29] Assets and Liabilities - Total assets increased by 5.5% to CNY 65,467,095,000 compared to the end of the previous year[5] - Total liabilities rose to 58,118,068 thousand RMB from 55,305,506 thousand RMB, indicating increased financial obligations[18] - The company's equity attributable to shareholders increased to 7,349,027 thousand RMB from 6,763,872 thousand RMB, showing improvement in shareholder value[18] - The total assets as of September 30, 2020, were 32,290,057 thousand RMB, slightly down from 32,291,674 thousand RMB at the end of 2019[20] - Total liabilities for Q3 2020 were 50,239 thousand RMB, an increase from 38,339 thousand RMB in Q3 2019[21] - The total equity attributable to shareholders was 32,239,818 thousand RMB, down from 32,253,335 thousand RMB at the end of 2019[21] Operational Changes - Accounts receivable decreased to 0 from 500 thousand RMB, a 100% change, due to improved capital efficiency and reclassification to financing receivables[13] - Prepayments increased by 40.8% to 779,619 thousand RMB, primarily due to increased construction material reserves[13] - Inventory rose by 37.9% to 1,634,891 thousand RMB, mainly due to an increase in unfinished labor projects[13] - Contract assets increased by 56.3% to 14,961,286 thousand RMB, attributed to an increase in completed but unsettled projects[13] - Construction in progress surged by 125.3% to 481,718 thousand RMB, mainly due to the purchase of drilling equipment in Saudi Arabia[13] Expenses - Financial expenses rose by 43.4% to 883,403 thousand RMB, primarily due to increased foreign exchange losses from RMB fluctuations[14] - Research and development expenses for Q3 2020 amounted to 184,074 thousand RMB, a decrease from 203,963 thousand RMB in Q3 2019[22] - The company's management expenses for the first three quarters of 2020 were CNY 15,814, a decrease from CNY 17,703 in the same period of 2019, representing a reduction of approximately 10.7%[25] Shareholder Information - The total number of shareholders reached 122,044, with the largest shareholder holding 56.51% of shares[8] - The company has not issued preferred shares, and there are no known related party relationships among major shareholders[11] Product and Market Development - The company has not disclosed any new product developments or market expansion strategies in this report[11] - The company did not apply the new revenue and leasing standards for the year 2020, as indicated in the financial report[29]

中國后北 Monec 中国石化 SINOPEC 中石化石油工程技術服務股份有限公司 Sinopec Oilfield Service Corporation （股票代號 A 股：600871； H 股：1033) 2020 半年度報告 | --- | --- | --- | |-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------| | | | | | | | 重要提示 | | | 一、本公司董事會、監事會及董事、監事、高級管理人員保證半年度報告內容的真實、準確、完整，不存 在虛假記載、誤導性陳述或重大遺漏，並承擔個別和連帶的法律責任。 | | | 二、 | 年 ...

Financial Performance - The company reported a significant increase in revenue, achieving a total of 10.5 billion RMB for the first half of 2020, representing a 15% year-over-year growth[7]. - The net profit for the first half of 2020 was recorded at 1.2 billion RMB, which is a 20% increase compared to the same period last year[7]. - The company's operating revenue for the reporting period was RMB 31,432,437 thousand, an increase of 3.9% compared to RMB 30,256,030 thousand in the same period last year[12]. - The net profit attributable to shareholders of the listed company decreased by 41.4% to RMB 298,277 thousand from RMB 509,428 thousand year-on-year[12]. - The company's consolidated revenue for the first half of 2020 was RMB 31,432,437 thousand, a 3.9% increase from RMB 30,256,030 thousand in the same period last year[24]. - The company's net profit in Q2 2020 was RMB 480,585 thousand, a 49.6% increase year-on-year, recovering from a loss of RMB 182,308 thousand in Q1 2020[24]. - The company's total profit for the first half of 2020 was RMB 452,870 thousand, down from RMB 742,777 thousand in the same period last year, reflecting a decrease of approximately 39.0%[121]. - The basic earnings per share decreased by 40.7% to RMB 0.016 from RMB 0.027 in the same period last year[14]. Market Outlook and Strategy - The company has outlined a future outlook with a projected revenue growth of 10% for the second half of 2020, driven by new market expansions and product offerings[7]. - The company plans to expand its market presence in Southeast Asia, targeting a 15% market share by the end of 2021[7]. - The overall market outlook for the oil service industry in the second half of 2020 remains challenging due to external risks and low international oil prices[49]. - The company aims to strengthen its international business strategy, focusing on key markets such as Saudi Arabia and Kuwait while exiting inefficient markets[56]. - The company plans to enhance its service capabilities and optimize market layout to improve operational performance in the second half of 2020[50]. Investments and Acquisitions - Investment in new technology development increased by 30%, focusing on enhancing drilling efficiency and reducing operational costs[7]. - A strategic acquisition of a local competitor is in progress, expected to enhance service capabilities and customer base[7]. - The company plans to sign new contracts worth RMB 251 billion in the second half of 2020, including RMB 161 billion from Sinopec Group and RMB 90 billion from external markets[50]. - The company signed new contracts worth RMB 429.7 billion, a 0.3% increase year-on-year, with domestic contracts from Sinopec totaling RMB 218.4 billion, down 5.0%[25]. Research and Development - The company applied for 364 domestic and international patents, with 234 patents granted during the first half of the year[35]. - The company's research and development expenses increased by 29.2% to RMB 619,803 thousand, up from RMB 479,782 thousand in the previous year[39]. - The company will enhance its technology research and development, targeting breakthroughs in key technologies such as high-temperature and high-pressure MWD[57]. Financial Position and Assets - The total assets of the company increased by 5.6% to RMB 65,539,809 thousand from RMB 62,069,378 thousand at the end of the previous year[17]. - The net assets attributable to shareholders of the listed company rose by 9.0% to RMB 7,374,726 thousand from RMB 6,763,872 thousand at the end of the previous year[12]. - The company's total assets included contract assets of RMB 13,849,140 thousand, which accounted for 21.1% of total assets, reflecting a 44.7% increase from the previous period[41]. - Total liabilities as of June 30, 2020, were RMB 58,165,083 thousand, reflecting an increase of RMB 2,859,577 thousand from the end of 2019[67]. - The company's equity attributable to shareholders reached RMB 7,374,726 thousand, up by RMB 610,854 thousand compared to the end of 2019[67]. Cash Flow and Financing - The net cash flow from operating activities improved to RMB 281,258 thousand, compared to a negative cash flow of RMB -709,159 thousand in the previous year[12]. - The company's cash flow from operating activities generated a net inflow of RMB 281,258 thousand, an increase of RMB 990,417 thousand year-on-year[69]. - Cash flow from investing activities resulted in a net outflow of RMB 439,267 thousand, a decrease of RMB 258,142 thousand year-on-year[70]. - Cash flow from financing activities generated a net inflow of RMB 523,554 thousand, a decrease of RMB 592,985 thousand year-on-year[70]. Corporate Governance and Compliance - The company has continuously improved its corporate governance in accordance with regulatory requirements, ensuring transparency and compliance[95]. - The company has not changed its accounting firm during the reporting period and has reappointed Deloitte Touche Tohmatsu Certified Public Accountants LLP for the 2020 annual audit[79]. - The company has complied with the Corporate Governance Code as per the Hong Kong Stock Exchange rules[99]. - The company has not established a nomination committee as per the Corporate Governance Code, but has clear provisions in its Articles of Association regarding director nominations[98]. Environmental and Social Responsibility - The company has established an environmental emergency management system and conducted regular training and drills for emergency response[97]. - The company disposed of 78.2 million tons of general solid waste and 6.32 million tons of hazardous waste in compliance with regulations during the first half of 2020[97]. - The company has implemented energy efficiency improvement projects, achieving a 4.9% year-on-year decrease in comprehensive energy consumption per ten thousand yuan of output value[97]. Shareholder Information - The total number of shareholders as of June 30, 2020, was 129,023, with 128,676 holding A-shares and 347 holding H-shares[102]. - The top shareholder, China Petroleum Group, held 10,727,896,364 A-shares, representing 56.51% of the total shares[103]. - The second-largest shareholder, Hong Kong Central Clearing Limited, held 5,402,034,694 H-shares, accounting for 28.46% of the total shares[103].

Financial Performance - Net profit attributable to shareholders was RMB -182,308,000, a decrease of 196.9% year-on-year[4] - Operating revenue decreased by 4.4% to RMB 12,868,009,000 compared to the same period last year[4] - The company reported a basic earnings per share of RMB -0.01, a decline of 200.0% compared to the previous year[4] - Net profit turned negative at RMB -182,308,000 compared to a profit of RMB 188,182,000, largely due to the impact of COVID-19 on operational workload and revenue[11] - The company reported a gross profit margin of approximately -1.8% in Q1 2020, compared to a positive margin in Q1 2019[20] - Net profit for Q1 2020 was -182,308 thousand RMB, compared to a net profit of 188,182 thousand RMB in Q1 2019, indicating a significant decline[20] Assets and Liabilities - Total assets increased by 1.9% to RMB 63,233,163,000 compared to the end of the previous year[4] - Total current assets rose to RMB 32,826,751,000 from RMB 30,529,316,000, reflecting a growth in cash and contract assets[14] - Total liabilities increased to RMB 56,496,853,000 from RMB 55,305,506,000, indicating a rise in short-term borrowings[15] - The total liabilities amounted to 38,338 thousand RMB, with total equity at 32,253,203 thousand RMB as of the end of Q1 2020[20] Cash Flow - Cash flow from operating activities was RMB -1,184,219,000, showing a decline from RMB -1,119,740,000 in the previous year[4] - Cash inflow from operating activities totaled CNY 12,269,625, a decrease of 7.1% compared to CNY 13,213,466 in Q1 2019[24] - Net cash flow from operating activities was CNY -1,184,219, slightly worse than CNY -1,119,740 in the same period last year[24] - Cash flow from investing activities was negative at RMB -149,791,000, worsening from RMB -83,761,000, mainly due to increased equipment purchases[11] - Cash outflow from investing activities was CNY 149,820, compared to CNY 84,644 in Q1 2019, indicating increased investment activity[24] - The company reported a significant increase in cash flow from financing activities, up 52.0% to RMB 1,654,034,000 from RMB 1,088,047,000, primarily due to increased loan sizes[12] - Cash inflow from financing activities increased significantly to CNY 14,299,046, up 52.5% from CNY 9,365,000 in Q1 2019[25] - Net cash flow from financing activities was CNY 1,654,034, an increase of 52.1% compared to CNY 1,088,047 in Q1 2019[25] Expenses and Income - Sales expenses increased by 44.3% to RMB 13,020,000 from RMB 9,022,000 due to intensified market expansion efforts[11] - Other income surged by 949.5% to RMB 61,436,000 from RMB 5,854,000, mainly driven by increased consumption tax refunds[11] - Investment income dropped by 72.9% to RMB 14,825,000 from RMB 54,648,000, attributed to reduced gains from debt restructuring[11] - Research and development expenses for Q1 2020 were 167,581 thousand RMB, slightly up from 163,227 thousand RMB in Q1 2019[18] - Financial expenses decreased to 219,059 thousand RMB in Q1 2020 from 282,661 thousand RMB in Q1 2019, a reduction of 22.5%[18] - The company experienced a loss from credit impairment of 919 thousand RMB in Q1 2020, compared to a loss of 69,431 thousand RMB in Q1 2019[20] Shareholder Information - The number of shareholders at the end of the reporting period was 134,052, with the largest shareholder holding 56.51% of the shares[6] Other Financial Metrics - The weighted average return on net assets decreased by 5.90 percentage points to -2.70%[4] - Prepayments increased by 40.7% to RMB 779,362,000 due to increased engineering material preparations[10] - Contract assets rose by 35.8% to RMB 12,997,596,000, primarily due to delays in project settlements caused by the COVID-19 pandemic[10] - Special reserves increased by 41.5% to RMB 527,984,000, mainly due to a decrease in safety production expenses[10] - Other income increased significantly to 61,436 thousand RMB in Q1 2020 from 5,854 thousand RMB in Q1 2019[18] - The impact of exchange rate changes on cash and cash equivalents was CNY 111, a significant improvement from CNY -35,091 in Q1 2019[25]

Financial Performance - The net profit attributable to shareholders for 2019 was RMB 914,244 thousand according to Chinese accounting standards, and RMB 986,873 thousand according to International Financial Reporting Standards[5]. - The company's operating revenue for 2019 reached RMB 69,870,147 thousand, an increase of 19.6% compared to RMB 58,409,078 thousand in 2018[24]. - The net profit attributable to shareholders for 2019 was RMB 914,244 thousand, a significant increase of 543.6% from RMB 142,056 thousand in 2018[24]. - Basic earnings per share for 2019 were RMB 0.048, up 500% from RMB 0.008 in 2018[26]. - The weighted average return on equity increased to 14.66% in 2019, up 11.8 percentage points from 2.86% in 2018[26]. - The company achieved a significant reduction in losses from previous years, with a total profit of RMB 1,355,768 thousand in 2019 compared to a loss of RMB -10,350,586 thousand in 2017[24]. - The company reported a total of RMB 410,540 thousand in non-recurring gains and losses for 2019, compared to RMB 104,105 thousand in 2018[29]. - The net cash flow from operating activities improved to RMB 1,377,053 thousand in 2019, compared to a negative cash flow of RMB -2,939,789 thousand in 2018[24]. - The company's net assets attributable to shareholders increased by 17.1% to RMB 6,763,872 thousand at the end of 2019 from RMB 5,778,410 thousand at the end of 2018[24]. - The total assets as of December 31, 2019, were RMB 62.07 billion, reflecting a 1.9% increase from the previous year[38]. Dividends and Retained Earnings - The company reported a negative retained earnings of RMB -1,496,212 thousand at the end of 2019, leading to a recommendation of no cash dividend distribution for the year[5]. - The company did not declare a cash dividend for 2019 due to negative retained earnings at year-end, but will adhere to its cash dividend policy once capable[135]. - The net profit attributable to shareholders was RMB 986.87 million, representing a significant increase of 543.6% compared to the previous year[45]. Audit and Compliance - The annual report has been audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu CPA Ltd., both issuing standard unqualified audit opinions[5]. - There are no violations of decision-making procedures for providing guarantees to external parties[7]. - The company has no capitalized interest for the year ended December 31, 2019[132]. - The company’s financial reports for 2019 were deemed fair and compliant with regulatory requirements, reflecting its financial status and cash flow accurately[185]. Corporate Governance - The board of directors consists of 8 members, with independent director Pan Ying being absent due to illness[4]. - The company actively participated in major decision-making processes and strengthened communication with management[189]. - The company’s board of supervisors held 8 meetings and 2 shareholder meetings in 2019, fulfilling its supervisory responsibilities[189]. Market and Operational Strategy - The company’s future plans and development strategies are subject to uncertainties and do not constitute substantive commitments to investors[5]. - The company aims to reduce the cost per hundred yuan of revenue while enhancing project management and cost control[50]. - The company plans to focus on sustainable development and internal reforms to improve profitability and core competitiveness[50]. - The company will continue to optimize resource allocation and improve service quality to achieve sustainable development[93]. Contracts and Revenue Growth - The company signed new contracts worth RMB 69.5 billion in 2019, a year-on-year growth of 10.7%[46]. - In 2019, the company achieved a consolidated revenue of RMB 69.87 billion, a year-on-year increase of 19.6%[45]. - The drilling services segment achieved operating revenue of RMB 36,487,700 thousand in 2019, up 22.1% from RMB 29,883,121 thousand in the previous year[58]. - The engineering construction services segment reported operating revenue of RMB 16,381,730 thousand, a 24.7% increase compared to RMB 13,132,857 thousand in 2018[61]. Research and Development - Research and development expenses increased by 28.6% to RMB 1,194,198 thousand in 2019, up from RMB 928,586 thousand in 2018[68]. - The company successfully applied a new generation of network imaging logging systems and achieved breakthroughs in high-temperature MWD instruments[64]. - The company will enhance its R&D capabilities, focusing on deep oil and gas, shale gas, and key technologies to support exploration and development[101]. Environmental and Social Responsibility - The company disposed of 52.87 million cubic meters of drilling wastewater and 33.48 million cubic meters of domestic sewage in compliance with regulations in 2019[177]. - The company has established an environmental emergency management system and conducts regular training and drills[178]. - The company has implemented advanced technologies to reduce energy consumption and pollutant emissions[177]. Related Party Transactions - The company engaged in significant related party transactions, including purchasing raw materials and equipment from Sinopec Group for RMB 10,973.226 million, accounting for 25.9% of similar transactions[162]. - The company provided engineering services to Sinopec Group for RMB 39,874.446 million, representing 57.1% of similar transactions[162]. - The total amount of related party transactions does not exceed the annual limits set by independent shareholders[163]. Future Outlook - The company plans to sign new contracts worth RMB 68 billion in 2020, with RMB 39.6 billion from internal markets and RMB 15.4 billion from overseas markets[93]. - The company expects to maintain a strong market presence in the domestic oil service industry amid recovering demand[92]. - The international business segment aims to sign new contracts worth USD 2.2 billion in 2020, focusing on markets like Saudi Arabia, Kuwait, and Ecuador[100].

Financial Performance - Net profit attributable to shareholders rose by 64.4% to CNY 723,193,000 year-on-year[5] - Operating revenue grew by 28.0% to CNY 47,599,937,000 for the first nine months of the year[5] - Basic earnings per share increased by 58.3% to CNY 0.038[5] - The company reported a significant increase in accounts payable, which rose to RMB 24,860,425 thousand from RMB 23,261,762 thousand, reflecting higher operational activity[17] - Total operating revenue for Q3 2019 reached RMB 17,343,907 thousand, a 28% increase from RMB 13,528,135 thousand in Q3 2018[21] - Net profit for Q3 2019 was RMB 213,765 thousand, compared to RMB 39,025 thousand in Q3 2018, representing a significant increase[22] - Earnings per share for Q3 2019 were RMB 0.011, compared to RMB 0.002 in Q3 2018, showing improved profitability per share[22] Assets and Liabilities - Total assets increased by 9.8% to CNY 66,853,074,000 compared to the end of the previous year[5] - The total assets increased to RMB 66,853,074 thousand from RMB 60,904,715 thousand, reflecting overall growth in the company's financial position[15] - The total liabilities rose to RMB 59,930,783 thousand from RMB 55,126,305 thousand, indicating an increase in financial obligations[17] - Total current assets amounted to 32,013,819 thousand RMB, with accounts receivable at 15,630,004 thousand RMB and inventory at 1,411,638 thousand RMB[31] - The total liabilities were 55,126,305 thousand RMB, with current liabilities comprising 52,963,348 thousand RMB[32] Cash Flow - Cash flow from operating activities turned positive with a net amount of CNY 897,769,000, a significant improvement from a loss of CNY 3,043,798,000 in the same period last year[5] - Operating cash flow improved significantly, with a net cash flow from operating activities of RMB 897,769 thousand compared to a loss of RMB 3,043,798 thousand in the previous year[12] - The net cash flow from operating activities for the first three quarters of 2019 was 897,769,000, recovering from a negative cash flow of -3,043,798,000 in the same period of 2018[26] - The company reported a net cash outflow from investing activities of -1,275,151,000 in Q3 2019, compared to -398,073,000 in Q3 2018[27] - The total cash and cash equivalents at the end of Q3 2019 were 2,004,551,000, a decrease from 2,139,449,000 at the end of Q3 2018[27] Investments and Expenses - Research and development expenses surged by 154.4% to RMB 683,745 thousand, reflecting increased investment in technology for drilling and complex reservoir projects[12] - Financial expenses rose by 175.5% to RMB 615,969 thousand, mainly due to increased interest expenses and the impact of new leasing standards[12] - The company received government subsidies amounting to CNY 42,092,000 during the reporting period[6] - The company plans to continue expanding its market presence and investing in new technologies[5] Shareholder Information - The total number of shareholders reached 136,686, with the largest shareholder holding 56.51% of the shares[7] - The company reported non-recurring gains of CNY 86,229,000 for the third quarter[6]

[Glossary](index=4&type=section&id=Section%20I%20Glossary) This section provides definitions for key terms and abbreviations used throughout the report [Company Profile and Key Financial Indicators](index=5&type=section&id=Section%20II%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company and its key financial performance metrics [Key Accounting Data and Financial Indicators](index=6&type=section&id=VII.%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20of%20the%20Company) The company achieved robust performance in H1 2019, with significant growth in revenue and net profit under both CASBE and IFRS Key Accounting Data (Under CASBE) | Indicator | Current Period (RMB Thousand) | Prior Period (RMB Thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 30,256,030 | 23,650,777 | 27.9 | | Net Profit Attributable to Parent | 509,428 | 400,949 | 27.1 | | Net Profit Attributable to Parent After Deducting Non-recurring Gains and Losses | 430,060 | 463 | 92,785.5 | | Net Cash Flow from Operating Activities | -709,159 | -3,515,042 | N/A | | Total Assets (Period-end) | 66,064,838 | - | 8.5 (vs. end of prior year) | | Net Assets Attributable to Parent (Period-end) | 6,584,854 | - | 14.0 (vs. end of prior year) | Key Financial Indicators (Under CASBE) | Indicator | Current Period | Prior Period | Change | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 0.027 | 0.022 | 22.7% | | Weighted Average Return on Net Assets | 8.44% | 8.99% | Decreased by 0.55 percentage points | | Weighted Average Return on Net Assets After Deducting Non-recurring Gains and Losses | 7.13% | 0.01% | Increased by 7.12 percentage points | Key Accounting Data (Under IFRS) | Indicator | Current Period (RMB Thousand) | Prior Period (RMB Thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Profit Attributable to Equity Holders | 803,913 | 615,731 | 30.6 | | Basic and Diluted Earnings Per Share (RMB) | 0.042 | 0.034 | 23.5 | | Return on Equity | 12.21% | 10.01% | Increased by 2.2 percentage points | Non-recurring Gains and Losses Items (RMB Thousand) | Item | Amount | | :--- | :--- | | Gains/Losses on Disposal of Non-current Assets | -1,437 | | Government Grants Recognized in Current Profit or Loss | 21,728 | | Gains/Losses from Debt Restructuring | 75,509 | | Other Non-operating Income and Expenses | 6,223 | | Income Tax Impact | -22,655 | | **Total** | **79,368** | [Company Business Overview](index=9&type=section&id=Section%20III%20Company%20Business%20Overview) This section outlines the company's principal business, operating model, core competencies, and significant asset changes [Principal Business, Business Model, and Core Competencies](index=9&type=section&id=I.%20Explanation%20of%20the%20Group%27s%20Principal%20Businesses%2C%20Business%20Model%2C%20and%20Industry%20Situation%20During%20the%20Reporting%20Period) The company is a large integrated oil and gas engineering and technical services provider, offering full-lifecycle services from exploration to well abandonment across five major segments, underpinned by integrated capabilities and advanced technology - The company's business covers five major segments: geophysical, drilling engineering, logging and testing, downhole special operations, and engineering construction, spanning the entire oil and gas exploration and development value chain[23](index=23&type=chunk) - The company operates in over **20 provinces** in China and **35 countries and regions** overseas[23](index=23&type=chunk) Core Equipment and Team Strength (As of June 30, 2019) | Asset Category | Quantity | | :--- | :--- | | Land Drilling Rigs | 716 units | | Offshore Drilling Platforms | 14 platforms | | Seismograph Main Units | 64 units | | Imaging Logging Systems | 131 sets | | 2500/3000 Type Fracturing Trucks | 134 units | | Professional Teams | 1,799 teams | [Significant Changes in Major Assets](index=9&type=section&id=II.%20Explanation%20of%20Significant%20Changes%20in%20the%20Group%27s%20Major%20Assets%20During%20the%20Reporting%20Period) As of June 30, 2019, total assets increased by 8.5% to **RMB 66.06 billion** due to higher workload and new lease standard adoption, while net assets attributable to parent rose 14.0% Asset and Liability Status (As of June 30, 2019) | Indicator | Amount (RMB Thousand) | Change vs. Prior Year-End (%) | | :--- | :--- | :--- | | Total Assets | 66,064,838 | 8.5% | | Net Assets Attributable to Parent | 6,584,854 | 14.0% | | Asset-Liability Ratio | 90.0% | -0.5 percentage points | - The increase in total assets was primarily due to higher workload leading to increased contract assets and the recognition of right-of-use assets under the new lease standard[24](index=24&type=chunk) [Discussion and Analysis of Operations](index=10&type=section&id=Section%20IV%20Discussion%20and%20Analysis%20of%20Operations) This section provides a detailed review of the company's operating performance, market outlook, and risk factors [Operating Performance Review and Analysis](index=10&type=section&id=I.%20Discussion%20and%20Analysis%20of%20Operations) In H1 2019, the oilfield services industry improved due to increased upstream capex, leading to a 27.9% revenue growth and a 3.3 percentage point increase in gross profit margin for the company H1 2019 Overall Performance | Indicator | Amount (RMB Thousand) | YoY Growth (%) | | :--- | :--- | :--- | | Operating Revenue | 30,256,030 | 27.9% | | Net Profit Attributable to Parent | 509,428 | 27.1% | | Basic Earnings Per Share (RMB) | 0.027 | 22.7% | - The gross profit margin for principal activities in H1 was **9.2%**, an increase of **3.3 percentage points** year-on-year, primarily due to deepened reforms, strengthened management, and internal efficiency improvements[27](index=27&type=chunk) H1 2019 New Contract Value | Market | New Contract Value | YoY Growth (%) | | :--- | :--- | :--- | | **Total** | **RMB 42.85 billion** | **24.6%** | | Sinopec Market | RMB 22.98 billion | 42.7% | | Domestic External Market | RMB 7.94 billion | 9.2% | | Overseas Market | USD 1.72 billion | -2.0% | [Review of Business Segments](index=10&type=section&id=Business%20Review) In H1 2019, drilling, logging and testing, downhole special operations, and engineering construction services all achieved double-digit revenue growth, while geophysical services declined H1 2019 Principal Business Segment Performance (RMB Thousand) | Business Segment | Revenue from Principal Activities | YoY Change (%) | Gross Profit Margin (%) | Change in Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | Geophysical | 1,869,906 | -26.7% | 5.0% | Decreased by 0.6 percentage points | | Drilling | 16,779,456 | 35.8% | 10.0% | Increased by 4.3 percentage points | | Logging and Testing | 1,048,528 | 51.8% | 20.7% | Increased by 18.1 percentage points | | Downhole Special Operations | 3,197,268 | 56.7% | 7.8% | Increased by 3.1 percentage points | | Engineering Construction | 6,481,250 | 23.3% | 8.2% | Increased by 0.3 percentage points | | **Total** | **30,009,996** | **28.7%** | **9.2%** | **Increased by 3.3 percentage points** | - International business revenue was **RMB 6.01 billion**, a **2.1% year-on-year decrease**, accounting for **20.0%** of principal business revenue, with **32 new/renewed drilling rigs** signed in Saudi Arabia totaling **USD 1.06 billion** in contract value[35](index=35&type=chunk) [Analysis of Assets and Liabilities](index=13&type=section&id=%28III%29%20Analysis%20of%20Assets%20and%20Liabilities) As of the reporting period end, total assets grew 8.5% from the beginning of the year, driven by a 56.5% increase in contract assets and a 99.9% rise in construction in progress Major Asset and Liability Item Changes (vs. Beginning of Year) | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Contract Assets | 56.5% | Increased workload in H1 led to higher utilization | | Construction in Progress | 99.9% | Due to investment in geophysical acquisition and construction equipment | | Non-current Liabilities Due Within One Year | 330.3% | Due to reclassification of some long-term borrowings | | Special Reserves | 98.0% | Due to increased provision for special reserves | [Second Half Market Outlook and Work Plan](index=16&type=section&id=II.%202019%20Second%20Half%20Market%20Outlook%20and%20Work%20Plan) The company anticipates continued oilfield services recovery in H2 2019, with oil prices between USD 60-70/barrel, and plans to secure over **RMB 25 billion** in new contracts - International oil prices are expected to fluctuate between **USD 60-70/barrel** in H2, with major domestic oil companies continuing to increase upstream exploration and development capital expenditure[48](index=48&type=chunk) - H2 operating plan targets new contract value of over **RMB 25 billion** and completed contract value of over **RMB 34 billion**[49](index=49&type=chunk) - Planned H2 capital expenditure is **RMB 2.01 billion**, primarily for urgent production needs, technical service capability enhancement, and equipment upgrades[58](index=58&type=chunk) - The company will continue to deepen internal reforms, streamline organizational structure, optimize team composition, and strengthen project management-centric refined management[57](index=57&type=chunk) [Risk Warnings](index=18&type=section&id=%28II%29%20Potential%20Risks) The company faces key risks including oil price volatility, intense market competition, environmental and safety hazards, geopolitical and policy risks in overseas operations, and exchange rate fluctuations - Key risk factors include: - **Oil Price Uncertainty**: Global trade frictions and geopolitical conflicts increase oil price volatility - **Market Competition Risk**: The oversupply in the oilfield services industry has not fundamentally improved, leading to intense competition - **Environmental and Safety Risk**: Oilfield service operations may result in casualties, property damage, and environmental harm - **Overseas Operation Risk**: Facing multiple geopolitical, economic, legal, and tax risks in international operations - **Exchange Rate Risk**: International business is primarily settled in USD, making the company susceptible to RMB exchange rate fluctuations[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) [Significant Matters](index=21&type=section&id=Section%20V%20Significant%20Matters) This section details significant corporate events, including profit distribution, litigation, related party transactions, and accounting policy changes [Profit Distribution and Commitment Fulfillment](index=21&type=section&id=II.%20Profit%20Distribution%20or%20Capital%20Reserve%20Capitalization%20Plan) The Board resolved not to distribute H1 2019 cash dividends or capitalize capital reserves, while the controlling shareholder strictly fulfilled its commitments regarding competition and related party transactions - The Board resolved not to distribute H1 2019 dividends or proceed with capital reserve capitalization[71](index=71&type=chunk) - Controlling shareholder Sinopec Group continued to fulfill its long-term commitments made during the major asset restructuring regarding avoidance of horizontal competition, regulation of related party transactions, and maintaining the listed company's independence[72](index=72&type=chunk)[73](index=73&type=chunk) [Significant Litigation and Equity Incentive](index=23&type=section&id=VI.%20Significant%20Litigation%20and%20Arbitration%20Matters) During the reporting period, the judicial reorganization plan for the company's indirectly controlled Brazilian subsidiary was approved, and **14.715 million** A-share stock options were cancelled due to unfulfilled exercise conditions - The judicial reorganization plan for the company's indirectly controlled Brazilian subsidiary was approved by the Rio de Janeiro court in Brazil on **July 15, 2019**[76](index=76&type=chunk) - Due to unfulfilled exercise conditions for the first exercise period, the company cancelled **14.715 million** A-share stock options; an additional **2.163 million** options were cancelled due to changes in incentive recipients[82](index=82&type=chunk) [Significant Related Party Transactions](index=24&type=section&id=X.%20Significant%20Related%20Party%20Transactions) The company's significant related party transactions primarily involve the controlling shareholder Sinopec Group and its affiliates, covering procurement, engineering services, community services, and financing, all conducted at market prices H1 2019 Major Ordinary Related Party Transactions (RMB Thousand) | Related Party Transaction Content | Related Party | Transaction Amount | | :--- | :--- | :--- | | Procurement of Raw Materials and Equipment | Sinopec Group and its Affiliates | 4,519,246 | | Provision of Engineering Services | Sinopec Group and its Affiliates | 18,199,681 | | Obtaining Loans | Sinopec Group and its Affiliates | 16,917,831 | | Repayment of Loans | Sinopec Group and its Affiliates | 15,224,918 | | Interest Expense | Sinopec Group and its Affiliates | 384,288 | [Changes in Accounting Policies](index=28&type=section&id=XVIII.%20Explanation%20of%20Other%20Significant%20Matters) Effective January 1, 2019, the company adopted the revised CASBE No. 21 – Leases, requiring lessees to recognize right-of-use assets and lease liabilities for most leases, with retrospective adjustments to opening financial statements - Effective **January 1, 2019**, the company adopted the new lease standard, eliminating the distinction between finance and operating leases for lessees, requiring recognition of right-of-use assets and lease liabilities for all leases (except short-term and low-value asset leases)[93](index=93&type=chunk) Impact of New Lease Standard on Book Amounts as of January 1, 2019 (RMB Thousand) | Financial Statement Item | Adjustment Amount | | :--- | :--- | | Fixed Assets | -71,599 | | **Right-of-Use Assets** | **+1,020,627** | | Intangible Assets | -4,549 | | Non-current Liabilities Due Within One Year | +310,302 | | **Lease Liabilities** | **+663,295** | [Share Changes and Shareholder Information](index=29&type=section&id=Section%20VI%20Changes%20in%20Ordinary%20Shares%20and%20Shareholder%20Information) This section provides details on the company's share capital structure and major shareholders [Shareholder Information](index=29&type=section&id=II.%20Shareholder%20Information) As of June 30, 2019, the company's total share capital structure remained unchanged with **143,985** shareholders, and controlling shareholder Sinopec Group held a combined **70.18%** stake - As of **June 30, 2019**, the total number of shareholders was **143,985**, comprising **143,643 A-share holders** and **342 H-share registered holders**[97](index=97&type=chunk) - Controlling shareholder Sinopec Group directly holds **56.51%** of the company's A-shares and indirectly holds **13.67%** of H-shares through its wholly-owned subsidiary, totaling a **70.18%** stake[100](index=100&type=chunk)[103](index=103&type=chunk) Top Ten Shareholders' Shareholding (As of June 30, 2019) | Shareholder Name | Number of Shares Held | Shareholding Percentage (%) | | :--- | :--- | :--- | | Sinopec Group | 10,727,896,364 | 56.51 | | HKSCC Nominees Limited | 5,402,118,744 | 28.46 | | CITIC Limited | 1,035,000,000 | 5.45 | | Dirui Asset Management (Hangzhou) Co., Ltd. | 133,333,333 | 0.70 | | Donghai Fund - Industrial Bank - Huaxin Trust - Huizhi Investment No. 49 | 66,666,666 | 0.35 | | Donghai Fund - Industrial Bank - Huaxin Trust - Huizhi Investment No. 47 | 66,666,666 | 0.35 | [Information on Directors, Supervisors, and Senior Management](index=31&type=section&id=Section%20VII%20Information%20on%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section provides details on the shareholding, incentives, and changes in the company's directors, supervisors, and senior management [Shareholding and Incentive Status of Directors, Supervisors, and Senior Management](index=31&type=section&id=I.%20Changes%20in%20Shareholding) As of the reporting period end, the company's directors, supervisors, and senior management did not directly hold shares, though some senior management held stock options, and some personnel indirectly held shares through the 'Cohesive Win-Win Plan' - As of the end of the reporting period, all current and departed directors, supervisors, and senior management did not directly hold company shares[107](index=107&type=chunk) - Some senior executives collectively held **763,000** unexercised stock options[109](index=109&type=chunk) - **10** directors, supervisors, and senior management indirectly held company shares by subscribing to a total of **3.55 million** units under the 'Cohesive Win-Win Plan'[110](index=110&type=chunk)[111](index=111&type=chunk) [Changes in Directors, Supervisors, and Senior Management Personnel](index=33&type=section&id=II.%20Changes%20in%20Company%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management%20Personnel) During the reporting period, the company experienced several personnel changes among its directors, supervisors, and senior management, including the election of Mr. Chen Xikun as Vice Chairman and Mr. Yuan Jianqiang as General Manager and Director - Significant personnel changes include: - **Mr. Chen Xikun**: Elected as Vice Chairman of the company - **Mr. Yuan Jianqiang**: Appointed as General Manager and elected as a Director - **Mr. Sun Qingde**: Relinquished his positions as Vice Chairman and General Manager due to job role changes[112](index=112&type=chunk) [Financial Report](index=34&type=section&id=Section%20VIII%20Financial%20Report) This section presents the company's financial statements prepared under both China Accounting Standards for Business Enterprises and International Financial Reporting Standards [Financial Report Prepared Under China Accounting Standards for Business Enterprises](index=34&type=section&id=Prepared%20Under%20China%20Accounting%20Standards%20for%20Business%20Enterprises) This part includes the unaudited H1 2019 consolidated and company financial statements prepared under CASBE, encompassing balance sheets, income statements, cash flow statements, and notes [Financial Report Prepared Under International Financial Reporting Standards](index=124&type=section&id=Prepared%20Under%20International%20Financial%20Reporting%20Standards) This part includes the H1 2019 condensed consolidated financial information prepared under IFRS and reviewed by Grant Thornton Hong Kong Limited, comprising statements of comprehensive income, financial position, changes in equity, cash flows, and notes [Documents for Inspection](index=155&type=section&id=Section%20IX%20Documents%20for%20Inspection) This section lists documents available for inspection by shareholders and regulatory bodies at the company's office [Directory of Documents for Inspection](index=155&type=section&id=Section%20IX%20Directory%20of%20Documents%20for%20Inspection) The report lists documents available at the company's office for shareholder and regulatory review, including the signed semi-annual report, financial reports, articles of association, and all publicly disclosed documents - Documents for inspection include: - Original semi-annual report signed by the Chairman - Semi-annual financial report signed and sealed by senior management - Articles of Association - Originals of all publicly disclosed documents and announcements during the reporting period[590](index=590&type=chunk)

Financial Performance - The company reported a total revenue of RMB 10.5 billion for the first half of 2019, representing a year-on-year increase of 15%[8]. - The net profit attributable to shareholders was RMB 1.2 billion, an increase of 20% compared to the same period last year[8]. - The company's operating revenue for the reporting period reached RMB 30,256,030 thousand, representing a 27.9% increase compared to RMB 23,650,777 thousand in the same period last year[11]. - Operating profit increased by 82.5% to RMB 736,554 thousand from RMB 403,678 thousand year-on-year[11]. - Net profit attributable to shareholders was RMB 509,428 thousand, up 27.1% from RMB 400,949 thousand in the previous year[11]. - The company's consolidated revenue for the first half of 2019 was RMB 30,256 million, a 27.9% increase from RMB 23,651 million in the same period last year[23]. - The net profit attributable to shareholders for the first half of 2019 was RMB 509 million, up 27.1% from RMB 401 million year-on-year[23]. - The company's main business gross margin for the first half of 2019 was 9.2%, an increase of 3.3 percentage points compared to the same period last year[23]. - The total new contract amount signed in the first half of 2019 was RMB 42.85 billion, a 24.6% increase year-on-year[24]. - The company completed contracts worth RMB 30.96 billion in the first half of 2019, a 35.1% increase year-on-year[24]. Operational Efficiency - The company has expanded its service offerings, including enhanced drilling and completion services, which contributed to a 25% increase in operational efficiency[8]. - User data indicates a 30% growth in the number of active projects compared to the previous year, reflecting strong market demand[8]. - The company achieved a reduction in operational costs amounting to RMB 4.7 billion through various efficiency measures[34]. Investment and Development - The company plans to invest RMB 500 million in new technology development for oil extraction and reservoir management in the next fiscal year[8]. - The company plans to sign new contracts worth over RMB 25 billion and complete contracts worth over RMB 34 billion in the second half of 2019[49]. - The company aims to complete 8,000 kilometers of 2D seismic acquisition and 12,000 square kilometers of 3D seismic acquisition in the second half of 2019[50]. - The company plans to drill a total of 4.8 million meters in the second half of 2019, focusing on key projects in shale gas and tight oil[51]. - The company plans a capital expenditure of RMB 2.01 billion in the second half of 2019 to enhance exploration and development service capabilities[59]. Financial Stability - The company has maintained a strong balance sheet with total assets of RMB 20 billion and a debt-to-equity ratio of 0.5, indicating financial stability[8]. - Total assets as of June 30, 2019, were RMB 66,064,838 thousand, an 8.5% increase from RMB 60,904,715 thousand at the end of the previous year[17]. - The asset-liability ratio was 90.0%, a decrease of 0.5 percentage points compared to the end of the previous year[19]. - The company's total liabilities as of June 30, 2019, amounted to RMB 59,479,984 thousand, an increase from RMB 56,070,784 thousand at the end of 2018, which is an increase of about 4.3%[122]. - The total equity attributable to shareholders increased to RMB 6,584,854 thousand as of June 30, 2019, compared to RMB 5,778,410 thousand at the end of 2018, representing a growth of approximately 13.9%[122]. Research and Development - The company's research and development expenses increased by 99.7% to RMB 479,782 thousand from RMB 240,196 thousand year-on-year, reflecting a significant investment in technology[36][37]. - The company applied for 310 new patents and received 203 patent authorizations in the first half of 2019, indicating a strong focus on innovation[33]. Strategic Initiatives - The company is actively pursuing strategic partnerships and potential acquisitions to enhance its market position and service capabilities[8]. - The board has approved a stock option incentive plan, allowing for the issuance of up to 5.085 million stock options to key management personnel[8]. - The company completed the acquisition of a 45% stake in Huameifutai Oil and Gas Enhanced Production Technology Service Co., Ltd. for $26.9024 million, making it a wholly-owned subsidiary[42]. Market Outlook - Future outlook includes a projected revenue growth of 10% for the second half of 2019, driven by increased market penetration and new client acquisitions[8]. - The company expects the global oil market to remain balanced, with international oil prices fluctuating between $60 and $70 per barrel in the second half of 2019[48]. Environmental and Social Responsibility - The company reported a decrease in comprehensive energy consumption per ten thousand yuan of industrial output by 7.2% year-on-year, achieving 0.244 tons of standard coal[98]. - The company has established an environmental emergency management system and conducted regular training and drills for emergency response plans[98]. - The company has implemented a "Green Action Plan" to enhance environmental protection and pollution prevention measures[97]. Corporate Governance - The company has established an audit committee to oversee financial reporting and internal controls, ensuring compliance and accuracy in financial disclosures[119]. - The company has complied with the corporate governance code as per the Hong Kong Stock Exchange rules, with no insider trading incidents reported[99].