On August 26th 2020, Sinopec Oilfield Service Corporation held 2020 Interim Results Announcement Conference Call in Beijing. 47 of institutional investors, analysts and journalists participated in the conference call. Chairman Mr Chen Xikun，Executive Director and CEO Mr. Yuan Jianqiang, CFO Mr. Xiaoyi and Board Secretary Mr. Li Honghai attended the meeting. At the meeting, the management firstly introduced the operations, financials of 1H 2020 and outlook for 2H 2020. Then in Q&A session, the management answered the questions that investment institutions and medias were interested in.
In 1H 2020, due to the impact of COVID-19 epidemic on global economy, crude oil prices plummeted. The average Brent oil price in 1H 2020 was 40.2 USD/barrel, down by 39% YoY. Domestic and foreign oil companies have adjusted their E&P plans and sharply reduced upstream CAPEX. The oilfield service industry was affected significantly. However, facing the dual challenges from the outbreak of the COVID-19 epidemic and plunged oil prices, the company has steadily carried out epidemic prevention and control, promoted the resumption of production, expanded domestic and foreign markets, and focused on improving quality and efficiency. Especially in the second quarter, SSC seized the favorable opportunity for the continuous improvement of the domestic epidemic prevention and control situation, and launched a 100-day campaign to improve profitability, promote production, operation, reform and development. We successfully turned into profitable ,recorded 481 million Yuan of net profit in Q2, up by 49.6% YoY, and other major operation indicators also improved significantly. In 1H 2020, we recorded a revenue of 31.432 billion yuan, increased by 3.9% YOY, and a net profit of 298 million yuan. The new contracts value of 1H 2020 was 42.97 billion yuan, marching against the headwind with better performance unexpected.
Mr. Chen Xikun said, after the previous severe test of low oil prices and market competition, our company is well positioned for market competition, risk management, and industrial influence. Only by making us stronger, will we achieve steady and enduring growth in the complicated market environment. The management and all employees of the company will stay sober, raise our risk awareness, implement concrete actions, and concentrate on the following work:
Firstly, we will coordinate and optimize market layout, and secure the development base. We will spare no efforts in serving and safeguarding Sinopec internal market, consolidate and develop domestic large and efficient markets of PetroChina, Cnooc and PipeChina, focus more on optimal and strong markets, and actively develop overseas high quality markets.
Secondly, we will improve technological innovation and strengthen our core competitiveness. We will enhance R&D capability, cultivate specialized key technologies, and promote the application of scientific achievements. We will reorganize and integrate businesses of logging, mud logging, and directional drilling, carry out business transformation and upgrading, and raise the proportion of high-end businesses from 30%to 50%.
Thirdly, we will keep deepening reform and unleash the vitality of institutional mechanisms. We will improve our organizational structure, streamline management, and increase the proportion of employees from main businesses. We will optimize our team structure, make our main businesses stronger and better, reduce the auxiliary organizations from 114 at the beginning of this year to 68, and professional teams from 1799 to 1600. We will advance the three reforms of labor force, and stimulate the employees’ vitality.
Fourthly, we will focus on stringent cost control, and raise our profitability. We will carry on the campaign of continuous hard work and efficiency improvement, strive to raise quality, speed, and efficiency, and shorten the cycle of well construction. We will strictly control material procurement and out-sourcing expenditure, and reduce non-productive expenditures. Through various ways, we will make costs well under control.
Fifthly, we will strength risk control and lay foundation for further development. We will continuously take epidemic prevention and control as routine work, especially in overseas markets. We will actively manage market risks, operational risks, and risks in contract execution and shortage of cash flows, and ensure a steady and healthy development of the company. （Rong Liming, Liu Wenxu）