Good morning, ladies and gentlemen, friends of COSL. It's good to see you again. A very warm welcome to annual results meeting of COSL. Allow me to introduce you management members today who are with us. Mr. Qi Meisheng, Chairman of Company. Mr. Cao Shujie, CEO and President of Company. Mr. Zheng Yonggang, CFO of Company. Ms. Jiang Ping, Board Secretary of Company. Thank you. The first part of the meeting, Mr. Zheng Yonggang, CFO, he will share with us overall performance of COSL in 2018 and an outlook of the Company for 2019 and beyond. The rest of the meeting will be for you to raise questions and for them to address them. Shall we start?
Good morning, ladies and gentlemen. Thanks all for attending COSL's annual results press conference 2018. Please take note of our disclaimer. Today's presentation will be divided into two parts. First is the 2018 results overview. Second is our future outlook. Let's review the development of oil and gas industry. As we all know, the overall international crude oil price rebounded in 2018. Growth in the oil price drive oil and gas company to increase CapEx, and it had improved exploration and development from the second half of 2018 in Chinese market. Global upstream E&P spending increased by approximately 7% over 2017. The situation of oversupply still exist. COSL has faced a serious challenge in the operating environment in 2018. Facing the opportunity and challenge of industry, COSL promotes the technological and international development steadily.
Seizing the rising demands of E&P, provide guarantee for customer to increase their reserve and production through technological innovation and improving equipment efficiency. COSL has successfully accomplished its business objective during the period. This is our 2018 financial result. The operating revenue increased by 25.4% year-over-year to nearly CNY 21.9 billion. Overcoming the competition in the industry and the raw material cost rising, COSL achieved profit for a consecutive year, the profit for the year is nearly CNY 89 million. In terms of revenue, we ranked fifth behind the big three and Weatherford, but ahead of all of the equipment company, including Transocean, including Noble. In terms of growth rate, we are the fastest one. We achieved 25.4%, the growth rate. At the end of the year, we held available cash is nearly CNY 11.5 billion, and our debt ratio is around 53.6%.
Compared to the last year, which is 53.1%, a little bit increased due to the workload increase. Our accounts payable increased, I remember CNY 1.4 billion, just the debt ratio a little bit increase. Our distribution policy for the 2018, we proposed $0.07 per share, the tax included. This is our 2018 financial result. With the expansion of domestic and overseas market, COSL's business capacity and profitability have been improved. The overall workload of our four sector has all increased to varying degrees. Except for the geophysical and survey sector, the revenue of the other three sector increased. Among it, the well service sector grew the fastest one and contribute the most. This picture illustrates our growth rate. From this picture, you can see our well service sector is the fastest one, and the growth rate is 40%. Our drilling sector grows 22%.
Our marine support sector is around 10%, the geophysical and survey service sector down 2%. From this picture, you can see our well service sector is the fastest one, in 2018, contributed around RMB 2.8 billion. In terms of the operating base our drilling sector grows by 23.8%. Our self-owned vessels of marine support increased by 6.4%. Our geophysical sector grew in volume of operation, but dropped in revenue due to the increase of multi-client projects while revenue will be confirmed at the time of data sales. Our geophysical and survey service down 2% is due to the change of business model. In the past, we provide service, we collect money. We recognize the sales revenue. Now, the business model changed. We provide service and we spend money. We treat it as asset and depreciate in next four years.
We recognize the sales revenue when we sell data. The timing will be delayed, maybe two years later, maybe three years later. The timing will be delayed compared to the past business model. This is a big change, is called multi-client, the sales model. This is the explanation for our drop in the geophysical and survey service. In reality, it's increased. Okay, thanks. Let's move on to the performance of COSL in 2018. As global market recover, we increase number of tender and bidding activity. Utilization rates of equipment also improves gradually. However, oversupply of production capacity will exist in the medium and the short term. Except for some special rigs, the day rate stay at the low levels.
Although the equipment sector in the industry still face the challenge of oversupply, as shown in the figures above, the utilization rate of COSL's drilling rig, vessels, and seismic vessels were better than the average level of international peers in 2018. In 2018, this is a illustration of our the drilling rig utilization rate. From this picture, you can see utilization rates for COSL both for the semi-sub and the jackup, is around 65%. 5%-10% higher than international peers in 2018. Also we project will be the utilization rate in the next year, which means in 2019 will be bit higher. Maybe it can touch 75%, maybe. COSL has been profitable for consecutive years, as shown above. Although the COSL's profit scale is small, it reflected the competitive environment in the certain extent.
Apart from the factor of overall industry, COSL's profit was limited by the price rising of raw materials, fuels, and chemicals. In the meantime, the improvement of E&P in the domestic made immediate request of equipment and technical capacity. In order to seize the opportunity of E&P rising demand, COSL made full use of its own resources and expand market shares by subcontracting and leasing. As a result, increase in workload lead to cost rising. Okay. Looking around the global industry, we are also pleased to find our equipment strength ranks in the forefront of the industry. The scale of our drilling rig ranks the second in the world. The marine support market shares is the fourth largest in the world, the workload of geophysical contract is the first largest in the world. The breakthrough in well service technology have achieved the advanced level.
The market shares of cementing ranks fourth, the well and logging market ranks sixth, and drilling and completion fluids ranks seventh. Our equipment sector stays stable in the share of global oilfield service market, and well service sector keeps rising. From this picture, you can tell, in our well service sector, this green line is our well service sector. In the past 10 years, increase is around 0.1%, the market share globally, now to the nearly 0.6% market share globally. Increase a lot. Our equipment sector keeps nearly the same. Our company in the future, the major driving the profitable factor will be majorly from the well service sector in the future. As we have mentioned, the contribution of well service sector increased, reflecting our ability in technology development to continuously break through the bottleneck and in achievement transformation. COSL achieved high quality development in 2018.
Development mode was transforming from scale and speed to quality and efficiency. COSL's research and technology progress focus on the improving customer operational efficiency, high temperature, high pressure, green environment-friendly, and low carbon. In 2018, COSL has provided significant support for customer of a new discovery in exploration, increased output of heavy oil and marginal oilfield. I'd like to introduce our self-development MRCT. It's an important method for obtaining information such as earth formation and oil and gas reserves. The self-development MRCT coring sample complete strong adaptivity to earth formation, suitable for complex well condition. In 2018, 401 cores were collected and 51 cores record are created in one run of CNOOC. MRCT has gained attention from a number of international oil company and will gain more market shares in domestic.
Now we are very proud to say, in this market area, we are the leading player in this service area. Among all of our international peers, including the big three, we are the leading player. In this area, we are the leading player. In this service area, we are the leading player. In 2018, COSL records a revenue growth both at domestic and abroad. The latter of which hits 31%. This is international, increase 31% to $5.6 billion. Domestic increased 23.5% and hit $16 billion. This is domestic. Our well service, this well service increased 40% and hit nearly $9.8 billion. Well equipment sector increased 15.6% and hit more than $12 billion. In terms of the revenue, in terms of growth rate, we achieve the significant increase in 2018.
As we all know, it has improved our E&P activity from the second half of 2018 in Chinese market. COSL in the development of domestic market, but also focus on the global strategic layout, having developing market through various business model to enhance the overall profitability. In 2018, COSL gained 29 new customer and signed 133 new contract in overseas market. This sums the illustration. For example, Europe, our Innovator platform launched the drilling contract for the new client Lundin, the Pioneer receives the next drilling contract. This our strategic area. Also, Middle East is another one. In Saudi Arabia, in Iraq, we already make the breakthrough in some of the market, Saudi Arabia and Iraq. Set out drilling, we went to 21 wells, we are now in bidding the next round.
In some strategic area, we make the breakthrough. With the workload increase, safety position is stable and gained an excellent safety management achievement. Safety is on COSL's top priority. We kept inspecting hidden dangers and conducting emergency management. Our TRIR remains low, which stood at 0.08. A premier TRIR record plays key role in realized COSL's internationalization. Meanwhile, COSL concerned about energy saving and environmental protection issues. We actively made charitable contribution and co-host the safety culture events with clients. The company still receives award and gains recognition from the capital market and the institution, even though in face of the severe industrial environment. I finished the 2018 and the financial and operational performance overview. I will move to the 2019 outlook.
In 2019, the oilfield service industry will keep recovering in general, with increased market activity and a further improvement in the overall operating environment as compared in 2018. According to the Spears report, the workload in the oilfield service will build up. A growth rate of 8% is expected for 2019. Oil and gas continue to make up large proportion of China energy consumption structure, while the proportion of clean energy and new energy will increase. For example, the wind power is our strategic target, the wind power. China will continue to accelerate exploration and production to ensure energy security over the next seven years. In 2019, COSL will follow the strategy of technological and international development, increase the proportion of well service sector revenue, and focus on the development of international market while securing the domestic energy supplies.
COSL will strive to expand its business onshore and offshore, especially in the new energy industry such as wind power, to make COSL an internationally competitive integrated oilfield service provider, covering the broad range of energy. For the domestic market, pursuant to the national policy, Chinese oil and gas companies such as CNPC, CNOOC, and Sinopec will increase oil and gas E&P activity in China, and the more small and medium-sized oil and gas companies will do the same as well. This will be more project opportunity related to onshore business and wind power in the future. In this connection, COSL will closely follow the needs of our clients in China, seize the opportunity of industrial development, diversify the types of business in order to steadily increase the revenue generated from the domestic market. This is an illustration on the domestic.
We have the 33, and the international, we have 18 in the fleet. There will be 32 drilling rigs in domestic market, and also, I believe will be more the semi-sub and the jackups, the drilling. Also, we will add it to our fleet in domestic market in 2019. This slide shows summary of contract in overseas market. In the background of fast growth in domestic market, COSL will strive to further revenue increase from overseas. Here, I want to share with you about Iraqi market. Due to the significant performance of COSL, one of our Iraqi clients offered to cooperate with COSL to help to improve integrated service capability. According to this, COSL will enjoy a good market prospect in Iraq for the next two years.
This is just an illustration including our overseas market, America, Africa, Middle East, New Zealand, others, also here the focus on just Iraq, including the service type. We cover the broad range of service type our output value our COSL brand. We already built up the COSL brand, COSL Drilling, COSL Tech in the Iraqi market. Also we already received the recognition from the broad range and the customer. This is our Iraqi market. As usual, we prepare a slide of our contract status and the situation of 51 rigs operated and managed by COSL. In domestic market, it is expected that there will be more workload in 2019. This is just a current one, we believe it will be more, such as semi-sub, we will add it to our fleet in 2019 due to the increase of workload.
It may change in the future because some contracts are still in progress. We will keep you posted. In overseas market, considering COSL's overall coordination of global resources, the impact of a traditional seasonal factor on workload will be effectively controlled in 2019. This is also the current one, we believe our overseas fleet will take the new contract. Some yellow ones, the yellow area, will be replaced by the operation, which is in blue color. Will be replaced. In 2019, COSL will adopt structural cost reduction measures to strictly control the cost increment caused by the increase of our workload. The CapEx budget of the company in 2019 is about RMB 3 billion. Reasonable investment and debt repayment structure can safeguard the healthy cash flow and a qualified debt rating. This all enable us to adopt different modes of operation and apply the different business models.
Among the higher investment in oil and gas, the emergence of new competitive framework, COSL will keep following the industry trends closely, allocate resources guided by customer demand, do best at technical reserve and safety management, improving profitability through the structural cost reduction such as the reform. COSL is confident it could stand higher in the new opportunity and continuously promote the high-quality development of the company. Thank you for your consistent support. Here comes the end of my presentation and the person will come. Thank you.
Thank you, Mr. Zheng. Before we start the Q&A section, I am happy to say that we have a translator to help us with the questions and answers. The first question would come from the gentleman in gray. Please.
Thank you. This is Aditya from Macquarie. The first question I have was specifically on your Singapore subsidiary. You have Prospector and Strike in that subsidiary. There's a CNY 2.4 billion loss, which you booked in your financials. With Prospector and Strike now coming back to work, can we expect that loss to meaningfully narrow and maybe even break even this year? Second question is on your rig rates. Second half of 2018 was better than first half of 2018. Can you explain if that is a mix impact or were you actually able to see better pricing? Thank you.
Thank you for your questions. I would like to take your first question. Mr. Cao, my colleague, is going to take your second one. Regarding the loss that happened in Singapore subsidiary, thank you for your careful days in studying our material. It is true that there was such a loss in Singapore in last year, in 2018. It is mainly because of the business adjustment in our Asia Pacific region, particularly the organizational structure adjustment in Singapore.
一些资产和资源从中国境内部署到亚太地区。而在亚太地区以新加坡分公司为中心的，同时在印度尼西亚和马来西亚设立了两个子公司。
In 2018, we restructured our resources in Asia Pacific region. Particularly, we allocated more resources and assets from China to Asia Pacific region outside of the country. Singapore was regarded as the center of our Asia Pacific region, while we also set up two subsidiaries, one in Indonesia, the other in Malaysia.
刚才你说到的是主要是因为资产的调整，一部分从境内调到境外，就包括资源的。因此导致了一些摊销、折旧带来的这么个情况，非经营性的因素。
The loss that occurred in Singapore was mainly because of the adjustment regarding resources and assets from China to the overseas market. Therefore it is because of the depreciation and amortization of such assets, it is non-operational activity.
对于公司在2018年对亚太地区业务的重构和公司的调整，公司在2019年从目前已经市场上拿到的合约预期来看，2019年一定比2018年，新加坡公司包括亚太区一定是好于2018年。
You understand that there were adjustments and restructuring in the Asia Pacific region for the company. Based on the contract that we have already won in the market, we believe that the performance in Asia Pacific, particularly in Singapore, will definitely be better than last year.
一个具体事例，就像在印度尼西亚，我们现在已经成为印度尼西亚区域市场上最大的油田服务公司，包括钻井在内。
Just let me give you an example. In Indonesia, we have already become the biggest oil service provider in the local market.
Also the drilling contractor. [Foreign language]
Thank you.
好，谢谢。我来给你回答你的第二个问题，就是下半年。好，我回答你第二个问题，就是下半年整个情况可能好于上半年，它有几个方面。第一个是因为商业模式不太一样，也就是下半年看到我们有一些有一体化的总包的服务，可能相对来讲显示的价格总体来就比上半年要高。
Let me answer your second question. Just now you asked about the process. The second half is better than the first half. There are a couple of reasons. The first reason is that we adopted different business model in the second half, and it is the integrated EPC model, which gave us better price than the first half.
第二个原因是因为作为区域有些不太一样，作为服务的对象也不一样，它的价格也不太一样，所以有些下半年有的区域的价格相对来讲比上半年的一个区域价格要高一点，所以显示的价格要高一部分。
The second reason is because of the differences between different regions and the different customers. Therefore the price is also different. That's why the price in the second half is also better than the first half.
第三个就是因为有些我们经过我们的业绩表现，可能一些激励措施可能在下半年体现，可能下半年销量比原定要高一部分。
The third reason is because of your motivation program or the incentives that we gave out in the second half, that brought better performance in the second half.
至于19年的价格，现在大家看看我们这个财务总监也给它通报了一下，就是说现在整个市场的价格一直在低位徘徊，可能整个的供需还是没有解决，还是供大于求，所以这个价格应该还是在低位徘徊，这个价格可能不会有什么太大的变化。
Regarding the price trend for 2019, as our CFO mentioned in his presentation just now, so far in the market, the supply is still bigger or greater than demand, and the prices are still at a low level. We don't think that there will be a major change regarding price in 2019.
整个价格还是决定于市场的一个竞争，通过竞争获取市场价格，还是基于市场来决定的价格因素。
Actually prices are determined by the competition in the market. If the competition in the market changes, the price will also change.
好，谢谢。
Thank you.
Yes, thanks. Neil Beveridge from Bernstein. Thank you for the presentation. Two questions. First of all, we saw strong revenue growth and utilizations in 2018, clearly lower margins on the strong cost growth that we had. What gives you the confidence that we're going to be able to see better cost control this year? And what are your expectations for margins? The second question is, your sister company, CNOOC, has come out and said that they expect to increase domestic E&P CapEx by 50% this year. We are already three months into 2019. I wonder if you could just give us a little bit of a sense of how the year is going so far, and whether or not you've seen a significant increase in activity for the last three months relative to where we were at the start of 2018. Thank you.
伯恩斯坦有两个问题要问。第一个问题，我们留意到2018年无论在收入方面还是利润率方面，都有一个非常明显的提升，但是因为成本的上升也造成了毛利的降低。所以2019年刚才你也提到要加大力度控制成本的增加，那我想知道具体来讲，您对于2019年的成本控制的信心如何，并且2019年您预计的毛利率是如何？第二个问题是关于CNOOC的。中海油这边已经宣布了说2019年会在国内增加E&P方面的投资，增加50%。那目前2019年已经过去了三个月了，您预计未来2019年往后的这些月份当中会有一个什么样的变化，什么样的进展？谢谢。
好，第一个问题，请我们的CFO给予回答，第二个问题我等会儿来回答。
Thank you for your questions, Mr. CFO will take your first question and I will answer your second question.
OK。回答你第一个问题，我觉得这个问题实际上是分成两个方面：第一个方面是关于我们18年在收入大幅增长情况下，那么相对来说margin还是比较低的。第二个问题，对于19年成本控制的看法。
Thank you for your question. Let me take your question about the gross margin and cost control. Your first part of the question is about the increased revenue in 2018 via low margin. The second part is about the cost control.
我想18年在成本的结构上，首先说18年是一个恢复期，对于整个行业来说是一个恢复期。那么在整个行业恢复期中发生了很大量的一次性成本，为了满足客户的需要，或者满足项目的需要，发生了很多一次性的这种升级改造、更新、维修等等相应的费用。
First of all, about the cost structure in 2018. Actually, 2018 was a year of recovery, not only for us, but also for the whole industry. Therefore, there occurred many one-time for our costs. For example, in order to satisfy customers' needs and demands, or for a particular project in terms of upgrading, maintenance and so forth.
还有在18年是一些成本，可能是持续性的，会影响到我们2019年。这些成本在19年也是我们重点关注的对象。比如说像我们原材料的成本在上升，这个有一部分是由于客观的因素，比如说价格的原因，但是也有一部分是因为我们自己内部的，由于工作量上升，对应的我们原材料消耗也大幅上升。
Some parts in the cost structure in 2018 will extend to 2019. Those costs will be our major focus in cost control in this year. For example, the raw material price has been going up. This may be because of some objective reasons in the market, because the prices are going. Some are because of our increased workload in the company, because the workload is higher, the consumption is also higher.
另外还有一些就是我们的人工成本，包括我们的人工成本，包括我们的分包综艺费用，在18年也大幅提升。
The labor cost in 2018 increased as well, so did the overall outsourcing cost.
所以在2019年，我们重点将会管控这些我们可以控制的成本，包括原材料的消耗，包括人工成本，包括分包费用。我们希望通过这种结构性的一些措施可以降低我们的成本，比如说我们可以加大这种的外聘劳务，可以加大我们的科研研发，提高我们自有的服务的比例等等。通过这些措施，相信油服会在2019年在成本控制上取得一个比较好的节奏。
These will be the major areas in cost control for us in 2019. For example, in the raw material consumption, the labor cost, as well as outsourcing cost. Through this structural control, we hope that we can reduce cost in the externally hired labors and R&D investment so that we can use more of our own services instead of outsourcing them to other parties.
好，我来回答第二个问题。正如您所知，我们公司在中国境内的主要客户CNOOC，他们确实公布了他们在2019年的勘探开发投资和工作计划。
Just as what you asked and what you have known that in China, CNOOC has already announced its plan for E&P activities for 2019.
正是对于他们的行动计划和实施，公司在第一季度，我们在境内的资源几乎是满负荷在运转。
In response to the E&P plan from CNOOC, we have been running our resources at full capacity in China in Q1.
同时我们也在采取两种措施来分享更多的CNOOC的市场。
Meanwhile, we are taking two measures in order to share the CNOOC's market better.
我们一方面把自己在海外的一些资源科学地调回国内市场。
The first measure is for us to relocate the overseas resources back to China.
第二方面，我们是加大了外部资源，我们集中供应。
The second measure for us is to consolidate external resources and centralize the supplies.
正因为得益于一方面国内市场客户的需求和我们所采取的一些措施。第一季度即将结束，我们非常高兴地看到我们的业务量，工作量，刚才说的是满负荷在运转。我们有信心，我们跟去年同期比是一个比较好的提升。
Benefited from the stronger demands in China as well as our own capacity. At the end of Q1, we are happy to see an upgrade in our workload, which has been running at full capacity. We have confidence that we can continue with this momentum with such a good start compared with the same period last year.
但是考虑到这种规则，一季度的业绩需要在四月底向大家公布。
Regarding the specific business performance of Q1, we will disclose it to public in April.
好，谢谢。
Thank you.
谢谢管理层，我是中银国际的刘志成。主要想问一下所得税率的问题，因为我们看见这个17、18年的报表了，我们实际交的所得税率其实都蛮高，17年都已经40几，18年达到88%。那我想了解一下当中有什么原因？那19年其实我们有没有指引说大概用什么水平比较合适？谢谢。
刘志成 from BOCI. My question is about VAT. We noticed that your financial statements for 2017 and 2018, the VAT rates are pretty high. It was above 40% in 2017 and 88% in 2018. Just want to understand what are the reasons behind and what is your guidance regarding VAT rate for 2019? Thank you.
首先说呢，就是COSL在国内是属于高新技术企业，我们是享受15%的优惠的税率。
Thank you for your question. The first point I want to make is that in China, COSL is regarded as a company of high technology and innovative technology. We enjoy a 15% of VAT tax preferential treatment.
对。另外呢，由于有些国家的一些特殊的科研的激励政策，使我们实际的在国内实际税负可能会更低一些，实际的税率更低一些。
Because of some policy support from the government on the R&D on technology and in technology, the actual VAT rates are probably lower than that.
从报表上看，税负比较高，主要是由于两方面原因，一方面是由于递延所得税影响，但是最主要的还是由于国内和海外的这种税务差造成的。
Looking at the financial statements for 2017 and 2018, there are two reasons accounting for such higher tax rates. The number one is because of the deferred tax in China. The second reason is because of the different taxes in China and in other countries.
在国内我们需要交税，因为在国内我们还是盈利的。我们也坦诚在海外，在个别地区，个别地区我们是盈利的，有些地区是亏损的。所以说在盈利地区我们会预缴很多的所得税，但是我们在海外亏损的又无法在国内进行抵免，所以说造成这种的税负差。
In China, we are making profit, we are paying taxes, but in the overseas markets, in a particular country or market, there has been a loss. Some overseas markets, we are making a profit. Anyway, we have to pre-pay the VAT in advance.
Income tax.
Income tax, sorry. The corporate income tax.
Yeah。
However, we cannot get a rebate for such a loss in another country.
Yeah。
Okay. Next question.
Next question, please. Yes.
Good morning. Thank you for your presentation. It's Scott Darling here from JP Morgan. I've got three questions. First one is do you think you can sustain the same growth in your Well Services? Do you think it's fair to forecast sort of a 17%-19% operating profit margin for this year? My second question is on geophysical operating profit, do you think that could double this year? My third question, you talked a lot about clean energy, wind power. Tell us about that in the future, do you have any revenue targets to meet in the long term? Thank you.
JP Morgan有三个问题要问，第一个问题关于油田服务方面，我们2019年是否能够继续维持2018年的上升的势头，能够实现17%到19%的一个利润率。第二个问题是关于物探方面，您相信2019年这个业务量会不会翻一倍。第三个问题是关于您在发言的过程当中讲到了很多清洁能源，比如说是风能，那近期或者是在未来有没有一个具体的目标让您实现风能方面的发展？谢谢。
好，我来回答。第一方面，具体的19年的提升比值我无法告诉大家，但我只能告诉大家，我们有信心会提升。第二方面，关于物探。现在我们的物探资源几乎在能力所承载的负荷的80%到90%这个范围。因此，物探采集和物探的作业量，我们基本上达到负荷的80%到90%。
Thank you for your questions. Your first question regarding the profit margin in 2019. I cannot tell you a specific percentage for 2019. What I can tell you is that we have confidence that we can keep improving and operating our profit margin in this year. The second question about the geophysical business. If you look at our resource utilization in the geophysical resources, we are currently running them at 80%-90% of capacity already in terms of acquisition and workload.
继续回答第二个问题，我们会针对一些特定市场，特别像中国境内的一些滩涂和浅海地区的物探采集的新方法和新的资源，加大海底电缆对OBC业务的规模。
Let me continue with your second question. For some particular markets or areas, for example in China, we will cast more resources and adopt new methodology to continue with our geophysical business, for example in the shallow water areas in the coastal regions, also to enhance our OBC business.
但是这个增产的过程需要一定的时间。
However, this process may take some time.
可能在下半年甚至明年能够起到效用。
You will see the effect the results in the second half this year or next year.
第三个问题，关于我们的清洁能源，特别是在风能这个领域，我们未来的增长。我们目前是把我们已有的技术和在这个领域的优势的资源在试水这个领域。2018年我们取得了较好的市场的认可，我们现在正在组织更多的资源来进入这个领域。
Your third question is about clean energy, particularly the wind energy. Far what we are doing right now is to apply the existing technologies that we are holding and allocating the best resources to try the market first. In 2018, we already won recognition from the market through our trials, and currently we are organizing more resources and trying to enter the market this year.
跟大家分享的我们在这个领域的优势，主要是一方面是在海上钻机的钻孔的业务，是我们传统的强项优势。所以进入风电产业，特别在深水和风电，就是我们唯一的目前的独特的优势。
Let me share with you some of the strengths that we have. The first strength is that we have a traditional capability, which is also our strongest area, is the onshore drilling rigs. If it is wind power in the deep water, we can give full play to our this strength.
第二个优势就是我们海上的风机的安装施工工程，我们有我们自己的工程船，有我们自己海上工程施工的经验和技术。
Our second strength is on the installation and the construction of onshore wind power facilities. Because we have our own vessels, and we have got technologies and experience in engineering, construction and installation.
2019年我预判这个领域的产值将会比2018年有一个较大的增长。
In 2019, according to my judgment, there will be a big upgrade in terms of output or revenue in this sector than 2018.
谢谢。
Thank you.
Any more from the back rows? Yes, gentleman.
Thomas Hilboldt from HSBC. Thank you. Just two very quick questions. Historically, you've talked a lot in the drilling segment about the importance of integrating the drilling and the well services business. I don't hear that same messaging now. Can you talk about your expectations for the drilling segment this year? We've been waiting for a long time for the turn in profitability in that business. Do you think you can move to break even in drilling this year? That's question one. Question two, I'm wondering what sorts of targets either the board or the management team internally has set for evaluating the performance of the business and of the management team. Do you have return targets, return on equity targets? Do you have profitability targets? What are the measures by which you're looking at your own performance over this calendar year? How should the market look at those?
Thank you.
汇丰银行有两个问题要问的。第一个问题，历史上来讲，我们一直听到管理层说在钻机方面、钻井方面，我们要实现一种跟我们的油田服务、技术服务等等实现一体化的一个增长。但是好像最近我们很少听到这样的一个信息了，所以就想了解一下，针对2019年您的预期是什么？因为我们要等多久才能够实现盈利？首先它能够实现一个收支平衡，最终实现盈利。第二个问题就是关于管理方面的了，想知道公司管理层内部自己有没有给自己定一个目标来评估一下自己管理层的一个表现呢？比如说的是按你的收入呢？还是按利润呢？还是按ROE呢？有没有针对自己的业绩表现也做一个绩效考核？市场如何看待管理层自己的这个业绩表现、绩效考核、绩效表现呢？谢谢。
好，非常感谢这两个问题。第一个问题，先请我们的CEO回答，第二个问题我来回答。
Thank you for your two questions. Mr. CEO will take the first question. I will take the second one.
好，先说第一个问题，就是一体化的事情。一体化就是说油服，可能大家知道我们这个产业链比较长，从钻井、泥浆、固井、定向井，整个业务都比较全，所以说我们的一体化有比较优势。但这个一体化的项目也得根据市场，因为有的客户有这种需求，只要我们有这个服务能力，可以去好好地搭建，去做这个市场。所以多大市场还是基于市场的客户的需求。
Thank you for your question. It's true that we talked a lot about integration, about different business sectors. You can see this is a chain of services from drilling to cementing to completing of our wells. Actually, it is a kind of a comparative advantage we have. How to execute this kind of integrated service really depends on what the market needs. If a customer has such a demand or such a need, since we have this capability, we can make use of this capability. Actually, this integration is really depending on the market.
基于盈利能力，也得看情况，就是说基于市场情况，基于我们自身的判断，我们是一个什么策略驱动，如果是前期的，可能为了占领市场，可能说我们要保证一个盈亏平衡，如果从长期来讲，可能要实现盈利各方面，对吧？这种公司还是要盈利的，对吧？在一体化方面。
As for break even or profitability, well, it really depends on what strategy you have for this particular service area. If your strategy goes like this, it's an early stage of a project, in the long run, you may make a profit, you may try to realize break even first. After all, the ultimate goal of a company is to realize profit.
大家现在目前是国内和国外也有一些市场，我们一直在跟踪，也一些正在前期的介入，根据情况，我们会及时地做出我们的一些决策。
Currently in China and in the overseas markets, we have some projects in mind that we have been following them for a long time. There have been early stage involvements in those project as well. At the right time, we may work out our own strategy for those projects.
好，谢谢。
Thank you.
好，回答第二个问题。公司无论是董事会还是管理层，对咱们管理层的考核一直是存在的。
Let me answer your second question. Either from the board level or the management level, there has been a performance evaluation system for all the managerial staff in the company.
董事会在这对管理层制定这个考核的标准，一方面是本着征询股东、客户、员工和社会共赢的这个大的原则。
In terms of the performance evaluation. The board of directors will consider feedback from all the directors, the customers, the employees, as well as the public.
同时，第二个就是也是征询资本市场对常规的、通用的考核评估的机制。
Meanwhile, we also take reference of the performance evaluation mechanism in the capital market.
董事会对公司2018年的考核主要是这几个方面。
For example, the areas that the board of directors would look into to assess the performance of all the managerial staff would be as follows:
第六方面就是战略的执行的力度。
The first area is how well the strategy has been implemented.
这个战略执行的力度，包括我们公司跟全球的同行对比我们的竞争力，包括我们的增长的幅度。
This includes a comparison with the international peer competitors in terms of our increase in competitiveness as well as our business growth.
第二方面就是公司已经现行的两大战略，也是技术化发展，也是国际化发展的战略。董事会对管理层的考核，对这两个领域，你技术发展的增长速度、效率和效益，以及国际化你的市场的开拓的幅度和效益都在考核当中。
The second area that the board of directors will look into is on the technical development and internationalization of our business by the management team. Specifically, we look at how quickly we are developing our technology, how good these technologies are, and how effective these technologies will be. In terms of internationalization, we can also look into areas such as how quickly we are entering the international market and how well we have done our job in those markets.
当然其中还有一个重要的考核，就是我们的管理层对18年的盈利的预期的考核。
one area which is even more important in our evaluation of managerial performance is on the profit performance in 2018.
当然公司管理层也对公司的其他二级机构，包括海外公司也制定了相应的和一些特殊的考核办法，特别是在针对不同国家，我们还有不同的对当地管理层的一些特殊考核。
We have also formulated specific evaluation mechanisms for the secondary affiliates of the company as well as the overseas subsidiaries. For example, in a particular country, we have formulated performance evaluation mechanisms for the local managerial staff.
总之，公司董事会对公司管理层目前现行的激励考核机制我认为是非常有效的。我平时观察到管理层工作的付出是非常积极的。
In my opinion, in short, the current performance evaluation mechanism established by the board of directors on the management staff is very effective, and has been very effective. You can see that the devotion and passion from the management to their work has been very high.
谢谢。
Thank you.
Yes, in the back row, please. Gentlemen, yes.
谢谢管理层，我是摩根士丹利分析师Andy，有两个问题。第一个问题是关于我们的国内和海外的平台的调配。我们刚才看到在国内，特别是jackup的话，基本上是满负荷了。但在海外市场的话，其实jackup我们看还有好几个平台是有闲置的。那么从资源的调配上，我们会不会考虑把这个平台从海外调到国内来，然后争取更好的利用率？还是说我们觉得海外市场它的长期的增长潜力更好，所以我们现在会把它放在海外市场去等开拓市场的机会。那第二个就是我们如果看国内市场的情况，现在如果是满负荷的这样一个运作，有没有可能在未来的6到12个月当中，能够看到国内市场我们的议价能力能够出来？因为毕竟这是一个供求关系的变化。如果说CNOOC有更多的工作量，而国内的现有平台已经满负荷了，是不是应该会有一个加价的可能性？还是说我们的国内定价依然会依照海外和全球的日费的表现，虽然国内的供求关系很好，但是价格还是无法有明显的一个提升？谢谢。
好吧，我来回答。第一个问题确实正如你所看到的，公司国内的平台资源在满负荷运转，国外还有两到三条平台在待命。这待命平台目前由于客户保密的要求，其实我们已经签约了，只是等待客户在作为国取得他的许可证的问题。所以我们短期内没有对远距离的这种资源调回国内的考量。近距离的一些我们会考量灵活的动员、动员调配的示意。第二个就是国内市场，现在市场上有点供不应求，但是放在整个行业内，放在全球市场看，还是分两方面：一方面是装备板块，还是严重的供过于求的局面。因此装备板块的服务价格短期内我们看不到它上升的条件，因为无论是中国市场还是国际市场是互通的，是同一个机制的。由此也可以看见，国内的市场近期也有很多同行的资源在陆续地进入，这是一。第二方面从技术板块。技术板块现在呈现了一个供求相对平衡，甚至供不应求的局面。无论是我们提供的资源，还是全球我们的同行，包括斯伦贝谢、哈里伯顿、贝克休斯等我们的同行，其实他们的资源目前也是呈现了一定程度的供不应求。主要原因是什么？因为这几个我们技术板块，我们在上一轮的油价下跌，至今有4年左右的时间，很多技术板块的供应商，我说太多了，没来得及等你翻译。我就先说完。供应商很多。这些同行的供应商也转行了，他转行了，研究别的领域去了。所以整个技术板块的业态初步达到供求平衡，但向供不应求这个局面。
The first question is about the risks in China and abroad. We noticed that the risks in China are falling with full capacity and full workload, but there are still two to three jackup rigs in the overseas market, which are standing by or staying idle. Do you have any plan to relocate them back to China? Or do you think that there's more potential in the overseas market and you will keep those rigs at their places now waiting for opportunities? The answer is, it's true that in China our rigs are running with full capacity. It is also true that two to three rigs are still standing by in the overseas market.
Currently, just because of the confidentiality request from our customer, what I can tell you is that we have already signed agreements with our customers, and these customers are seeking for his or their permits for these rigs. We don't see any possibility to relocate those rigs back to China, and particularly in the near run. If the distance is short, there's such a possibility to relocate those idle rigs back to China. Talking about the domestic market. Currently, in terms of their drilling rigs, it is a kind of short demand. This is for the company only, but for the whole industry or for the global market, if you look at the equipment sector, they are still very serious oversupply. In terms of the price, I don't think there is a ready condition for us to raise the equipment price.
Because the domestic market and the global market share the same mechanism in pricing. Meanwhile, we also see new resources from our domestic peer competitors are entering into this segment. If you look at the technical segment, what I can tell you is that currently there is a break even between demand or supply or a little bit short supply at this moment. This is because the oil price dropped years ago, and some of the suppliers of these technical equipment had shifted their business to some other areas. That is to say, they are producing some other products. Basically that is the situation for the technical and equipment segments.
Great. We are running short of time. We are taking one last very short question. It would come from The last question. Okay. I think we've heard high quality questions and answers today. Let me check with the management