Edited Transcript of 601808.SS earnings conference call or presentation 26-Mar-20 2:00am GMT

The operating revenue increased by 42% year-on-year to RMB 31 billion. Net profit increased by RMB 2.44 billion year-on-year to RMB 2.53 billion. The growth rate of revenue was significantly higher than that of international large drilling and oilfield service companies. In terms of business segment, the workload of 4 segments increased to different extent. Since the sharp decline of oil price and the downturn of the industry in 2016, the COSL has achieved the best year in terms of profitability and operating efficiency and the revenue contribution of well service increased to 48%.

Looking around the global industry, we are also pleased to find our equipment stress ranks in the forefront of the industry, on the scale of drilling rigs ranks the second in the world. And the marine support market here is the third largest and the workload geophysical contract is the fourth largest in the world.

Specifically, operating days of drilling segment increased by 32% year-on-year and the revenue for the period amounted to RMB 10.84 billion, increased nearly 40% as compared to the 2018. The well service segment continued to increase investment in scientific research and technological innovation. This is a competitive advantage emerging and the operating results reaching a record high. Revenue for the period amounted to RMB 15.06 billion, increased 53% over 2018. Revenue from Marine Support increased by 13% year-on-year to RMB 3 billion. The utilization rate of the sales of fleet was 94%, representing year-on-year increase of 4 percentage points. Revenue from geophysical and survey segments increased by 31% to RMB 2.17 billion as compared to the 2018. The company explored markets and obtained the collection contract in Canada, Namibia, Argentina and Brazil.

Let’s move on to performance of COSL’s industry transformation, with increased number of tender and bidding activity, utilization rates of drilling rigs also improved gradually. However, oversupply of production capacity still exists in the medium and short terms. Day rates are unlikely to see a rise in the near term. As the above graph shows, the utilization rate of the COSL’s equipment segment for the average level of 2019 are better than results of international levels.

Let’s move on to overall domestic market condition, COSL monitors the demand of in-store core customers, effectively transferred the achievement of independent R&D reduced the proportion of subcontracting and maintained or increased the market share. At the same time, by practicing the concept of green development, all 12 LNG-powered oilfield supply vessels has commenced construction. Through the flexible allocation of resources, COSL satisfied the increase in domestic demand in the background of the increasing effort in oil and gas E&P.

In the overseas market, in 2019, the company made effort to promote the construction of 6 overseas branches with large outboard contribution and optimized the equipment allocation to improve profitability. COSL entered into 84 new overseas contracts, with a total amount of over USD 1 billion, achieving new breakthrough in new regions and customers, in particular, Asia Pacific, Middle East and the Far East as important achievements of COSL’s international market expansion in 2019.

In 2019, we ought to meet the technical needs of different stage, such as exploration development and production. COSL continues to increase its effort in scientific research, constantly breaks through bottlenecks in technological development and accelerates the transformation of scientific and technological achievement.

Next, I will introduce 2 representative technology. In 2019, as the drilling edge, our geological oriented technology is the first self-developed, undercommercialized drilling edge tool in China. Its performance has reached advanced level in the industry, providing solid technical support for stable production, production increase and the cost reduction development of oil fields.

Next one, FLAT-PRO drilling fluid, which successfully solved technical problem such as deepwater, low temperature, fluidity variation and gas damage. Effectively, facilitating deep water safety and efficient drilling, and providing technical support for subsequent market expansion. The company has always adhered to concept of safety first and to carry out initiatives in hidden things or investigation under emergency management. The OSHA indicator for the year was 0.11. Excellent quality and safety management performance is an important foundation to ensure internationalization of COSL. Meanwhile, COSL is concerned about energy saving and the environmental protection issues. We actively made charitable contribution and cohost safety culture events with clients.

Here is a capital market owners that the company has received during the past year, the company has won a number of awards, including outstanding scientific and technological innovation and the price. One of the best innovative public company and the Board of Director value creation price.

In the next parts, I would like to share with you the outlook of COSL. First, let’s look at the latest development in the oil and gas industry. According to the third-party reports, we can see the global supply and demand of crude oil are changing in 2020. Oil prices remain on a downward trend. Restart Energy forecasts that if oil price stays around $30 per barrel, the global CapEx of E&P company alone may fall by USD 100 billion in 2020. Excessive supply of crude oil and fluctuation in oil price will bring uncertainty to the industry. Our company will constantly strengthen its modern operation and management under risk resistance.

Oil and gas continue to play an important role in China LNG consumption structure. In 2020, China will continue to increase exploration and development to assure energy’s security. [CNOOC-Otis] is our key customer and its CapEx in 2020 is estimated to run from CNY 85 billion to CNY 95 billion, representing an increase of 6% to 18% as compared to the estimated amount in 2019. In 2020, CNOOC-Otis will continue to increase its effort in oil and gas exploration and provide the company with potential workload in the current and the future.

But as you know, and yesterday, the WTI price is around $24 and Brent price is around $30. The low oil price brings a huge pressure on the oil and gas company, including CNOOC-Otis . In yesterday’s conference call and Mr. [Xu Keqiang] does say CNOOC-Otis will cut down the CapEx. And we don’t know whether it take place in the overseas market, within the local market. If it took place in the overseas markets, the impact on COSL will be little. If it took place in the China market, China offshore, it will bring the big impact on COSL, but we don’t know where it’s to take place. And until now, we didn’t receive any notice about cancellation of project. But it’s true, there is some delay, but delay is due to the outbreak of virus.

Benefiting from this is partly the domestic workload of COSL will increase by different degree in 2020. Based on the above information, COSL will focus on 5 aspects, including driven by innovation growth, overseas expansion, low carbon development market orientated operation and boosting prosperity with talent to build several capabilities and we’ll also focus on 4 major business segment to realize the strategy of goals of technological and international development with our aim to gradually develop up the company into an integrated oilfield service provider, with multiple energy sector coverage and international competitiveness.

Next, I will elaborate the development of the company in several aspects. COSL will break through the technological bottleneck and then through the capacity for applied research result to production through multiple ways. According to the needs of customers, we will continue to create high tech products and highlights the high-tech value by innovating the model for attracting talents, making good use of existing talent-attracting policy and the focus on the internal talent contribution. In terms of technological innovation, we will comprehensive accelerate high temperature lodging, small size and the high-end directional well drilling, deep water high-temperature and high-pressure drilling and seek oil development in 2020. In the next few years, COSL will continue to raise the contribution of the technology sector. Constantly accelerate serialization and industrialization of technology and products and accelerate the commercialization of the research finding to enhance the contribution rate of the technology segment.

Going forward, let’s take a look at domestic market. Our current core market is the offshore market in China and CNOOC-Otis our offshore core customer in China, which is one of our unique advantage. In the current market environment, we will flexibly adjust our business models to provide efficient and high-quality service to reinforce COSL’s leading position in China offshore market.

First, let’s look at the operation at domestic rates. The slide illustrates the domestic contract status on the situation of 31 jack-up rigs on 10-6 up. It may change in the future because some contracts are still in the progress. We will keep you posted. In order to promote international development more efficiently, the company, based on the customer needs and the market condition in each region, has proposed important measures and gradually beat and play to the side effect of the overseas market to further enhance the contribution of the technology sector and the expense side of key markets, such as Europe, Africa and the Middle East. If the oil price remains low for long term, for the long time, oil your company may reduce capital expenditure and suspend or cancel the operation. The oilfield service industry will face increasing uncertainty. In view of this, COSL will enhance customer communication, lessen workload and the development plan of customers, seek opportunities for overseas operations.

Then looking at the operation status, oil rig in the overseas market of a [market cap] and the 4 [segments up]. It may also change its future because some contracts are still in progress. In addition, COSL’s adequate cash flow, effective financing channels, lower financing costs and good rating, allow it to operate in very small, in a more flexible manner in the general environment of oil price downturn. In 2020, we meet increasing domestic investment in exploration and development. COSL will keep optimizing asset and increasing input in technological R&D. CapEx in 2020 is estimated at approximately RMB 4.8 billion.

There has been great change in the recent international macroeconomic situation under the price of bulk commodity and bring new challenge to the company. COSL will further transfer its cost advantage into its core competitive needs, along with technological and the international development goals. The company will mature this unique integration advantage, sound financial structure and the extensive management and operation team will deliver higher value and return to our shareholders, customers in all walks of life.

Thank you for your consistent support. Here comes to the end of my presentation. Questions are welcome. Please. Thank you.

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Questions and Answers

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Yanyan Wu, China Oilfield Services Limited – Company Secretary [1]

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(foreign language) [Interpreted] Thank you, Mr. Zheng for your presentation. Now I would like to open the floor for questions. (Operator Instructions)

Now I would like to invite the first question. (Operator Instructions)

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Operator [2]

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(foreign language) [Interpreted] (Operator Instructions)

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Unidentified Analyst, [3]

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(foreign language) [Interpreted] It’s [Mr. Yang] from Oriental Securities. Two questions, the first question is about price. Can you please share with us what is the day rate and the day revenue of your rigs now? So are the insurance by the oil price because oil price has been dropping recently? If there’s a drop, how much is it?

The second question is about workload. So looking at your backlog, do you see any deferral or any default in backlog because oil price has been dropping and it is very low? So do you see any possibilities that your CapEx this year will also reduce accordingly? And if this is reduced, how do you see the upcoming workload in 2020?

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Shujie Cao, China Oilfield Services Limited – CEO, President & Executive Director [4]

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(foreign language) [Interpreted] Thank you for your questions. Your first question is about price, whether price has also been dropping. So I just want to remind you to look at the market. Actually, it happened not long ago as the oil price began to drop. And such drop has not yet passed to our daily business because if you look at our investments, if you look at the response from the market, such a price drop has not yet fully passed to us or to the market. So far, in Q1, if you look at the contracts that are already under execution, we haven’t seen any price drop. Yes. That is to your first question.

The second question is about the workload. Ourselves, the capacities that we own ourselves are fully utilized right now and that in the near future, we don’t see the possibility for such the self-owned capacity to cause the pressure to our other business. Globally, whether our contract will be influenced or not and whether there’s any determination or any changes regarding our backlog, domestically, we don’t see any change so far on our backlog. And externally, there is some — one particular client, I think is a very extreme take, actually. This is a client on the overseas market, who already expressed the intention of either terminating or suspending the contract. Yet, it is still under discussion and it is, as I said, at a very extreme pace. And we don’t see this phenomenon been happening through all the other external market yet.

Your another question is about the oil price being low, and is still dropping, what do you — what will be the alternative possibly in the future regarding our workload? Actually, we have not seen any sign that the oil price will go up again in the near future. And we believe that the oil price will be maintained at a low level for a very long time. That being said, this will represent volume-based difficulties for all the oil and gas companies and perhaps a lot of them cannot survive. But therefore, we expect that in the market, it will be later, essentially, rather than it’ll happen very soon.

For the oil service industry, definitely, it will be combined, but the influence will be coming. And if you look at our own 4 business sectors, the first sector that will have to fight or face such impact, will be the geophysical and engineering service sector. Our marine service won’t be influenced at large in the future because of the low price. But regarding our workload, here we see that there will be a major job in terms of a workload in the company in the future.

However, the company, the management is still full of confidence regarding our future growth because of the 2 reasons, the first one is, in 2014, there was a major oil price drop. However, after that, the company managed to address through all the difficulties in the market and now have already grown ourselves into one of the best performers in the industry. Suffice it to say, we are competitive in the market. The second reason is the China’s element. The domestic market is still the most active bank in the world in terms of exploration and, in general, surveys.

I hope I have answered your questions.

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Operator [5]

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(foreign language) [Interpreted] (Operator Instructions)

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Tingting Si, BofA Merrill Lynch, Research Division – Analyst [6]

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(foreign language) [Interpreted] This is Madam Si Tingting from Merrill Lynch (foreign language) and 2 questions. First of all, congratulations on your good performance in 2019. And the first question is about your 7-year plan. And so as that you attended a group meeting not long ago, that is at a group level, and do you have any new guidelines regarding the 7-year plan? Or do you still think that the 7-year plan is a major part from their group, considering the oil price changed recently? And also the CapEx, let me just add, too, that it may drop, seriously, this year. And since you have already chartered some pressures from the group, does this mean that the group is going to provide subsidies and better compensate for the past 4 months in 2020. So this is the first one.

The second question is about the cost. Again, because of the oil price drop, do you see any possibilities after taking those measures to reduce the cost internally? Because I have noticed that in 2019, the upfronting cost is 19% as compared to 16% in the previous year. So do you see any possibilities to reduce the upfronting this year?

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Yonggang Zheng, China Oilfield Services Limited – CFO [7]

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(foreign language) [Interpreted] Thank you for your good word on the performance in 2019. So 2 questions for me. I would like to take the first one, and Mr. [Shaoxu Jiang], our colleague, is going to take the second question.

Regarding your first question about the 5-year plan, because of the oil price has been dropping, whether we are going to adjust the 5-year plan at the [affixment] level, while my answer is, in my understanding, such a 5 — a 7-year plan is a serious commitment from the group to the government and to the country. This is a strategic investment. So no matter how the oil price changes, upward or downward, this won’t change our commitment to the government or to the country in the long run here. Strategy of the 7-year plan will continue. Of course, the oil price has been going and there’s a possibility for the group to acquire some of the details in the 7-year plan. For example, some low, efficient — with some low-efficiency activities may be reduced because of the low oil price but in the long run, this strategy, this commitment will not change.

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Shujie Cao, China Oilfield Services Limited – CEO, President & Executive Director [8]

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[Interpreted] Let me continue answering your first question. As I said, that we’re going to reduce the CapEx this year, and do we see any risks involved because of a lot of chartered rigs and vessels. What I want to clarify is, that because in the earlier years, we can take the opportunities of a surplus of major equipment in the market, and established contract with the rig owners and the vessel owners in the risk-sharing model. That is to say, if the contracts is over, then we don’t have to pay any rental for the rigs or for the vessels. So in this case, it won’t be any major risk for us.

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Meisheng Qi, China Oilfield Services Limited – Chairman [9]

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[Interpreted] I just want to add one more thing. For all the rigs that we have charges, about 20 of them, so all these contracts were entered. At the early stage, it is the midterm contract, but at a later stage, most of the contracts that were entered recently are based on back-to-back model. So in this way, the oil price, no matter how low it is, won’t represent any risk for us.

Mr. Cao Shujie is going to take your second question.

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Shujie Cao, China Oilfield Services Limited – CEO, President & Executive Director [10]

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[Interpreted] Your second question is about the cost and whether they find a possibility for us to reduce the outsourcing cost. For a long time, the cost has been a major focus in our day-to-day operations, and our goal is to maintain the low-cost competitiveness in the market. So that’s why we set up a working group, trying to control all the expenses and expenditures stringently. We conducted the repairs and the maintenance by ourselves. We worked hard to improve the utilization rate of all the equipment. Meanwhile, we also take stringent measures in the procurement in order to further reduce the cost. Meanwhile, we also work hard on R&D and have adopted a lot of technologies to further reduce the cost in internally.

Regarding the outsourcing, actually, there are 2 scenarios. Number one is about equipment. So we chartered equipment from the market depending on different price level because there have been price fluctuations in the market all the time. So we chartered equipment from the market, this is the first part of outsourcing. The second part is about the high-end technologies. So we believe that through our own R&D activities and the more self-owned technologies being developed and adopted, there will be less technologies from external for — through outsourcing. So this will be the trend in the long run. So according to the price fluctuation in the market, when we decided to charter more or less equipment from the market, meanwhile, we are also working very hard, trying to develop and apply more of our own technologies in the future.

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Meisheng Qi, China Oilfield Services Limited – Chairman [11]

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[Interpreted] Let me add one more thing regarding the outsourcing cost. So I just want to remind all the investors and analysts to look at outsourcing this matter from — it’s just like 2 sides of a coin. So first of all, the outsourcing is a way for us to create more value on the business where we see potential for us to create more value in the future through outsourcing instead of buying or building ourselves. Secondly, outsourcing is also a very important measure for us to mitigate risks because of the different cycles in different sectors and also industries. So this is a very important measure we’ve taken to counterpart the risks because of the cycles in the industry.

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Shujie Cao, China Oilfield Services Limited – CEO, President & Executive Director [12]

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[Interpreted] I hope that we have answered the question.

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Unidentified Analyst, [13]

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[Interpreted] And this is (inaudible) from Morgan Stanley. 2 questions. The first question, we now see that the oil service — the well services is now almost 50% of your total business revenue. I just want to understand what is the competition situation in the domestic market? So if the cost is continuing to go down, do you think that you can find more service providers to do the job for you? That is the well services.

The second question is about the drilling. In 2016, the drilling business was very big. But later, when the market changes and then there was profit loss and profit actually dropped down sharply, what is the current situation now? Do you think that it will repeat what happened in the past? Or the fixed income — the fixed cost basis already very big, so if any changes in the market, the profit itself or the revenue will also drop sharply in the future?

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Meisheng Qi, China Oilfield Services Limited – Chairman [14]

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[Interpreted] Thank you for your questions. Your first question is about the well service sector. Yes, you’re right. As you may have noticed in our announcement we published last night, in the year 2019, our services almost had 50% of our total business or total revenue. And in the well service sector, it contains the well technologies, well chemicals and the well production. So in the first 2 service sectors, that is well technologies and the well chemicals, we are very, very confident because, so far, at least in the near future, we won’t see — we haven’t seen and we won’t see any competitor who has got high technology meanwhile very low cost performance — technologies or performance. That is very high performance-price ratio. So that’s why in these 2 service sectors, we are very, very competitive, and we are very confident.

Regarding the oil production. What we are doing right now is, on the one hand, we enhanced our efforts of cooperations with their forward leaders in the industry in R&D. Meanwhile, we also try to develop as many as possible by ourselves. So because of this, the oil production sector, it is not yet formalized how the market looks like in China because there are a lot of competitors, yet it is a (inaudible) sector. So therefore, we will develop ourselves fully to compete in the market and try to establish ourselves well in this market sector.

Let me continue with this question. We also noticed that recently, a lot of the players that have been operating onshore are now also trying to move to offshore. And through all these years of business growth, we have also noticed that the production process, the technologies, the equipment onshore are not that fully suitable for offshore operations clustering the compact space and the capacity if you’re operating in the rig. So that’s why I can tell you that the onshore competitors, they have the production process, the equipment have technologies that are suitable for onshore, but not that suitable for offshore.

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Shujie Cao, China Oilfield Services Limited – CEO, President & Executive Director [15]

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[Interpreted] Let me answer your second question. So whether there will be a major upward bounce in our technology sector as what had happened with the drilling sector. So it is exactly because we have already seen the major changes in the market in 2014 that the oil price dropped sharply. And we realized that we’re very weak in terms of equipment and the technology. So that’s why we decided to make major strategic adjustments and the restructuring, trying to enhance our own capabilities in terms of equipment and the technologies. We tried very hard to keep improving this sector, but in the past few years, our technology sector has been growing very, very fast, and now it is almost half of our business. So the advantage of our technology sector is exactly that it is not a heavy asset sector. It is a light asset sector. By relying on the technology, we have been able to win the market and realize the faster growth. And it is because of our strategic adjustment several years ago. Of course, it is also because of its own strengths that it has been able to grow very, very well in the past few years.

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Meisheng Qi, China Oilfield Services Limited – Chairman [16]

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Let me add one more thing. So you are all investors and analysts. And you must have already known the oil service industry very well globally. So in the past few years, while the industry was in the very sluggish pace and there were a lot of M&As, a lot of purchase and a lot of attempt to consolidate. That is for the equipment sector, not for the technology sector. So the technology is better at mitigating risk. So actually, you can’t finance money (inaudible) with just the right total, which is a growing technology and equipment in a very balanced manner in order to mitigate their risks. So this is why we did a very good job last year, and this is also where we had got confidence on our long-term growth for the whole company. That’s my answer to your question. I hope I have answered your questions.

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Lei Mu, JP Morgan Chase & Co, Research Division – Analyst [17]

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[Interpreted] Mr. Mu from JPMorgan, 2 questions. The first question is still about CapEx. We’ve noticed that in your annual report and in your PowerPoint, you also mentioned about the CapEx from the CNOOC point of view and from the international market point of view. I suppose that the oil price maintains very low, stayed below $40 per barrel this year, or a little bit above $40 next year. But how do you see the CapEx in — for the company? And what will be the CapEx changes regarding your oil study in the future? The second question is, what do you think about the impact to your own CapEx or cash flow, considering the oil price and market situation now?

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Meisheng Qi, China Oilfield Services Limited – Chairman [18]

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[Interpreted] Thank you for your questions. Your first question will be taken by Mr. Cao, our CEO; and Mr. Zheng, our CFO, will take your second question.

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Shujie Cao, China Oilfield Services Limited – CEO, President & Executive Director [19]

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[Interpreted] Let me take your first question about the CapEx. So domestically, the CapEx, (inaudible) is saying that they’re going to reduce the CapEx, but it is not clear how much it’s going to be reduced. So actually, there are 2 parts in regarding CapEx: the overseas part and the domestic part. Domestically, a data that we are going to follow the schedule last year, and according to the plan, our workload won’t change a lot. And regarding the overseas sector, we will just follow what is already planned because our workload for the overseas part is not big. So we don’t think there’s a major change for us as well.

Because if you look at our business, and in addition to our own business for COSL, we have other overseas business, which is not part of CNOOC, it’s a lot — our own overseas business. So we look at the market situation and adjust our own pace accordingly.

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Yonggang Zheng, China Oilfield Services Limited – CFO [20]

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[Interpreted] Let me take your second question. First of all, CapEx. Our CapEx for 2020 is CNY 480 million R&D, increased in 2019.

There are 3 areas that we increased our CapEx. The first area is R&D on technologies. You may have noticed that from 2016 to 2020, our investments in R&D has been increasing year-by-year.

The second area that we increased our — in CapEx, is on the environmental protection, the R&D-powered vessels, or the disposal handling, we will definitely invest more on this area.

The third area that we will increase our investments is on the chartered rigs from oil or equipment, for example, the renovation. So depending on what are the requirements from a specific project, we will also increase such investments. So far, all the equipment renovations are undergoing properly.

Your second part of your question is about the cash flow. So we are holding sufficient cash flow in hand. If you look at our annual report, by the end of last year, we are holding CNY 10.3 billion R&D cash flow.

So for 2020, this year, we have new plans of paying backward as issuing new debt, based on our plans. So if we follow the plan, by the end of this year, we will continue to have sufficient cash in hand and to maintain a very healthy and a stable financial position.

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Unidentified Company Representative, [21]

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[Interpreted] So ladies and gentlemen, this is the end of our teleconference. Thank you very much.

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Meisheng Qi, China Oilfield Services Limited – Chairman [22]

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[Interpreted] Thank you all very much, all the analysts and all the investors and our friends. Thank you.

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Unidentified Company Representative, [23]

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[Interpreted] Just now, we were able to answer some of the questions from our investors and the analysts through the phone lines. As I said, we also opened the web for interaction. And after publishing the notice of the meeting, we were able to collect some other questions from our investors as well from the web.

Most of the questions we collected through the e-mails or through the web are actually covered already in our discussions just now. For example, the 7-year plan, whether there will be any change regarding the 7-year plan. And CapEx questions, for example, CapEx for CNOOC and then CapEx for COSL, whether there will be any change. So basically, these questions are already answered and we won’t repeat these questions.

Questions like the net profit, the business revenue growth for the technology sector, why this is such a growth so on and so forth? These questions were also covered. Yet, there’s no — this question, which is not touched yet. I would like to ask the management to elaborate a little bit more here. The question is about the offshore wind power in 2019.

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Meisheng Qi, China Oilfield Services Limited – Chairman [24]

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[Interpreted] Well, I’ll be happy to share with you more information about the offshore wind power project for the company. In 2019, we realized about RMB 100 million revenue through of our offshore wind power project.

The reason why the revenue was only RMB 100 million, almost RMB 100 million, it’s not a big number, it’s because that we had limited capacity when we were involved into the offshore wind power generation project.

So therefore, in 2020, if you look at our business plan for this year, we will definitely try our best to capture the window of the wind power — offshore wind power business, particularly in summertime, because that will be the peak of the offshore wind power generation. So this year, we will invest more resources in to the capacity building. Meanwhile, we will also be active looking for business partners because we have our own technology and operations advantage for the offshore part. And we will try to work together with the equipment manufacturers and set up operation in order to increase our capacity.

Actually, this is a very seasonal industry. And we understand that the total window for operations is about 6 months, that is before and after summer.

So internally, we also analyzed our own strength and weakness. What we are strong at of the installations as well as the technical analysis. What we are weak at is at the equipment production capacity.

So that’s why we are trying to balance how to grow this new business sector first. Because if we increase our capacity too big, basically, you have to start the production for half a year. So we are trying to reach a balance at this moment.

So that’s why we have to realize the growth through the way of working with two legs. So on the one hand, we will enhance our own capacity to a limited extent. Meanwhile, we will try to look for the a new business partner so that we can increase the capacity in the joint method. That’s all, thank you.

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Unidentified Company Representative, [25]

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[Interpreted] So thank you all for your questions. I believe that there are still some questions that are not answered yet. However, we have already overran than our scheduled time under this press conference very soon. So I hope that we can find other ways to keep communicating with you and to try to resolve — to answer all your questions accordingly.

So just a reminder. Yesterday, CNOOC gave out the — its results announcement. When they talked about the CapEx, they use the word adjust, not the word cut. So if you want to understand more about the CapEx from CNOOC, please pay a visit to their official website.

So dear investors and analysts, thank you very much for the exchanges. I would please take you through our presentation and taking the questions. I believe that you have already got a better idea what the measures the company has taken and you must have better understanding of our business and are more confident on our business growth. And meanwhile, we are able to understand what are the areas that investors are concerned more. And particularly, with such a low oil price situation in the market. So I believe that we will continue with our communications with all of you in the near future. And before we finish, I wish a successful career for all of you, and a healthy — and good health for all of you and your families.

So this is the end of the results announcement. Thank you, and goodbye.

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]