The stock market plummeted by 0.18 percent, while digging service sector and shale gas sector went against the market trend by surging by 3.91 percent and 2.32 percent, respectively. Relevant individual stocks such as Tong Oil Tools Co., Ltd. (300164.SZ), Bode Energy Equipment Co., Ltd. (300023.SZ) and Haimo Technologies Group Corp. (300084.SZ) rose by the daily limit of 10 percent, and others like Jiangsu Changbao Steeltube Co., Ltd. (002478.SZ), Sinopec Oilfield Equipment Corporation (000852.SZ) and Yantai Jereh Oilfield Services Group Co., Ltd. (002353.SZ) gained significantly by 8.24 percent, 7.82 percent and 6.18 percent, respectively.
Oil service sector entered a new round of prosperity cycle as oil and gas industries recovered, said officials from Haimo Technologies to the reporter of Shanghai Securities News (SSN) in an interview yesterday. Suffering four years of industry downturn, oil service companies engaged themselves in improving management, reducing costs and accumulating resources. They will benefit from this round of industrial recovery and embrace new development opportunity.
Active responses have been given to documents like opinions of State Council on promoting coordinated and stable development of natural gas, which was launched recently.
Prosperity has been transmitted to oil service sector
Haimo Technologies president Dou Jianwen said that in terms of international oil market and China trying to less depend on overseas oil market so as to maintain national energy security, the oil and gas industries began to recovery from the second half of 2017 and entered a new round of prosperity cycle. The prosperity has been transmitted to oil service sector now.
Translated by Coral Zhong and Vanessa Chen
As petroleum prices kept picking up in 2017, capital spending of oil companies, an important indicator of the industry, started to climb. Fixed-asset investment of China’s oil and natural gas extraction moved up by 13.6 percent year on year in 2017. Total capital spending on oil and gas exploration and development of China National Petroleum Corporation (CNPC), Sinopec Group and China National Offshore Oil Corporation saw a year-on-year increase of 11.28 percent, hitting a new high since 2013.
CNPC convened a conference to study how to enhance efforts in exploring domestic oil and gas and strive to guarantee national energy security on August 3. Later, Sinopec Group also indicated it would boost oil exploration and development.
The opinions which was issued by the State Council on September 5 required the government to speed up development of capacity and infrastructure of natural gas and strive to increase domestic natural gas production to be over 200 billion square meter by the end of 2020.
CNPC president Wang Yilin pointed out on September 7 that the company should maintain the stance of ensuring national energy security in the long run, make use of China’s oil and gas resources, stick to putting priority on oil exploration and development, and boost domestic oil and gas production via non-normal measures.
CNPC has made substantial measures to implement the opinions. On September 7, the Tongluo Gorge gas storage project started construction. The gas storage capacity of 1.5 billion cubic meters will be completed and put into operation in 2020 to meet the gas demands in peak seasons in Chongqing, Sichuan Province and the nation.
Related companies to benefit
China Petroleum Engineering Co., Ltd. (600339.SH) said that as international oil prices continued to rebound, the investment in China’s domestic oil and gas industry is expected to accelerate. The company is optimistic about future orders.
It is reported that in the first half of this year, Haimo Technologies Group Corp. (300084.SZ) has acquired orders for oilfield equipment and related services amounting to 522 million yuan, equivalent to the entire revenue of 2017. This has laid a good foundation for the company to complete this year's business objectives.
The relevant person in charge of Haimo Technologies said that the company has full orders in all business sectors, and full-load production is still in short supply. At present, it is accelerating construction of new projects to expand production capacity as soon as possible. The company's subsidiary Qinghe Machinery is mainly engaged in the manufacture of hydraulic end of fracturing pumps, and is a stable supplier of the world's largest fracturing service provider Halliburton. Another subsidiary of the company, Sitan Instruments, is mainly engaged in research and development and manufacturing of special instruments for oil and gas production. Currently, both subsidiaries are fully loaded.
The company's oil and gas field environmental equipment production R & D base is accelerating construction. The project was originally expected to be put into use in the first half of 2019. However, due to market changes, the company adjusted the development model of the oil and gas field environmental protection equipment business, and reduced the investment scale in the project. The company will no longer carry out relevant fixed asset investment on production and service projects related to the “mud not landing” which is expected to have poor market performance. At present, it is expected that the project after the investment is reduced is expected to be completed in advance.
Yesterday afternoon, the relevant person in charge of Sinopec Oilfield Equipment told the reporters that the signs of recovery in the whole industry were obvious. “At present, orders from various units have increased significantly compared with the same period of last year. As of the end of the first half of the year, the company’s new orders increased by about 53 percent year on year.”
“It’s mainly because that the oil and gas companies’ increase in the expenditure on capital transferred to us. It takes about half a year. The most direct response is the instrument. Response from the equipment will be slower," said a person in charge of Sinopec Oilfield Equipment.
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