An overview of investment

In the domestic market, the oil cracking service in China Petroleum & Chemical Corp's Ordos Basin is still the core service. Baiqin Oil Service completed multi-stage cracking services in 43 and 52 horizontal wells respectively in the third and fourth quarters, and totaled 95 in the second half of the year, an increase compared with the first half of the year. However, the total number of cracking operations completed in the whole year was 152, an increase of 3.4% over the 147 in 2012. We estimate that the decline in revenue per well for the whole of 2013 will be close to 20% in the medium term, and the annual production service income will decline by about 15% compared with the same period in 2012. Due to the mass production of the independently developed power Packer, the material cost has dropped, so the profit rate of the production increase service remains stable.

In terms of well service, Baiqin Oil Service has made continuous progress in Petrochina Company Limited's duty area. The company completed five directional drilling services in Dazheng Oilfield in the third quarter and launched two directional drilling projects in Songluo Plain in the fourth quarter. In addition, the company completed the service of several drilling wells in the fourth quarter and further won the service contracts for three oil wells.

In overseas markets, rilla and Zhonglu are the main markets for Baiqin oil suits.

The completion service from Venezuela National Oil Company has become a new priority for the company since the second half of 2012 and has continued to become a major force in 2013. The sharp increase in the number of contracts of the Venezuelan National Oil Company has led to a great-leap-forward development of the company's completion operations, with completion revenue increasing 35-fold to HK $214 million in the first half of 13 years. However, in the second half of the year, Baiqin Oil Service seems to lack more data from the completion list of Nerilla in the second half of the year. On the contrary, it is a good start to the crack service. On the other hand, the business of China and Singapore is also being actively promoted.

Generally speaking, the domestic service income and profit level of Baiqin oil service are relatively stable, and they are equipped with a certain degree of capacity. On the other hand, the overseas business statement is fluctuating, and the lists of several major overseas markets are unstable and lack of predictability. On the whole, the performance of Baiqin oil service in the second half of 2013 was basically within the market expectation. In the technical field, Baiqin Oil Service has accelerated the development and cooperation of drilling and cracking technology. The technology of the company is successful, but it still needs to be improved. It reached more than 30 sets at the end of 13 years, and the service customization model is still being explored. In addition, the equipment service integration capability has been gradually formed: the Huizhou manufacturing base was completed at the beginning of 14 years, and the cracking and continuous tubing equipment gradually increased.