During the Period, the Company encountered the COVID-19 pandemic and oil price fluctuation. Honghua's revenue from continuing operations decreased by 11.2% to
AGAINST THE BACKDROP OF NATIONAL ENERGY SECURITY STRATEGY, HONGHUA'S FRACTURING BUSINESS CONTINUED TO GROW RAPIDLY
Although Brent oil price plunged in 2020, the Chinese government still prioritized national energy security and was determined to expand domestic oil & gas exploration to satisfy domestic market demand.
During the Period, the Company's sales and product R&D have all made significant breakthroughs. Honghua sold 4 sets of electric fracturing pumps, and launched the first set of electric coiled tubing in
In the stage of exploring cost-reducing, efficiency-enhancing, and eco-friendly development models, Honghua facilitated large-scale development of unconventional oil & gas with electric fracturing equipment. Therefore, the Company's pumping service achieved explosive growth, with stages of pumping service offered throughout the year amounting to 4,357, an increase of 48.5 % over last year. During the Period, Honghua assisted clients in breaking multiple records throughout the year. At Fuling block, an average daily fracturing construction record of 5.6 stages and a daily fracturing construction record of 8 stages were achieved. Moreover, Honghua's fracturing crews created a record of 366.7 tons of sand addition during operation, setting a new sand addition record following PetroChina's sand addition record during deep shale gas single-stage reservoir reconstruction, further responding to market recognition. Following Honghua's first shale gas fracturing engineering service contract in 2019, after expanding the scope of operations from single pumping service to comprehensive electric fracturing services, Honghua obtained a complete set of electric fracturing equipment leasing and service contract in Changning that worth
FLEXIBLY ADJUSTED BUSINESS STRATEGY TO SATISFY THE EVOLVING NEEDS OF CLIENTS, PROMOTED SALES IN PARTS & COMPONENTS SEGMENT
Although the overseas market was affected by factors including the pandemic and oil prices, Honghua managed to adopt a flexible sales mechanism to seize the needs of customers for parts and components updates and upgrades and deepened the long-term partnerships. During the Period, revenue from parts & components increased by 6.5%
LEVERAGED THE BACKGROUND AS A STATE-OWNED ENTERPRISE, AND ADD NEW ENERGY BUSINESS OFFERING WITH FLEXIBILITY
Honghua responded to national policies and deployed new energy industry actively to counterbalance cyclical fluctuation risks of the traditional petrochemical industry. Relying on its advantages as a state-owned enterprise and utilizing its existing manufacturing capacity, Honghua successively entered into offshore wind power construction agreements with state-owned enterprises, with orders totaling over
OUTLOOK
At the beginning of 2021, the COVID-19 pandemic remains not yet fully under control, and there are still many uncertainties in the oil and gas market. In the long run, low-carbon and clean energy will be the direction of future development, which will pose challenges to the traditional petrochemical industry. Nevertheless, we still see many positive factors are emerging in the short term. With the expected large-scale vaccination programs, and the oil prices in stable recovery as a result of the ongoing joint production cuts, the "darkest moment" of the oil and gas industry had passed. In 2021, Honghua will further develop fracturing equipment as its core business to satisfy clients' needs of reducing costs and enhancing efficiency via adhering to the national energy security strategy, grasping domestic industry opportunity of increasing energy reserve, and responding to market demand for high efficiency and sustainability. Moreover, Honghua will also pay close attention to the delivery of offshore wind power projects and subsequent market expansion. At the same time, in light of the bottoming out in the overseas market, Honghua will seize the strong demand arising from the recovery of the overseas market and strengthen development and sales of its principal business of drilling rigs and promote the execution of major domestic and overseas orders. To be a world-class and domestically leading supplier of integrated solutions for energy development, Honghua will further enhance cost control and optimize supply chain management to increase cash turnover efficiency as well as strengthen the reserve and training of strategic and innovative young talents and accelerate the digital transformation of the Company for high-quality and high-efficiency sustainable growth.
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