HONG KONH: China Oilfield Services Ltd (COSL), a unit of the nation's third-biggest oil producer, expects earnings to come under more "pressure" and may delay projects after a profit slump in the first six months on weaker crude prices.

Second-half earnings will come under "heavier pressure" because of the "lagging effect" of the global economic slowdown and lower crude-oil prices, Chief Financial Officer Zhong Hua said at a media briefing in Hong Kong yesterday. The company isn't expecting to post a loss in this period, he said.

Net income dropped 33 percent in the first half after a plunge in crude-oil prices slashed sales of China Oilfield's biggest customer CNOOC Ltd by 42 percent and demand for its rigs and services.

The field-services provider may spend 9 billion yuan ($1.3 billion) this year compared with a budget of 10.4 billion yuan, Zhong said after the briefing.

The Beijing-based company will make a provision of about 820 million yuan for the impairment of the assets of unit COSL Drilling Europe, formerly known as Awilco Offshore ASA, China Oilfield said on August 21.

The mainland services provider is studying ways of raising funds, including selling additional A-shares in the domestic market, Zhong said.

COSL shares have gained 10 percent in Hong Kong trading this year, compared with the 37 percent advance in the benchmark Hang Seng index. The stock fell 0.8 percent to HK$6.77 yesterday.

COSL has no new acquisition target, Chief Executive Officer Liu Jian told reporters at the briefing.

Reuters

(HK Edition 09/01/2009 page4)