Securities code: 300191 securities abbreviation: Sino Geophysical Co.Ltd(300191) Announcement No.: 2022-005
Sino Geophysical Co.Ltd(300191)
Nanhai 22 / 05 major contract announcement
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Sino Geophysical Co.Ltd(300191) (hereinafter referred to as ” Sino Geophysical Co.Ltd(300191) ” or “the company”) the overseas wholly-owned company smart Oil Investment Co., Ltd. (English Name: smart oil investment Ltd., hereinafter referred to as “smart oil”) chose to enter into oil contract negotiation with China National Offshore Oil Corporation Limited (hereinafter referred to as “CNOOC”) after completing the joint research of block 22 / 05 in the South China Sea. After full communication, the two sides reached an agreement on cooperation matters, and officially signed a 30-year product sharing contract – oil contract in Nanhai 22 / 05 contract area (hereinafter referred to as “oil contract”) on February 15, 2022. Smart oil has become an operator of exploration, development and production in the contract area. According to the provisions of the oil contract, smart oil enjoys 100% of the exploration rights and interests of the block within 6 years of the exploration period, and will carry out oil and gas exploration operations such as fine processing and interpretation of seismic data, comprehensive seismic geological research, comprehensive evaluation of oil and gas, well location deployment and drilling. If there is commercial oil and gas discovery in the contract area, smart oil enjoys 49% of the exploitation rights and interests, and the production period is 15 years. The basic information about this contract is as follows: I. contract risk tips
1. The contract has been deliberated and adopted at the second meeting of the Fifth Board of directors of the company and needs to be submitted to the general meeting of shareholders for voting.
2. The term of this contract includes exploration period, development period and production period, with a total of 30 years.
Exploration period: 6 years in total, divided into three stages, including 2 years in the first stage, 2 years in the second stage and 2 years in the third stage;
Development period: if any oil and gas field is found in the contract area, the period from the date when the competent department of the government of the people’s Republic of China approves the environmental impact report of any oil (gas) field to the date when the corresponding development operation is completed. Production period: 15 years from the date of commercial production of any oil and gas field in the contract area. If an oil and gas field needs to be exploited in layers due to large construction scale and long period, or multiple oil and gas reservoirs, or other special circumstances, the production period can be appropriately extended after being reported to CNOOC for approval.
3. Major risks of the contract and countermeasures.
(1) In order to ensure the smooth performance of the contract, the company plans to increase US $18 million to smart oil by stages through jinsinan Energy Co., Ltd. (BVI subsidiary) for exploration investment in block 22 / 05 in the South China Sea. The matter has been deliberated and approved at the second meeting of the Fifth Board of directors of the company and needs to be submitted to the first extraordinary general meeting of shareholders of the company in 2022 for voting. After the capital increase is deliberated and approved by the general meeting of shareholders of the company, it can be implemented only after it is approved by the Department of Commerce, the State Administration of foreign exchange and other regulatory authorities.
As the actual controlling shareholder of smart oil, Sino Geophysical Co.Ltd(300191) provides performance guarantee for smart oil, Sino Geophysical Co.Ltd(300191) guarantees CNOOC that the guaranteed smart oil will perform all obligations under the oil contract on time. It is estimated that the total amount of guarantee for the exploration period of 6 years will not exceed US $18 million or the equivalent amount of RMB (subject to the actual amount).
(2) Smart oil bears 100% of the exploration rights and interests and all the exploration costs, with large investment and high risk. If no oil and gas is found in the exploration, the drilling cost of the preliminary well in the exploration cost will have a certain impact on the overall performance of the company. If no oil (gas) field is finally found in the contract area, the drilling and other exploration expenses paid by smart oil will cause losses.
The parent company Sino Geophysical Co.Ltd(300191) is a comprehensive energy company with core oil prospecting technology, focusing on integrated high-end technical services for oil and gas exploration and development and exploration, development and production of oil blocks. With the technical and financial support of the parent company, smart oil has successively served as the operator of contract areas 05 / 31 and 09 / 17 in Bohai Sea, China, and the joint operator of Weizhou 10-3 West oilfield and block 22 / 04 in Beibu Gulf, South China Sea since 2013. It has completed and discovered a number of offshore exploration wells, accumulated rich experience in offshore oil operation, and block 22 / 05 has undergone preliminary joint research, Smart oil has made a relatively fuller assessment of the potential and risk of the block, which is conducive to further reducing the exploration investment risk of the block.
(3) The overall exploration period of the contract is long. During the six-year exploration period, smart oil needs to pay the necessary exploration expenses such as fine processing and interpretation of seismic data, comprehensive seismic and geological research, comprehensive evaluation of oil and gas, well location deployment and drilling. Whether the exploration is successful or not needs to be confirmed by the actual exploration, and there is great uncertainty. If the exploration is unsuccessful, the above exploration expenses will cause losses, and the subsequent development and production operations in the 22 / 05 contract area will not be carried out. At present, the estimation of oil and gas resources in the contract area is only the estimation of seismic geological reservoir data purchased by the company’s internal geological and reservoir expert team according to the joint research in the early stage and the proved reserves and production of the oil fields around the block. No authoritative third party has been hired to evaluate the oil and gas resources in the area, and there is still great uncertainty, The actual oil and gas resources will be determined according to the final exploration results.
Several drillable structures have been selected in the preliminary joint research. After the oil contract comes into effect, smart oil will rely on the rich reservoir evaluation experience of the parent company Sino Geophysical Co.Ltd(300191) to further study and determine the optimal target and optimize the well location design. The joint research before entering the oil contract provides strong support for the implementation of the first stage of exploration operation in the exploration period. Smart oil will carry out drilling operation as soon as possible, Strive to make major breakthroughs in block oil and gas exploration as soon as possible and enter the development and production stage of commercial oil and gas fields as soon as possible, so as to obtain huge potential benefits from oil exploration and development.
4. Offshore oil operation risk
Offshore oil operations are greatly affected by sea conditions, and the technology and equipment are complex. Affected by many factors such as cost control, environmental protection, safe production, oilfield abandonment and so on, the investment is large and the risk is high.
The operator is obliged to do its best to prevent pollution and damage to the atmosphere, sea and port, and ensure the personal safety of operators. If the environment is polluted due to improper operation and other reasons, the company will bear certain economic losses.
5. This transaction does not constitute a connected transaction. 2、 Introduction to the parties to the contract
1. Basic information of both parties
(I) smart oil
Chinese Name: smart Oil Investment Co., Ltd
English Name: smart oil investment Ltd
Registered capital: USD 50000
Chairman: Zhou Jinming
Date of establishment: November 17, 2011
Registered address: British Virgin Islands
Company nature: limited liability company (BVI offshore company)
Total investment
(1) The company approved the proposal on establishing BVI company with its own funds at the 13th meeting of the first board of directors on June 21, 2011 and the first extraordinary general meeting of shareholders in 2011 on July 13, 2011, and agreed to establish a BVI subsidiary with a total investment of no more than US $5 million, and the company can establish a wholly-owned subsidiary and invest abroad as a wholly-owned subsidiary.
(2) The ninth meeting of the second board of directors on August 20, 2013 and the second extraordinary general meeting of shareholders in 2013 on September 9, 2013 considered and approved the proposal on using all the remaining over raised funds to increase capital to BVI subsidiary, and agreed to increase capital by US $70 million to the wholly-owned subsidiary jinsinan Energy Co., Ltd. (BVI subsidiary), At the same time, it is agreed that jinsinan Energy Co., Ltd. will increase its capital to its wholly-owned subsidiary smart Oil Investment Co., Ltd. by no more than US $70 million. The increased investment will be invested with all the remaining over raised funds, and the insufficient part will be supplemented by its own funds.
(3) On September 29, 2015, the third meeting of the third board of directors and the second extraordinary general meeting of shareholders in 2015 deliberated and approved the proposal on changing the over raised funds project and increasing the capital of BVI subsidiary with the over raised funds for the implementation of Bohai 05 / 31 exploration and development project, It is agreed to change the unused raised capital of RMB 78.2625 million (including interest) of the over raised capital project \\ ” Sino Geophysical Co.Ltd(300191) Western Research Center \\” project to increase the capital to smart oil through the capital increase of BVI subsidiary Jinsi south for the implementation of Bohai 05 / 31 exploration and development project.
(4) On July 3, 2018, the 27th meeting of the third board of directors deliberated and approved the proposal on increasing capital to overseas wholly-owned company smart oil and signing major oil contracts with CNOOC, and agreed that the company would increase capital of US $90 million to smart oil through Jinsi south for smart oil’s project in West 10-3 Oilfield and block 22 / 04 in Beibu Gulf of the South China Sea.
(5) On April 12, 2019, the fourth session of the board of directors deliberated and approved the proposal on increasing the capital of overseas wholly-owned company smart oil and signing major oil contracts with CNOOC for the fourth time, and agreed that the company would increase the capital of smart oil by US $48 million by stages through Jinsi south to carry out the project of smart oil in the 09 / 17 contract area of Bohai Sea, China. (6) On November 8, 2019, the 12th meeting of the 4th board of directors deliberated and approved the proposal on increasing capital to smart oil, an overseas wholly-owned company, and signing major oil contracts with Petrochina Company Limited(601857) , and agreed to increase capital by US $70 million to smart oil by stages through jinsinan Energy Co., Ltd. (BVI subsidiary) for smart oil’s project in block 91-95 of Junggar basin.
As of the announcement date, the company has completed the approval of phased investment filing of relevant departments such as the national development and Reform Commission, the Commercial Commission and the safe of the above-mentioned Bohai Sea 05 / 31 contract area, Bohai Sea 09 / 17 contract area, Nanhai 22 / 04 contract area and Junggar basin Jiu 1-jiu 5 contract area, with a total approved overseas investment of US $245127900. Smart oil is a wholly-owned overseas company of Sino Geophysical Co.Ltd(300191) . It is the overseas representative of Sino Geophysical Co.Ltd(300191) participating in international oil and gas exploration and development investment. Its main business is the exploration and development business for global oil and gas fields and shale oil and gas. Smart oil directly participates in the bidding business of oil and gas field exploration and development outside China.
(II) CNOOC
1. China National Offshore Oil Corporation Limited
Registered capital: RMB 113.8 million
Chairman: Wang Dongjin
Date of establishment: 1983
Headquarters address: No. 25, Chaoyangmen North Street, Dongcheng District, Beijing.
Company nature: limited liability company (solely state-owned)
Business scope: organize the exploration, development, production and sales of oil, natural gas, coalbed methane, shale oil and shale gas, oil refining, petrochemical and natural gas processing and utilization, product sales and storage, LNG project development and utilization, oil and natural gas pipeline network transmission, chemical fertilizer and chemical products development, production and sales and related businesses, and provide services for oil Providing services for the exploration and exploitation of natural gas and other geological and mineral products, general contracting of projects, scientific and technological research, technical consultation, technical services and technology transfer related to the exploration, development and production of oil and gas, import of crude oil and refined oil, compensation trade and entrepot trade; Wholesale of gasoline, kerosene and diesel oil (limited to sales branches, valid until February 20, 2022); Undertaking Sino foreign joint ventures; joint production; International bidding for mechanical and electrical products; Production, sales and related services of new energy sources such as wind energy, biomass energy, hydrate, coal chemical industry and Cecep Solar Energy Co.Ltd(000591) .
CNOOC is a super large state-owned enterprise directly under the state owned assets supervision and Administration Commission of the State Council and the largest offshore oil and gas producer in China. After more than 30 years of reform and development, CNOOC has developed into an international energy company with prominent main business, complete industrial chain and business in more than 40 countries and regions. The company has formed five business segments: oil and gas exploration and development, professional technical services, refining and sales, natural gas and power generation, and financial services. CNOOC has good credit status and strong performance ability.
2. Similar transactions with CNOOC in recent three years
On April 12, 2019, smart oil and CNOOC signed the oil contract in China Bohai 09 / 17 contract area. After the signing of the Bohai 09 / 17 oil contract, the smart oil expert team carried out 3D seismic data pre stack wefox intelligent imaging and fine seismic geological interpretation, integrated intelligent technology oil and gas prediction, systematically evaluated the oil and gas accumulation law and favorable oil and gas targets in block 09 / 17, and revealed the oil and gas exploration potential in block 09 / 17. Based on the principle of “overall deployment, step-by-step implementation and accurate drilling”, the drilling targets of four exploration wells were selected in the first stage of the exploration period, and the offshore drilling technical teams of all social parties were organized and coordinated to cooperate in the offshore oil and gas drilling operation in the Bohai Bay. The first exploration well qk18-3-1 in Bohai 09 / 17 contract area has completed the drilling operation at the end of 2021, and multiple sets of oil and gas display sections have been found in Shahejie formation. In 2022, the remaining three exploration wells in the first phase of the exploration period will continue to be completed.
3. The company has no relationship with CNOOC. 3、 Introduction to contract area
The contract area 22 / 05 in the South China Sea is located in the Beibu Gulf of the South China Sea and the southwest sea area of Weizhou Island. It is close to the West Weizhou 10-3 oilfield and block 22 / 04 in the South China Sea where smart oil is the joint operator, with a water depth of about 40m. The block structure is located in the Beibu Gulf Basin, the north slope of Weixinan Sag, the favorable oil and gas accumulation zone of the buried hill on the rising wall of No. 1 fault, and close to the “a” depression, the main hydrocarbon generation center of Weixinan Sag on the falling wall of No. 1 fault. It is estimated that the hydrocarbon generation potential of “z3w7-3e-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-3w-, It shows that the contract area has good reservoir forming conditions and exploration potential.
In order to facilitate the overall understanding of Weizhou 10-3 West oilfield and block 22 / 04 in the South China Sea and make more scientific and reasonable exploration and development investment, smart oil signed the joint research agreement on block 22 / 05 in the South China Sea with CNOOC on August 18, 2020 to carry out a one-year joint research, evaluate the potential in the region and find out the potential
