Anton Oilfield Services Group (“Antonoil” or the “Group”, HKEx stock code: 3337), the leading independent oilfield services provider in China, has announced that the Group officially spudded a well in its reservoir production management project on June 9, 2014. This marked Reservoir Production Management Service of the Group entering the implementation stage.
Since the beginning of this year, the Group has secured two reservoir production management projects, one for a shale gas well in Hubei and another for a tight oil well in Subei Basin.
The contract model entails the provision of end-to-end management of the project and the undertaking of limited initial production risks, to be rewarded with basic service fees and performance incentives as the production reaches initial target.
Antonoil’s Reservoir Production Management Service integrates its reservoir knowledge and risk control capabilities from the expertise of the Group’s reservoir geologists and engineering management capacity to provide comprehensive management in clients’ projects to achieve certain rates of initial production.
Unlike integrated project management (IPM) services, which focus on engineering integration services and do not bear any production risks, Reservoir Production Management Service attains economic incentives based on the risks undertaken to help clients achieve production.
Antonoil has started to establish this product line since 2013. In doing so, the Group has been dedicated to attracting reservoir geology talents, leveraging the Reservoir Geology Research Institute and mobilizing the Group’s other product lines to support the development of the service. As a result, Antonoil’s Reservoir Production Management Service has been fairly compelling and competitive since its inception.
The demand for Reservoir Production Management Service arises when clients seek to reduce their engineering technical risks due to their limited engineering expertise, and technical service companies can address such risks in great confidence because of its deep research and understanding of the target reservoir and engineering technical capabilities.
By tying clients’ project investment with output, the product line not only lowers clients’ engineering technical risks but also makes it easier for them to manage projects. In low-efficiency projects or block projects, when clients are constrained by their limited engineering technical capabilities or economic scale, they can use this model to incentivize oilfield service providers, lower their own risks and effectively encourage service providers to lift up service quality. Therefore, this model has gradually gained wider adoption over recent years.
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