The recent times have been challenging to say the least for seismic industry. Withfalling crude oil prices and decreasing oil & gas exploration activities we havere-grouped and worked around our strategies to adapt to the persistently weak demand.
United States continues to cement its place as the major producer of both oil and gasand it has caused a shift in trade patterns. The country can now satisfy roughly 90% ofits energy needs from domestic sources up from 70% in 2005. Losing the United States as aprimary market major oil producing nations are now looking at other countries. SimilarlyMiddle East countries are also witnessing an increase in demand. Output from Southern Iraqand Kurdistan is expected to ramp up despite security issues that surround the region.
Such volatility in demand-supply dynamics is fuelling uncertainty between traditionaland new oil suppliers. The world's biggest demand centres are also shifting. While theUnited States continues to remain the world's largest consumer and importer of oil thereis a visible increase in demand from countries like China and other Asian and South Asiancountries.
Asian Oilfield positioning
With the backdrop of the macro industry scenario discussed above I believe AOSL is nowwell poised as we expect industry recovery. We expect reforms and investments to kick-infor Oil & Gas sector in the coming months. As an entity we stand to gain from theupcoming opportunities backed by our core competencies and execution abilitiesdemonstrated in the recently concluded projects.
Major oil companies (at national and global levels) are reposing their faith in us fortheir upcoming exploration projects. Yes there have been challenges and headwinds thatthe Company has been bothered with but I expect things to change positively in the comingfiscal. The recent acquisition of equity by Oilmax Energy Private Limited brings in 20years of experience and expertise on board. We are optimistic and confident that the newmanagement and board will write a new chapter of success and growth for the Company in thecoming years.
Focus on Technology
Seismic activities in the recent past have undergone changes thereby demandingaccuracy and correctness of the data. At AOSL we too have evolved and pioneered withtechnological adeptness in India in some of our recently concluded projects. From datacapturing to reservoir imaging; from 2D to 3D imaging from wired cables to wirelessreal-time data imaging - we pioneered these technological innovations in India for thevery first time.
Moving ahead we shall continue to offer solutions to suit the exploration objectivesand ambitions of oil companies. We shall leverage our expertise address their demands inthe most difficult and challenging terrains and deliver superior and accurate imagingsolutions.
Today we stand on threshold of opportunities. With the new government now gainingfoothold and pushing in major reforms we expect the coming years to be big - for Indiaand AOSL. Our transformed identity has added to our credibility which in turn enabled usto work for global clients in North Africa Far-East West Africa and South-East Asia.Even in India we expect major tenders to be awarded for oil exploration which wasstagnant over a significant period of time.
In terms of project execution we have been working hard to enhance our operationalefficiency reduce costs and improve margin levels.
The recent actions taken are in accordance with our strategic framework for long-termvalue creation. The sustained oil price weakness and cautious spending pattern of ourclients continue to negatively impact the seismic demand and we expect the demand forseismic services to continue facing headwinds. However we are well prepared for thechallenges with a focused and disciplined approach towards cost control and operationalefficiency. With a more dedicated approach towards usage of technology we expect todeliver unmatched data results and services and emerge as an attractive contractor andpartner for oil companies today and tomorrow.
In conclusion I would like to thank the Board management customers bankers andemployees for their continued trust and support towards the company. We shall marchforward with added passion towards achieving greater stakeholder value in the comingfiscal.
Mr. Rohit Agarwal