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C.A.T. oil´s revenues increase by 35.6% in the first half of 2008
Quarterly revenues hit a new record high at EUR 73.5 million Total job count increases by 31.5% Market position in high-margin sidetrack drilling business further expanded
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Vienna (euro adhoc) - August 29, 2008 - C.A.T. oil AG (O2C, ISIN: AT0000A00Y78), one of the leading providers of oil and gasfield services in Russia and Kazakhstan, today announced its results for the first half of 2008. In the second quarter of 2008 the Company again benefitted from strong growth and increased its half year revenues by 35.6% to EUR 139.4 million. This steep increase was mainly attributed to the rising complexity of the jobs performed and a strong demand for C.A.T. oil´s services. Altogether, the Company´s total job count rose by 31.5% to 1,488 jobs (H1 2007: 1,132) with per-job-revenues climbing up to thou. EUR 93.7 compared to thou. EUR 90.8 in the first half of 2007.
C.A.T. oil´s second core business, sidetrack drilling, contributed significantly to the Company´s growth in the first half of financial year 2008. Unlike hydraulic fracturing operations, sidetrack drilling experienced price gains and margins expansion. Additionally, higher utilization rates of the capacities led to higher per-job revenues in this important business. In the second quarter 2008 alone, a 225% rise in the sidetrack drilling job count compared to a 175% yoy increase in sidetrack drilling capacities underlines the Company´s capability to realize improvements in the capacity utilization rates.
Like in previous quarters, C.A.T. oil set a clear focus on the expansion of its operating capacities. In the first half of 2008 C.A.T. oil added another sidetrack drilling rig to its capacities and now altogether operates 11 sidetrack drilling rigs and 15 fracturing fleets. Additionally, C.A.T. oil hired and trained new crews for two drilling rigs, which will become operational in the third quarter of 2008.
Bottom line results still impacted by expansion costs
Due to the massive expansion of the business and the accelerating inflation in Russia, C.A.T. oil´s cost base remained susceptible to cost pressures. In the first half of 2008 costs of goods sold increased by 54.4% to EUR 113.1 million (H1 2007: EUR 73.5 million), mainly due to higher expenditures for materials and supply, direct costs, depreciation as well as wages and salaries. In the second quarter a steep increase in diesel fuel and cement prices put additional pressure on the margins, but could be partly restrained by a tighter control over procurement and the efficiency of key disposables. In the first half of 2008, gross profit declined by 11.1% to EUR 26.3 million (H1 2007: 29.6 mil-lion) leading to a 9.2% decline of the EBITDA to EUR 24.6 million (H1 2007: 27.1 million) and a 37.3% decrease of the EBIT to EUR 13.8 million (H1 2007: 22.0 million). EBITDA and EBIT margins amounted to 17.7% and 9.9% respectively (H1 2007: 26.4% and 21.4%). As a consequence, net income decreased by 57.3% to EUR 6.8 million compared to EUR 15.9 million in the first half of 2007 and earnings per share totaled EUR 0.139 (H1 2007: EUR 0.325).
On a quarterly basis, the Company´s EBITDA remained stable at EUR 17.3 million (Q2 2007: EUR 17.6 million) and EBIT decreased by 22% to EUR 11.6 million (Q2 2007: 14.9 million).
In the first half of 2008 C.A.T. oil´s cash flow from operating activities rose significantly by 142.1% to EUR 15.4 million (H1 2007: EUR 6.4 million), primarily due to lower investments in working capital. Influenced by capital expenditures for additional drilling capacities the cash flow from investing activities was EUR -19.5 million compared to EUR -47.4 million in the first half of last year. Cash flow from financing activities amounted to EUR -2.6 million.
Comfortable equity ratio
By the end of H1 2008 C.A.T. oil had cash and cash equivalents of EUR 8.8 million compared to EUR 15.0 million at the end of financial year 2007. The Company´s shareholder equity increased by EUR 0.8 million to EUR 235.7 million at the end of H1 2008. This increase reflects a superposition of EUR 6.8 million in retained earnings and a EUR 6.0 million charge to reserves due to foreign exchange losses on long-term euro-denominated loans, extended by C.A.T. oil AG to its operating subsidiaries for new capacity additions. With a balance sheet total of EUR 302.9 million the Company´s equity ratio stood at healthy 77.8% compared to 82.3% at the end of 2007.
Alongside with the expansion of operating capacities, the Company again significantly increased its average headcount. In the first half of 2008, C.A.T. oil employed an average of 3,618 people compared to 2,875 in the same period last year.
Sidetrack drilling to drive growth in 2008
The management of C.A.T. oil remains positive for the rest of financial year 2008. Manfred Kastner, CEO of C.A.T. oil, outlined: "The second quarter 2008 demonstrated the successful implementation of our diversification strategy. Our market positions in the Russian and Kazakh markets have again increased. With rising sidetrack drilling activities and improving capacity utilization rates we are fully prepared for upcoming market challenges and sustainable high growth".
Sidetrack drilling will remain the main growth driver in 2008 and continue to balance the 2008 weaker fracturing market. The Company faces high demand and continued price gains in this business. Following the addition of one side-track drilling rig in Q2 2008, C.A.T. oil intends to put two more rigs into operations in Q3 2008 - one sidetrack drilling rig and one heavy mobile rig, which can be used for sidetrack drilling or conventional horizontal drilling operations. Altogether, the Company plans to expand its drilling capacities to 15 rigs at the end of 2008.
Fracturing market to recover in 2009
Furthermore, C.A.T. oil expects the fracturing market to start accelerating again at the beginning of 2009. Early tender campaign data for 2009 witness a demand for fracturing services among Russia´s largest consumers that is stronger than expected. Alongside with sustainable sidetrack drilling margins the Company expects healthy growth in the quarters to come.
About C.A.T. oil AG: Austria-based C.A.T. oil AG (O2C, ISIN: AT0000A00Y78) is one of the leading providers of oil- and gasfield services in Russia and Kazakhstan. C.A.T. oil´s core business is hydraulic fracturing, a process which helps to open up oil- and gas-bearing rock formations in order to increase or even enable oil and gas production. The C.A.T. oil crews use state-of-the-art methods and technologies to generate high pressure in the oil or gas reservoirs concerned. This pressure causes cracks to appear in the rock through which oil or gas can be produced in larger quantities from the production well, and hence efficiently boosts extraction, particularly in the case of deposits that are difficult to develop or low-output wells. In addition, hydraulic fracturing can be used to revitalize wells that have previously been idle.
The Company has its headquarters in Vienna and employed an average of 3,618 people in the first half of 2008, most of whom are based in Russia and Kazakhstan. Customers include leading oil and gas producers such as Gazprom, KazMunaiGaz, LU-KOIL, Rosneft, and TNK-BP. C.A.T. oil has been listed in the Prime Standard of the Frankfurt Stock Exchange since May 4, 2006, and has been a member of the SDax since September 18, 2006.
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Branche: Oil & Gas - Upstream activities
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