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C.A.T. oil reports solid growth in revenues and earnings for the first nine months of 2007
Â• Revenues up 13.0% to EUR 164.1 million Â• EBITDA increased by 10.7% to EUR 42.7 million Â• Successful enhancement of service portfolio and operational areas
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Vienna (euro adhoc) - November 30, 2007 - 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 nine months of the financial year 2007. Concurrently with further massive capacity additions and expansion into new businesses and regions, the Company realized solid growth in revenues and earnings. Driven by high operating activity in the summer months, C.A.T. oil achieved a new high in service count and altogether accomplished 694 jobs (Q3 2006: 649 jobs). At the same time, average per-job revenue rose to thou. EUR 88.3 (Q3 2006: thou. EUR 86.0) due to growing job size and complexity. The third quarter was again characterized by comprehensive capacity additions throughout all services. Compared to Q3 2006 C.A.T. oil increased its hydraulic fracturing capacities by 55.6% to 14 fleets and its capacities for high-margin sidetracking drilling by 250% to seven rigs. On top of expanding its existing services, C.A.T. oil further diversified its business allowing the Company operations in markets outside of Russia and Kazakhstan.
Growth in revenues and profit despite high front-loaded costs
On the back of a strong demand and higher exposure to lucrative large fracturing jobs, revenues in the first nine months of 2007 increased 13.0% yoy to EUR 164.1 million (9M 2006: EUR 145.2 million). But, consequent to extensive operating capacity additions and business diversification, C.A.T. oilÂ´s operating cost base was influenced by front loaded growth-related costs. As a result, C.A.T. oilÂ´s cost of sales rose 17.3% yoy to EUR 117.1 million in 9M 2007. EBITDA increased 10.7% yoy to EUR 42.7 million (9M 2006: EUR 38.6 million) and EBIT rose 7.5% yoy to EUR 34.4 million (9M 2006: EUR 32.0 million). EBITDA and EBIT margins amounted to 26.0% and 20.9%, respectively (9M 2006: 26.6% and 22.0%). Net income in the first nine months of 2007 was EUR 22.6 million, effectively flat yoy (9M 2006: EUR 22.5 million). Earnings per share amounted to EUR 0.46 (9M 2006: EUR 0.50).
On a quarter-to-quarter basis, revenues increased 9.9% yoy to EUR 61.3 million, driving gross profit up 11.3% yoy to EUR 17.5 million in Q3 2007. However, a steep rise in general and administrative expenses on the back of additional office and camp rental expenses for C.A.T. oilÂ´s new subsidiaries resulted in an 8.6% yoy gain in EBITDA to EUR 15.6 million in Q3 2007. EBIT rose only 2.7% to EUR 12.4 million due to much higher depreciation charge in comparison to Q3 2006. Consequently, the EBITDA margin stayed effectively flat yoy at 25.5% and the EBIT margin decreased to 20.2% compared to 21.6% a year ago.
C.A.T. oilÂ´s cash flow from operating activities rose 19.6% yoy to EUR 8.5 million in Q3 2007 but declined 9.0% yoy to EUR 14.8 million for the first nine months of 2007 due to a strong increase in working capital in the first half of 2007. Nonetheless, the Company managed to decrease investments in working capital by 12.8% yoy to EUR 3.7 million in Q3 2007. Cash flow from investing activities increased 88.4% yoy to EUR -70.7 million. This significant increase is due to C.A.T. oilÂ´s massive investment program, which includes payments for new fracturing, sidetrack drilling, coiled tubing and seismic capacities. The CompanyÂ´s cash and cash equivalents decreased EUR 51.1 million since the beginning of the year to EUR 23.3 million as of September 30, 2007.
Successful expansion into new markets
In the third quarter, C.A.T. oil further successfully advanced in its expansion and diversification course. In addition to massive enhancements of the operating capacity, the Company complemented its core businesses by establishing the new subsidiary CAToil-Geodata. This gives the Company access to the appealing segment of geotechnical services and strong organic growth in 2D/3D seismic and reservoir engineering. CAToil-Geodata will also allow C.A.T. oil to enter new markets outside of Russia and Kazakhstan. During the third quarter CAToil-Geodata was awarded seismic and consultancy contracts in India, Nigeria and Latin America, with a total value of EUR 15 million. Also, CAToil-Geodata launched mobilization of six 2D/3D seismic crews which have already been contracted for the winter season of 2007/8.
In Q3 2007, the Company again witnessed strong demand for its new service sidetracking drilling. With a 250% yoy increase in sidetracking drilling capacity to seven rigs, C.A.T. oil is well positioned to benefit from an enormous growth potential of this service. C.A.T oilÂ´s new subsidiary CAToil Drilling launched its operations and deployed two sidetracking rigs for Gazprom Neft in the Noyabrsk area with a view to expanding services for this strategically important client in Q4 2007 and 2008. This contract was signed within a framework of the September 2006 strategic partnership agreement between Gazprom Neft and C.A.T. oil.
In the course of substantial additions to C.A.T. oilÂ´s operating capacities, the CompanyÂ´s average headcount increased 35.1% yoy to 3,198 employees (Q3 2006: 2,368). The majority of the new employees has been recruited in Russia and Kazakhstan to work on oil and gas fields of C.A.T. oilÂ´s clientele.
Investment program to pay off in 2008
C.A.T. oilÂ´s management is convinced that the significant investments made over the last nine months will pay off and reward the Company with growing revenues and attractive double-digit margins. Manfred Kastner, CEO of C.A.T. oil AG, outlined: "In the first nine months 2007 we intensively worked on our goals to rapidly diversify and transform our Company from a pure pressure pumping specialist into a fully integrated service provider for the oil and gas industry. Growing contribution of new high-growth services such as sidetrack drilling or seismic services and sustained growth in fracturing operations will support growth in revenues and earnings in 2008 and beyond. However, high growth in our industry does not come without upfront costs ahead of revenue generation. Nonetheless, we should fully realize the full potential of our 2007 investment program next year once the new capacities are at full utilization and success rates."
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. oilÂ´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 3,053 people in the first nine months of financial year 2007, most of whom are based in Russia and Kazakhstan. Customers include leading oil and gas producers such as Gazprom, KazMunaiGaz, LUKOIL, 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.
end of announcement euro adhoc 30.11.2007 08:32:00 --------------------------------------------------------------------------------
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