C.A.T. oil AG

EANS-News: C.A.T. oil AG
Strong demand and revenue growth further support expansion of business in Q1 2011

• Total job count increased by 24.6% yoy to 770 jobs • Revenues boosted by 29.4% yoy to EUR 61.0 million • Business expansion well on track • Outlook for FY2011 confirmed

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quarterly report

Subtitle: • Total job count increased by 24.6% yoy to 770 jobs • Revenues boosted by 29.4% yoy to EUR 61.0 million • Business expansion well on track • Outlook for FY2011 confirmed

Vienna, 30 May 2011 (euro adhoc) - C.A.T. oil AG (O2C, ISIN: AT0000A00Y78), one of the leading providers of oil and gas field services in Russia and Kazakhstan, today announced its results for the first quarter 2011. C.A.T. oil has had a good start to 2011 and was able to benefit from a supportive macroeconomic environment, the increased customer demand and the milder winter weather conditions. C.A.T. oil increased its total job count by 24.6% yoy to 770 jobs - the highest level reached in a first quarter in the Company´s history. C.A.T. oil´s revenues rose by more than 29% yoy to EUR 61.0 million. With its business expansion well on track, C.A.T. oil confirms its outlook for the financial year 2011.

Manfred Kastner, CEO of C.A.T. oil, commented: "We have successfully entered into 2011 and continued to push our top-line growth. Given our customers have increased their deployment levels, demand for our services went up as well. In addition, we have begun to expand our business by putting two new sidetrack drilling rigs into operation. This is just the beginning, we have busy times ahead of us: We will capitalize on the solid demand for our services to further increase revenues and at the same time set up our high class conventional drilling as a third core business."

Revenues of EUR 61.0 million strongly above previous year´s level

During the reporting period, C.A.T. oil benefited from a stronger demand for its services and the milder winter conditions in West Siberia compared to Q1 2010. Revenues increased 29.4% yoy to EUR 61.0 million (Q1 2010: EUR 47.1 million) and reflected a 24.6% yoy upturn in the job count to 770 jobs (Q1 2010: 618 jobs), as well as stronger average per job revenues.

The increased utilization was particularly realized in the fracturing and auxiliary businesses with the job count rising by 34.8% yoy and 10.8% yoy, respectively. In contrast, the total number of sidetrack drilling jobs was 17.0% yoy below the prior year´s quarter and reflected three developments: a longer execution of individual sidetrack drilling operations due to the difficult geological conditions, a rig being moved to a new region of operations, as well as the installation process of two new sidetrack drilling rigs. C.A.T. oil increased its average revenue per job by 6.9% yoy to TEUR 79 (Q1 2010: TEUR 74) and benefited from the improved pricing environment in the fracturing business, as well as a more favorable exchange rate of 39.9 rouble per euro (Q1 2010: 41.4 rouble per euro).

Cost base reflects higher utilization and business expansion

During the reporting period cost of sales increased by 33.1% yoy to EUR 55.5 million (Q1 2010: EUR 41.7 million) and primarily reflected the significantly higher operating activities, as well as the up-front costs related to the adaptation and mobilization of the two new sidetrack drilling rigs.

Although cost of sales developed roughly in line with C.A.T. oil´s increased utilization levels, the overall cost base was impacted by the set up of new capacities across the business and the slower than expected operations in parts of the sidetrack drilling business. The preparations for the capacity expansion were well underway during Q1 2011. The Company expects the nine new conventional drilling rigs to be delivered during the course of the second half of 2011.

General and administrative expenses increased by 17.2% yoy to EUR 4.9 million (Q1 2010: EUR 4.2 million), primarily due to higher wages and social funds contribution, bank charges, license and insurance fees as well as rental expenses. The total weighted average headcount contracted 7.6% yoy to 2,362 employees (Q1 2010: 2,557 employees) as the outsourcing of support and auxiliary functions continued during the reporting period.

Manfred Kastner said: "The times of easy oil are long gone. Efficient methods to access wells and stimulate deployment have become more decisive factors than ever before. In the past we have already made use of this development and the expansion into high class conventional drilling therefore marks the next logical step for us. Of course, it requires financial and personnel resources. However, we are confident that we will be rewarded. With our expanded business we will be even better positioned to deliver tailored services and generate additional earnings."

Earnings situation influenced by business expansion and impacts on sidetracking activities

C.A.T. oil´s first quarter earnings have been influenced by its diversification into the third core business and the lower than expected results of the sidetrack drilling business. Although the Company realized strong revenue growth, the investment-related costs could not be fully offset. Whilst gross profit came in slightly above the prior year quarter at EUR 5.5 million (Q1 2010: EUR 5.4 million), EBITDA decreased by 4.4% yoy to EUR 8.7 million (Q1 2010: EUR 9.1 million). The EBITDA margin amounted to 14.2% (Q1 2010: 19.2%). EBIT amounted to EUR 0.5 million (Q1 2010: EUR 1.8 million). The decline in EBIT primarily reflects the combined effect of a lower EBITDA and a higher depreciation expense related to investments in new capacity. C.A.T. oil´s net result amounted to EUR -1.0 million (Q1 2010: EUR 1.1 million), reflecting an extraordinarily high corporate tax expense of EUR 1.8 million, largely related to the utilization of tax assets and dividend payments by the subsidiaries. This effect is expected to even out over the course of the year.

Capital expenditure primarily funded through cash flow

During the first quarter of 2011, funds from operations went down 20.4% yoy to EUR 7.9 million (Q1 2010: EUR 10.0 million) largely due to a lower pre-tax profit. Despite seasonally high working capital requirements caused by the delays in the processing of invoices, cash flow from operating activities amounted to a net inflow of EUR 0.3 million (Q1 2010: net outflow of EUR 0.4 million). Capital expenditure increased to EUR 27.8 million (from EUR 2.8 million in Q1 2010) due to the payments for the new rigs. Cash flow from investing activities was a net outflow of EUR 27.4 million (Q1 2010: net outflow of TEUR 40) that included the proceeds from the sale of equipment of EUR 0.4 million (Q1 2010: EUR 2.8 million). Cash flow from financing activities was a net inflow of EUR 6.0 million in Q1 2011 (Q1 2010: EUR 1.7 million), which primarily reflected the increase in long-term and short-term borrowings.

As of 31 March 2011, cash and cash equivalents amounted to EUR 12.8 million (31 December 2010: EUR 34.1 million). C.A.T. oil´s balance sheet remained strong with a healthy equity ratio of 79.4% as of 31 March 2011 (31 December 2010: 83.2%).

Outlook for the full year 2011 confirmed

With the macroeconomic environment expected to remain supportive and demand to stay solid, C.A.T. oil confirms its outlook for the full year 2011. C.A.T. oil is confident to win additional orders and expects total revenues for 2011 to come in above the current order book level of EUR 230 million (based on an exchange rate of 40 rouble per euro). In addition, C.A.T. oil remains committed to profitable growth and aims at achieving the 2011 EBITDA margin close to the 2010 level. C.A.T. oil will further proceed with the rationalization of its business and will completely exit low margin workover services in Q2 2011. Moreover, the Company will capitalize on its strong market position in Russia and Kazakhstan to realize additional revenue growth.

www.catoilag.com

Press contact:

FD                          FD
Carolin Amann                Thomas Krammer
Tel.: +49 (0)69 92037-132           Tel.: +49 (0)69 92037-183
Email: carolin.amann@fd.com      Email: thomas.krammer@fd.com


About C.A.T. oil AG:
C.A.T. oil AG is one of the leading providers of oil and gas field services in
Russia and Kazakhstan and is listed on the Frankfurt Stock Exchange (SDAX).
C.A.T. oil offers a wide spectrum of services to increase the lifecycle of an
oil field or to make unexploited oil fields accessible. The Company´s growth is
driven by the following factors: Existing oil fields need to be stimulated due
to shrinking oil and gas resources in order to optimize capacities.
Simultaneously, idle wells are reactivated or made accessible through new
methods in order to deploy wells to their maximum. Additionally, C.A.T. oil will
establish conventional drilling as third core service which allows to activate
completely unexploited oil and gas sources. 

Since its foundation in 1991 in Celle, Germany, C.A.T. oil has built up a leading hy-draulic fracturing services business in Russia and Kazakhstan. Following its IPO in 2006 the Company has invested more than EUR 250 million in additional services and capacities: sidetrack drilling has become the Company´s second core business. In November 2010, the Company introduced a comprehensive investment program with a volume of EUR 150 million which will mainly be used to set up conventional drilling as part of the Company´s service portfolio. Furthermore, C.A.T. oil offers coiled tubing, well work-over, cementing and seismic services. Due to the recent investments C.A.T. oil´s fleets and rigs are state-of-the-art and therefore allow for time-efficient and effective deployment. C.A.T. oil´s customer base includes the leading Russian and Kazakh oil and gas producers amongst them Gazprom, KazMunaiGaz, LUKOIL, Rosneft and TNK-BP. C.A.T. oil has a long-standing relationship with these customers and has been a reliable service provider since its market entrance in the early nineties.

The Company has its headquarters in Vienna. As of 31 March 2011, the Company employed an average of 2,362 people, most of which are based in Russia and Ka-zakhstan.

Key financial figures for Q1 2011 [in million EUR]

Q1 2011    Q1 2010    Change in %
Revenues                       61.0       47.1        29.4
Cost of sales                  55.5       41.7        33.1
Gross profit                    5.5        5.4         1.1
EBITDA                          8.7        9.1        -4.4
EBITDA margin (in%)            14.2       19.2
EBIT                            0.5        1.8       -70.0
EBIT margin (in%)               0.9        3.7
Net income                     -1.0        1.0       >-100
Earnings per share (in EUR)  -0.020      0.021       >-100
Equity Ratio (in %)            79.4       84.4

Cash flow from
operating activities            0.3       -0.4        >100
Cash flow from
investing activities          -27.4      -0.04        >100
Cash flow from
financing activities            6.0        1.7        >100
Cash and cash equivalents(1)   12.8       32.4       -60,5

Total job count
Per-job revenue
(in thou. EUR)                 79.0       74.0         6.8
Employees                     2,362      2,557        -7.6 

(1) As of 31 March 2011 and 31 March 2010 respectively

end of announcement                               euro adhoc
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company:     C.A.T. oil AG
          Kärtner Ring 11-13
          A-A-1010 Wien
phone:       +43(0) 1 535 23 20 - 0
FAX:         +43(0) 1 535 23 20 - 20
mail:     ir@catoilag.com
WWW:      http://www.catoilag.com
sector:      Oil & Gas - Upstream activities
ISIN:        AT0000A00Y78
indexes:     SDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt
language: English 

Contact:

Thomas Krammer
Tel: +49(0)69-92037-183
Email: thomas.krammer@fd.com

Branche: Oil & Gas - Upstream activities
ISIN: AT0000A00Y78
WKN: A0JKWU
Index: SDAX, Classic All Share, Prime All Share
Börsen: Frankfurt / regulated dealing/prime standard



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