C.A.T. oil AG: Strong and successful expansion in 2007
Vienna (euro adhoc) -
Revenues up 15.0% YoY to EUR 222.6 million Massive increase in operative capacity Geographic expansion to European Russia New businesses launched
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finances
April 30, 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 the annual results for the financial year 2007. The reporting period was marked by an impressive progress in the transformation of C.A.T. oil AG from a West Siberian fracturing niche player into a diversified oilfield service company. The Company successfully expanded into new high-growth, high-margin businesses and new regions within and outside of Russia. The Company invested record EUR 89.1 million in new capacity additions and thus managed to significantly increase its operating capacity both, in its core and new businesses.
Revenues up 15,0%
In 2007, C.A.T. oil´s revenues reached a new peak of EUR 222.6 million, up 15% YoY. The key revenue drivers were a 5.9% YoY increase in the Company´s total job count to 2,473 jobs (2006: 2,335 jobs) and an 8.5% YoY gain in an average revenue per job to thou. EUR 90 (2006: thou. EUR 83). With more and more new capacity becoming operational during the year, the Company´s 2007 quarterly job count demonstrated strong YoY growth in the course of the year. Concurrently, new capacity additions to the hydraulic fracturing business were more difficult to market and deploy in the middle of the year without discount as the fracturing market competition intensified. Additionally, demand for gas fracturing jobs was lower than a year ago due to a mild winter in the northern hemisphere. As a result, C.A.T. oil realized a slightly lower revenue growth than originally expected for 2007. The Company´s EBITDA increased 8.8% YoY to EUR 49.7 million compared to EUR 45.7 million in 2006. EBITDA-margin decreased to 22.3% (2006: 23.6%). Earnings before interest and corporate tax (EBIT) were essentially flat YoY at EUR 37.2 million (2006: 36.9 million), driving the EBIT margin contraction to 16.7% in 2007 from 19.1% in 2006. C.A.T. oil´s net income decreased 9.4% YoY to EUR 22.7 million (2006: EUR 25.0 million) as an unrealized foreign exchange loss on intercompany loans surged to EUR 4.7 million in 2007 compared to thou. EUR 745 in 2006 on the back of the accelerated ruble devaluation against Euro in the third and fourth quarter of 2007. As a consequence, earnings per share amounted to EUR 0.46 compared to EUR 0.54 in financial year 2006.
2007: year of investments and business expansion
Manfred Kastner, CEO of C.A.T. oil AG commented: "2007 was a very important year for the development of our company. With our extensive investment program we managed to enhance our regional and service coverage and our customer base. This strategy of aggressive expansion combined with our technical expertise, our highly qualified staff and the financial strengths of our Company, paves the way for sustainable growth in 2008 and beyond."
In 2007, C.A.T. oil invested EUR 89.1 million in the operating capacity additions. By the end of the year, C.A.T. oil extended the number of operating hydraulic fracturing fleets 67% YoY to a total of 15 fleets. The Company´s sidetrack drilling capacity rose 400% YoY to a total of 10 rigs. This substantial expansion in the sidetrack drilling capacity facilitated a 153% YoY increase in a total sidetrack job count in 2007. The performance in this business was supported by rising job complexity and a greater share of higher added value horizontal sidetracks at expense of less sophisticated inclined sidetracks. Additionally, C.A.T. oil expanded its capacity for coiled tubing and nitrogen services 50% YoY. These substantial capacity additions demonstrate the Company´s commitment to defend its ample market share in the Russia and Kazakh fracturing markets and meet the rising demand for its second core business, sidetrack drilling, in a growing and booming market environment.
In 2007, C.A.T. oil benefitted both from intensifying and broadening customer relationships. Long standing and successful cooperation over a number of years led to an increased trend towards multiple-year strategic partnerships and order contracts comprising a broader scope of services. In March 2007, C.A.T. oil´s operating subsidiary CATKoneft was awarded a three-year-contract with Rosneft, the largest oil producer in Russia. In November 2007, Rosneft charged the operating subsidiaries of C.A.T. oil with another 385 fracturing jobs for the challenging oil fields in the Yugansk area. In the fourth quarter of 2007 C.A.T. oil´s subsidiary CATBOBNEFT was named winner in two major tenders by TNK-BP for three-year-contracts for sidetrack drilling and workover services at the Samotlor field, one of the largest oil fields in the world. Another positive development in late 2007 was the deployment of two sidetrack drilling rigs in Noyabrsk area for Gazprom´s oil subsidiary Gazprom Neft, which the Company concluded a strategic partnership with back in 2006. C.A.T. oil also won a tender to deploy two additional sidetrack drilling rigs for Gazprom Neft in 2008.
Another important step for C.A.T. oil was the expansion of its business to European Russia. In April 2007, the Company acquired a 100% stake in the oilfield services company FilOrAm from TNK-BP. The Company is located in Orenburg region in the European part of Russia and provides C.A.T. oil with strategic access to Russia´s Volga-Urals oil and gas basin, as well as a highly competitive base towards northwestern Kazakhstan.
In 2007, C.A.T. oil not only expanded regionally, but also further advanced in the diversification of its service portfolio. In July C.A.T. oil entered the fast growing segment of geotechnical services, including 2D/3D seismic and reservoir engineering by forming the new subsidiary CAToil-Geodata and hiring a team of approximately 90 industry professionals. After more than a decade of under-exploration in Russia, seismic is another booming business in the Russian oil field service sector.
Record capital expenditures for future diversification and growth
In 2007, C.A.T. oil generated a cash flow from operating activities of EUR 21.1 million compared to EUR 23.4 million in the previous year. The decline is mainly due to higher investments in working capital to pursue growth and diversification strategies resulting in a build up of inventories for new businesses and materially higher VAT prepayments for equipment.
The financial year was earmarked by the comprehensive investment program leading to record investments in property, plant and equipment of EUR 89.1 million, up 34% YoY from EUR 66.5 million in 2006. C.A.T. oil´s cash flow from financing activities amounted to EUR 8.0 million, reflecting primarily short-term overdraft facilities used by the Company´s operating subsidiaries. On December 31, 2007, C.A.T. oil had cash and cash equivalents of EUR 15.0 million compared to EUR 74.5 million at the end of 2006. C.A.T. oil´s balance sheet underlines the Company´s dynamic growth and moderate financial policy. Total assets increased 21.5% YoY to EUR 285.3 million and equity rose 8.7% YoY to EUR 234.9 million at the end of 2007 (2006: 216.1 million). Despite a sharp increase in current and non-current liabilities to EUR 50.6 million (2006: EUR 18.8 million), the equity ratio´s level remained high with 82.3%.
In line with C.A.T. oil´s massive investment program, the Company´s average weighted headcount increased by 32.4% to 3,127 employees (2006: 2,362 employees).
Sidetrack drilling to drive growth in 2008
In 2008 sidetracking drilling will remain the Company´s fastest growing business. With currently 10 operating mobile sidetrack drilling rigs, C.A.T. oil is among the top three independent sidetrack drilling service providers in Russia. C.A.T. oil will benefit from a sustained wide gap between supply and demand for sidetrack drilling services in the Russian oil industry resulting in further price gains in 2008. Based on the existing back log of sidetrack drilling jobs for 2008, C.A.T. oil is confident that it can increase its sidetracking job count by 190%.
Despite the intensified competition in the Russian hydraulic fracturing market, C.A.T. oil stays highly competitive on price and quality and anticipates its fracturing job count rise 15% YoY in 2008.
Positive outcome is also expected from the growing business seismic services. With a total of five 2D/3D crews, the Company is well positioned to benefit from the increasing demand for this service.
In 2008, C.A.T. oil plans to expand into conventional drilling services to benefit from a major upturn in greenfield capital expenditures. To this end, C.A.T. oil has already ordered three new 180-ton mobile drilling rigs in 2008, which have a significant technical advantage over Russian rigs currently operating on the various oil fields. These mobile rigs are also efficient to perform sidetrack drilling jobs, in particular deep ones.
Manfred Kastner, CEO of C.A.T. oil AG, outlined: "More than ever C.A.T. oil is in an excellent position to benefit from the fast growing demand for oil and gas services in Russia and Kazakhstan. Oil and gas producers show a fast increasing interest in the employment of reliable independent service companies with advanced and sophisticated technical capabilities and technologies. With our extensive investment program we have expanded in core and new services and technologies which confirm our standing as a preferred partner for the majors in the industry. Our investments will certainly pay off in the future."
www.catoilag.com
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 3,388 people at the end of 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.
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Branche: Oil & Gas - Upstream activities
ISIN: AT0000A00Y78
WKN: A0IKWU
Index: SDAX, Classic All Share, Prime All Share
Börsen: Börse Frankfurt / regulated dealing