EANS-News: C.A.T. oil AG
C.A.T. oil benefits from expansion into sidetrack
drilling in 2008
Wien (euro adhoc) -
- Revenues up 24.1% YoY to EUR 276.2 million representing an
all-time-high - Growth driver sidetrack drilling: contribution to revenues rose to around 30% of total revenues in 2008, up from 16% in 2007 - Total EBITDA declined 5.1% YoY to EUR 47.2 million due to cost pressure - Order book for 2009 amounted to EUR 188 million at the end of Q1 2009 robust demand for brownfield services - Cost reduction programmes initiated to increase profitability
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April 30, 2009 - 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 audited results for the financial year 2008. As published in a preliminary earnings statement on April 17, 2009, the Company achieved a 24.1% growth in revenues despite an extremely challenging market environment. C.A.T. oil increased revenues to EUR 276.2 million (2007: EUR 222.6 million) and slightly exceeded its revised revenue target of EUR 270 million. This all-time-high in revenues has been supported by a 14.5% rise in deployment jobs as well as an 8.8% increase in average revenues per job. These growth rates confirm the success of the Company´s diversification strategy, as well as its strong market position based on high quality services and modern technology.
Strong operative performance in both core businesses
By the end of fiscal year 2008 the fracturing business of C.A.T. oil consisted of 15 state-of-the-art fleets with an average age of five years, allowing very efficient and reliable deployment. In its first core business hydraulic fracturing C.A.T oil benefited from a 20.3% YoY rise in job count. Throughout 2008 C.A.T. oil continued to expand its second core business sidetrack drilling, adding an extra four rigs and bringing the total number to 14 at year end. C.A.T. oil was able to make very good use of its sidetrack drilling capacities and improved utilization, thereby increasing sidetrack drilling job counts significantly by 165.7% YoY. Sidetrack drilling has thus again been growth driver number one in 2008, making C.A.T. oil the fastest growing company in this business in Russia.
Manfred Kastner, CEO of C.A.T. oil AG, commented: "Our diversification strategy and the massive expansion into sidetrack drilling pays off: In 2008 this business not only stood for one third of our total revenues, but EBITDA from this high-margin service was effectively at par with hydraulic fracturing. Thanks to this growth driver we could off set price pressure in hydraulic frac-turing and increase our overall average revenue per job from TEUR 90 to 98."
Sharp rise in cost of revenues, depreciation and corporate tax rate
The Company´s strong operative performance was impacted by pressure on the cost base and negative effects in the core markets which were related in large parts to the global financial crisis. As a consequence, EBITDA declined 5.1% YoY to EUR 47.2 million (2007: EUR 49.7 million) primarily due to inflationary pressures on the Company´s operating cost base. EBIT fell 44.3% YoY to EUR 20.7 million (2007: EUR 37.2 million), reflecting a 110.5% YoY in-crease in depreciation. In 2008, net income decreased by 88.7% YoY to EUR 2.6 million (2007: EUR 22.7 million) primarily due to higher unrealized foreign exchange losses on euro-denominated loans, losses from impairment of fair value of financial investments, increased interest expenses and an unusually high effective income tax rate. Earnings per share amounted to EUR 0.05 (2007: EUR 0.46).
Sound cash position and strong equity base
In 2008, C.A.T.oil continued to operate on the basis of a solid financial posi-tion. The Company´s cash flow from operating activities went up 19.4% YoY to EUR 25.2 million in 2008 from EUR 21.1 million in 2007. Cash flow from in-vesting activities declined 51.6% YoY to EUR -43.2 million from EUR -89.4 million a year ago due to lower capital expenditures. Cash flow from financing activities increased to EUR 27.6 million (2007: EUR 8.0 million), mainly due to a draw down of EUR 30 million from a three-year EUR 50 million committed credit line. Cash and cash equivalents stood at EUR 14.4 million at 31 De-cember 2008 (31 December 2007: EUR 15.0 million). C.A.T. oil´s equity ratio remained at a very strong level and amounted to 73.4% (2007: 82.3%).
Kastner added: "Our efficient use of modern technology and our high quality approach has yet again contributed to our strong organic growth. With our strong operative track record, our competitive position in our core markets and our solid financial situation we are well prepared to address the market chal-lenges we currently experience. We will carefully monitor the needs of oil and gas producers, continue to deploy our customer relationships and thereby set the basis for C.A.T. oil´s long-term growth."
Resilient demand for brownfield-related services
The global economic development remains difficult to foresee and the 2009 outlook for the oil and gas industry has been moderate so far. As a result of lower global demand and a weak oil price, oil and gas producers have signifi-cantly reduced their budgets for 2009. In Q4 2008 and in Q1 2009 C.A.T. oil has already taken steps to adjust its operating cost base and to strengthen competitiveness in a challenging market environment. The Company´s strong operative track-record and its excellent customer relationships have contrib-uted to another successful order book filling. Although it has taken more time than in the past as customers have revised and reassessed their business plans several times, C.A.T. oil has been able to secure its 2009 order book of EUR 188 million (assuming an exchange rate of 48 Rouble/Euro) by the end of the first quarter.
Based on current developments the Company expects to keep the service job count at the level of 2008 with resilient demand for brownfield services and weaker demand for greenfield services. C.A.T. oil therefore expects to be primarily active its core services with robust demand for fracturing jobs and further growth in sidetrack drilling.
At the same time, price pressure, as well as a further devaluation of the Rou-ble and Tenge against the Euro is expected to continue influencing the Com-pany´s revenues. At this point in time, with the uncertain global economic out-look the Company believes it would be prudent to obstain from guiding the market on the expected 2009 financial result.
Cost cutting programmes
In view of the uncertain outlook C.A.T. oil has taken steps to increase profit-ability. In winter 2008/2009 the Company has entered into renegotiations with subcontractors and suppliers. Purchase prices for some of the materials and supplies, including fuel, as well as transportation and other subcontractor costs were reduced by up to 15% on average.
Moreover, C.A.T. oil has started to adjust its workforce to the changed demand and to bring down wage levels. C.A.T. oil intends to reduce the number of employees in Russia and Kazakhstan mainly by fluctuation and bring down the 2009 weighted average headcount to about 3,000 employees from 3,621 employees in 2008. In addition, the company has a flexibility to reduce average wages by up to 25% at expense of variable components as total wages had extraordinarily gone up throughout Russia and Kazakhstan in 2008.
Focus on improvement of profitability
Throughout 2009 C.A.T. oil will closely monitor market developments and cus-tomer demands and adjust its services and capacities accordingly. The Com-pany will moreover intensify its strict cost management and continue to im-prove capacity utilization. With respect to further expansion C.A.T. oil does not plan major investments - apart from one sidetrack drilling rig which is sched-uled for delivery by mid-2009. Capital expenditure will therefore remain way below historic levels as investments will concentrate on maintenance of the existing capacity in good working order.
In its operations C.A.T. oil will make best possible use of its strengths, i.e. of-fer integrated deployment solutions and high quality standards. In the currently difficult market environment, being a reliable partner for oil and gas producers is even more important and one key for C.A.T. oil to maintain its strong market position and to increase its leading role as service provider in the long-term. C.A.T. oil has almost finished its post-IPO investment cycle and will continue to operate from a strong equity base. It will thus continue its successful busi-ness strategy in 2009 to further develop the Company and prepare C.A.T. oil for new market opportunities and long-term future growth.
Key financial figures for fiscal year 2008 [in million EUR] 2008 2007 Change in % Revenues 276.2 222.6 24.1 Gross profit 48.7 56.8 -14.2 EBITDA 47.2 49.7 -5.1 EBITDA margin 17.1 22.3 EBIT 20.7 37.2 -44.3 EBIT margin 7.5 16.7 Net profit for period 2.6 22.7 -88.7 Earnings per share (in EUR) 0.05 0.46 -84.8
Balance sheet total 284,1 85,3 0.3 Equity 208.6 234.9 -11.1 Equity ratio 73.4 82.3 Capital expenditure 44.2 89.2
Cash flow from operating activities 25.2 21.1 19.4 Cash flow from investing activities -43.2 -89.4 Cash flow from financing activities 27.6 7.9 245.3 Cash and cash equivalents 14.4 15.0 4.3
Total job count 2,831 2,473 14.5 Per-job revenue (in thou. EUR) 98.0 90.0 8.5 Employees (average) 3,621 3,127 15.8
www.catoilag.com
Press contact: A&B Financial Dynamics Carolin Amann Lucie Kimmich Tel.: +49 (0)69 92037-132 Tel.: +49 (0)69 92037-183 Email: c.amann@abfd.de Email: l.kimmich@abfd.de
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 3,621 people at the end of 2008, most of whom are based in Russia and Kazakhstan. Customers include lead-ing 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 Ex-change since May 4, 2006, and has been a member of the SDax since September 18, 2006.
end of announcement euro adhoc
Further inquiry note:
Lucie Kimmich
Tel.: +49 (69) 920 37-183
E-Mail: l.kimmich@abfd.de
Branche: Oil & Gas - Upstream activities
ISIN: AT0000A00Y78
WKN: A0IKWU
Index: SDAX, Classic All Share, Prime All Share
Börsen: Börse Frankfurt / regulated dealing/prime standard