EANS-News: C.A.T. oil continues its growth path in Q1 2014 despite challenging environment

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Subtitle: • Operating performance accelerated across all segments
despite harsh weather conditions in Western Siberia • Devaluation of
the Russian rouble by around 20% yoy impacts financial results:
Revenues down 8.3% yoy to EUR 90.7 million; EBITDA decreased by 13.1%
yoy to EUR 20.9 million • Sustained high profitability with EBITDA
margin of 23% • Net income up 32.1% yoy to EUR 9.5 million •
Investment program 2014-16 fully on track • CEO Manfred Kastner
reiterates outlook 2014: “With our clear goal in mind to achieve
sustainable growth and value generation, our view of 2014 remains
unchanged. We continue to expect revenues in the range of EUR 420 to
450 million and EBITDA of EUR 113 to 121 million.”

quarterly report

C.A.T. oil AG (O2C, ISIN: AT0000A00Y78),one of the leading providers
of oil and gas field services in Russia and Kazakhstan, continued its
growth path and accelerated its operating performance in the first
quarter of the year. Despite reporting 2.5 times higher
weather-related downtime days yoy, the Company increased its total
service job count as well as its drilling and sidetracking footage by
4.3% and 17.9% yoy, respectively. The Russian rouble, which the
prevailing majority of C.A.T. oil's service contracts are denominated
in, was persistently weak during the first three months of the year
and as such had an impact on the financial results of the Company.
Despite an 18.9% yoy rouble devaluation relative to the euro, the
first quarter revenues of C.A.T. oil contracted by only 8.3% yoy to
EUR 90.7 million (Q1 2013: EUR 98.9 million). Revenues in the first
quarter were bolstered by solid customer demand and high operating
activity levels. Although the EBITDA fell 13.1% yoy to EUR 20.9
million (Q1 2013: EUR 24.0 million), the EBITDA margin of 23.0%, down
by only 1.3 percentage points yoy, once again demonstrated the
Company's ability to operate on a highly profitable basis. As such,
C.A.T. oil confirms that the implementation of its 2014-16 investment
program of EUR 390 million is fully on track. The Company reiterates
its positive outlook for FY2014.

Manfred Kastner, CEO of C.A.T. oil, commented: "The first quarter
2014 marked a challenging, but successful start into the year for us.
With our clear goal in mind to achieve sustainable growth and value
generation, our view of 2014 remains unchanged. We continue to
deliver state-of-the-art services and strive to be a partner of
choice for our customers in our markets. Our 2014-16 expansion
program to further accommodate our customers growing demand for more
advanced services is well underway. We thus confidently reiterate our
guidance for 2014 and continue to expect revenues in the range of EUR
420 to 450 million and an EBITDA of EUR 113 to 121 million (based on
the average rouble-to-euro exchange rate of 48)."

Top-line development reflects the Russian rouble devaluation

In the first quarter 2014, C.A.T. oil faced two key challenges:
Extremely low temperature in Western Siberia during the months of
January and February, resulting in an abnormally high number of
downtime days, as well as a steep rouble devaluation which negatively
impacted the Company's financial results. The Company's consolidated
revenues contracted 8.3% yoy to EUR 90.7 million (Q1 2013: EUR 98.9
million). In rouble terms, however, C.A.T. oil increased its revenues
by 9.4% yoy. Despite the challenging environment, C.A.T. oil
continued its growth path and materially elevated its operating
activity levels across all reportable segments. The total job count
accelerated 4.3% yoy to 909 jobs (Q1 2013: 872 jobs), whereas the
average per job revenue declined 12.0% yoy to TEUR 100 (Q1 2013: TEUR
113) in the aftermath of the rouble devaluation.

The Company's Well Services segment's revenues decreased by 14.0% yoy
to EUR 47.0 million (Q1 2013: EUR 54.7 million). The segment's job
count staged an upturn of 4.0% yoy to 856 jobs (Q1 2013: 823 jobs)
driven by an increasing demand for multi-stage fracking services. The
average per job revenue was down by 17.3% yoy to TEUR 55 (Q1 2013:
TEUR 67) mainly owing to the negative foreign exchange effect.

Drilling, Sidetracking and IPM segment reported a decline in revenues
of 2.9% yoy to EUR 42.9 million (Q1 2013: EUR 44.2 million),
reflecting, on the one hand, a 17.9% yoy gain in the total drilling
and sidetracking footage to 70 thousand meters (Q1 2013: 59 thousand
meters) and, on the other hand, the devaluation effect. The segment's
job count was up 9.0% yoy to 53 wells and sidetracks (Q1 2013: 49
wells and sidetracks), whereas the share of horizontal wells and
sidetracks surged to 57% of the Company's overall drilling and
sidetracking mix (Q1 2013: 40%).

Tight cost control and high profitability

While dynamically growing its operating activity levels, C.A.T. oil
successfully managed its operating cost base. In the first three
months of the year, the Company's cost of sales went down 6.1% yoy to
EUR 76.2 million (Q1 2013: EUR 81.1 million). Given a 30% expansion
in C.A.T. oil's sidetracking capacity in 2013 along with the new
staff additions, the Company's total weighted average headcount rose
by 9.3% yoy to 2,837 employees (Q1 2013: 2,595 employees). With more
than 90% of the Company's operating costs in roubles, the effect of
the rouble devaluation on the Company's margins was minimal. However,
the steep rise in weather-related downtime days put a strain on the
margins. C.A.T. oil's earnings before interest, tax, depreciation and
amortization (EBITDA) diminished 13.1% yoy to EUR 20.9 million (Q1
2013: EUR 24.0 million). Nonetheless, the EBITDA margin stayed at a
high level of 23.0% (Q1 2013: 24.3%). The Company's earnings before
interest and tax (EBIT) decreased 16.1% to EUR 9.7 million (Q1 2013:
EUR 11.5 million), resulting in the EBIT margin of 10.7% (Q1 2013:
11.7%).

An impressive 32.1% yoy upturn in net income

The Company's net financial result improved to EUR 0.1 million from
EUR -1.6 million in Q1 2013, mainly due to the combined effect of
foreign currency gains of TEUR 4 (Q1 2013: losses of EUR 1.0 million)
and net interest income of EUR 0.1 million (Q1 2013: expenses of EUR
0.5 million). Based on the positive net financial result and a
significant contraction in income tax expenses, the Group's net
income surged 32.1% yoy to EUR 9.5 million in Q1 2014 (Q1 2013: EUR
7.2 million).

Solid financial foundation with headroom for further growth

Despite a steep yoy rouble devaluation, the Company's cash flow from
operating activities was down only 6.1% yoy to EUR 5.7 million in Q1
2014 (Q1 2013: EUR 6.1 million). Driven by successful execution of
the Company's 2014-16 investment program, capital expenditures surged
18.9% yoy to EUR 17.5 million (Q1 2013: EUR 14.7 million). Cash flow
from investing activities was a net outflow of EUR 17.3 million (Q1
2013: net outflow of EUR 14.0 million) and cash flow from financing
activities was a net inflow EUR 4.0 million (Q1 2013: net inflow of
EUR 3.7 million).

As of 31 March 2014, C.A.T. oil's cash and cash equivalents stood at
EUR 31.9 million, down 25.1% from EUR 42.6 million as of 31 December
2013. The Company had net cash of EUR 10.3 million as of 31 March
2014 compared to net cash of EUR 24.6 million as of 31 December 2013.
The Company's equity ratio remained solid and amounted to 70.1% as of
31 March 2014 (31 December 2014: 71.4%).

Investment program 2014-16 fully intact

In November 2013, C.A.T. oil announced its 2014-16 capital
expenditure plans of EUR 390 million. This investment program stays
fully intact. The Company will invest EUR 135 million in 2014 aiming
at expansion of the operating capacities by 67% for drilling, 18% for
sidetracking and 7% for fracking in the second half of the year.
Execution of the program and manufacturing of the ordered new
capacities are on schedule.

Supportive market environment

The Russian oilfield services market remains supportive to the
Company's expansionary plans as customers' demand for more complex
and technologically intense services accelerates. State-of-the-art
horizontal drilling and multi- stage fracking are amongst C.A.T.
oil's important selling propositions. Shift in customers' preferences
towards these services is perfectly mirrored by the Company's steeply
growing share of horizontal jobs in the total drilling and
sidetracking footage and multi-stage fracks in the total fracking job
count. This development demonstrates C.A.T. oil's advantageous
position in the market.

Outlook reiterated for FY2014

Since the publication of the FY2013 results on 23 April 2014, the
Company has been awarded additional service orders worth EUR 8
million for 2014 and EUR 18 million for 2015 (based on the average
rouble-to-euro exchange rate of 48). This, once again, shows the
customers' trust and confidence in C.A.T. oil. As a results, the
Company's 2014-16 total order book stands at EUR 780 million as of 27
May 2014 (28 May 2013: EUR 538 million for 2013-15). Thereof, the
2014 order book amounts to EUR 423 million (28 May 2013: EUR 400
million).

Based upon encouraging industry trends and a supportive operating
environment as well as the record order book the Company reiterates
its guidance: In Fiscal Year 2014 C.A.T. oil continues to expect
revenues in the range of EUR 420 to 450 million and EBITDA of EUR 113
to 121 million (based on the average rouble-to- euro exchange rate of
48).

www.catoilag.com

Press contact:

FTI Consulting
Thomas M. Krammer
Phone: +49 (0)69 92037-183
Email: thomas.krammer@fticonsulting.com

Steffi Fahjen
Phone: +49 (0)69 92037-115
Email: steffi.fahjen@fticonsulting.com

About C.A.T. oil AG: C.A.T. oil AG is one of the leading independent
oil and gas field service contractors in Russia and Kazakhstan and is
listed on the Frankfurt Stock Exchange (SDAX). C.A.T. oil provides a
range of high quality services, which enable oil and gas producers to
extend lifecycle of their fields or bring yet unexploited oil and gas
reserves to production. Since its foundation in 1991 in Celle,
Germany, C.A.T. oil has built up a leading hydraulic fracturing
service, a very effective method of well stimulation by cracking rock
formations with pressurized fluids, in Russia and Kazakhstan.
Following its IPO in 2006, the Company developed a second core
service of sidetrack drilling in 2006-08 and has established a strong
presence in Russia's sidetrack drilling market. Sidetrack drilling is
a term used to describe drilling of a new wellbore from the upper
section of an existing well. In 2011-12, the Company launched the
next phase of its growth and diversification strategy and set up high
class drilling operations as a third core service offering. High
class drilling is the classical technology of drilling vertical,
inclined and horizontal wells for extraction of oil and gas. In
total, the Company has already invested more than EUR 450 million in
growth and diversification since its IPO in 2006. Following the
successful set up of high class drilling in 2011-12, C.A.T. oil
introduced its new segment reporting in 2013 clustering its
activities in "Well Services" (fracturing, cementing and completion
operations) and "Drilling, Sidetracking and IPM (Integrated Project
Management)". C.A.T. oil's customer base includes the leading Russian
and Kazakh oil and gas producers such as Rosneft, Lukoil, Gazprom
Neft, Tomskneft VNK, Slavneft, Russneft and KazMunaiGaz. The Company
has long-standing relationships with these customers and has been a
reliable service provider since its market entrance in the early
nineties. C.A.T. oil has its headquarters in Vienna. The Company's Q1
2014 weighted average headcount stood at 2,837 people, most of which
are based in Russia and Kazakhstan.

Key financial figures for Q1 2014

[million EUR] Q1 2014 Q1 2013 Change (%)
Revenues 90.7 98.9 -8.3
Cost of sales 76.2 81.1 -6.1
Gross profit 14.6 17.8 -18.0
EBITDA 20.9 24.0 -13.1
EBITDA margin (%) 23.0 24.3
EBIT 9.7 11.5 -16.1
EBIT margin (%) 10.7 11.7
Net income 9.5 7.2 32.1
Earnings per share 0.194 0.147 32.1
(EUR)
Equity Ratio (%)[1] 70.1 71.4

Cash flow from 5.7 6.1 -6.1
operating activities
Cash flow from -17.3 -14.0 23.8
investing activities
Cash flow from 4.0 3.7 9.3
financing activities
Cash and cash 31.9 42.6 -25.1
equivalents1

Total job count 909 872 4.3
Per-job revenue 100 113 -12.0
(thou. EUR)
Employees 2,837 2,595 9.3

[1] As of 31 March 2014 and 31 December 2013 respectively

Further inquiry note:
Thomas Krammer
Tel: +49(0)69-92037-183
Email: thomas.krammer@fticonsulting.com

end of announcement euro adhoc
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company: C.A.T. oil AG
Kärntner Ring 11-13
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