EANS-News: C.A.T. oil AG / C.A.T. oil successfully boosts earnings and profitability in Q2 2014

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Subtitle: • Revenues up 1.0% yoy to EUR 112.4 million despite rouble
devaluation • EBITDA growth of 18.8% yoy to EUR 34.1 million •
Excellent profitability with the EBITDA margin of 30.3% • Net income
surged 12.5% yoy to EUR 15.8 million • CEO Manfred Kastner: “We
remain fully committed to our operations and customers and will
further grow our business in the second half of this year. We
reiterate our 2014 guidance and remain adhered to our expansion
plans.”

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, significantly
boosted its earnings and profitability in the second quarter of the
year. Despite the increased political uncertainties, C.A.T. oil
experienced a very strong upturn in customers' demand for its
services and further increased operating activity levels in Western
Siberia and Kazakhstan.

Manfred Kastner, CEO of C.A.T. oil, commented: "Although the
political environment deteriorated, we fully concentrated on our
operations in the second quarter. After challenges arising from
abnormally cold weather in the first quarter, our operations picked
up considerably in the second quarter both seasonally and compared to
the same period of the previous year. Although we expect
macroeconomic and political environment to remain volatile, we are
confident in C.A.T. oil's performance going forward. We have not been
active in business activities restricted by the EU and the US
sanctions for Russian oil industry and have no plans to change our
business model. We remain fully committed to our operations and
customers and will further grow our business in the second half of
this year. We reiterate our 2014 guidance and remain adhered to our
expansion plans."

Double digit revenue growth in local currency

The Russian rouble, which the prevailing majority of C.A.T. oil's
service contracts are denominated in, devaluated by almost 18% yoy
against the Euro in the first half of the year. In Q2 2014, the total
service job count increased by 15.5% yoy to 1,148 jobs (Q2 2013: 994
jobs) but the average per job revenue declined 12.5% yoy to TEUR 98
(Q2 2013: TEUR 112) due to the lower value of the rouble. Despite
significantly higher operating activity levels, the Company's
revenues thus edged up only 1.0% yoy to EUR 112.4 million in Q2 (Q2
2013: EUR 111.2 million) and were down 3.3% yoy to EUR 203.1 million
in H1 2014 (H1 2013: EUR 210.1 million). In local currency, however,
the revenues improved by 19% in Q2 and 14% in H1 2014.

Operating activities up across all segments

Well Services' revenues stayed effectively flat yoy at EUR 58.3
million in Q2 2014 (Q2 2013: EUR 58.5 million). Driven by a strong
expansion of the fracturing operations, the segment's job count rose
by 15.7% yoy to 1,077 jobs (Q2 2013: 931 jobs). The average per job
revenue diminished 13.9% yoy to TEUR 54 (Q2 2013: TEUR 63),
reflecting the rouble devaluation. The share of multi-stage
fracturing jobs in the total fracturing job count rose to 24% in Q2
2014 (Q2 2013: 17%).

Drilling, Sidetracking and IPM's revenues increased by 3.3% to EUR
53.5 million in Q2 2014 (Q2 2013: EUR 51.8 million). Thereby, the
higher operating activity levels contributed to compensate negative
currency effects. The segment reported a 12.3% yoy gain in the job
count to 71 wells and sidetracks (Q2 2013: 63 jobs) and a significant
expansion in the total drilling and sidetracking footage by 46.7% to
109.1 thousand meters (Q2 2013: 74.4 thousand meters).

High profitability with the EBITDA margin of 30.3%

C.A.T. oil significantly strengthened its earnings power and
profitability due to the higher capacity utilization and efficiency
gains, on the one hand, and the lower cost base, on the other hand.
Cost of sales decreased by 5.4% yoy to EUR 84.7 million in Q2 (Q2
2013: EUR 89.5 million) and 5.7% yoy to EUR 160.9 million in H1 2014
(H1 2013: EUR 170.7 million).

Earnings before interest, tax, depreciation and amortization (EBITDA)
elevated by 18.8% yoy to EUR 34.1 million in Q2 2014 (Q2 2013: EUR
28.7 million), with the EBITDA margin expanding to 30.3% (Q2 2013:
25.8%). In H1 2014, EBITDA rose by 4.3% yoy to EUR 54.9 million (H1
2013: EUR 52.7 million) and the EBITDA margin widened to 27.0%
compared to 25.1% a year ago.

Earnings before interest and tax (EBIT) grew even stronger, by 44.1%
yoy to EUR 22.6 million in Q2 2014 (Q2 2013: EUR 15.7 million) and
the EBIT margin broadened to 20.1% (Q2 2013: 14.1%). In H1 2014, EBIT
staged an 18.6% yoy increase to EUR 32.3 million (H1 2013: EUR 27.2
million), bringing the EBIT margin to 15.9% (H1 2013: 13.0%).

As of 30 June 2014, C.A.T. oil employed 2,873 (H1 2013: 2,641)
people. The increase in the headcount by 8.8% yoy reflected new hires
in the Drilling, Sidetracking and IPM segment.

Significantly increased net income

The Group's net income advanced by 12.5% yoy to EUR 15.8 million in
Q2 (Q2 2013: EUR 14.0 million) and 19.1% yoy to EUR 25.3 million in
H1 2014 (H1 2013: EUR 21.2 million).

Robust balance sheet

Funds from operations grew by 39.3% yoy to EUR 30.9 million in Q2
2014 (Q2 2013: EUR 22.2 million) and 11.3% yoy to EUR 48.8 million in
H1 2014 (H1 2013: EUR 43.8 million) due to the higher profit before
tax and the lower negative effects of other non-cash positions
compared to the respective reporting periods in 2013. Cash flow from
operating activities diminished by 50.0% yoy to EUR 20.8 million in
the second quarter (Q2 2013: EUR 41.5 million) and 44.4% yoy to EUR
26.4 million in the first half of the year (H1 2013: EUR 47.6
million), reflecting a higher level of net working capital. Scheduled
payments for the ordered operating capacities led to an increase in
capital expenditures by 49.7% yoy to EUR 24.6 million in Q2 2014 (Q2
2013: EUR 16.4 million) and 35.1% yoy to EUR 42.1 million in H1 2014
(H1 2013: EUR 31.1 million). Cash flow from investing activities
represented a net outflow of EUR 24.3 million in Q2 2014 (Q2 2013:
EUR 15.1 million) and EUR 41.7 million in H1 2014 (H1 2013: EUR 29.1
million). Cash flow from financing activities was a net inflow of EUR
10.3 million (Q2 2013: net outflow of EUR 10.4 million) and EUR 14.3
million in H1 2014 (H1 2013: net outflow of EUR 6.8 million).

As of 30 June 2014, cash and cash equivalents were down 4.7% to EUR
40.6 million from EUR 42.6 million as of 31 December 2013. C.A.T. oil
maintained a solid balance sheet with an equity ratio of 61.7% as of
30 June 2014 (31 December 2013: 71.4%).

Adherence to the 2014-16 investment program despite increased
political uncertainties

In early August, C.A.T. oil assessed the EU and USA sanctions imposed
on the Russian oil industry. Based on the initial assessments, C.A.T.
oil concludes that the export controls neither jeopardize its
business model nor impact its expansion plans. Therefore, C.A.T. oil
remains adhered to execution of its 2014- 16 investment program of
EUR 390 million in a timely and disciplined manner. For the current
year, C.A.T. oil budgeted EUR 135 million in growth and maintenance
capital expenditures. As the manufacturing schedules for the ordered
equipment remain unchanged, C.A.T. oil continues anticipating the new
operating capacities to be delivered to Russia before the yearend.

Management reiterates the outlook as market fundamentals stay solid

Despite the challenging geopolitical environment, C.A.T. oil sees
high activity levels among its customers with the ongoing strong
demand for complex and technologically sophisticated services. C.A.T.
oil has been able to win additional tenders, bringing the 2014-16
total order book to EUR 785 million as of 28 August 2014 (27 May
2014: EUR 780 million).

Based on the solid operating and financial performance during the
first six months of 2014, C.A.T. oil has confidently entered the
second half of the year. The Company management believes that strong
fundamentals of the Russian OFS market should enable C.A.T. oil to
further expand its business going forward. C.A.T. oil reiterates its
guidance for 2014 and continues projecting revenues of EUR 420
million to EUR 450 million and EBITDA of EUR 113 million to EUR 121
million (based on the average rouble-to-euro exchange rate of 48).

www.catoilag.com

Press contact:
FTI Consulting
Carolin Amann
Phone: +49 (0)69 92037-132
Email: carolin.amann@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 H1 2014
weighted average headcount stood at 2,873 people, most of which are
based in Russia and Kazakhstan.

Key financial figures for H1 2014

[million EUR] H1 2014 H1 2013 Change (%)
Revenues 203.1 210.1 -3.3
Cost of sales 160.9 170.7 -5.7
Gross profit 42.2 39.5 6.9
EBITDA 54.9 52.7 4.3
EBITDA margin (%) 27.0 25.1
EBIT 32.3 27.2 18.6
EBIT margin (%) 15.9 13.0
Net income 25.3 21.2 19.1
Earnings per share (EUR) 0.52 0.43
Equity Ratio (%)[1] 61.7 71.4

Cash flow from 26.4 47.6 -44.4
operating activities
Cash flow from -41.7 -29.1 43.0
investing activities
Cash flow from 14.3 -6.8 >-100
financing activities
Cash and cash 40.6 53.2 -23.6
equivalents [1]

Total job count 2,057 1,866 10.2
Per-job revenue(TEUR) 99 113 -12.3
Employees 2,873 2,641 8.8

[1] As of 30 June 2014 and 31 December 2013 respectively

Key financial figures for Q2 2014

[in million EUR] Q2 2014 Q2 2013 Change (%)
Revenues 112.4 111.2 1.0
Cost of sales 84.7 89.5 5.4
Gross profit 27.7 21.7 27.4
EBITDA 34.1 28.7 18.8
EBITDA margin (%) 30.3 25.8
EBIT 22.6 15.7 44.1
EBIT margin (%) 20.1 14.1
Net income 15.8 14.0 12.5
Earnings per share (EUR) 0.32 0.29

Cash flow from 20.8 41.5 -50.0
operating activities
Cash flow from -24.3 -15.1 60.7
investing activities
Cash flow from 10.3 -10.5 >-100
financing activities

Total job count 1,148 994 15.5
Per-job revenue (TEUR) 98 112 -12.5

Further inquiry note:
Carolin Amann Tel: +49(0)69-92037-132 Email: carolin.amann@fticonsulting.com
Steffi Fahjen Tel: +49(0)69-92037-115 Email: steffi.fahjen@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