EANS-News: Schoeller-Bleckmann Oilfield Equipment AG / - Persistently challenging market environment weighs on business results in Q1 2016 - Fundamentally sound balance sheet structure with high equit

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quarterly report

Ternitz/Vienna, 25 May 2016. Schoeller-Bleckmann Oilfield Equipment
AG (SBO), listed on the ATX market of the Vienna Stock Exchange, was
hit by the further decline of global drilling activity in the first
quarter of 2016 like the entire oilfield service industry. Throughout
the first quarter alone, the rig count went down by another 21 % to
1,551 rigs in March 2016, bringing the decrease to almost 60 % since
October 2014, in North America even to as much as almost 80 %.

Despite this extremely difficult environment, SBO generated a
positive free cash-flow and maintains a fundamentally sound balance
sheet structure. Due to its high liquidity, SBO is in a position to
pursue targeted investments within its long-term growth strategy even
in the current cycle, such as illustrated by the acquisition of
Downhole Technology LLC on 1 April 2016.

"The downturn is not over yet. Oil companies are continuously cutting
back on their spending for exploration and production (E&P) in 2016.
However, signs are increasingly pointing to a recovery of the oil
market. There are indications that the oversupply will go down in the
second half of the year: As a result of the massive cuts on spending,
production in North America and other non-OPEC countries has already
decreased. OPEC is largely producing at maximum level. At the same
time, demand is rising steadily," comments Gerald Grohmann, CEO of
SBO. "Our focus is on navigating SBO safely with consistent
countermeasures through the cycle. We are improving our cost base and
invest specifically in our growth so as to prepare the company to
fully benefit from the next upswing."

Results of Q1 2016

Reflecting the strong constraint of customers, bookings in the first
quarter of 2016 shrank by 28.8 % to MEUR 40.6 (1-3/2015: MEUR 57.1).
Sales went down by 56.5 % to MEUR 46.8 (1-3/2015: MEUR 107.5). In the
first quarter of 2015, SBO had still profited from record bookings
received in 2014. The order backlog at the end of the first quarter
of 2016 was MEUR 28.3, following MEUR 34.3 as at 31 December 2015 and
MEUR 91.7 as at 31 March 2015.

Earnings before interest, taxes, depreciation and amortisation
(EBITDA) was MEUR minus 4.8 (1-3/2015: MEUR 29.0). Earnings before
interest and taxes (EBIT) stood at MEUR minus 16.9 (1-3/2015: MEUR
16.1). These include one-off expenses for due diligence and
restructuring in the amount of MEUR 3.0. The quarterly non-cash-
effective valuation of option commitments of MEUR minus 2.8 was
reflected in the financial result. This concerned mainly the option
for acquiring 33 % of the shares in "Resource Well Completion
Technologies Inc.", bringing the financial result to MEUR minus 3.3
(1-3/2015: MEUR minus 1.6). Profit before tax stood at MEUR minus
20.2 (1-3/2015: MEUR 14.5). Profit after tax came to MEUR minus 15.0
(1-3/2015: MEUR 10.4). Earnings per share arrived at EUR minus 0.94
(1-3/2015: EUR 0.65).

Despite the very difficult market conditions, SBO generated a
positive free cash-flow in the amount of MEUR 3.8 in the first
quarter of 2016 (1-3/2015: MEUR 28.6). The company has a profoundly
strong balance sheet structure: SBO's equity ratio as at 31 March was
57.1 % (31 December 2015: 60.8 %), liquid funds stood at MEUR 224.9
(31 December 2015: MEUR 196.3) and the net cash position at MEUR 24.2
(31 December 2015: MEUR 26.2). Based on its sound balance sheet
structure, SBO was in the position to acquire 68 % (rounded) of the
shares in "Downhole Technology LLC" at a purchase price of MUSD 102.9
(or MEUR 90.4 at the relevant date) at the beginning of the second
quarter of 2016.

Outlook

The downturn hitting the oilfield service industry since the fourth
quarter of 2014 is not over yet. Crucial will be how long the
considerable oversupply of the crude market will last. It is only a
matter of time that the massive cuts on E&P spending and the decline
of global drilling activity will lead to a situation where the rising
demand will not be met any more. At this point, new spending will be
required. Past experience in the oilfield service industry has told
us one thing: The sharper and longer the downturn, the steeper the
next upswing usually is.

There are some indications that the oversupply in the oil market will
decrease during the second half of the year, and supply and demand
will gradually move towards reaching a stable balance: Market
observers expect to see a production decline in 2016 of 0.5 mb/d for
North America and of 0.8 mb/d for non-OPEC countries (including North
America). In the first quarter of 2016, the decline in non-OPEC
countries was already stronger. At the same time, current
expectations are that global demand should go up by 1.2 mb/d.
Quarter-on- quarter, the rise was even 1.4 mb/d (1-3/2015 vs
1-3/2016).

With its strong cash balance and high equity ratio, SBO is prepared
even for a lengthy downturn. The company will continue the measures
initiated in 2014 and 2015 to combat the decline in 2016:
Cost-cutting programmes will further be implemented consistently and
capacities adjusted to the market situation. Site optimisation in the
United States will be completed by mid-year. The strategy to develop
new markets for the products of SBO in the Oilfield Equipment segment
will be continued.

Following the acquisition of Canada-based "Resource Well Completion
Technologies Inc." (Resource) in November 2014, SBO took over
US-based "Downhole Technology LLC" (Downhole Technology) on 1 April
2016. With Resource and Downhole Technology, SBO now has become a
leading provider of products in the fields of "sliding sleeve" and
"plug-n-perf", the two dominating Completion technologies.

Based on targeted spending to expand the Completion segment and the
consistent implementation of ongoing restructuring activities, SBO
will, as technology and market leader, be well prepared to fully
benefit from the next upswing.

Comparison of key figures

_____________________________________________________________________
_________ | | | 1-3/2016|
1-3/2015| Change in %| |Key_figures:__|_______________|___________
____|_______________|_______________| |Sales_________|___________MEUR
|___________46.8|__________107.5|__________-56.5|

|Earnings | | | | |
|before | | | | |
|interest, | | | | |
|taxes, | MEUR| -4.8| 29.0| N.A.|
|depreciation | | | | |
|and | | | | |
|amortisation | | | | |
|(EBITDA)______|_______________|_______________|_______________|_______________|
|EBITDA_margin_|______________%|__________-10.2|___________27.0|_______-_______|
|EBIT__________|___________MEUR|__________-16.9|___________16.1|___________N.A.|
|EBIT_margin___|______________%|__________-36.1|___________15.0|_______-_______|

|Profit before | MEUR| -20.2| 14.5|
N.A.| |tax___________|_______________|_______________|_______________
|_______________| |Profit after | MEUR| -15.0|
10.4| N.A.| |tax___________|_______________|_______________
|_______________|_______________| |Earnings per | EUR|
-0.94| 0.65| N.A.|

|share_________|_______________|_______________|_______________|_______________|
|Free_cash-flow|___________MEUR|____________3.8|___________28.6|__________-86.8|
|Headcount_____|_______________|__________1,062|__________1,534|__________-30.8|

Schoeller-Bleckmann Oilfield Equipment AG is the global market leader
in high- precision components and a leading supplier of oilfield
equipment for the oilfield service industry. The business focus is on
non-magnetic drillstring components and high-tech downhole tools for
drilling and completing directional and horizontal wells. As of 31
March 2016, SBO has employed a workforce of 1,062 worldwide (31 March
2015: 1,534), thereof 334 in Ternitz/Austria and 378 in North America
(including Mexico).

Further inquiry note:
Andreas Böcskör, Head of Investor Relations
Schoeller-Bleckmann Oilfield Equipment AG
A-2630 Ternitz, Hauptstraße 2
Tel: +43 2630/315 DW 252, Fax: DW 101
E-Mail: a.boecskoer@sbo.co.at

end of announcement euro adhoc
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company: Schoeller-Bleckmann Oilfield Equipment AG
Hauptstrasse 2
A-2630 Ternitz
phone: 02630/315110
FAX: 02630/315101
mail: sboe@sbo.co.at
WWW: http://www.sbo.at
sector: Oil & Gas - Upstream activities
ISIN: AT0000946652
indexes: WBI, ATX Prime, ATX
stockmarkets: official market: Wien
language: English