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C.A.T. Oil AG further improves profitability and earnings under abnormally harsh weather conditions

Published: May 31, 2010; 00:00 · (Vindobona)

C.A.T. oil AG (O2C, ISIN: AT0000A00Y78), one of the leading providers of oil and gas field services in Russia and Kazakhstan, today has published its results for the first quarter 2010.

C.A.T. Oil AG further improves profitability and earnings under abnormally harsh weather conditions / Picture: © C.A.T. Oil

- Revenue development impacted by rough weather conditions and changes in revenue mix
- Ongoing cost control and portfolio optimisation contribute to increased EBITDA and EBIT margins

C.A.T. oil AG (O2C, ISIN: AT0000A00Y78), one of the leading providers of oil and gas field services in Russia and Kazakhstan, today has published its results for the first quarter 2010. During the reporting period, C.A.T. oil, on the one hand, experienced positive effects from the global economic recovery; on the other hand, the Company faced adverse weather conditions in Western Siberia. As a consequence, the Company´s operational weather downtime days reached a historical high and had a negative impact on revenue development. Despite the climatic challenges, however, C.A.T. Oil was able to further improve its profitability and increase its EBITDA and EBIT margins.

Manfred Kastner, CEO of C.A.T. Oil, commented: "The first quarter is tradition-ally weaker due to the difficult winter weather in our core markets. With aver-age temperatures of minus 35 degrees Celsius in Western Siberia, representing the lowest levels since C.A.T. Oil went public, the first quarter 2010 has been exceptional. Our weather downtime days were nearly two and a half times as high as usual. The right combination of our expertise, state-of-the-art technology and efficiency was decisive for the performance in the first quarter. The fact that we were able to further increase our profitability during this extraordinary winter demonstrates that our ongoing efforts to optimise op-erations have paid off. C.A.T. Oil is operationally and financially very solid and well positioned to deliver additional growth in 2010."

Revenues impacted by lower job count and amended service mix

To meet customers´ demand more flexible and improve revenue mix, C.A.T. Oil is constantly optimising its service portfolio and capacities. In the first quarter 2010, the Company reduced its own capacities for low-margin auxiliary workover services as in the future these will be performed by external partners, if and where needed. C.A.T. Oil enjoyed solid demand for its core businesses in Q1 2010, with sidetrack drilling being growth driver number one, delivering a 100% YoY increase in job count.

In the reporting period, the total number of jobs declined by 7.3% YoY to 618 jobs (Q1 2009: 667 jobs), reflecting the reduced operational activities due to the weather and the streamlined service portfolio. At an average level of 41.4, the Rouble-to-Euro exchange rate was more favorable than in the previous year, but was not strong enough to offset the effects of the difficult weather conditions. In the reporting period, revenues declined by 12.4% YoY to EUR 47.1 million (Q1 2009: EUR 53.8 million) and average revenues per job decreased by 2.4% YoY to TEUR 74 (Q1 2009: TEUR 76), largely reflecting changes in hydraulic fracturing and sidetrack drilling revenue mix and lower seismic activities.

The cost of sales went down by 12.4% YoY to EUR 41.7 million (Q1 2009: EUR 47.6 million) - reflecting the reduced working day level as well as positive effects of the Company´s continued strict cost management. As part of C.A.T. Oil´s continued cost optimisation programme, general and administrative expenses were reduced by 5.7% YoY to EUR 4.2 million (Q1 2009: EUR 4.4 million); personnel expenses decreased by 13.9%, primarily reflecting the outsourcing of auxiliary functions and the adjustment of the work force to 2,557 employees (Q1 2009: 3,228).

Strong increase in EBIT and EBITDA

The successfully implemented measures to increase profitability are clearly visible in the Company´s income statement: earnings before interest, corporate tax, depreciation and amortization (EBITDA) increased by 11.9% YoY to EUR 9.1 million (Q1 2009: EUR 8.1 million), resulting in an improved EBITDA margin of 19.2% (Q1 2009: 15.0%). C.A.T. Oil´s earnings before interest and corporate tax (EBIT) rose by 40.6% YoY to EUR

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