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Schoeller-Bleckmann Oilfield Equipment AG / - Persistently challenging market environment weighs on business results in Q1 2016 -Fundamentally sound balance sheet structure with high equity ratio - Acquisitionof Downhole Technology strengthens position

Published: May 25, 2016; 07:30 · (Vindobona)

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.

Schoeller-Bleckmann Oilfield Equipment AG / - Persistently challenging market environment weighs on business results in Q1 2016 -Fundamentally sound balance sheet structure with high equity ratio - Acquisitionof Downhole Technology strengthens position / Picture: © Vindobona.org

 

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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

Digital press kit: http://www.ots.at/pressemappe/2917/aom

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