C.A.T. oil 2012: Convincing Top and Bottom Line Growth on Lucrative Business Expansion and Diversification

C.A.T. oil AG (O2C, ISIN: AT0000A00Y78),one of the
leading providers of oil and gas field services in Russia and
Kazakhstan, today announced its results for the Fiscal Year 2012. The
Company′s top and bottom line soared to new historic highs on the back
of swift business growth and diversification. C.A.T. oil increased its
revenues by 20.0% yoy to EUR 336.8 million (2011: EUR 280.7 million),
thereby exceeding its revenue target range of EUR 300 to 320 million.
Moreover, the Company substantially strengthened its profitability, and
confidently surpassed its 2012 EBITDA guidance of EUR 67 to 73 million:
EBITDA rose by 46.5% yoy to EUR 80.0 million (2011: EUR 54.6 million).
The EBITDA margin expanded to 23.8% from 19.5% in the previous year.

2012 was a very successful year, also from an operational point of view:
Having proficiently accomplished its 2011-12 investment program, C.A.T.
oil has successfully built up its third core service, high class
drilling, and reinforced its already strong sidetracking and fracturing
platforms. Nine new state-of-the-art drilling rigs were gradually put
into operations and contributed to the Company′s outstanding performance
in 2012.

Manfred Kastner, C.A.T. oil′s CEO, commented: 'Growth is important and
growth is what we all strive for. But this is only one side of the coin.
The other, and even more important one, is profitability. Prosperous
companies manage to combine both and that is what C.A.T. oil did.
Clearly keeping our objectives for 2012 in view we managed to push our
revenues and our EBITDA to EUR 336.8 million and EUR 80.0 million,
respectively. We have thus surpassed our goals for 2012. Additionally we
bolstered our profitability and significantly broadened our EBITDA
margin. But what really makes 2012 a special year is that at the same
time we very efficiently expanded and diversified our business into high
class drilling. We have concluded a crucial phase in our Company′s
history rounding up our service portfolio thus being in a better
position to take advantage of the market opportunities than ever before.?

Revenues up 20% mainly due to the greater job size and complexity

During the reporting period the Company′s revenues topped at EUR 336.8
million, up 20.0% yoy compared to EUR 280.7 million in 2011 driven by a
2.3% yoy rise in the service job count to 3,444 jobs (2011: 3,366 jobs)
and a simultaneous increase in the average per job revenue by 17.1% yoy
to TEUR 97.0 (2011: TEUR 82.9). A strong customers′ demand, the greater
job size and complexity and a favorable pricing mix contributed to this
development. Apart from that, the new high class drilling service
successively generated first profitable contributions to the Company′s
top line growth in the course of the year.

Cost base lagged behind the top-line growth on efficiency gains

In 2012, C.A.T. oil′s cost of sales went up 16.4% yoy to EUR 282.7
million (2011: EUR 242.8 million) driven by the Company′s strong
business expansion, in particular the higher operating activity levels,
the greater job size and complexity and the set up of the new high class
drilling service. The Company reduced its direct costs by 9.4% yoy to
83.3 million (2011: EUR 92.0. million) primarily due to the improved
efficiency of its sidetracking operations on a turnkey basis and thus
the lower third party costs. Depreciation expense rose by 26.2% yoy to
EUR 47.9 million (2011: EUR 38.0 million) mainly owing to expansion of
the Company′s operating capacities. As a result of the Company′s fast
business expansion during the reporting period, general and
administrative expenses went up 10.7% yoy to EUR 21.6 million (2011: EUR
19.5 million). The total weighted average headcount grew by 6.9% yoy to
2,522 employees in 2012 (2011: 2,360 employees) primarily due to
additional hires for the new drilling business.

Significant growth in EBITDA and EBITDA margin expansion

The Company′s earnings before interest, tax, depreciation and
amortization (EBITDA) climbed 46.5% yoy to a new peak of EUR 80.0
million in the financial year 2012 (2011: EUR 54.6 million). The EBITDA
margin substantially widened to 23.8% compared to 19.5% in the previous
year. The improved profitability stems from a combination of the strong
revenue growth and the Company′s more favorable service mix as well as
its tight and efficient cost management during the reporting period.

Despite the higher depreciation expense, C.A.T. oil posted a 93.4% yoy
boost to its earnings before interest and tax (EBIT) to EUR 32.2 million
(2011: EUR 16.6 million) with the EBIT margin rising to 9.5% (2011:
5.9%).

Net income up 210.9% yoy

C.A.T. oil′s strong operational performance is further underlined by a
210.9% yoy increase in the Company′s net income to EUR 21.0 million
(2011: EUR 6.8 million). The net financial result improved to EUR -2.3
million in 2012 compared to -6.2 million in the previous year,
reflecting foreign currency exchange gains of EUR 0.8 million (2011:
losses of EUR 5.0 million) as well as net interest expenses of EUR 3.0
million (2011: EUR 1.2 million).

Solid balance sheet

The Company′s funds from operations rose by 61.0% yoy to EUR 74.7
million in 2012 (2011: EUR 46.4 million) and cash flow from operating
activities was up by 181.8% yoy to EUR 83.9 million (2011: EUR 29.8
million). With the bulk of the Company′s 2011-12 expansion program
successfully executed in 2011, capital expenditures decreased by 65.9%
yoy to EUR 37.7 million during the reporting period (2011: EUR 110.6
million). As a result, C.A.T. oil′s free cash flow was a net cash inflow
of EUR 48.6 million in 2012 compared to a net outflow of EUR 78.2
million in the previous year. The Company′s cash flow from investing
activities was a net outflow of EUR 35.3 million (2011: net outflow of
EUR 108.0 million). Mainly driven by an early redemption of long-term
borrowings and an increase in cash dividend paid, cash flow from
financing activities was a net outflow of EUR 39.4 million (2011: net
inflow of EUR 73.7 million).

As of 31 December 2012, cash and cash equivalents advanced to EUR 38.8
million (31 December 2011: EUR 30.4 million). The Company′s net debt was
down 76.7% to EUR 11.8 million (31 December 2011: EUR 50.5 million). At
the same time the Company once again strengthened its balance sheet with
an equity ratio rising to 67.0% as of 31 December 2012 (31 December
2011: 62.3%).

Proposal for a 100% yoy increase in dividend per share to EUR 0.25

At the AGM on 14 June 2013 the Management and Supervisory Board will
propose a dividend of EUR 0.25 per share for 2012. This represents an
increase of 100% compared to the last year and a profit distribution of
58%.

Promising outlook for 2013

Based on the vigorous performance in 2012, C.A.T. oil is very confident
in its outlook for the current Fiscal Year. Despite feeble global
economic growth, Company′s home markets, Russia and Kazakhstan, still
bear material upside potential for oil and gas field service companies:
As the global oil consumption continues to grow, the outlook for the oil
price and, therefore, upstream activities remain positive. Besides that,
Russian oil and gas producers are expected to further boost their
upstream investments that should result in the higher demand for oil and
gas field services and support the Company′s profitable growth going
forward.

C.A.T. oil reiterates its EUR 45 million capital expenditure program for
2013 aiming at expansion of operating capacities by approximately 30%
for sidetracking and 10% for fracturing by the second half of 2013 to
address a positive outlook for the Russian oilfield service market
expansion and customers′ strong demand for the Company′s services.

The Company′s positive view of the current year′s business prospects
resides upon buoyant results of the 2013 tendering campaign. As of 25
April 2013, the Company′s order book for 2013 stood at EUR of 392
million (based on a rouble-to-euro exchange rate of 40), an increase of
38% yoy. Moreover, the Company has already secured long-term service
orders, resulting in a total order book of EUR 530 million, up 64% yoy,
for a three-year period of 2013-15.

Based on these sturdy fundamentals, C.A.T. oil projects its FY2013
revenues in a range of EUR 405 to 425 million and EBITDA ranging from
EUR 95 to 105 million (based on a rouble-to-euro exchange rate of 40).

www.catoilag.com

¹ As of 31 December 2012 and 31 December 2011 respectively

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