C.A.T oil AG: Significant Increases in Investment and Core Services

C.A.T. oil AG, one of the leading providers of oil and gas field services in Russia and Kazakhstan, will invest EUR 390 million from 2014 to 2016, EUR 300 million dedicated to bring on stream new operating capacity and EUR 90 million for maintenance. The approved investment program suggests that by the end of 2016 operating capacities shall increase by 33% for fracturing, 55% for sidetracking and 170% for drilling compared to the end of 2013. Through this investment the Company shall not only materially enhance its operating activities and business scale but also develop a more balanced service portfolio.
- Capacity increase of EUR 300 million in addition to EUR 90 million for maintenance
- Significant expansion of operating capacity for all core services: fracturing by 33%, sidetracking by 55% and drilling by 170% by YE2016 from YE2013
- CEO Manfred Kastner: “Building upon the momentum that C.A.T. oil and the broader industry have enjoyed we will invest a further EUR 300 million to support our sustainable profitable growth in the upcoming three years.”

The total investment shall be split between the Company’s operating and reportable segments as follows: approximately 20% of the total capex will be allocated to Well Services and around 80% to Drilling, Sidetracking and IPM. The 2014-16 investment program aims at expanding significantly the Company’s business to meet the growing intensity and complexity of customers’ upstream operating activities.

A favorable product mix development combined with the Company’s efficient cost management should further improve profitability over the period. The Company will remain focused on its primary offering of fracturing, sidetracking and drilling services, though might undertake further expansion of its complementary services such as well completions should Russian producers expedite the development of tight oil resources in 2014-2016.

Manfred Kastner, C.A.T. oil CEO, commented: “Building upon the momentum that C.A.T. oil and the broader industry have enjoyed we will invest a further EUR 300 million to support our sustainable profitable growth in the upcoming three years. We will do so in a very flexible way tailored to the needs and short- to mid-term production plans of our customers. We have already proven our competence in rolling out expansion programs efficiently, economically and in a timely manner several times as witnessed by our successful diversification into sidetracking services in 2006-08 and drilling operations in 2011-12. Although we remain primarily adhered to our organic growth strategy, we continue screening selective M&A opportunities, which emerge from time to time in the Russian oilfield services market.”

The 2014-16 investment program constitutes the next phase of C.A.T. oil’s ambitious expansion strategy and follows the previous two investment cycles: In 2006-08 the Company invested more than EUR 100 million in sidetrack drilling thus successfully diversifying the Company’s service portfolio. With equal consistency and determination the Company undertook the 2011-12 investment program of EUR 150 million primarily aimed at expanding into high class drilling. The Company’s total investments in growth, diversification and maintenance of operating capacities amount to EUR 400 million since its IPO in 2006. Building on the experience gained in the past and positive market prospects for the Russian oil and gas industry, C.A.T. oil is more than confident in setting once again the right priorities for the future success and prosperity of the Company, its shareholders and employees.

The Company will finance its 2014-16 investment program through a combination of operating cash and long-term debt. Upon C.A.T. oil AG’s request, the Company’s majority shareholder CAT. Holding (Cyprus) Limited has expressed its consent to enlarge and extend until November 2018 the existing committed credit line of EUR 100 million on an arm’s length basis thus demonstrating its full commitment going forward. Despite significant investments in the next three years, C.A.T. oil foresees modest leverage, staying below its internal guidelines for the Debt-to-EBITDA ratio of less than 2.0 times.