C A T oil : successfully boosts earnings and profitability in Q2 2014

 Revenues up 1.0% yoy to EUR 112.4 million despite rouble deval- uation

 EBITDA growth of 18.8% yoy to EUR 34.1 million

 Excellent profitability with the EBITDA margin of 30.3%

 Net income surged 12.5% yoy to EUR 15.8 million

 CEO Manfred Kastner: "We remain fully committed to our opera- tions and customers and will further grow our business in the second half of this year. We reiterate our 2014 guidance and re- main adhered to our expansion plans."

Manfred Kastner, CEO of C.A.T. oil, commented: "Although the political envi- ronment deteriorated, we fully concentrated on our operations in the second quarter. After challenges arising from abnormally cold weather in the first quar- ter, our operations picked up considerably in the second quarter both season- ally and compared to the same period of the previous year. Although we ex- pect macroeconomic and political environment to remain volatile, we are con- fident in C.A.T. oil's performance going forward. We have not been active in business activities restricted by the EU and the US sanctions for Russian oil industry and have no plans to change our business model. We remain fully committed to our operations and customers and will further grow our business in the second half of this year. We reiterate our 2014 guidance and remain adhered to our expansion plans."

The Russian rouble, which the prevailing majority of C.A.T. oil's service con- tracts are denominated in, devaluated by almost 18% yoy against the Euro in the first half of the year. In Q2 2014, the total service job count increased by
15.5% yoy to 1,148 jobs (Q2 2013: 994 jobs) but the average per job revenue declined 12.5% yoy to TEUR 98 (Q2 2013: TEUR 112) due to the lower value of the rouble. Despite significantly higher operating activity levels, the Compa- ny's revenues thus edged up only 1.0% yoy to EUR 112.4 million in Q2 (Q2
2013: EUR 111.2 million) and were down 3.3% yoy to EUR 203.1 million in H1
2014 (H1 2013: EUR 210.1 million). In local currency, however, the revenues improved by 19% in Q2 and 14% in H1 2014.

Well Services' revenues stayed effectively flat yoy at EUR 58.3 million in Q2
2014 (Q2 2013: EUR 58.5 million). Driven by a strong expansion of the fractur- ing operations, the segment's job count rose by 15.7% yoy to 1,077 jobs (Q2
2013: 931 jobs). The average per job revenue diminished 13.9% yoy to TEUR
54 (Q2 2013: TEUR 63), reflecting the rouble devaluation. The share of multi- stage fracturing jobs in the total fracturing job count rose to 24% in Q2 2014 (Q2 2013: 17%).
Drilling, Sidetracking and IPM's revenues increased by 3.3% to EUR 53.5 mil- lion in Q2 2014 (Q2 2013: EUR 51.8 million). Thereby, the higher operating activity levels contributed to compensate negative currency effects. The seg- ment reported a 12.3% yoy gain in the job count to 71 wells and sidetracks (Q2 2013: 63 jobs) and a significant expansion in the total drilling and side- tracking footage by 46.7% to 109.1 thousand meters (Q2 2013: 74.4 thousand meters).

C.A.T. oil significantly strengthened its earnings power and profitability due to the higher capacity utilization and efficiency gains, on the one hand, and the lower cost base, on the other hand. Cost of sales decreased by 5.4% yoy to

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EUR 84.7 million in Q2 (Q2 2013: EUR 89.5 million) and 5.7% yoy to EUR
160.9 million in H1 2014 (H1 2013: EUR 170.7 million).
Earnings before interest, tax, depreciation and amortization (EBITDA) elevat- ed by 18.8% yoy to EUR 34.1 million in Q2 2014 (Q2 2013: EUR 28.7 million), with the EBITDA margin expanding to 30.3% (Q2 2013: 25.8%). In H1 2014, EBITDA rose by 4.3% yoy to EUR 54.9 million (H1 2013: EUR 52.7 million) and the EBITDA margin widened to 27.0% compared to 25.1% a year ago.
Earnings before interest and tax (EBIT) grew even stronger, by 44.1% yoy to EUR 22.6 million in Q2 2014 (Q2 2013: EUR 15.7 million) and the EBIT mar- gin broadened to 20.1% (Q2 2013: 14.1%). In H1 2014, EBIT staged an
18.6% yoy increase to EUR 32.3 million (H1 2013: EUR 27.2 million), bringing the EBIT margin to 15.9% (H1 2013: 13.0%).
As of 30 June 2014, C.A.T. oil employed 2,873 (H1 2013: 2,641) people. The increase in the headcount by 8.8% yoy reflected new hires in the Drilling, Sidetracking and IPM segment.

The Group's net income advanced by 12.5% yoy to EUR 15.8 million in Q2 (Q2 2013: EUR 14.0 million) and 19.1% yoy to EUR 25.3 million in H1 2014 (H1 2013: EUR 21.2 million).

Funds from operations grew by 39.3% yoy to EUR 30.9 million in Q2 2014 (Q2
2013: EUR 22.2 million) and 11.3% yoy to EUR 48.8 million in H1 2014 (H1
2013: EUR 43.8 million) due to the higher profit before tax and the lower nega- tive effects of other non-cash positions compared to the respective reporting periods in 2013. Cash flow from operating activities diminished by 50.0% yoy to EUR 20.8 million in the second quarter (Q2 2013: EUR 41.5 million) and
44.4% yoy to EUR 26.4 million in the first half of the year (H1 2013: EUR 47.6 million), reflecting a higher level of net working capital. Scheduled payments for the ordered operating capacities led to an increase in capital expenditures
by 49.7% yoy to EUR 24.6 million in Q2 2014 (Q2 2013: EUR 16.4 million) and

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35.1% yoy to EUR 42.1 million in H1 2014 (H1 2013: EUR 31.1 million). Cash flow from investing activities represented a net outflow of EUR 24.3 million in Q2 2014 (Q2 2013: EUR 15.1 million) and EUR 41.7 million in H1 2014 (H1
2013: EUR 29.1 million). Cash flow from financing activities was a net inflow of EUR 10.3 million (Q2 2013: net outflow of EUR 10.4 million) and EUR 14.3 million in H1 2014 (H1 2013: net outflow of EUR 6.8 million).
As of 30 June 2014, cash and cash equivalents were down 4.7% to EUR 40.6 million from EUR 42.6 million as of 31 December 2013. C.A.T. oil maintained a solid balance sheet with an equity ratio of 61.7% as of 30 June 2014 (31 De- cember 2013: 71.4%).

In early August, C.A.T. oil assessed the EU and USA sanctions imposed on the Russian oil industry. Based on the initial assessments, C.A.T. oil con- cludes that the export controls neither jeopardize its business model nor im- pact its expansion plans. Therefore, C.A.T. oil remains adhered to execution of its 2014-16 investment program of EUR 390 million in a timely and disci- plined manner. For the current year, C.A.T. oil budgeted EUR 135 million in growth and maintenance capital expenditures. As the manufacturing sched- ules for the ordered equipment remain unchanged, C.A.T. oil continues antici- pating the new operating capacities to be delivered to Russia before the year- end.

Despite the challenging geopolitical environment, C.A.T. oil sees high activity levels among its customers with the ongoing strong demand for complex and technologically sophisticated services. C.A.T. oil has been able to win addi- tional tenders, bringing the 2014-16 total order book to EUR 785 million as of
28 August 2014 (27 May 2014: EUR 780 million).
Based on the solid operating and financial performance during the first six months of 2014, C.A.T. oil has confidently entered the second half of the year.

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The Company management believes that strong fundamentals of the Russian OFS market should enable C.A.T. oil to further expand its business going for- ward. C.A.T. oil reiterates its guidance for 2014 and continues projecting reve- nues of EUR 420 million to EUR 450 million and EBITDA of EUR 113 million to EUR 121 million (based on the average rouble-to-euro exchange rate of
48).
www.catoilag.com

FTI Consulting

Carolin Amann

Phone: +49 (0)69 92037-132

Email: carolin.amann@fticonsulting.com

Steffi Fahjen

Phone: +49 (0)69 92037-115

Email: steffi.fahjen@fticonsulting.com

C.A.T. oil AG is one of the leading independent oil and gas field service contractors in Russia and Kazakhstan and is listed on the Frankfurt Stock Exchange (SDAX). C.A.T. oil provides a range of high quality services, which enable oil and gas producers to extend lifecycle of their fields or bring yet unexploited oil and gas reserves to produc- tion.

Since its foundation in 1991 in Celle, Germany, C.A.T. oil has built up a leading hy- draulic fracturing service, a very effective method of well stimulation by cracking rock formations with pressurized fluids, in Russia and Kazakhstan. Following its IPO in

2006, the Company developed a second core service of sidetrack drilling in 2006-08 and has established a strong presence in Russia's sidetrack drilling market. Sidetrack drilling is a term used to describe drilling of a new wellbore from the upper section of an existing well. In 2011-12, the Company launched the next phase of its growth and diversification strategy and set up high class drilling operations as a third core service offering. High class drilling is the classical technology of drilling vertical, inclined and horizontal wells for extraction of oil and gas. In total, the Company has already invest- ed more than EUR 450 million in growth and diversification since its IPO in 2006.

Following the successful set up of high class drilling in 2011-12, C.A.T. oil introduced its new segment reporting in 2013 clustering its activities in "Well Services" (fracturing, cementing and completion operations) and "Drilling, Sidetracking and IPM (Integrated Project Management)".

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C.A.T. oil's customer base includes the leading Russian and Kazakh oil and gas pro- ducers such as Rosneft, Lukoil, Gazprom Neft, Tomskneft VNK, Slavneft, Russneft and KazMunaiGaz. The Company has long-standing relationships with these custom- ers and has been a reliable service provider since its market entrance in the early nineties.

C.A.T. oil has its headquarters in Vienna. The Company's H1 2014 weighted average headcount stood at 2,873 people, most of which are based in Russia and Kazakhstan.

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1 As of 30 June 2014 and 31 December 2013 respectively

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