OREANDA-NEWS. September 01, 2011. C.A.T. oil has reported 1H11 financial results which are broadly below our estimates but higher than the consensus forecast, reported the press-centre of ATON.

The company’s 1H11 revenue increased 24.4% YoY on the back of an increased job count supported by greater demand and growth in C.A.T. oil’s capacity.
 
1H11 EBITDA margin dropped to 20% from 24.7% in 1H10 reflecting increased direct costs (+89.7% YoY) for the new conventional drilling business set-up and the last portion of outsourcing of the remaining workover business.
 
Net income decreased by 19.3% YoY to EUR6.9mn due to a decline in operating income (-19.4% YoY) which was the result of higher direct costs and depreciation expense.
 
C.A.T. oil stated in its report that it has taken defensive measures in order to guarantee the availability of funds and protect the company in light of the risky backdrop being created by European credit markets. Additionally, C.A.T. Holding Ltd, the main shareholder of the company (60%), has taken over as guarantor of the EUR100mn credit line (secured in Nov 10) which was earlier extended to C.A.T. oil by Eurobank EFG.
 
Bottom line
In general we believe that the results are neutral for the stock. At the same time we feel that investors may react positively to the replacement of the credit line guarantor with the main shareholder, as it guarantees funding stability even if the situation on the European debt markets worsens.