MOSCOW, April 12, 2010 - Eurasia Drilling Company Limited (“EDC” or the “Company” - LSE: EDCL) today reports its 2009 unaudited financial statements, prepared in accordance with US GAAP, for the twelve month period ended December 31, 2009.
Dr. Alexander Djaparidze, EDC’s Chief Executive Officer, commented,
“2009 was a challenging year for us with low oil prices that led our largest customer to decrease its drilling volumes by 25% compared to 2008 volumes. Through our management team’s efforts, along with outstanding performance of our field employees, we were able to compensate for this decline by gaining additional work and new contracts with other clients such that our overall drilling volumes were down by only 7% compared to 2008. This was accomplished while actually improving our productivity, leading to the best EBITDA margins we have ever had and strengthening our already solid financial position.”
2009 FINANCIAL HIGHLIGHTS:
Financial results for 12 months period ended December 31, 2009 were mainly affected by two factors: a decrease in drilling volumes by 7% compared to 2008 and ruble devaluation that resulted in average RUR/USD exchange rate increase to 31.7 RUR/USD from 24.9 RUR/USD. Key 2009 financial indicators were as follows:
- Top line revenue was USD 1,382 million (2008: USD 2,102 million)
- EBITDA was USD 320 million (2008: USD 453 million)
- EBITDA margin increased 1.7% to 23.2% (2008: 21.5%)
- Net income was USD 165 million for the period (2008: USD 221 million)
- Earnings per share were USD 1.22 in 2009 (2008: USD 1.51)
- Net cash provided by operating activities was a record of USD 406 million (2008: USD 310 million)
- Net cash position as of December 31, 2009 was USD 252 million (including both short and long term debt)
- Capital expenditures, excluding acquisitions of new businesses during 2009, were USD 105 million
Mr. Richard Anderson, EDC’s Chief Financial Officer, added,
“Even in turbulent markets, EDC continues to demonstrate strong financial results. We have preserved our ability to grow in the future along with client demand for our services, and to take advantage of the many inorganic growth opportunities available to us. ”
2009 OPERATIONAL HIGHLIGHTS:
- Increased total number of drilling rigs to 209 from 202 at the beginning of 2009
- Drilling output decreased 7% to 3.7 million meters (2008: 4.0 million meters)
- Sustained market share (based on meters drilled) of approximately 26% of the drilling market at the end of 2009 (all organic growth)
- Signed 3-year Framework Agreement with Lukoil for 6.6 million meters
- Diversified our client base; our major customer accounts for 63% of total drilling volumes compared to 73% in 2008
- In November 2009 commenced drilling operations on Lukoil’s Yu. Korchagin platform on the Caspian Sea, where we are the general drilling contractor
- Completed the acquisitions of a directional drilling business and a workover business in Western Siberia
Reminder:
EDC will host a conference call on Monday, April 12, 2010 at 3:00 pm BST (London time) to discuss full-year 2009 results. Equivalent times for other locations: 4:00 p.m. Central Europe, 6:00 p.m. Moscow.
Participants can dial in on the day of the call on UK Tel: +44 (0) 208 515 2302 and quote the Conference ID, which is 4279970, Conference title (which is “Eurasia Drilling Earnings Call”) and Speaker’s name to access the call. Toll free numbers are also available: in the UK 0800 358 0857, or in Russia 810-8002-1984011.
Replay of the conference call audio will be available on UK Tel: +44 (0) 207 154 2833 through Monday, April 26, 2010 (until midnight, BST). Toll free numbers are also available for the replay of the conference call audio in the UK 0800 358 3474. Access code to all the replay numbers is 4279970#.
Income Statement for the year ended December 31, 2009 (USD million)
2009 (unaudited) 2008 (audited)
Revenues
Drilling and related services 1,362 2,072
Other sales and services 20 30
Total revenues 1,382 2,102
Cost of services (912) (1,454)
Selling, general and administrative expenses (95) (122)
Taxes other than income taxes (55) (72)
Depreciation (106) (102)
Gain on disposal of property, plant and equipment - (5)
Income from operating activities 214 347
Interest expense (14) (27)
Interest income 11 10
Currency transaction loss (4) (33)
Gain on bargain purchase 2 -
Other expense - (1)
Income before income taxes 209 296
Income Tax (44) (75)
Net income 165 221
Basic earnings per share of common stock (USD per share) 1 .22 1.51
Diluted earnings per share of common stock (USD per share) 1.22 1.51
Balance Sheet as of December 31, 2009 (USD million)
2009 (unaudited) 2008 (audited)
Assets
Current assets
Cash and cash equivalents 434 279
Accounts receivable, net 192 230
Inventories 117 183
Other assets 52 61
Total current assets 795 753
Property, plant and equipment 683 609
Other non-current assets 44 83
Total assets 1,522 1,445
Liabilities and Member's equityCurrent liabilities
Accounts payable and accrued liabilities 224 236
Short-term debt and current portion of long-term debt 32 92
Other current liabilities 95 54
Total current liabilities 351 382
Long-term debt 150 171
Long-term-Other 20 12
Total liabilities 521 565
Stockholder's equity
Paid in capital & APIC less treasury stock 471 481
Retained earnings 595 464
Accumulated other comprehensive income/(expense) (65) (65)
Total Member's equity 1,001 880
Total liabilities and Member's equity 1,522 1,445
Cash Flow Statement for the period ended December 31, 2009 (USD million)
2009 (unaudited) 2008 (audited)
Cash flows from operating activities
Net income 165 221
Adjustments for non-cash items:
Non- cash adjustments (Depreciation) 106 102
Changes in working capital 135 (13)
Net cash provided by operating activities 406 310
Cash flows from investing activities
Purchases of property, plant and equipment (105) (327)
Acquisition of subsidiary, net of cash acquired (23) -
Other investing activities 4 3
Net Cash used in investing activities (124) (324)
Cash flows from financing activities
Net change in loans (81) 23
Dividends paid (34) -
Purchase of treasury stock (18) (40)
Other financing activities (3) (5)
Net cash provided by financing activities (136) (22)
Effect of exchange rate changes on cash 9 (28)
Net increase/(decrease) in cash and cash equivalents 155 (64)
Cash and cash equivalents at beginning of period 279 343
Cash and cash equivalents at end of period 434 279
Non-USGAAP Measure
Reconciliation of Net Income to EBITDA (USD million)
2009 (unaudites) 2008 (audited)
Net Income 165 221
Income Tax Expense 44 75
Gain on bargain purchase (2) -
Gain on disposal of PP&E - 5
Currency transaction losses 4 33
Interest Expense 14 27
Interest Income (11) (10)
Depreciation 106 102
EBITDA 320 453
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EDC is the largest independent provider of onshore drilling services in Russia, as measured by the number of meters drilled, providing onshore integrated well construction services and workover services. In addition, the Company provides offshore drilling services in the Caspian Sea. The Company offers its onshore integrated well construction services and workover services to local and international oil and gas companies primarily in Russia and its offshore drilling services to Russian and international oil and gas companies in the Russian, Kazakh and Turkmen sectors of the Caspian Sea. The Company is traded on the London Stock Exchange under the symbol “EDCL”.
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For further information, please contact:
Kim L. Kruschwitz, VP Investor Relations
+44 (0) 207 717 9707
investors.relations@eurasiadrilling.com
April 12, 2010
Some of the views expressed in this document may constitute “forward looking statements” that involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
