Eurasia Drilling Expects Record Year as Crude Spending Rises

Eurasia Drilling Co. (EDCL), Russia’s largest traded oilfield services company, expects to beat last year’s onshore drilling record as demand increases.

Net income rose 34 percent in 2011 to $277 million after Eurasia drilled 4.8 million meters onshore, the Moscow-based company said today on its website. The number of meters drilling will likely rise by a further 15 percent this year, Chief Financial Officer Richard Anderson said by phone.

“This is a great time to be in Russia, the oil business is really popping,” Anderson said.

OAO Rosneft, OAO Lukoil and TNK-BP, Russia’s top three oil producers, are boosting spending this year after Urals blend crude prices averaged more than $100 a barrel last year for the first time.

Eurasia Drilling plans to spend $420 million to $450 million this year to accelerate drilling, Anderson said in an interview with Bloomberg Television.

Plans to buy drilling assets from OAO Slavneft, a unit of TNK-BP and OAO Gazprom Neft, for $150 million may fall apart as the sides have yet to agree on terms after announcing a tentative deal last year, the CFO said.

“As time goes by, the chances of closing it are dimmer and dimmer,” he said.

The company plans to announce the acquisition of a company that has about three rigs in the Middle East in May or June, the executive said. The new unit will be used as a platform for growth in the region, according to Anderson.

Dividend payouts of about 20 percent of net income will probably remain company policy, he said. Cash may be used to accelerate debt reduction in the absence of any other opportunities, he said.

Revenue surged 52 percent to $2.75 billion last year, according to Eurasia.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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