Eurasia Drilling Co., Russia’s largest oilfield services provider, said profit margins this year would be higher than previously expected because of the strength of demand for rigs.
Eurasia’s margin for earnings before interest, taxes, depreciation and amortization, or Ebitda, will probably be be 26 percent this year, higher than the 25.1 percent it previously expected, Chief Financial Officer Richard Anderson said by telephone. Ebitda increased 17 percent to $441 million in the first half, according to an e-mailed statement today.
“The market continues to be good,” Anderson told Bloomberg News. “Clients’ capital spending continues to be at levels that are very supportive to our business.”
Oil companies in Russia, the world’s largest producer, have boosted spending on drilling as depleting Soviet-era fields require additional work to stem output declines. President Vladimir Putin has pledged to hold oil production, the country’s largest single tax earner, steady for decades.
Eurasia lowered estimates for sales in 2013 to $3.55 billion from $3.6 billion on a weaker ruble, Anderson said. The ruble, the currency in which Russian oilfield services companies are paid, has weakened about 8.4 percent since the start of the year to 33.18 per dollar, according to data compiled by Bloomberg.
First-half net income rose to $217 million, while sales rose 7.6 percent to $1.7 billion, according to today’s earnings statement from the Moscow-based company.
Expectations for capital expenditure have been lowered to $550 million from a guided $600 million, as the delivery of two of the 12 land rigs expected this year will come next year instead, Anderson said. Eurasia’s offshore Neptune rig will begin work in the Turkmen Caspian Sea by the end of September, he said.
Capital expenditure in the first half fell to $179 million from $282 million in the first six months of 2012, Eurasia Drilling said.
Drilling climbed 5.9 percent to 3.04 million meters (9.97 million feet) in the first half. Horizontal drilling increased 20 percent from the same period the previous year to 492,000 meters, accounting for 16 percent of total volumes, according to the statement. Eurasia expects horizontal volumes to continue to rise in the second half, Anderson said.
Eurasia expects drilling with OAO Rosneft to pick up in the second half of the year compared to the first, Anderson said. Eurasia has not seen any effect on the services market from Rosneft’s purchase of TNK-BP in March, when Russia’s largest producer acquired its third largest.