C.A.T. Oil Rises on 300 Million-Euro Expansion PlanStephen Bierman
C.A.T. Oil AG, Russia’s largest provider of hydraulic-fracturing services, rose for a fifth day in Frankfurt trading after announcing expansion plans.
C.A.T. Oil advanced as much as 2.9 percent, and traded up 1.6 percent at 20.575 euros as of 2:13 p.m. local time. That extends its five-day increase to 13 percent and would be the highest close since 2007.
The company has earmarked 300 million euros ($405 million) to expand operating capacity over the next three years, C.A.T. Oil said today in a statement on its website. That investment will allow the driller to meet rising Russian demand, it said.
President Vladimir Putin has urged energy producers to maintain output in coming decades to safeguard oil-export revenue, the state’s largest single source of income. The industry is turning to more advanced drilling technologies to squeeze more crude from aging fields as the bulk of Russia’s Soviet-legacy deposits reach maturity.
C.A.T. Oil’s investments will boost fracturing capacity by 33 percent, sidetracking capacity by 55 percent and drilling services by 170 percent, according to the statement. The Vienna-based company also plans to spend 90 million euros by the end of 2016 on maintenance.
Growth will be “tailored to the needs and short-to-mid-term production plans of our customers,” Chief Executive Officer Manfred Kastner said in the statement.
“The company seems well prepared for expansion of Russian tight-oil development, which will potentially be a hot topic closer to the end of the decade,” OAO Gazprombank wrote in a research note. The Russian bank raised its estimate of 2017 revenue at C.A.T. Oil by 45 percent to 750 million euros.
Expansion will be financed through a combination of operating cash and long-term debt, C.A.T. Oil said. Debt will remain less than twice earnings before interest, taxes, depreciation and amortization, it said.