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August 31, 2010

Integra Group: Interim 1H 2010 Financial Results and Order Book Update

MOSCOW, August 31, 2010 – Integra Group (LSE: INTE), a leading FSU-based onshore oilfield services provider, released today its unaudited Interim Consolidated Financial Statements, prepared in accordance with IFRS, for the six months ended June 30, 2010.
Results for six months of 2010 demonstrate a year-on-year pickup in revenues driven primarily by improving demand for select oilfield services and the strengthening of the ruble against the US dollar. Adjusted EBITDA margin improved due to materially better efficiency of the drilling and IPM services.
In August 2010 Integra Group completed the sale of its heavy drilling rig manufacturing business (ZAO URBO). The financial results, assets and liabilities of ZAO URBO are recognized as held-for-sale in the financial statement for 1H2010 and corresponding restatement of 1H2009 financial statements was made for comparison purposes. 

1H 2010 Financial Highlights

• Sales increased by 16.1% to US$ 421.3 million (vs. US$ 363.0 million in 1H 2009)
• Adjusted EBITDA increased by 27.4% to US$ 61.9 million (vs. US$ 48.6 million in 1H 2009)
• Adjusted EBITDA margin increased to 14.7% (vs. 13.4% in 1H 2009)
• Operating profit for the period amounted to US$ 4.4 (vs. operating loss of US$ 8.7 in 1H 2009)
• Net loss for the period (before minority interest) amounted to US$ 30.4 million (vs. net loss of US$ 22.3 million in 1H 2009)
• Net cash generated from operating activities decreased by 29.9% to US$ 34.9 million (vs. US$ 49.8 million in 1H 2009)
• Capital expenditures were US$ 25.7 million (vs. US$ 19.6 million in 1H 2009)
• Net debt as of June 30, 2010 was US$ 164.8 million (vs. US$ 175.4 million as of December 31, 2009)

1H 2010 Operating Highlights

• 117,028 meters drilled (vs. 88,619 meters during 1H 2009)
• 1,585 workover operations conducted (vs. 1,776 workover operations during 1H 2009)
• 532,505 seismic shot points made (vs. 430,770 seismic shot points during 1H 2009)
• 495 cementing operations conducted (vs. 372 cementing operations during 1H 2009)
• 94 coil tubing operations conducted (vs. 170 coil tubing operations during 1H 2009)
• 120  wells completed with directional drilling service (vs. 71 wells during 1H 2009)
• 164 downhole motors and 28 turbines produced (vs. 217 downhole motors and 24 turbines produced during 1H 2009)
• 6 cementing units produced (vs. 1 cementing unit in 1H 2009)

2010 Order book update

• US$ 758.5 million (RR 23,514 million) in tenders won and contracts signed for execution in 2010, excluding the order book of  ZAO URBO
• of which US$ 725.5 million (RR 22,490 million) is in signed contracts for 2010
• 2010 total order book (contracts signed and tenders won) is 7% higher in Ruble terms compared to 2009 order book calculated on August 25, 2009 (adjusted for cancelled contracts in 2009, historic order book of ZAO URBO and order book of Integra Trade House which we plan to discontinue)
• 89% of 2010 order book is denominated in Rubles

Antonio Campo, Integra Group’s Chief Executive Officer, commented:

“In 1H 2010 we benefited from a steady recovery in the oilfield services industry and repositioning of our business. Higher volumes of our operations, improved efficiency and stronger ruble were the main factors contributing to improved result year-on-year. Prices for our services are generally flat to slightly higher as areas of overcapacity still exist in some services. In this environment, efficiency is one of our top priorities and we are pleased that our cost control measures allow us to see a continued improvement in margins. We are particularly pleased by profitability trends in our Drilling, Workover and IPM division and the fact that we generated an operating profit for the first time in the past 21 months.
This year we took a number of strategic steps to boost our service and technology portfolio, expand the market presence of our core oilfield services, as well as improve our financial flexibility. These steps included joining forces with Schlumberger in the seismic joint venture, divesting our heavy rig manufacturing business, changing our organizational structure and management to improve efficiency and completing an overhaul of our debt portfolio.
Our outlook for the remainder of the year is moderately positive and we expect the second half of 2010 to be broadly in line with the first half.”


The unaudited Interim Consolidated Financial Statements, prepared in accordance with IFRS, for the six months ended June 30, 2010 can be found under the following link:
http://www.integra.ru/eng/investors/results/

For additional discussion and analysis of our financial results for the six months ended June 30, 2010, please see our Management's Discussion and Analysis of Financial Conditions and Results of Operations, which can be found under the following link:
http://www.integra.ru/eng/investors/results/

 
Conference Call Dial-In Details

Date:                             Tuesday, August 31, 2010
Time:                            17.00 Moscow / 14.00 London / 9.00 New York
Title:                              Integra Group 1H 2010 Financial Results
Conference ID:             95643381
UK international tel.:    +44 1452 569 335
USA free tel.:                +1 866 655 1591

There will also be a playback facility available until September 13, 2010. The details are:

UK international tel.:    +44 1452 550 000
USA free tel.:                +1 866 247 4222
Access code:                95643381#


Contacts
Integra Group  
Andrei Machanskis 
Head of Investor Relations 
Tel. +7 495 933 0621
amachanskis@integra.ru

Sergey Beldinsky 
Head of Public Relations
Tel. +7 495 933 0621
sbeldinsky@integra.ru

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Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Integra Group. You can identify forward-looking statements by terms such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “will,” “could,” “may” or “might,” or the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. Integra Group does not intend to or undertake any obligation to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in Integra Group’s projections or forward-looking statements, including, among others, general economic and market conditions, Integra Group’s competitive environment, risks associated with operating in Russia, rapid technological and market change, and other factors specifically related to Integra Group and its operations.
 
This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Integra Group, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of Integra Group.