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August 30, 2012

Integra Group Reports 1H 2012 Financial Results and Order Book Update

Integra Group (LSE: INTE), one of the leading independent providers of diversified oilfield services, released today its unaudited Interim Condensed Consolidated Financial Statements, prepared in accordance with IFRS, for the six months ended June 30, 2012.

Operations of Integra Group’s Formation Evaluation segment were discontinued following a combination of the seismic businesses of Integra, Schlumberger and Geotech and were excluded from 1H 2011 financial results for comparison purposes.

1H 2012 Financial Highlights
• Sales decreased by 3.4% to US$ 295.0 million (vs. US$ 305.5 million in 1H 2011)
• Adjusted EBITDA*  from continuing operations decreased by 96.2% to US$ 1.4 million (vs. US$ 36.6 million in 1H 2011)
• Adjusted EBITDA margin decreased to 0.5% (vs. 12.0% in 1H 2011)
• Loss for the period from continuing operations amounted to US$ 40.8 million (vs. profit of US$ 20.6 million in 1H 2011)
• Net cash generated from operating activities decreased by 29.7% to US$ 5.2 million
(vs. US$ 7.4 million in 1H 2011)
• Capital expenditures were US$ 21.1 million (vs. US$ 42.6 million in 1H 2011)
• Net debt as of June 30, 2012 was US$ 188.8 million (vs. US$ 181.6 million as of December 31, 2011)

1H 2012 Operating Highlights
• 149 thousand meters drilled (vs. 126 thousand meters during 1H 2011)
• 31 active drilling rigs (1H 2011: 18 active drilling rigs)
• 1,651 workover operations conducted (vs. 1,739 workover operations during 1H 2011)
• 79 workover crews (1H 2011: 76 workover crews)
• 232 cementing operations conducted (vs. 502 cementing operations during 1H 2011)
• 14 cementing fleets (1H 2011: 14 cementing fleets)
• 104 coiled tubing operations conducted (vs. 147 coiled tubing operations during 1H 2011)
• 4 coiled tubing units (1H 2011: 4 coiled tubing units)
• 159 wells completed with directional drilling service (vs. 222 wells during 1H 2011)
• 24 directional drilling crews (1H 2011: 24 directional drilling crews)
• 330 downhole motors and 30 turbodrills produced (vs. 205 downhole motors and 42 turbodrills produced during 1H 2011)

2012 Order book update
• US$ 645.9 million (RR 20.2 billion) in tenders won and executed contracts in 2012, excluding the order book of discontinued businesses, calculated on August 27, 2012;
• of which US$ 602.5 million (RR 18.9 billion) is with respect to executed contracts for 2012, and US$295.0 is already recognised as 1H 2012 revenue;
• 2012 total order book (executed contracts  and tenders won) is 11.2% higher in Ruble terms compared to 2011 order book calculated on August 22, 2011 (adjusted for historic order book of discontinued businesses), and already exceeds full year 2011 revenue by 4.9%;
• Our 2012 order book is denominated in Russian rubles.

Felix Lubashevsky, Integra Group’s President and Chief Executive Officer, commented:

”In the first six months of 2012, compression of industry margins arising from increased operating costs and lack of meaningful price growth for our services coincided with negative volumes in several technology services.  As announced at the time of our first quarter results, in 1H2012 we have recognized a total of US$ 22.0 million of additional expenses and lost margins related to incidents on complex long-term drilling and workover projects. These incidents were the primary reason behind a significant deterioration of our margins and cash earnings but have been fully resolved with our customers resulting in the preservation of key relationships and further business won. Adjusted for one-time expenses we see a seasonal pickup in quarterly profitability in most services and expect these trends to continue into the third quarter.

Our strategic priorities for the remainder of 2012 and beyond are quality improvement, cash conversion, select capacity investment to capture current market growth and further cost optimization.”


The unaudited Interim Condensed Consolidated Financial Statements, prepared in accordance with IFRS, for the six months ended June 30, 2012 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, 2012, please see our Management's Discussion and Analysis of Financial Condition 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: Thursday, August 30, 2012
Time: 16.00 Moscow / 13.00 London / 8.00 New York
Title: Integra Group 1H 2012 Results
Conference ID: 20820822
UK international tel.: +44 1452 555 566
USA free tel.: +1 866 966 9439

There will also be a playback facility available until September 13, 2012. The details are:

UK international tel.: +44 1452 550 000
USA free tel.: +1 866 247 4222
Access code: 20820822#

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

*Adjusted EBITDA is calculated as profit (loss) from continuing operations before finance income (expense), exchange gains (losses), current and deferred income taxes, depreciation and amortization, impairment, write-off or disposal of property, plant and equipment or intangible assets, gains (losses) on acquisition and disposal of any interest in the Group’s subsidiaries or associates, impairment of goodwill, share of results in associates, share-based compensation and profit (loss) attributable to non-controlling interest.


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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.