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ATON - Daily Dashboard, Oil and Gas - Nov 15, 2012.

Oil and Gas

EDC Capital Markets Day: Key Takeaways

Eurasia Drilling Company held a Capital Markets day for investors and analysts yesterday (14 Nov). Key highlights include:

(To view the original document, please click on the link below:

http://reports.aiidatapro.com/brokers/AtonEN/2012_11_15.pdf)

The company provided targets for the next three years: revenue is expected at $4.5-5.2bn (2012E = $3.18bn) per year, while EBITDA margin should average 26-28% (2012E = 24.3%). Before-tax profit margin is targeted at 13-15% (2012E = 12%) per year.

EDC's major shareholder (14.5%) and CEO Alexander Djaparidze said that he plans to pass the business on to his children. We believe this is a positive signal given the market's concerns that Djaparidze might be considering the sale of his remaining stake after he transferred 22.6% to the Hadar Fund.

Fu ture gro wth is expected to be driven by continued strong demand for drilling services in Russia due to the high depletion levels of the nation's oilfields combined with oil companies' plans to develop unconventional resources which require more complex drilling. Another direction for development is international expansion, which the company plans to conduct primarily via the acquisition of local players.

Bottom line

While most of the information provided was known to market participants, management's confidence in the drilling market's prospects and the release of long-term targets could prove to be supportive for the stock price, in our view.

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Copyright: Aton OOO (LLC), All rights reserved.

For further Information please contact: Aton OOO (LLC),

27 Pokrovka str., bld.6, 105062 Moscow, Russia

phone: (495) 777-66-77, (495) 228-38-99

aton-line@aton-line.ru, http://www.aton.ru
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Publication:Russian Banks and Brokers Reports
Date:Nov 15, 2012
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