According to C.A.T. Oil, the market still does not accurately assess the effect of the company’s entering the sector of traditional drilling. The company’s indebtedness problems have also been exaggerated. Financial experts at Aton have analyzed C.A.T. Oil securities and set their assessment of the appropriate price for C.A.T. Oil’s commercial paper at EUR9.64. This price is 75 percent higher than the current market price.

Since the beginning of 2012, the stock of the C.A.T. Oil servicing company has already risen by 24 percent, but market participants did not respond seriously to the increase because it was preceded by a 41-percent fall in 2011. The experts of the investment company believe that the undervaluation of C.A.T. Oil securities is the result of the company’s low liquidity.

C.A.T. Oil’s shares are traded on the Frankfurt Stock Exchange, but the average daily trading volume is only about 150 thousand Euros, while the free float is 29 percent of all outstanding shares. In part, investors are weary of the sharp rise in the company’s debt. While the company’s debt was EUR1 million in 2010, by the end of 2011, it had grown to EUR81 million. The increase in debt was associated with the expansion in the sector of traditional drilling. To do so, C.A.T. Oil acquired nine rigs, which are fully operational. However, the market still does not fully appreciate the company’s entrance into the drilling segment. A more accurate evaluation of C.A.T. Oil’s impact on the drilling business will only be possible by the end of 2012. As estimated by Aton, the oil servicing company’s annual revenues amount to EUR305 million, and its net profit forecast is EUR11 million. In addition, the company’s debt burden is expected to fall to 1.2 times its EBITDA. In general, the demand for oilfield services remains high, especially given the Russian companies’ interest toward unconventional reserves. This requires the active use of sidetracking and the technology of hydraulic fracturing, which is the core business segment for C.A.T. Oil.

While the company offers access to the development of non-traditional fields, C.A.T. Oil is not widely recognized among key investment market players. The company has no influential shareholders among the wealthiest Russians placed on the Forbes list. Still, C.A.T. Oil works in one of the most attractive sectors of the Russian economy, the oilfield servicing segment. The demand for such services, though volatile, still remains at a high level. On the one hand, the number of industry players is small, while on the other hand, the oil companies have to increase the amount of drilling to maintain production at current levels. Considering that oil will remain the main Russian export commodity, one can safely presume that C.A.T. Oil will not be left without work.