August 28, 2012 / 7:51 AM / in 5 years

UPDATE 2-EDC hikes targets after first-half profit rise

3 Min Read

* H1 net income up 24 percent to $181 million

* EBITDA up 40 percent to $373 million

* Drilling increases 23 percent

MOSCOW, Aug 28 (Reuters) - Russia's biggest oilfield services company Eurasia Drilling Co Ltd (EDC) on Tuesday raised its full-year targets and said it aimed to drill more this year after increased drilling helped its first-half net income rise 24 percent.

EDC has started using unconventional technologies, such as horizontal drilling, to offset declining oil output from Russia's West Siberia fields.

The world's top crude producers need novel approaches to help them sustain annual oil output at no less than 10 million tonnes in next 10 years.

A company official told a conference call that EDC increased drilling volumes guidance for 2012 to "at least" 5.6 million metres from previously expected 5.5 million metres, while its forecast for earnings before interest, tax, depreciation and amortisation (EBITDA) margin rose to 23.5 percent from 22.7 percent on revenues of $3.15 billion.

Earlier on Tuesday, EDC said its first-half net income rose to $181 million. This was above a projection of $177 million from analysts at Alfa bank.

The company said top-line revenue increased 24 percent year-on-year to $1.56 billion in the first six months of the year, while EBITDA jumped 40 percent to $373 million.

This was on the back of a 23 percent rise in drilling to 2.87 million metres.

Russian oil companies, faced with annual decline rates of 2 percent in their West Siberian home base, where Soviet-era fields generate 85 percent of Russia's 10.3 million barrel per day output, have stepped up the use of unconventional technologies to secure Russia's position as the world's top producer.

EDC said horizontal metres drilled during the first half of 2012 increased by 13 percent to 412,000 compared with the same period last year.

"We are confident that we will meet both our operational and financial targets for the year," W. Richard Anderson, EDC's chief financial officer, said in a statement.

EDC also said net debt at the end of June increased to $350 million from $244 million at the end of 2011.

EDC was formed when Russia's second-largest oil producer, Lukoil, spun off its oil services operations. Lukoil remains its largest customer.

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