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Energy

WRAPUP 1-Russian drilling firms see higher volumes ahead

* Service firms benefit as oil majors spend more on drilling

* Eurasia Drilling says will drill 5 percent more this year

* First-half drilling volumes up 14 pct - government data

* Exploration drilling for new deposits up 46 pct -govt data

By Jessica Bachman

MOSCOW, Aug 31 (Reuters) - Russian drilling and oil field service companies expect to win more contracts in the second half as spending rises on exploratory drilling to battle falling deposits in west Siberia.

Both Russia's largest independent drilling company, Eurasia Drilling EDCLq.L, and smaller oil services company Integra INTEq.L, reported a rise in first-half drilling volumes on Tuesday and looked to more growth in the future.

“We expect our full year 2010 drilling volumes to increase by at least 5 percent and be close to four million metres,” Eurasia said when reporting a 35 percent jump in first-half earnings. [ID:nWLA1798].

Integra, which posted a net first-half loss of $30.4 million, said its drilling volumes rose 32 percent on the back of increased spending on oil field services. [ID:nWLA1844]

“In H1 2010 we benefited from a steady recovery in the oilfield services industry and repositioning of our business,” chief executive Antonio Campo said.

According to government data, drilling volumes in Russia rose 14 percent in the first half compared to the 2009 period when companies, reeling under lower oil prices, threw drilling expenditure to the cutting room floor.

Exploration drilling, or the search for new deposits, grew 46 percent in the first half, an indication that companies are on track to returning to pre-crisis levels.

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To see a graphic on Russian oil production and drilling: here

For key Russian statistical oil reports [O/RUS1]

For key Russian oil data <OILSTAT/RU>

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On Monday, CAT Oil O2C.DE, a small-cap oil service company operating in Russia and Kazakhstan, reported second-quarter net income doubled to 7.5 million euros on the back of rising drilling demand from oil majors.

“During the reporting period, C.A.T. oil benefited from the noticeable signs of an economic recovery and increasing demand for oil field services,” the company said.

Both CAT Oil and Eurasia said in their second-quarter financial reports they were significantly increasing capital expenditure to keep up with the growth in demand for drilling. (Editing by John Bowker and Dan Lalor)

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