KCA Deutag - comment

KCA released a non-committal email this morning referring to its Russian operations. This is likely in response to several questions from analysts, including ourselves, seeking clarity on KCA’s Land Drilling business. KCA has 17 rigs operating in Russia which is roughly 1/3rd of their operable rigs (Land Drilling has 76 rigs in total, 49 operable). Land Drilling is the most profitable segment, generating €133m of EBITDA on a trailing 12 months basis. The Land Drilling segment owns the rigs so there is likely to be capital at risk for KCA and its Russian business. Unlike off-shore, where KCA Deutag are only the operator, KCA Deutag owns the land drilling rigs and operates on behalf of clients. The Statement from KCA Deutag has not provided any new information and just states that KCA Deutag are in compliance will all applicable sanctions. KCA Deutag has suspended all new investments in Russia and is evaluating its options.