26th Oct 2015 09:37
LONDON (Alliance News) - Capital Drilling Ltd Monday said it has recorded quarter-on-quarter revenue growth throughout 2015 but revenue in the first nine months of the year is still significantly down from a year earlier.
The drilling services company generated USD20.8 million in revenue in the third quarter ended October 25, up from USD19.8 million in the previous quarter but down from USD23.6 million a year earlier.
That third consecutive quarter-on-quarter rise brought year-to-date revenue to USD59.8 million, which is still a steep drop from the USD77.4 million made a year earlier.
"Recent industry commentary suggests the significant and prolonged downturn of the global mining sector has now reached the bottom of its cycle and will go on to make a measured recovery. There is little indication, however, of a material improvement in the near-term," said the company.
"Notwithstanding these challenging market conditions, Capital Drilling is continuing to deliver positive cash flows, with a strong net cash position, and is gaining additional contracts for its unutilised rigs," it added.
The company's average revenue per operating rig in the third quarter rose to USD192,000 from USD186,000 in the previous quarter and from USD179,000 a year earlier. That was attributed to well performing diamond drilling exploration contracts and the company's ongoing focus on improving drilling efficiencies for all existing contracts.
The company has a total of 97 rigs, and 34% of them were utilised in the third quarter, which it described as "stable".
Capital Drilling repaid USD8.0 million toward its outstanding loans in the period and when combined with the additional USD2.0 million paid off in the first half of 2015, brings its outstanding balance on its revolving credit facility to USD5.0 million at the end of September compared to USD15.0 million at the end of December.
Capital Drilling has a cash balance of USD8.6 million, with a net cash balance of USD3.6 million.
"Throughout the quarter, market conditions and tendering activity remained subdued yet consistent. Capital Drilling's strategic decision to deliver a low cost drilling model to broaden its client base, and maximise rig utilisation, has resulted in additional revenue and earnings including exploration drilling in Peru and Botswana," said the company.
"Further, subsequent to period end, the company has secured two additional contracts in Tanzania, specifically an exploration drilling contract with Magnis Resources, for one reverse circulation rig, and an underground rig for development drilling with AngloGold Ashanti at the Geita Gold mine.
Chief Executive Mark Parsons said it is on track to hit its full year expectations and is now in a stronger position for when the mining and oil sectors both begin to recover from the downturn caused by lower commodity and oil prices.
Capital Drilling shares were up 3.2% to 24.50 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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