TIDMCAPD
RNS Number : 4758N
Capital Drilling Limited
26 October 2016
Capital Drilling Limited
("Capital Drilling", the "Group" or the "Company")
Q3 2016 Trading Update
Capital Drilling Limited (CAPD:LN), a leading drilling solutions
company focused on emerging and developing markets, today provides
its Q3 2016 trading update for the period to 25 October 2016.
Third Quarter (Q3) 2016 Key Metrics
Q3 2016 Q3 2015 Q2 2016 % change % change
from Q3 from Q2
2015 2016
Revenue
($mn) 23.8 20.8 22.6 14.1% 5.3%
ARPOR ($) 187,000 192,000 171,000 -2.6% 9.4%
Average
utilised
rigs 40 33 42 21.2% -4.8%
Fleet Utilitsation
(%) 43% 34% 44% 26.5% -2.3%
Average
Fleet 95 97 94 -2.1% 1.1%
Closing
fleet size 95 97 94 -2.1% 1.1%
-------------------- ----------- -------------- -------- --------- ---------
Operational Highlights
-- Q3 trading has benefitted from previously announced contract awards:
- RAKITA Exploration (part of the Freeport McMoran Company),
Serbia: 4 deep hole exploration directional drilling rigs, initial
2 rigs commenced early August
- Ascom Mining, Ethiopia: 2 diamond rigs, commenced August
- Resolute, Mali: 1 diamond rig, commenced August
- Acacia Mining Ltd, Kenya: 3 diamond rigs, commenced September
-- Recent contract awards include:
- Mining Resources, Mauritania: 1 reverse circulation rig, commenced September
- Thani Stratex, Egypt: 1 diamond rig, commenced October
- Tilva (BVI) Inc (a Rio Tinto/Nevsun Resources JV), Serbia: 2 diamond rigs, commenced October
-- Q3 utilisation of 43% on an average rig fleet size of 95 rigs
- utilisation has increased to 48% in October
-- Q3 Average Revenue per Operating Rig (ARPOR) increased to
$187,000 (Q2 2016 $171,000) as a result of improved exploration
fleet performance
Financial Highlights
-- Third quarter revenue 14.1% higher at $23.8 million, compared
to Q3 2015 of $20.8 million (Q2 2016: $22.6 million)
-- Interim dividend payment increase of 36% of USD1.5 cents per
share paid on 7 October 2016 (2015: Interim dividend of 1.1 cents
per share paid on 9 October 2015)
Trading and Corporate Update
Capital Drilling generated revenue of $23.8 million during Q3
2016, representing a 5.3% improvement on the previous period (Q2
2016 revenue: $22.6 million). The result delivers the fourth
consecutive quarterly increase.
ARPOR increased 9.4% during the quarter as contracts awarded
during H1 2016 achieved greater operational performance.
Utilisation reduced marginally in the quarter (Q3 2016 43.0% from
Q2 2016 44.0%) as rigs rotated between short term exploration
contracts. However rig utilisation has since increased to 48% with
new contracts commencing in October.
As previously announced the company has purchased two new rigs
to support the Rakita exploration project in Serbia, providing
further deep hole directional capability specifically required for
the contract. Further, there is continued expenditure directed
toward operational readiness and rig mobilisations as we continue
to re-engage in this market upturn.
The interim dividend payment of USD 1.5 cents per share,
totalling $2.0 million, as announced in the Company's H1 Results,
has been paid to shareholders on 7 October 2016. The dividend
represents a 36% increase on the previous interim dividend (2015
Interim dividend: USD 1.1 cents per share).
On 28 September, the Company announced it had completed a share
placement, with certain Directors and Founding Members, releasing
25,500,000 shares (approximately 18.9% of Issued Share Capital).
The completion of this Placing satisfied significant market demand
for the Group's shares, while broadening the shareholder base with
institutional investors and increasing share liquidity. The
Directors and original founder's collective holding now represents
51.0% of issued shares.
To capitalise on current contracts and future growth
opportunities, a realignment of the Executive Leadership Team and
organisational structure was completed during the quarter. Business
units will now focus on Exploration and/or Production activities
and are more closely aligned with Client's operational structures.
This is expected to improve the Group's capability to deliver on
the diverse requirements of clients in each phase. Additionally, at
the Executive level, Dewald van Tonder will join the Executive
Leadership Group as Chief Financial Officer, commencing 1 November
2016, following the resignation of Jaco Brümmer.
Outlook
Capital Drilling has seen continuing improvements in market
conditions with a number of new contracts commenced post the end of
Q3 in addition to the new contracts secured in the quarter, helping
to lift utilisation to 48% in October. As the end of the year
approaches, utilisation is expected to remain stronger than recent
periods, however levels will ease with the traditional industry
shut down over the December and January period.
Improving market sentiment generally is evident, with the uplift
in capital and equity raisings primarily by junior mining
companies. Increasing activity in brownfields exploration, together
with extension of existing open cut mines into underground
development, provides further evidence of improving market
optimism. The Group maintains a robust balance sheet, strong cash
generation and a competitive operating model, placing it in a solid
position to capitalise on the improving conditions.
Commenting on the trading update, Mark Parsons, Chief Executive
Officer, said:
"Positive signs of improvement in the market are continuing,
with increased activity primarily generated from the gold segment.
What is encouraging is the increasing number of clients re-engaging
in exploration activity.
Recently awarded new exploration contracts add marginal
contributions to 2016 revenue while offsetting inconsistent
activity in Mauritania. Guidance provided in the Company's 1H 2016
results will remain unchanged with the forecasted revenue growth in
the fourth quarter.
Pursuit of the Group's growth strategy is on target, with assets
currently being deployed to expand operations in the West African
region. Encouragingly, we are also seeing an increase in
underground activity at existing open cut mines, supporting our
direction to increase the Company's underground capabilities.
For the remainder of the year, we will continue to focus on our
strategy of increasing underground capability; increasing
utilisation of the exploration fleet; building our production
contracts portfolio; and expanding into West Africa and other
emerging countries, including Serbia. Despite increasing activity,
we will maintain our prudent approach to cost management."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
For further information, please visit Capital Drilling's website
www.capdrill.com or contact:
Capital Drilling Limited +230 464 3250
Jamie Boyton, Chairman investor@capdrill.com
Mark Parsons, Chief Executive Officer
finnCap Ltd +44 20 7220 0500
Christopher Raggett, Corporate Finance
Joanna Scott/Simon Johnson, Corporate Broking
Tamesis Partners LLP +44 20 7389 5021
Charlie Bendon
Richard Greenfield
Buchanan +44 20 7466 5000
Bobby Morse capitaldrilling@buchanan.uk.com
Gemma Mostyn-Owen
About Capital Drilling
Capital Drilling provides specialised drilling services to
mineral exploration and mining companies in emerging and developing
markets, for exploration, development and production stage
projects. The Company currently owns and operates a fleet of 96
drilling rigs with established operations in Botswana, Chile,
Egypt, Ethiopia, Kenya, Mali, Mauritania, Serbia and Tanzania. The
Group's corporate headquarters is in Mauritius.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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