Australian drilling major DDH1 is maintaining high utilisation of its expanded drill fleet (above 77%) and expects cost pressures on margins to ease in the current half as improved contract prices continue to kick in. Record half-year revenue produced EBITDA of A$65.6 million in the six months to December 31.
The EBITDA number was up 15.9% on the same period last year.
DDH1 ranks in the top half-dozen mineral drilling contractors in the world with 190 rigs and revenue in the first half of A$286m, up 15.7% year-on-year, while revenue per rig ($1.53m, up 6.3%, in H1) is the best in the industry.
The company said a 7.1% rise in revenue per shift in H1 reflected increasing rates.
“We achieved record 1H23 results, notwithstanding elevated underlying costs, due to inflationary pressure,” DDH1 CEO Sy van Dyk said.
“Pleasingly, these costs are starting to moderate and we are making meaningful rate increases as contract renewals roll over.
“Our EBITDA margins remain strong.”
About 60% of DDH1’s FY23 H1 revenue was generated in Western Australia, where it is based.
The company reported operating cash generation of $62.24m in the half, with $26.7m returned to shareholders in dividends and buybacks, and $17m invested in the drill fleet and R&D.
“Resource companies are well funded and are reporting ongoing or expanded exploration budgets,” it said. DDH1’s top five clients, accounting for 38% of its H1 revenues, had a combined $27 billion of cash on their balance sheets – from $200m to $25b – at the end of 2022.
“Clients have indicated they intend to execute planned drilling programs.”
