Dynamic adding more rigs, weighing potential acquisitions

Australian drilling contractor has solid H1

Australian drilling contractor Dynamic Group has delivered a solid first half of FY22 post its circa-A$21 million acquisition of Orlando Drilling last May that more than doubled the size of the ASX-listed company.

Dynamic, which has Orlando and Dynamic Drill & Blast as operating units, reported first-half EBITDA of $8.1 million on revenue of $34.7m versus $11.6m and $2.9m in the first half of FY21.

The company expanded its drilling fleet by 17 rigs (working in Australia’s Pilbara and western goldfields) when it bought Orlando; it had 39 at the end of 2021 and is in the market for more machines. The Australian drilling space is hot! Local stockbroker Argonaut said last month exploration metres drilled across Australia in the September and December quarters was “higher than at any time in the prior 25 years, with expenditure close to the record set early last decade”.

“We expect metres drilled to remain elevated during 2022, with constraints more likely to be drilling rig and crew availability rather than demand. It is likely to result in expenditure – drilling costs – climbing at a greater rate than drilling metres in our view,” Argonaut said.

Dynamic says it has a “significant pipeline of growth opportunities, with a strong level of enquiry for short, medium and long-term projects”. Outside of organic potential, “the assessment of value accretive acquisitions” is ongoing.

The company raised $10m at 45c-a-share at the time of the Orlando deal.

It’s trading now at 43c and has a market capitalisation of about $46m.


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