No easing of drilling demand in sight, says DDH1

DDH1 CEO Sy Van Dyk says the drilling contractor continues to gear up for anticipated growth in demand for its services this year after posting record earnings and 14% higher revenue of A$506.9 million in FY22, versus the previous year.

Now running the world’s fifth biggest mineral drilling fleet following the acquisition of Swick Mining Services earlier this year, DDH1 is targeting organic and potentially further M&A growth in FY23.

“Demand for our company’s specialised services from mine producers and explorers continued at record levels across our four brands – DDH1 Drilling, Ranger Drilling, Strike Drilling and Swick Mining Services,” Van Dyk said in the group’s FY22 annual report.

“Accordingly, we added 14 rigs, which increased our fleet size to 183 at the end of FY22.

“A further 11 rigs are currently on order or under build for deployment in FY23.

“Our FY22 rig utilisation of 77.4% was up on FY21 by 2.4% [FY21 75%], our shifts were up 10.2% and our revenue per shift increased by 3.4%. We drilled 3.49 million metres, which was up 3.5% on FY21 and is a new record for our company.”

DDH1 said it top five customers which accounted for nearly half of its FY22 revenue had a combined $34 billion cash on their balance sheets at the end of June 2022. The company had “clear visibility for FY23 demand”.

DDH1’s $113.6m FY22 EBITDA was 10% higher than the previous year.

“As expected, we experienced some inflationary pressures, notably on wages, repairs and maintenance and consumables,” Van Dyk said.

“At the same time, we are working with clients to meaningfully increase drilling rates as contracts roll over in a tight supply market.”

DDH1 said its combined drill fleet had grown at an 8% CAGR in the past decade.

“Lead times for surface rigs remain between 8-12 months – excluding automation features,” the company said.

“Swick’s manufacturing capabilities enable an underground rig build to be completed in 6-8 weeks. [Our] underground segment is not constrained by rig availability.

“DDH1’s current manufacturing capacity can deliver up to 20 rigs per year.”

 

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