Oz drilling outlook strongest for 13yrs: Mitchell

Driller sees rig demand driving fleet use, pricing

Mitchell Services CEO Andrew Elf maintains the outlook for mineral drilling activity in Australia is “the strongest we have seen since 2008”, with the ASX-listed company lifting fleet utilisation and revenue in the September quarter.

Mitchell booked A$52.7 million of revenue for its FY22 Q1, up 14% on the previous three months, while EBITDA rose 6.4% on the quarter to $8.1m. The company maintained FY22 revenue guidance for $200-220m and EBITDA guidance of $40-44m.

It cut its net debt from $25.4m to $18.4m during the quarter after raising $16.4m at 42c-a-share in a recent investor entitlement offer. “That … debt figure will likely increase in the short term as the company continues to embark on its organic growth strategy,” Mitchell said.

The company’s 70 or so active rigs worked 4.6% more shifts in the September quarter, versus the previous three months, and are said to be generating A$3.04m per unit, up more than 11% on the previous quarter.

Elf said the outlook for drilling services demand remained positive on the back of global government stimulus and infrastructure spending, reducing mine grades and reserves, increased funding of the mineral exploration sector and tier-1 producer budgets, and Australia’s attractiveness as an exploration investment jurisdiction.

The company has a current market value around A$100m trading at 45c, down about 21% year-to-date.


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