Setting world standards for drilling services
When Brian Rudd, CEO of emerging markets focused drilling services giant Capital Drilling, headquartered from Singapore, told AuBJ that the company intended on being “the best drilling company in the world,” in September, 2009, there was no going back. Since that standout article, we have hotly pursued the company and its many subsequent announcements and the result? Rudd was right on the money.
This company has become the go-to for many mining projects in locations spanning its beginnings in the Lake Victoria goldfields region of Tanzania, on to Zambia, Egypt, the Democratic Republic of Congo, Pakistan, Armenia, Serbia, Papua New Guinea, Mozambique, Hungary, Eritrea and Chile. But Capital Drilling shows no signs of slowing up its global quest. Continuing to deliver on each and every job by following its company motto, developed market standards for emerging market operations, the company raises the bar for drilling services wherever it goes. Here is a recap of the many great feats Capital Drilling has under its belt since our last encounter.
A long way in a short time
Founded by Rudd and executive chairman Jamie Boyton in 2004, Capital Drilling now spans four continents and operates one of the industry’s youngest fleets of over 60 drilling rigs strong (in 2005 the company owned just two). In 2006, building on its original location in Tanzania and early work in Egypt and Zambia, the company began its marked ascent by entering new projects including Anglo Ashanti’s Geita Gold Mine in Tanzania, the Reko Diq Project in Balochistan in 2007, in Papua New Guinea with Barrick Asia Pacific in 2008 and in Mozambique for Riversdale Resources and Baobab Resources in 2009 to name a few.
The company moved into the blast hole drilling sector in around November 2008 as a diversification in response to the GFC, and as we last spoke it was in the process of adding another built track mounted RC rig to the Geita Gold Mine. That same month, on November 7, 2009, Capital Drilling announced the commencement of its drilling program in Eritrea for Chalice Gold Mine Ltd. on the Zara gold project. Once again, as the number of foreign mining companies with permits in Eritrea grew and continued to do so throughout this year, Capital Drilling was right alongside, riding on the cusp of the wave of project development. The company’s involvement in the Zara gold project was met with glowing reviews, and it was not long before it began advertising positions to gather more experts for its work in both Zambia and Egypt—a strong indication of its growth and the way the company goes about attracting, training up and retaining its superior workforce.
Capital Drilling’s ability to stay flexible and adapt to emerging markets is not surprising in hindsight —not only is doing this part of its company mission statement, but as a means of dodging the brunt of the GFC and continuing plans for expansion today. Other areas of interest expressed include underground drilling, coal bed methane and more.
Capital Drilling’s first half of 2010
Without question, one of Capital Drilling’s most well-publicized moves in this past year has been its admission to the Official List of the U.K Listing Authority and to trading on the Main Market of the London Stock Exchange (LSE). This took place on June 7, 2010, with 33.8 million new shares placed at 61.5 pence per share, gross proceeds of £20.8 million, of which £13.6 million was primary, and a market cap of approximately £82.77 million (having grown well since). The placing of 22.1 million shares raised gross proceeds of £13.6 million (circa US$20 million) and was conducted with Liberum Capital Limited (as sponsor, financial advisor and broker).
Rudd says Capital Drilling’s admission to the Official List is “a mile stone in the company’s history and a very proud moment for myself and the founding share holders along with all our team.”
“This listing has enabled us to strengthen our balance sheet and take on the growth opportunities that fit into our model and also make ongoing improvements to our current fleet. ”
Capital Drilling’s market value jumped by over £6 million within its first day of listing on the LSE main list, showing no signs of difficulty as observed with other companies who attempted to make the same move earlier on this year. Clearly Rudd’s mention of the ‘challenging markets’ in no way laid waste to the continued growth of the company.
Speaking to media about the highlights in company activity for the first half of this year, Rudd notes that around 18 rigs were mobilised as a result of different contracts won. In moving a quarter of its entire fleet, this was Capital Drilling’s biggest deployment to date. From June, another nine rigs were mobilized which saw the company’s utilization rate rise to 80 per cent for August. Additionally, the company achieved average revenue per operating rig (ARPOR) which totalled $128,000 for the first half of 2010 and climbed to $140,000 by June. A further five rigs were ordered, according to the company’s half yearly results, in order to meet client demand and take the total year-end fleet to 69 rigs. It appears that all manner of equipment, from full rigs to BW1000-12 Mud Pumps such as those supplied by BJRT International, is always a possibility when Capital Drilling bolsters its ever-growing global reach. As work continued on in the company’s historical business activities, a contract with ASX-listed OilSearch Limited marked the first ever contract for its energy division.
“After a difficult 18 months in the industry following the impact of the credit crunch, the first half saw a recovery in tendering and drilling activities. Capital Drilling was successful in the first quarter with a number of contract wins which presented a different challenge in the second quarter, namely the successful mobilisation and commencement of these contracts. With the arrival of rigs into Chile and Zambia in August, this mobilisation process is now largely complete,” Rudd stated.
“While Capital Drilling confirms that our current expectations of net profit after tax for the 2010 financial year remains consistent with the guidance at the time of IPO, we are encouraged by increasing activity in all of our regions, supporting our view of a more significant weighting of earnings in the second half of the financial year.”
It was not long before the company’s expectations of a fruitful second half in 2010 were realized.
Capital Drilling’s second half of 2010
Another promising detail in Capital Drilling’s first half 2010 results, was its lost time injury (LTI) milestones including Geita in Tanzania which achieved 1,000 days LTI free in January 2010. By August 16, 2010, Capital Drilling Egypt hit 500 days LTI free for the Sukari site, Zambia achieved 1,000 days LTI free on August 21 and Tanzania North Mara achieved 500 days LTI free on August 31.
“Egypt in its self has been an exciting place for us to work in and as a company we have grown along with our client from where we started there in 2006 operating four exploration diamond rigs with 30 odd staff and now today with over 230 and 18 drilling rigs,” Rudd says.
“We have also recently commenced drilling in Chile with four diamond rigs and currently have a number of new rigs been built to service new clients coming on board, in both Chile and the Latin American Market and to support this with have established office and warehouse centre in Santiago that we serve as our regional base and have future plans to establish satellite bases to strengthen field support to our operations and clients as the business grows.”
The entire month draws greater attention to the health and safety and training standards Rudd spoke about in our September issue. He told AuBJ that “We make sure everyone comes home with 10 fingers and toes,” at Capital Drilling and almost a year on, these results support his emphasis on how the company centrally places efforts to care for workers. Its high standards have long been an ingrained company characteristic —Capital Drilling has been a member of the Mineral Drilling Association of Australia Inc. since 2006. Contract success continued this month too, and Rudd and on August 31 the team took on a new role with Red Back Mining in Mauritania at the Tasiast project— a large gold mine in production at more than 250,000 ounces per annum. Capital Drilling’s initial contract entailed bringing five rigs in for development drilling.
“This month we started drilling on our most recent contract win in Mauritania with new two diamond rigs that were flown in with 30 tonnes of support equipment and by the end of this month we will have flown in another three new rigs and all their support equipment,” Rudd stated.
“Branching off from our experience in Egypt as a company and embracing the local culture and understanding the business environment we feel that this has placed us in a good position to develop our business in Mauritania and grow in the region.”
Let’s face facts. Between founders Rudd and Boyton’s vision for the company, wide ranging global experience, now well-established track record for safe, timely and cost-effective project completion, and Capital Drilling’s keen ability to apply developed skills to emerging markets, things are certainly looking good. If the company says it will explore a new business avenue —such as underground drilling or energy —you can bet that in a matter of months it will be there on thebooks. If it enters, or expresses hopes to enter, a particular market or location, the same applies.
“Recently we started another division called Well Force International which provides directional drilling management services and hires out down hole logging and survey instruments, Supply Force International is our own procurement group which is now growing in its own right,” Rudd says.
“[It is also] supplying its services to our competitors and customers in Africa and other parts of the world and we have plans to further strengthen its ability in which will come into play in the first quarter of 2011.”
In our September 2009 issue, not only did Rudd teach us on how well the company was doing, but he laid the foundations for what appears to be a highly successful first half of 2010 and a second half following right along. No financial crisis, client requirement or project challenge is too great, and a perfect balance between adding services and retaining historical strengths has been struck.
“Our focus is to continue to add value and support our customers’ needs with the best possible industry practices and doing all this in a safe and efficient manner,” Rudd says.
They don’t come much better than Capital Drilling, and as long as the company continues to set the standards for other drilling services wherever it works, that doesn’t look set to change.