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LONDON (Alliance News) - Capital Drilling Ltd shares rose on Thursday after it substantially increased its dividend despite reporting a fall in revenue and earnings in 2015, as drilling activity declined due to the ongoing downturn within the natural resource markets.
Capital Drilling shares were trading up 16% to 31.35 pence per share on Thursday morning.
The drilling company, which focuses on emerging and developing markets, said it will pay a final dividend of 2.5 cents per share, building on the interim dividend of 1.1 cents per share to give a full year dividend for 2015 of 3.6 cents.
Capital Drilling paid its first dividend at the end of 2014, announcing its maiden final dividend of 1.9 cents per share.
That payout comes despite the company reporting a fall in revenue to USD78.7 million from USD98.8 million in 2014, widening its net loss after tax for the year to USD10.2 million from USD600,000.
Earnings before interest, tax, depreciation and amortisation dropped to USD9.9 million from USD20.4 million, and the company also turned to a loss before interest and tax of USD4.7 million from a USD3.9 million profit last year.
The company said it expects to return to revenue growth and profitability in 2016.
Capital Drilling appears to have been hit by the slowdown in activity within commodity markets, as its fleet utilisation rate dropped to 34% in 2015 from 43% the year before. The company had one more rig than it did in 2014, and currently has 97 rigs on its books.
The average annual revenue from each operating rig remained flat in the year USD188,000.
Capital Drilling said its net asset value per share at the end of 2015 fell to 57.0 cents per share from 67.6 cents.
The company managed to move out of the red by the end of the year, turning to a net cash position of USD10.8 million from the USD400,000 net debt position at the end of 2014.
"Despite the significant softening of commodity prices and the subsequent headwinds suffered by the global mining industry in 2015, Capital Drilling further strengthened its balance sheet, generated positive free cash flow, and paid our first dividends since inception in 2004," said Chief Executive Mark Parsons.
"The financial performance of Capital Drilling demonstrates our robust strategy of focusing on cash generation from our assets, a high quality and young fleet, and providing blue chip clients operating long life of mine assets with multi-year drilling contracts," he added.
Capital Drilling said it plans to grow its market share in emerging markets, increase its suite of drilling services, and enter into strategic partnerships during 2016.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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