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LONDON (Alliance News) - Capital Drilling Ltd, a drilling company focused on emerging and developing markets, Thursday reported a decrease in revenue for the first nine months of the year following weak demand across the industry.
During the third quarter ended September 30, revenue totalled USD23.6 million, compared to USD21.7 million a year earlier. For the first nine months of the year, Capital's revenue reached USD77.4 million, down compared to the USD94.4 million generated in the same period in 2013.
"This quarter's revenue recorded a modest increase on the previous corresponding period last year amidst a continuing weak demand environment across the industry," it said.
The company has a fleet of 97 rigs, and quarterly revenue attributed an average of USD179,000 per rig compared to USD165,000 a year earlier, but the figure was down compared to the previous two quarters.
The average revenue per oil rig "fell 7% compared to the first half, reflecting the annual impact of Ramadan and less consistent drilling activities across exploration and delineation drilling," said Capital.
The company reported a rig utilisation rate of 44% during the quarter. The company said that the rig utilisation rate has remained steady and in the mid 40% range over the last five months. The rig utilisation rate measures the amount of rigs being used from the company's entire fleet.
Capital has continued to focus on blue chip clients and resources, with 50% of its revenue coming from long-term production for blue chip companies. Capital Drilling Tanzania, its subsidiary, was awarded a new one-year contract extension with African Barrick Gold PLC to continue grade control drilling at the North Mara gold mine until the end of 2015, it said in a statement.
"Capital Drilling has continued to face tough trading conditions due to the impact of the global slowdown in mining and the resultant demand impact on the services industry. Recent data released by market researcher SNL reported a 25% decrease in worldwide non-ferrous exploration budgets in 2014, with spending back to levels last seen in 2007, highlighting the challenges faced across the industry," said Executive Chairman Jamie Boyton.
Capital shares were down 2.8% to 26.25 pence per share Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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