Capital Drilling Swings To Annual Profit On Revenue Growth

LONDON (Alliance News) - Capital Drilling Ltd said on Friday it saw a substantial swing to profit in 2017 on top of revenue growth.

Shares in the drilling services company were up 8.3% at 39.30 pence on Friday.

Capital Drilling reported pretax profit for 2017 at USD9.7 million, swinging from a loss of USD1.0 million the year before, driven by higher revenue more than offset rising administrative expenses.

Revenue rose to USD119.5 million from USD93.3 million, generating a gross profit of USD39.3 million from USD26.3 million, with increased contributions from the Geita and Sukari production contracts, as well as contracts from Mali, Mauritania, Kenya and Serbia.

The average fleet size in 2017 was 93 drill rigs, down from 94 rigs in 2016, which helped push up the fleet utilisation rate to 53% from 45% and the average revenue per operating rig to USD194,000 from USD177,000.

Capital Drilling will pay a final dividend of 1.2 cents per share, up from 1.0 cents the year before.

"Capital Drilling saw a return to profitability in 2017 as the company continued to drive down costs, extend long-term contracts, as well as secure additional long term contracts in the West Africa market. Capital Drilling has also benefitted from the gradual improvement in market conditions in the mining sector, driving another year of strong revenue growth," said Executive Chairman Jamie Boyton.

"Metals prices improved over 2017 and there was a strong increase in capital markets activity, which has translated into increased budgets from mining and exploration companies. The work done in 2016 in preparing and mobilising assets in preparation for the improving sector contributed to an outstanding increase in cash generation and profitability for the group," Boyton added.