viewCapital Limited

Capital Drilling points to “encouraging signs” in gold market going forward as first-half revenues rise

The drilling services group said recent firmness in the price of the yellow metal was driving “renewed interest” in exploration and increasing the budgets of its customers

Gold price
The price of gold has risen nearly 10% since the start of the year

Capital Drilling Ltd (LON:CAPD) has pointed to “encouraging signs” in the gold market, its main source of business, as it reported a revenue rise in its first half.

In a trading update, the drilling services firm posted revenues of US$54.7mln, up 0.4% year-on-year, while its fleet utilisation rate had risen 13% to 52 rigs.

READ: Capital Drilling “well positioned” to benefit from likely increase in exploration budgets, says Peel Hunt as it initiates at ‘buy’

However, average monthly revenue per operating rig (ARPOR) had slipped 8.5% to US$183,000.

Capital said the result was in line with its guidance for the period, adding that it expected an “improved performance” in its second half after several new contracts began.

The company said that recent firmness in the gold price was a positive as mining activity in the sector accounted for 90% of the firm’s overall business.

The current price of the yellow metal was driving “renewed interest” from equity markets in exploration, the group said, which in turn would increase budgets for mining companies that use its services.

These “positive indicators” alongside several recent contract wins underpinned Capital's confidence in its growth plans for the remainder of the year.

The company is currently guiding for revenues of US$110-120mln for the current full year.

Jamie Boyton, executive chairman, said the firm had made a “strong push” into the West African market in the first half, adding that from the fourth quarter of the year it would also be expanding into Nigeria, a “mineral rich yet poorly explored country” which he said had significant potential.

He added that the company’s operations had continued to achieve significant safety milestones through the first half.

The group also delivered an update for its second quarter, which showed a 0.4% YOY decrease in revenue to US$27.7mln, although fleet utilisation had risen 8.3% to 52 rigs.

ARPOR for the quarter was 6.7% lower at US$182,000.

In early trading on Wednesday, the shares were steady at 53.5p.

Quick facts: Capital Limited

Price: 76.08 GBX

Market: LSE
Market Cap: £104.22 m

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Capital Limited named herein, including the promotion by the Company of Capital Limited in any Content on the Site, the Company receives from...


Market report: FTSE falls after US bankers fail to take action

FTSE kicked off in negative territory today after US central bankers see their recovery from the coronavirus downturn as ‘highly uncertain’. And there’s still no sign of a US stimulus deal being unveiled. The owner of Sports Direct and House of Fraser says it is seeing "a semblance of...

on 20/8/20

2 min read