Capital Drilling Limited (LON:CAPD) highlighted a 6.1% increase in quarter-on-quarter revenue as it released a Q3 update and told investors it is trading in-line with expectations.
The rig contractor, in a statement, said it is “well on track” to hit full-year revenue guidance of US$110mln to US$120mln.
It highlighted that increasing activity is expected through the remainder of this year which will see revenues further increase in the fourth quarter.
The Q3 update revealed revenue of US$29.4mln, which was a 6.1% improvement on Q2 but a 5.2% decline on the same three months of 2018.
Rig rates, measured as ‘average monthly revenue per rig’, were marked at US$174,000 in the quarter versus US$198,000 a year ago. This reflected a temporary reduction in drilling activities at Acacia's North Mara gold mine in Tanzania, where the government has suspended the use of tailings facilities - an issue which has subsequently been resolved.
Fleet utilisation remained fairly consistent with 48 rigs running, as there were in Q2, compared to 49 in the 2018 period. Capital Drilling retains a fleet of 92 rigs.
The company noted that it ended the quarter with US$2.5mln of cash, and declared an interim dividend of 0.7 cents per share for the first half of 2019.
Capital Drilling chief executive Jamie Boyton commented: "In the first nine months of 2019 Capital Drilling has positioned itself for further growth, which is now bearing fruit with strong exploration contracting and mobilisation activity and, as recently announced, broadening our service offering with the award of our first comprehensive mining services contract with Allied Gold Corp at their Bonikro gold project.
He added: “Our West African growth strategy continues to pay dividends, with a record number of contracts commencing in Q4. During the quarter, we have invested to support the new contracts, and we are confident that Capital Drilling is building a stronger, broader revenue base as a result.
“With increasing activity levels already seen in Q4, underpinned by high-quality long term contracts, we are optimistic of a solid performance for the remainder of the year as well as into 2020."
A busier fourth quarter
In the trading update, Capital Drilling noted that it has a strong pipeline of work including three new exploration contracts commencing in the fourth quarter - for Mali Lithium (in Mali), Perseus Mining (in Côte d'Ivoire) and Tanga Resources (Namibia).
It is also starting work on seven previously announced contracts - Allied Gold Corp (Côte d'Ivoire), Arrow Minerals (Burkina Faso), Awale Resources (Côte d'Ivoire), Compass Gold Corp (Mali), Desert Gold Ventures (Mali), Golden Rim Resources (Burkina Faso) and Thor Explorations Ltd (Nigeria).
Meanwhile operations continue under long term site contracts such as its deals with Centamin, at the Sukari mine, and AngloGold Ashanti’s Geita mine in Tanzania, Capital Drilling said.