It was another day of grief for the remaining shareholders in the world’s largest drilling company, Boart Longyear (BLY), which revealed yet more bad news.
The company’s shares plunged to all-time lows after the company revealed yet another fall in first quarter revenue, and in its drilling rig utilisation rate.
Boart, which made a net loss of $US620 million in 2013, said revenue continued to fall at the beginning of 2014 as the company shed more staff and began a strategic review.
The shares fell 19% at one stage to an all time low of 23.5c. They ended down almost 15% at 24.75c.
The company revealed a 47% slide in first quarter revenue to $US197 million ($213.15 million), from $US370.2 million in the first quarter of 2013.
Given the cost cutting and other efficiencies mining and oil companies of all sizes are engaged in at the moment, such a fall was to be expected. What seems to have shocked the market was the extent of the revenue slide.
Rig utilisation fell to 32%, from 39% in the previous corresponding quarter, Boart said.
"Utilisation rates remained at relatively low levels during the first quarter of 2014, driving a 47 per cent reduction in revenue compared to the first quarter of 2013 and a 91 per cent reduction in adjusted EBITDA (earnings)," Boart said.
But Boart directors attempted to put the best spin on the weak news by saying that cost cuts of more than $US80 million for 2014 were on track and more than $US800 million of reductions were achieved in 2013.
Compared to the fourth quarter of 2013, the company’s revenue was down $US27 million, or 12%, due to a ‘‘slow seasonal start-up’’, as Boart explained in yesterday’s statement.
BLY 2Y – Boart Longyear’s latest bad news quarter
The company has commissioned Goldman Sachs to carry out a strategic review of capital options. Yesterday’s poor first quarter news heightens the need for the company to decide on these options.
Boart’s 2013 loss was caused by $US461 million of restructuring costs and impairments in 2013 financial year as well as a sharp fall in revenues and operating losses.
It cut 3,481 jobs as miners large and small reacted to weak demand and prices by cutting drilling plans, expansion and shelving maintenance and other spending plans.
The company holds its AGM in Sydney on Monday week, May 19.
