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Driller downgrades guidance due to weather, COVID

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Driller downgrades guidance due to weather, COVID

The company had previously predicted that it would increase the number of operational drill rigs to 85 by the end of June, but said that record rainfall in Australia since late 2021 had hampered its plans.

“The company has incurred material costs in preparation for the start of these new projects,” Mitchell explained, “and will not be able to mobilise and generate gross margin from operations of these projects until it is dry enough to do so.”

“COVID-19-related absenteeism due to illness or close contact isolation is at an all-time high, with the company’s productivity and project margins suffering as a result,” according to the company.

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“While the Company remains optimistic that absenteeism levels will decline in the near future, particularly in light of the recent relaxation of close contact isolation requirements, the impact of absenteeism on revenue and operating costs continues to be felt.”

Mitchell has reduced its FY22 EBITDA guidance from A$40-44 million to $31-35 million as a result.

The delays were partially offset by new contract wins and extensions, according to the company, which reaffirmed its FY22 revenue guidance of $200-220 million.

It anticipates that capital expenditures on new rigs will be mostly complete by June 30, allowing it to concentrate on generating strong cashflow.

“The company expects the company’s expected operating rig count to drive increased revenue and earnings for the year,” Mitchell said.

Mitchell reported $54.5 million in revenue for the March quarter last month, including a record $20.2 million for the month of March.

EBITDA was $8.6 million in the March quarter, with $6.1 million in operating cashflow.

Yesterday, Mitchell stock closed at 34.5c, valuing the company at $77.6 million.

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