The continued future of Boart Longyear is cloudy following the driller’s latest negative financial results, giving less than 12 months for the company, or the market to turn around.
The company has recorded a massive fall in revenue in its latest first half results, seeing a fall of nearly US $300 million year on year.
The situation for the company is grim, with Boart Longyear CEO Richard O’Brien stating “as indicated in our most recent market updates, we feel we are at, or approaching, the bottom of the market”.
In the results, the company added that “the ability of [Boart Longyear] to continue as a going concern is likely to depend on the company successfully concluding its strategic review of recapitalisation options with completion of a recaptialisation transaction no later than 30 June 2015”.
“Without such a transaction, in order to continue as a going concern, the company would need to either experience a significant and rapid improvement in market conditions and the financial performance of the company, or secure a future amendment to the terms of the credit agreement to provide additional head room at 30 June 2015, none of which is being assumed at present.”
Regarding its strategic review, Boart Longyear has explored a number of recapitalisation options including standalone debt and equity, a combination off the two, debt-to-equity conversion, and other possibilities.
Year on year the company has made am adjusted net loss after taxes of US$ 68 million, a spike from the the US$24 million in the previous period.
It generated only US$ 421.5 million in the first half of 2014, compared to US$ 718.9 million in 2013, and US$ 1.098 billion in 2012.
Boart Longyear has not recorded a profit since 2012.
This continued struggle for the company was forecast earlier this year.
There was even talk of a partial break up of the company to reduce debt and generate revenue.
It has taken the knife to its headcount in an attempt to slash costs, reducing its staff numbers by 48 per cent since 2012, with CEO Richard O’Brien stating at the time that “we have taken decisive and aggressive action throughout the year to confront and manage the challenges created by our market and leverage”.
Boart Longyear turns 125 next year.
However it is not the only driller facing hardship this year.
Drilling contractor Swick Mining services also saw a massive falling in NPAT, dropping 83 per cent on the back of reduced demand and the suspension of its underground division.