Boart sees strong growth on surge in exploration

Mon Mar 7, 2011 5:11pm EST
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By Euan Rocha

TORONTO (Reuters) - Boart Longyear, the world's largest provider of drilling services to miners, expects solid earnings and revenue growth this year, as strong metal prices push miners to boost exploration spending.

Boart expects its revenue to rise about 20 percent to $1.75 billion in 2011, said its chief executive, adding that earnings before interest, taxes, depreciation and amortization are expected to rise 35 percent to $300 million.

The company expects much of its growth to come from regions outside its traditional strongholds.

"The majority of drilling is Canada, the U.S. and Australia and it has been for years," said Kipp. "But most of the resource companies that we are now dealing with are heading toward South America and Africa," Chief Executive Craig Kipp told Reuters in an interview.

Kipp, a long-time General Electric executive who joined Boart in 2005, took the helm of the drilling services company in early 2009.

Kipp said the company, which also manufactures drilling equipment that it sells to other drilling services companies, is running at about 75 percent capacity in its services business.

"We have a little spare capacity right now that is available. I would not be surprised, if that continues to tighten. We certainly expect it to get to 80 percent this year, so we are moving toward full utilization," said Kipp.

The Salt Lake City, Utah-based company considers 85 percent to be full capacity. The company always has some rigs that are undergoing maintenance or being transported.   Continued...