what lies ahead?

It's almost exactly 2 months since i exited SWK at 38.8c average. SP continued to climb but has slid over past 7 weeks. In general mining and mining service stks have been hammered these past 9 months. SWK has done far better than most. My sense of things in Oz (from abroad) is:
A) labour cost pressures have eased to extent that new employees are being hired at lower wages/conditions than 12 months ago.
B) Cost of comsumerbles such as explosive, drill bits etc has been steady for a while.
C) It's clear that profit margins at all mines has dropped considerably (as commodity prices except oil) continue to decline.

So what is likely to happen?
1) Exploration work has almost ground to a halt except in those mines with established production and strong cashflow. Fortunately SWK largely exited this sector 18+ months ago.

2)Mines will be squeezing blood from contractors as they battle to stay viable. Some mines are likely to close. those renewing contracts will plat hardball.

So how does this affect SWK? 2 things tend to happen. Contractor def wants to stay-on at mine and keep rigs in work. Hence, they will accept wk at a lower margin esp when it's clear mine itself is under strain. In addition most mines prefer to stay with same contractor. They know each other and over contract period many issues are sorted. Newcomers always involve some degree of disruption.

So what lies ahead for SWK?

A) My guesstimate is that until POG turns around any contractor's ability to maintain (let alone increase)
margins will be severely hindered. Hence, i expect new contracts hereon will be at lower margins.
B) But i don't expect SWK to lose any contracts. They have considerable CA and know they can undercut competitors in cost per metre drilled.
C) a potential game-changer is the automatic rod handling adaption. This saves 33% of labour requirements and only SWK has this capability.... at least as far as i am aware.

In summary i reckon SWK's EPS for 2HFY13 will be about same as 1H but outlook is subdued unless POG leaps. Hence now anticipate no increase in divs despite debt almost disappearing.