Ann: Appendix 4E - Preliminary Final Report , page-5

Reckon given the current environment for contractors its a very good result - utilisation is high, real rates are stable to positive - most other contractors would die for this.

It looks like they are paring back growth in the coal business with only 2-4 rigs planned to be bought in FY14 - but with the long life of exisiting fleet (avg age of 3.5 years vs life of 11-14 years) the coal business should continue to be a very good cash generator. And given the business has remained robust in these markets conditions there appears no obvious reason why things should decline from here. I'd expect their net debt (excluding the acqn) will continue to reduce next year.

In this context the proposed acquisition makes sense - gives them another path to growth and they can manage the debt taken on due to forecast cashflow from the coal business. I can't imagine they'd be paying a full price in this market. Combined with Reichdrill it provides them with a pretty interesting platform.