Swick shares soar on bullish outlook11th May 2009, 12:30 WST...

Swick shares soar on bullish outlook

11th May 2009, 12:30 WST

Shares in drilling service provider Swick Mining Services soared more than 20 per cent after the company updated the market about its improved fleet utilisation and gave a bullish outlook on demand for its services.

The company forecast a full-year revenue of $85 million, slightly lower than previous guidance, but said it expected improved margins in the second half with the absence of one-off costs and the benefit of improved efficiency and cost reduction.

Rig utilisation had risen from a low of 22 rigs in January to 37 rigs today, near the company’s record utilisation of 40 rigs in September last year.

“Management expects fleet utilisation and revenue to continue to improve during the year, assuming conditions remain stable,” the company said in a statement.

Swick attributed the rising utilisation rate to organic growth among the company’s blue chip clients and business development aimed at securing work in the gold and iron ore sectors where demand remained strong.

The company said it had also secured several new contracts in the past week and was awaiting decisions on several other tenders it had lodged.

Swick said full utilisation of its existing fleet would result in potential revenue of about $12.5 million a month.

Swick shares were up 7.5 cents, or 21.43 per cent, to 42.5 cents at 12.40pm.

STUART McKINNON