Hi all,I was able to join the briefing teleconference this...

Hi all,
I was able to join the briefing teleconference this morning and thought I would try and provide a run down of what was said. Each component of the business was broken down and discussed so I will do the same.

Hughes Production drilling - Is going along nicely as reported in the 1/2 yearly. Current rig utilisation is 38 out of 41, with predictions of approx 85 - 90% utilisation for the remainder of FY14.Someone asked a question re contract lengths and the response was along the lines of that they are all varied and even those that are expiring in 12 months can / may be extended. Even if lower prices are negotiated, the buying power of the group is so strong that margins can be maintained by squeezing the most out of material suppliers.

Hughes Delin - Still struggling. Will try and move some to WA but no confidence in this. Will also sell some rigs if the right price is offered. As known, this is the main drag on NPAT.

JSW - Will have 31 rigs in work by the end of FY due to contract wins. 2nd 1/2 revenue to be much higher than 1st 1/2. Also tendering for a fair amount of delin drilling and water drilling going along smoothly. Capex in the 2nd half related to JSW will be significantly less in the 2H unless more contracts are won and new rigs need purchasing. The price of Iron ore was discussed as a potential stumbling block if it heads south of $80 / tonne. This might be something for us to keep an eye on.

Reichdrill - Was my biggest concern initially but judging from the confidence from management, this section is actually going very strongly. The group has won a major contract to supply 7 rigs in FY15/16 to a major miner in NSW. That, along with servicing and supplying tangibles etc will be worth $30M over 2 years. The large rigs on order sell for around $2.8M ea. They also have 8 rigs on order in Sth Africa due to be delivered over the next 12 months - these are smaller than the above mentioned so I am not sure what they are worth. Bob was currently presenting at a conference in Las Vegas and says that at least 15 rigs are being bought as a result. This, as well as many tenders that are active have this part of the biz looking excellent.

Express Hydraulics - The recent contract wins should apparently see this side of the biz make stronger contributions in the future. Not much was said, but from the little it was mentioned it seems to reasonably safe.

Overall the feeling I got from management was that although there are many challenges ahead all seems pretty good. There was a mixture of shareholders and institutional / analysis representatives on the call which will hopefully see some positive reviews soon??? A question was received on along the lines of "so will revenue of $100M be accurate" to which yes was confidently given. Bob was also very bullish on the recovery and mood coming from Nth America so it is pleasing to know we have a strong presence there with Reichdrill.

I was a bit gutless in not asking if more announcements will be made in regards to progress and contract wins, so apologies there.

Overall I feel much better about the position we are in and will be happy to hold for a bit longer. If I had more spare cash I would prob be buying, but that is just me. Hope this has helped to allay some concerns.

*Also it appeared that the old owners of JSW have a very high opinion of Bob Hughes and the business he had built up. It almost sounded as if the recent purchase of JSW by Hughes was more in fact a merger and that JSW did so because of Bob and the Hughes biz??

Cheers MJP.