RE:RE:RE:RE:And another highMDI mgt was also mentionning that there is a shortage of drillers. When they were looking at M&A, they were not interested to buy rigs without crews.
You are right on the utilization rate, by definition they can't get to 100% because some rigs are located in locations (think up north) where the drilling season is short. Add to the downtime between jobs, maintenance and here you go. I think they can still add a few pourcentage points to get to 60 but there is not a lot of capacity left.
If capacity can not be expanded quickly, the rates should start to ramp up pretty soon as contracts get renewed. Beauty of a fixed cost business, all increases in rates fall straight to the bottom line after paying the tax man of course.
Another factor : everything being equal, this cycle should require more meters drilled as exploration targets are getting deeper and in more isolated/difficult locations as easy pickings were done in previous cycle. This bodes well for specialized drillers like Foraco or Major Drilling.
Own also a few MDI as they seem the best company in this industry. But buying the most levered one (like Foraco) can bring the best returns. This is why I was wondering about Boart. This being said, it is also a nice factor in this recovery : the biggest player is quasi bankrupt. They should be quite logical in their pricing.
GLTA