New contract wins
The Company has announced two contract awards with Centamin and Sama Resources, which are both highly significant for different reasons. The contract extension with Centamin underwrites continuity of a substantial proportion of group revenues over a 5-year period, while the new contract with Sama is the first in the Cote d’Ivoire and highlights the potential of West Africa, since the Company strategically repositioned one-third of its rigs in this growth region. While we retain existing forecasts, these contracts greatly improve revenue visibility and therefore should increase investor confidence. Further contract awards would have a significant drop through to profits and offer potential forecast upside. The shares offer good upside to our 85p price target. These contract awards should be taken well.
Capital Drilling Ltd (LON:CAPD) provide complete exploration and production drilling solutions to customers within the global minerals industry, with a focus on the African markets. Their clients include Rio Tinto, Antofagasta, Glencore & BHP Billiton.