Driller Diversifying to Meet Client Needs

Q: To what extent have you seen demand for your services pick up in 2016 and 2017 as commodity prices have turned a corner?

A: While the market still appears to be at the bottom end of the curve, during the first half of 2017 the majority of drillers received up to 50 percent more bid requests compared to the previous year. The average amount of the total rigs on contract in Mexico has moved up from its lowest point of 25 percent during the downturn to its current level of around 45 percent. We are pleased that at our lowest point during this 204 lengthy downturn, which was 2014, Globexplore still had 75 percent of our rigs on contract. In 2015 we had 83 percent, in 2016 we reached 86 percent and we are now at 95 percent of our fleet on contract. This high rate of rig utilization is remarkable considering we increased the size of our fleet by 30 percent from mid-2015 to the beginning of 2017 to meet our clients’ demand for additional man portable and deep hole core rigs. The current political and economic environment makes it challenging to predict what lies ahead but we feel optimistic about the future and our prospects for expansion when the market finally recovers.

Q: What are the largest greenfield and brownfield exploration projects the company is working on in Mexico?

A: Over the last 24 months we have won three separate 100,000m contracts. One is already completed and the two others are more than 50 percent complete. We are in discussions for two more 100,000m contracts with multiple clients. These are very large contracts; one is in complicated ground conditions with large caverns and open voids. The majority of holes are deeper than 1,000m with many to 1,400m. We are now expanding the program to 2,000m depths. This project is in a location that suffers from security issues so we operate with a low-profile camp-to-rig set-up. We have completed over 180,000m at this project with zero accidents and completed every hole on target, comfortably ahead of schedule.

The second large contract is in a remote area where we are operating a wide variety of specialized drilling types simultaneously. We are running standard surface core drilling along with a large campaign of man portable rigs, RC drilling and underground core drilling. This contract is at the halfway point, ahead of schedule and with zero accidents. We also have several smaller, 1,000m contracts with junior exploration companies and larger producers doing both greenfield and brownfield exploration. It is important to always give the same respect and quality to any size of contract. The larger contracts always start with the first drill hole and many of our larger contracts were won because of our performance on that first, small program.

Q: What are the biggest trends impacting the drilling industry in 2017 and how does Globexplore fit into that context?

A: The first major trend is that successful exploration companies are measuring pricing with performance and this is having a direct impact on drill program results. There are two types of clients in our industry; one that simply selects the lowest priced contractor and another that takes the professional responsibility of verifying the reputation and track record of a potential contractor. The client that selects the lowest price more often than not ends up paying more to complete their drill campaign due to various delays, missed targets and poor sample recovery. The client will often need to replace this failed contractor and restart the campaign entirely. The more experienced client calculates the true cost of the price per meter at the end of the program with all variables as an accurate comparison to other contractors in the past. These companies recognize that taking the time to analyze historical performance makes a huge difference in their true cost per meter. Drilling is no different than other services in that reliable quality results often cost more.

The second trend is that exploration and mining companies need a contractor that can provide a full spectrum of options. We are currently on contracts with a wide range of specialized drilling techniques from large diameter PQ diamond core to deep holes exceeding 2,000m, Man Portable, Underground and RC. Our clients trust us because they know we have the proven track record and reputation for excellence in each of the four types of drilling we provide. They know that we have invested in experienced human capital along with the latest technologies and modern drill fleets that give our clients the flexibility to hit their targets with the best option of their choice.

Q: How does the company plan to position itself to retain is reputation as a leader in drilling innovation and client service?

A: While we are very proud of our reputation as a leader in the high-quality performance of the four types of specialty drilling we provide to our clients, we have a strong corporate value of constant improvement. Every member of our team operates with this mentality and as managers we encourage, motivate and reward new ideas and solutions. We have a consistent model of successfully completing every contract we commit to with our clients, and we complete every hole on schedule. We have never left a contract early without seeing it through to the requirements of our clients, and every single company that has hired us would do so again and recommend our performance.

Q: How does Globexplore differentiate itself from the numerous other drilling companies around the country?

A: While our Headquarters is in Hermosillo we currently have five satellite facilities that include full logistical support with maintenance shops, administrative offices and extensive inventory warehouses throughout Mexico. Our clients often comment that they choose Globexplore because they consider us experts in the four different types of drilling services we provide. We are experts in all the important drilling techniques, including Traditional Core, Man Portable Core, Underground Core and Reverse Circulation. Our clients like the fact that as their drill program progresses they can rely on

one contractor who can quickly adapt from an initial reverse circulation reconnaissance drill program to a deep hole core rig or remote man portable exploration rig. We have earned over 35 letters of recommendation and testimonials to prove that we are exceeding our clients’ expectations in each of these four specialty drilling types. We never offer a service unless we are certain that we will be the best at it.

Our Diamond Drill fleet offers traditional core rigs mounted on tracks, skids, trucks and deep hole core rigs that reach targets beyond 2,000m along with the most modern Man Portable Drill rig fleet operating in Mexico. Our RC drill rigs are close to 50 percent more compact than what is commonly found in the industry with remote compressors that can be run up to 150m away from the rig, giving our clients flexibility and generating savings on drill pad size and construction.

Q: How is the company planning to expand its business throughout Mexico and on an international scale?

A: We are currently in the final stages of researching the markets of South and North America. We have clients in Mexico that have asked us to provide services in both Peru and the US, so these markets are the natural next destinations. We hope to make significant progress on this goal during 2018 and 2019. We have been responsible and patient about this next step until we are certain that we can provide the same high level of quality before we enter a new market. We have earned a strong reputation in Mexico and will only move when we know we can continue that in the next country. We have our systems, policies, corporate culture and most importantly the management in place. With our client partnerships getting stronger every year, it is an exciting time for Globexplore.