Fred Davidson
CEO
Energold Drilling (Energold)
/
View from the Top

Drilling Firm Looks to Majors Carrying Out Exploration,

Wed, 10/21/2015 - 16:21

Q: How has Energold improved its operations in Mexico as it secured new funding and incorporated new acquisitions into its fold?

A: In 2014, Energold renewed a US$10 million debenture from 2011 used for an acquisition in the energy services space, which has now reached US$13.5 million. Mexico holds tremendous promise in the energy space given its proximity to hotbeds of activity such as Texas. We are continuing to evaluate possibilities of offering additional energy services such as seismic drilling and shallow production here. Furthermore, given our experience and logistical advantage in Mexico, we have begun to offer seismic, water, geotechnical, as well as other products and services that Envirodrill, Dando Drilling, and Bertram have brought to the Energold group.

Q: How has Energold sustained its business despite the worldwide drop in exploration budgets?

A: Energold offers a unique value proposition for many of our clients where we provide drilling solutions that also maximize exploration dollars through logistical savings by removing the need to mobilize helicopters and heavy trucks to the sites. Furthermore, we are able to generate goodwill and local support through our hiring policies. In a world where resource nationalism is increasing, being known for gaining positive rapport with the locals is a big plus for many of the midcap and major miners we work with. This social benefit is an edge we provide to majors. Energold has been successful in continuing to source work from majors who have a long-term commitment to keep a pipeline of projects going. On a positive note, some majors are now starting to make acquisitions and investments in midcaps and select juniors. In several instances, Energold has drilled for the junior companies that simply continued their drilling programs after being absorbed by the majors. With our experience in energy, geotechnical, and water, Energold has been able to transition more mature projects into brownfield longer term contracts. The trend of more majors conducting their own programs instead of relying on juniors also meant they were more likely to further projects closer to production and cash flow. Energold has been able to capture some of that transition in Mexico and parts of South America.

Q: How have Energold’s R&D, manufacturing, and logistics strategies been evolving in Mexico?

A: We consistently invest in the R&D of our drill rig technology as it is a crucial part of being able to stay ahead of our competitors. With Dando’s history of developing some of the best rigs in the world for the last 150 years, we have been innovating and building Energold’s rigs at Dando’s facility since our acquisition in 2011. However, given our significant exposure in Mexico, it certainly makes logistical sense to build a plant here. In fact, Energold already has a small manufacturing facility in Chihuahua that produces specific parts and maintenance parts for our rig fleet in Mexico. When we set up an operation anywhere in the world with our frontier rigs, we always ship the rigs with at least six months’ worth of consumables and supplies, as logistics and import processes are generally time-consuming.

Q: With many drilling companies shedding personnel, has Energold been able to attract any of this talent?

A: The downturn in mineral drilling activity worldwide has certainly provided us a large pool of experienced drillers and drilling supervisors to choose from when projects come up. We have an HR manager who scours the field for talent and matches it up with jobs when they become available. Human capital is one of the three crucial pillars of our operation, besides the rigs and logistics. We learned from the brief downturn in 2010 that securing the right talent when the market is slow means we can grow much faster again when the market rebounds.

Q: What progress have you made in harnessing renewable energies in your operations?

A: One of Energold’s main operating advantages is minimizing impacts on the local environment. The incorporation of renewable energy into our operations is another notable step to helping commodity exploration become as non-invasive as possible. The solar panels are working out very well in providing a necessary source for lighting during evening shifts and as a small-scale power back-up to diesel generators. With renewable energy and batteries advancing so quickly in recent years, we are excited about the implications these technologies will have for the future of commodity drilling.