Thursday, August 25, 2016

Energold Drilling - Energy Division Overshadows The Company

Yesterday Energold Drilling released its 2Q 2016 results. The table below shows basic figures:

Generally, the company is still in a slump. Although there is some improvement in the Mineral Division (this business line offers drilling services mainly for precious metals companies) the Energy Division is in trouble. For example, in 2Q 2016 the company drilled 200 metres for oil sand companies. Well, I guess I would be able to drill more meters with my personal hand drill - it is just an evidence what problems Energold encounters as far as serious energy drilling is concerned.

I have written something about an improvement in mineral drilling. Look at the chart below - it shows basic operating measures reported by Mineral Division: 

source: Simple Digressions

It looks like this division encounters a slight improvement - since 2Q 2014 both operating measures (meters drilled and prices) have reached sort of plateau. 
Similarly to another drilling company, Geodrill, in 2Q 2016 the company had drilled more meters but at lower prices. I believe it may be a sign of the beginning of the recovery (slightly higher demand for drilling services but pricing power still at the mining companies).

Summarizing - I am not recommending Energold as a buying opportunity. It is not a pure precious metals related play. Apart from running its Mineral Division, the company is heavily involved in energy drilling and specialized industrial manufacturing. The latter two divisions are not doing well and, what is more, there are no signs that the situation in these sectors is going to improve. 

I am staying aside...

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