Boart Longyear Q2 revenue up on Q1

Shares in drilling services provider lift as it expects to be able to pay creditors.

Shares in drilling services provider Boart Longyear have lifted after the company said it expected to have the liquidity to meet obligations to credtitors and second-quarter revenue rose from first-quarter levels.

At 10.15am (AEST), Boart shares rose 2.2% to 23c, against a benchmark index fall of 0.17%. Boart shares earlier reached as high as 26c.

In a preliminary filing ahead of final results to be posted on August 26, the group reported revenue of $224.1 million in the three months to June 30, down from $348.7m in the previous corresponding period but up from $197.4m in the first quarter. 

Adjusted earnings before interest, tax, depreciation and amortisation fell to $14.1m in the June quarter, from $40.1m in the prior corresponding period. The result was up from $3.8m in the March quarter.

Boart expects it will remain compliant with all its bank financial covenants at least through the end of 2014, which it says will allow enough time to implement a recapitalisation solution from its strategic review, but warned that changes in market demand could risk its ability to comply with its covenants.

"We expect to have the liquidity and financial resources necessary to fund our operations for the foreseeable future, including supporting our customers' needs and meeting our obligations to our suppliers and other creditors," chief executive Richard O'Brien said. 

The company also noted that analyst estimates for full-year revenue range from $766m to $936m, saying estimates at the high end of the range may not fully reflect market demand and price pressures.

Shares in Boart have recently been volatile as investors digest the group's ongoing review of recapitalisation options and a ratings downgrade from Standard and Poor's.

Global investment firm Centerbridge Partners has taken a substantial shareholding in Boart Longyear of 12.7% as the mining services company reviews refinancing options as demand for drilling equipment from resources companies falls.

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