Q2 2026 Geodrill Ltd Earnings Call
Speaker #1: Good morning, everyone, and welcome to Geodrill's second quarter 2026 financial results conference call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.
Operator: Good morning everyone, and welcome to Geodrill's Q2 2026 Financial Results Conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded today, 10 August 2026.
Speaker #1: Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star 0 for operator assistance at any time.
Speaker #1: I would like to remind everyone that this conference call is being recorded today, August 10, 2026. Before we begin, certain statements made on today's call by management may be forward-looking in nature and, as such, are subject to various risks and uncertainties.
Operator: Before we begin, certain statements made on today's call by management may be forward-looking in nature, and as such, are subject to various risks and uncertainties. Please refer to the company's press release and MD&A for more details on these risks and uncertainties. I will now turn the call over to Mr. Dave Harper, President and CEO of Geodrill. Please go ahead.
Operator: Before we begin, certain statements made on today's call by management may be forward-looking in nature, and as such, are subject to various risks and uncertainties. Please refer to the company's press release and MD&A for more details on these risks and uncertainties. I will now turn the call over to Mr. Dave Harper, President and CEO of Geodrill. Please go ahead.
Speaker #1: Please refer to the company press release and MD&A for more details on these risks and uncertainties. I will now turn the call over to Mr. Dave Harper, President and CEO of Geodrill.
Speaker #1: Please go ahead.
Speaker #2: Good morning, everyone, and thank you for joining us today on the Q2 2026 Results Call. On the call with me this morning is Fred Borst, our CFO, who will be discussing the financials.
Dave Harper: Good morning, everyone, and thank you for joining us today on the Q2 2026 results call. On the call with me today is Greg Borsk, our CFO, who will be discussing the financials shortly. Let us get started. The second quarter was a tale of two outcomes. We delivered record revenue and continued to see strong demand across our markets. However, this did not translate into the levels of profitability that we expect in the business. Starting with the positives. We delivered the highest quarterly revenue in Geodrill's history at $55.1 million USD. This result reflects improvement in our contract book in both institutes, supported by our operations and continued strong demand for the drilling service across our markets.
Dave Harper: Good morning, everyone, and thank you for joining us today on the Q2 2026 results call. On the call with me today is Greg Borsk, our CFO, who will be discussing the financials shortly. Let us get started. The second quarter was a tale of two outcomes. We delivered record revenue and continued to see strong demand across our markets. However, this did not translate into the levels of profitability that we expect in the business. Starting with the positives. We delivered the highest quarterly revenue in Geodrill's history at $55.1 million USD. This result reflects improvement in our contract book in both institutes, supported by our operations and continued strong demand for the drilling service across our markets.
Speaker #2: Let's get started. The second quarter was a tale of two outcomes. We delivered record revenue and continued to see strong demand across our markets.
Speaker #2: Our list is not translated into the levels of profitability that we expect in the business. Starting with the positives—okay, so we delivered the highest quarterly revenue in Geodrill's history: $55.1 million USD.
Speaker #2: This result reflects a 24-hour capture ability to supply our large teams. We returned service across our markets. Activity levels remained strong throughout West Africa.
Dave Harper: Activity levels remained strong throughout West Africa and Egypt, where we continue to deliver against our key reform, operating programs and expanding our footprint in one of the core growth jurisdictions for us in West Africa. We benefit from high gold prices, supported by strong gold prices driven by the introduction of generative AI, seeing it particularly in junior mining camps. However, at the same time, profit and margin during the quarter was at a multi-year record. Our revenue mix remained level, margins were down below where they ought to be. Higher labor costs, inflation across consumables and operating inputs, and operational challenges associated with our Chile operations weighed heavily on margins. Chile delivered the weakest revenue growth during the quarter, but ongoing supply issues and other startup challenges affected the overall negative contribution from that region.
Dave Harper: Activity levels remained strong throughout West Africa and Egypt, where we continue to deliver against our key reform, operating programs and expanding our footprint in one of the core growth jurisdictions for us in West Africa. We benefit from high gold prices, supported by strong gold prices driven by the introduction of generative AI, seeing it particularly in junior mining camps. However, at the same time, profit and margin during the quarter was at a multi-year record. Our revenue mix remained level, margins were down below where they ought to be. Higher labor costs, inflation across consumables and operating inputs, and operational challenges associated with our Chile operations weighed heavily on margins. Chile delivered the weakest revenue growth during the quarter, but ongoing supply issues and other startup challenges affected the overall negative contribution from that region.
Speaker #2: We're interested in securing and expanding our goals to support customer demand—intermediate and junior large companies. At the same time, profitability during this quarter is estimated at the revenue level, rising to below today.
Speaker #2: Inflation across consumables and operating inputs, and operational challenges associated with our drilling operations, played heavily on margins. These are some activity levels we expect from the business.
Dave Harper: Simply put, we did not operate at a strong activity level to produce the profit margins we expect from the business. That said, it is important we do set our Q2 2025 results within the context of what is happening across the drilling industry. The industry as a whole is very busy and very priced to reflect rising input costs, inflation in key consumables and materials, plus supply chain disruptions and operating costs associated with mobilizing crews and equipment.
Dave Harper: Simply put, we did not operate at a strong activity level to produce the profit margins we expect from the business. That said, it is important we do set our Q2 2025 results within the context of what is happening across the drilling industry. The industry as a whole is very busy and very priced to reflect rising input costs, inflation in key consumables and materials, plus supply chain disruptions and operating costs associated with mobilizing crews and equipment.
Speaker #2: That's it. In the context of what is happening across the industry—development of the highest cost inflation supply challenges associated.
Operator: I have apologies, Dave. I am really sorry. Dave, your line sounds really garbled.
Operator: I have apologies, Dave. I am really sorry. Dave, your line sounds really garbled.
Speaker #1: I'm really sorry, Dave. Your line sounds really garbled.
Speaker #3: Yeah. Maybe, is it okay if I just continue? For Dave, because—Jenny, okay. I think so, Greg. Okay. Let me, let me do.
Greg Borsk: Yeah. Is it okay if I just continue for Dave, Jenny?
Greg Borsk: Yeah. Is it okay if I just continue for Dave, Jenny?
Operator: Yes, of course.
Operator: Yes, of course.
Dave Harper: I think so, Greg.
Dave Harper: I think so, Greg.
Greg Borsk: Okay. Let me do it. Over the past several years, drilling contractors have operated through rising labor costs, inflation in fuel, consumables and spare parts, supply chain disruptions, and increasing costs associated with mobilizing crews and equipment to support growth. Across the industry, many long-term contracts that were negotiated several years ago have been running through a very different cost environment than originally anticipated. As costs move higher, those contracts naturally became less profitable toward the back end of their term. We have seen similar dynamics across the sector as contractors work through legacy pricing structures while continuing to support customers and maintain service levels. The good news, however, is that those same long-term contracts that have served us extremely well, they provide revenue visibility, utilization, strong customer relationships, and stability through periods of market uncertainty. They helped build the platform we have today.
Greg Borsk: Okay. Let me do it. Over the past several years, drilling contractors have operated through rising labor costs, inflation in fuel, consumables and spare parts, supply chain disruptions, and increasing costs associated with mobilizing crews and equipment to support growth. Across the industry, many long-term contracts that were negotiated several years ago have been running through a very different cost environment than originally anticipated. As costs move higher, those contracts naturally became less profitable toward the back end of their term. We have seen similar dynamics across the sector as contractors work through legacy pricing structures while continuing to support customers and maintain service levels. The good news, however, is that those same long-term contracts that have served us extremely well, they provide revenue visibility, utilization, strong customer relationships, and stability through periods of market uncertainty. They helped build the platform we have today.
Speaker #3: So, over the past several years, drilling contractors have operated through rising labor costs, inflation in fuel, consumables and spare parts, supply chain disruptions, and increasing costs associated with mobilizing crews and equipment to support growth.
Speaker #3: Across the industry, many long-term contracts that were negotiated several years ago have been running through a very different cost environment than originally anticipated.
Speaker #3: As costs move higher, those contracts naturally became less profitable toward the back end of their term. We've seen similar dynamics across the sector as contractors work through legacy pricing structures while continuing to support customers and maintain service levels.
Speaker #3: The good news, however, is that those same long-term contracts that have served us extremely well provide revenue visibility, utilization, strong customer relationships, and stability through periods of market uncertainty.
Speaker #3: They help build the platform we have today. As many of these contracts renew, or as we secure new work, we have opportunities to incorporate pricing and terms that better reflect today's cost structure and the value of the service we provide.
Greg Borsk: As many of these contracts renew or as we secure new work, we have opportunities to incorporate pricing and terms that better reflect today's cost structure and the value of the service we provide. That should help us better absorb inflationary pressures going forward while maintaining the high-quality service our customers expect. From an industry perspective, the longer-term outlook remains very constructive. Gold prices remain strong. Copper continues to benefit from positive long-term fundamentals, and mining companies remain focused on reserve replacement, resource expansion, and advancing development projects. As a result, exploration budgets remain healthy, and bidding activity continues to be active across West Africa and Egypt. We are actually seeing customers commit to multi-rig and multi-year programs, which gives us confidence that demand for drilling services will remain strong. What we are seeing today is an industry that is busy. Utilization levels remain healthy among quality operators.
Greg Borsk: As many of these contracts renew or as we secure new work, we have opportunities to incorporate pricing and terms that better reflect today's cost structure and the value of the service we provide. That should help us better absorb inflationary pressures going forward while maintaining the high-quality service our customers expect. From an industry perspective, the longer-term outlook remains very constructive. Gold prices remain strong. Copper continues to benefit from positive long-term fundamentals, and mining companies remain focused on reserve replacement, resource expansion, and advancing development projects. As a result, exploration budgets remain healthy, and bidding activity continues to be active across West Africa and Egypt. We are actually seeing customers commit to multi-rig and multi-year programs, which gives us confidence that demand for drilling services will remain strong. What we are seeing today is an industry that is busy. Utilization levels remain healthy among quality operators.
Speaker #3: That should help us better absorb inflationary pressures going forward, while maintaining the high-quality service our customers expect. From an industry perspective, the longer-term outlook remains very constructive.
Speaker #3: Gold prices remain strong, copper continues to benefit from positive long-term fundamentals, and mining companies remain focused on reserve replacement, resource expansion, and advancing development projects.
Speaker #3: As a result, exploration budgets remain healthy, and bidding activity continues to be active across West Africa and Egypt. We are actually seeing customers commit to multi-rig and multi-year programs, which gives us confidence that demand for drilling services will remain strong.
Speaker #3: What we are seeing today is an industry that is busy. Utilization levels remain healthy among quality operators, tender activity is strong, and customers continue to invest in exploration despite broader economic uncertainty.
Greg Borsk: Tender activity is strong and customers continue to invest in exploration despite broader economic uncertainty. While inflation and contract startup costs have pressured margins for many contractors, the underlying demand environment remains one of the strongest we've seen in recent years. For Geodrill, our focus is now execution. We're focused on improving performance in Chile, driving productivity gains across the organization, managing cost responsibly, and ensuring that the substantial demand we are seeing translates into stronger profitability. We have a modern fleet, a highly experienced workforce, industry-leading infrastructure across our operating regions, and relationships with many of the world's leading mining companies. Those are significant competitive advantages that have been built over nearly three decades. We've been through several commodity cycles over the years, and one thing that we have learned is that when demand is strong and the fundamentals are healthy, operational discipline becomes the differentiator.
Greg Borsk: Tender activity is strong and customers continue to invest in exploration despite broader economic uncertainty. While inflation and contract startup costs have pressured margins for many contractors, the underlying demand environment remains one of the strongest we've seen in recent years. For Geodrill, our focus is now execution. We're focused on improving performance in Chile, driving productivity gains across the organization, managing cost responsibly, and ensuring that the substantial demand we are seeing translates into stronger profitability. We have a modern fleet, a highly experienced workforce, industry-leading infrastructure across our operating regions, and relationships with many of the world's leading mining companies. Those are significant competitive advantages that have been built over nearly three decades. We've been through several commodity cycles over the years, and one thing that we have learned is that when demand is strong and the fundamentals are healthy, operational discipline becomes the differentiator.
Speaker #3: While inflation and contract startup costs have pressured margins for many contractors, the underlying demand environment remains one of the strongest we've seen in recent years.
Speaker #3: For Geodrill, our focus is now execution. We're focused on improving performance in Chile, driving productivity gains across the organization, managing cost responsibility, and ensuring that the substantial demand we are seeing translates into stronger profitability.
Speaker #3: We have a modern fleet, a highly experienced workforce, industry-leading infrastructure across our operating regions, and relationships with many of the world's leading mining companies.
Speaker #3: Those are significant competitive advantages that have been built over nearly three decades. We've been through several commodity cycles over the years, and one thing that we have learned is that when demand is strong and the fundamentals are healthy, operational discipline becomes the differentiator.
Speaker #3: The opportunity in front of us is not finding work; the opportunity is executing efficiently, improving margins, and converting record activity levels into stronger returns for our shareholders.
Greg Borsk: The opportunity in front of us is not finding work. The opportunity is executing efficiently, improving margins, and converting record activity levels into stronger returns for our shareholders. We believe Geodrill is well-positioned to do exactly that. The foundation of the business is strong. The market backdrop remains favorable, and we are focused on taking the actions necessary to ensure today's revenue growth translates into improved earnings and long-term value creation in the quarters ahead. Let me now turn to the financial results. For the second quarter ended 30 June 2026, revenue for the quarter was $55.1 million, representing an increase of 10% compared to Q2 2025. The record revenue is a testament to management's strategy of continuing to focus on its primary markets and adding capacity in conjunction with clients' needs.
Greg Borsk: The opportunity in front of us is not finding work. The opportunity is executing efficiently, improving margins, and converting record activity levels into stronger returns for our shareholders. We believe Geodrill is well-positioned to do exactly that. The foundation of the business is strong. The market backdrop remains favorable, and we are focused on taking the actions necessary to ensure today's revenue growth translates into improved earnings and long-term value creation in the quarters ahead. Let me now turn to the financial results. For the second quarter ended 30 June 2026, revenue for the quarter was $55.1 million, representing an increase of 10% compared to Q2 2025. The record revenue is a testament to management's strategy of continuing to focus on its primary markets and adding capacity in conjunction with clients' needs.
Speaker #3: We believe Geodrill is well positioned to do exactly that. The foundation of the business is strong. The market backdrop remains favorable, and we are focused on taking the actions necessary to ensure today's revenue growth translates into improved earnings and long-term value creation in the quarters ahead.
Speaker #3: Let me now turn to the financial results. For the second quarter ended June 30, 2026, revenue for the quarter was $55.1 million, representing an increase of 10% compared to Q2 2025.
Speaker #3: The record revenue is a testament to management's strategy of continuing to focus on its primary markets and adding capacity in conjunction with clients' needs.
Speaker #3: Gross profit was $8.8 million, generating a gross margin of 16%, compared to 24% in the prior year period. EBITDA for the quarter was $7.9 million, with an EBITDA margin of 14%.
Greg Borsk: Gross profit was $8.8 million, generating a gross margin of 16%, compared to 24% in the prior year period. EBITDA for the quarter was $7.9 million with an EBITDA margin of 14%, compared to 28% in the same period last year. The margin compression was primarily driven by higher labor and operating costs, the appreciation of the Cedi, and operating losses associated with our Chilean operations. Overall, the net loss for the quarter was approximately $200,000, or effectively nil on a per-share basis, compared to net income of $5.4 million in Q2 2025. In relation to the net loss, we are currently evaluating the group's operations in Chile with a view to streamlining operations to improve margins and enhance productivity.
Greg Borsk: Gross profit was $8.8 million, generating a gross margin of 16%, compared to 24% in the prior year period. EBITDA for the quarter was $7.9 million with an EBITDA margin of 14%, compared to 28% in the same period last year. The margin compression was primarily driven by higher labor and operating costs, the appreciation of the Cedi, and operating losses associated with our Chilean operations. Overall, the net loss for the quarter was approximately $200,000, or effectively nil on a per-share basis, compared to net income of $5.4 million in Q2 2025. In relation to the net loss, we are currently evaluating the group's operations in Chile with a view to streamlining operations to improve margins and enhance productivity.
Speaker #3: Compared to 28% in the same period last year. The margin compression was primarily driven by higher labor and operating costs, the appreciation of the C.D., and operating losses associated with our Chilean operation.
Speaker #3: Overall, the net loss for the quarter was approximately $200,000, or effectively nil on a per-share basis, compared to net income of $5.4 million in Q2 2025.
Speaker #3: In relation to the net loss, we are currently evaluating the group's operations in Chile, with a view to streamlining operations to improve margins and enhance productivity.
Speaker #3: From a balance sheet perspective, we ended the quarter with shareholders' equity of approximately $118 million. We are maintaining financial flexibility while continuing to invest prudently in fleet upgrades and infrastructure to execute our drilling programs.
Greg Borsk: From a balance sheet perspective, we ended the quarter with shareholders' equity of approximately $118 million, maintaining financial flexibility while continuing to invest prudently in fleet upgrades and infrastructure to execute our drilling programs. Relating to the balance sheet, we have again reviewed our return on capital options to our shareholders, and we have determined at this time to maintain cash in the business to support operations. Future decisions regarding share buybacks and/or the payment of dividends will be reviewed again on a quarterly basis. We are also able to update the progress with the Côte d'Ivoire tax authorities. Despite having the tax receipts for the missing payments, as we disclosed in Q1 2026, we entered into a memorandum of understanding to repay the amounts in order for us to continue to operate and support our clients in Côte d'Ivoire.
Greg Borsk: From a balance sheet perspective, we ended the quarter with shareholders' equity of approximately $118 million, maintaining financial flexibility while continuing to invest prudently in fleet upgrades and infrastructure to execute our drilling programs. Relating to the balance sheet, we have again reviewed our return on capital options to our shareholders, and we have determined at this time to maintain cash in the business to support operations. Future decisions regarding share buybacks and/or the payment of dividends will be reviewed again on a quarterly basis. We are also able to update the progress with the Côte d'Ivoire tax authorities. Despite having the tax receipts for the missing payments, as we disclosed in Q1 2026, we entered into a memorandum of understanding to repay the amounts in order for us to continue to operate and support our clients in Côte d'Ivoire.
Speaker #3: Relating to the balance sheet, we have again reviewed our return on capital options to our shareholders, and we have determined at this time to maintain cash in the business to support operations.
Speaker #3: Future decisions regarding share buybacks and/or the payment of dividends will be reviewed again on a quarterly basis. We are also able to update on the progress with the Côte d'Ivoire tax authorities.
Speaker #3: Despite having the tax receipts for the missing payments, as we disclosed in Q1 2026, we entered into a memorandum of understanding to repay the amounts in order for us to continue to operate and support our clients in Côte d'Ivoire.
Speaker #3: In Q2 2026, we requested to reduce the monthly installments from approximately $900,000 to $450,000 and made monthly $450,000 payments in May, June, July, and August.
Greg Borsk: In Q2 2026, we requested to reduce the monthly installments from approximately $900,000 to $450,000 and made monthly $450,000 payments in May, June, July, and August. Through June 2026, we have repaid approximately $4.5 million of the scheduled $8.4 million repayment. We also continue to pursue legal remedies available to us. However, it is inappropriate at this time to comment on that matter. Closing remarks. Let us close with this. The foundation of this business remains extremely strong. We have a modern fleet, longstanding customer relationships, established infrastructure across key mining jurisdictions, and a team that has successfully navigated multiple commodity cycles over the past several decades. We have built a strong platform, and we are seeing robust demand across our markets. Our profitability has not yet caught up with the level of activity that we are delivering.
Greg Borsk: In Q2 2026, we requested to reduce the monthly installments from approximately $900,000 to $450,000 and made monthly $450,000 payments in May, June, July, and August. Through June 2026, we have repaid approximately $4.5 million of the scheduled $8.4 million repayment. We also continue to pursue legal remedies available to us. However, it is inappropriate at this time to comment on that matter. Closing remarks. Let us close with this. The foundation of this business remains extremely strong. We have a modern fleet, longstanding customer relationships, established infrastructure across key mining jurisdictions, and a team that has successfully navigated multiple commodity cycles over the past several decades. We have built a strong platform, and we are seeing robust demand across our markets. Our profitability has not yet caught up with the level of activity that we are delivering.
Speaker #3: Through June 2026, we have repaid approximately $4.5 million of the scheduled $8.4 million repayment. We also continue to pursue legal remedies available to us.
Speaker #3: However, it is inappropriate at this time to comment on that matter. Closing remarks: let us close with this— the foundation of this business remains extremely strong.
Speaker #3: We have a modern fleet, long-standing customer relationships, established infrastructure across key mining jurisdictions, and a team that has successfully navigated multiple commodity cycles over the past several decades.
Speaker #3: We have built a strong platform, and we are seeing robust demand across our markets. But our profitability has not yet caught up with the level of activity that we are delivering.
Speaker #3: We believe Geodrill is well positioned to translate today’s strong demand environment into improved profitability as we move through the balance of the year and beyond.
Greg Borsk: We believe Geodrill is well-positioned to translate today's strong demand environment into improved profitability as we move through the balance of the year and beyond. While Q2 demonstrated what Geodrill can achieve from a revenue and market position standpoint, the next chapter is about execution, efficiency, and converting that demand into stronger earnings for our shareholders. That's where our focus is, and that's where we believe the opportunity lies. Thank you for joining us today. Operator, if you can please open the line for any questions.
Greg Borsk: We believe Geodrill is well-positioned to translate today's strong demand environment into improved profitability as we move through the balance of the year and beyond. While Q2 demonstrated what Geodrill can achieve from a revenue and market position standpoint, the next chapter is about execution, efficiency, and converting that demand into stronger earnings for our shareholders. That's where our focus is, and that's where we believe the opportunity lies. Thank you for joining us today. Operator, if you can please open the line for any questions.
Speaker #3: So, while Q2 demonstrated what Geodrill can achieve from a revenue and market position standpoint, the next chapter is about execution, efficiency, and converting that demand into stronger earnings for our shareholders.
Speaker #3: That's where our focus is, and that's where we believe the opportunity lies. Thank you for joining us today. Operator, if you can, please open the line for any questions.
Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star one on your telephone keypad.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your telephone keypad. Should you wish to withdraw your question, you may press star two. Once again, that is star one should you wish to ask a question. Your first question is from Don Volpe from Beacon Securities. Your line is now open.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your telephone keypad. Should you wish to withdraw your question, you may press star two. Once again, that is star one should you wish to ask a question. Your first question is from Don Volpe from Beacon Securities. Your line is now open.
Speaker #1: Should you wish to withdraw your question, you may press *star two*. Once again, that is *star one* should you wish to ask a question. Your first question is from Don Angelo Volpe from Beacon Securities.
Speaker #1: Your line is now open.
Speaker #2: Hey, good morning, guys. Just wanted to focus on Chile here. So, just wondering what some of the actions you guys are looking at taking in the region.
Don Volpe: Hey, good morning, guys. I just wanted to focus on Chile here. Just wondering what some of the actions you guys are looking at taking in the region. Are we looking at potential reduced headcount, demobilization of some rigs? Just any color there would be helpful.
Don Volpe: Hey, good morning, guys. I just wanted to focus on Chile here. Just wondering what some of the actions you guys are looking at taking in the region. Are we looking at potential reduced headcount, demobilization of some rigs? Just any color there would be helpful.
Speaker #2: Are we looking at potential reduced headcount, demobilization of some rigs? Any color there would be helpful.
Speaker #3: Yeah. Don, what we're doing in Chile is we look at it on a client-by-client basis. We look at it in terms of profitability—are we getting the productivity, as Dave mentioned earlier in the call?
Greg Borsk: Yeah. Don, what we are doing in Chile is, we look at it on a client-by-client basis. We look at it in terms of profitability. Are we getting the productivity? As Dave mentioned early in the call, some of these are long-term multi-rig contracts. When we bid the contracts, we anticipate, we forecast certain productivity. For some of these clients, for some of these contracts in Chile, that has not come to fruition. So what we are doing in Chile is client by client. We are assessing each client and where it makes sense to wind up the contract, finish drilling, et cetera. Maybe we do not re-tender, et cetera. So it is on a client-by-client basis. I do not want to give you any indication that we are looking at Chile as a whole. The way we are approaching Chile is, look at the unprofitable clients, quickly try to wind up that drilling.
Greg Borsk: Yeah. Don, what we are doing in Chile is, we look at it on a client-by-client basis. We look at it in terms of profitability. Are we getting the productivity? As Dave mentioned early in the call, some of these are long-term multi-rig contracts. When we bid the contracts, we anticipate, we forecast certain productivity. For some of these clients, for some of these contracts in Chile, that has not come to fruition. So what we are doing in Chile is client by client.
Speaker #3: Some of these are long-term, multi-rig contracts. When we bid the contracts, we anticipate—we forecast—certain productivity. And for some of these clients, for some of these contracts in Chile, that hasn't come to fruition.
Speaker #3: So what we're doing in Chile is, client by client, we're assessing each client and where it makes sense to wind up the contract, finish drilling, etc.
Greg Borsk: We are assessing each client and where it makes sense to wind up the contract, finish drilling, et cetera. Maybe we do not re-tender, et cetera. So it is on a client-by-client basis. I do not want to give you any indication that we are looking at Chile as a whole. The way we are approaching Chile is, look at the unprofitable clients, quickly try to wind up that drilling. With the profitable clients, is there an opportunity to continue to try to increase profits there, et cetera? It is going to be a process over the next couple of quarters for sure.
Speaker #3: Maybe we don’t re-tender, etc. So it’s on a client-by-client basis. I don’t want to give you any indication that we’re looking at Chile as a whole.
Speaker #3: The way we're approaching Chile is to look at the unprofitable clients and quickly try to wind up that drilling. With the profitable clients, is there an opportunity to continue to try to increase profits there, etc.?
Greg Borsk: With the profitable clients, is there an opportunity to continue to try to increase profits there, et cetera? It is going to be a process over the next couple of quarters for sure.
Speaker #3: But it's going to be a process over the next couple of quarters, for sure.
Speaker #2: Okay. And then just a follow-on there, because I can't remember if it was last year or two years ago that some of these long-term contracts were signed.
Don Volpe: Okay. Just to follow on there, because I cannot remember if it was last year or 2 years ago, some of these long-term contracts were signed. Are they still in the startup phase in some of these? Are they expected to generate acceptable returns once fully operational? Is there, like, it is potentially pricing a little bit off with, let us call it inflation on some costs?
Don Volpe: Okay. Just to follow on there, because I cannot remember if it was last year or 2 years ago, some of these long-term contracts were signed. Are they still in the startup phase in some of these? Are they expected to generate acceptable returns once fully operational? Is there, like, it is potentially pricing a little bit off with, let us call it inflation on some costs?
Speaker #2: So, are they still in the startup phase in some of these? And are they expected to generate acceptable returns once fully operational? Or is it potentially that pricing is a little bit off, with, let's call it, inflation on some costs?
Speaker #3: Yeah, I don't think that they were, and we're not unique or we're not alone. In Chile, some of our competitors are facing similar problems.
Greg Borsk: Yeah. We are not unique or we are not alone in Chile. Some of our competitors are facing similar problems. It is not really pricing. The pricing there, the issue is productivity, where, as you know, we drill meters and we get paid by the meter, and we are just not getting the productivity. When you are there, you are at the rig and you have the staff and you have all the associated other costs, you need to get meters. You need to get productivity. For some of these accounts, it is just not happening. So, some of them are, I am not going to take you through every account, but on a positive, we do have some very good accounts in Chile. They are going to continue for at least into 2027.
Greg Borsk: Yeah. We are not unique or we are not alone in Chile. Some of our competitors are facing similar problems. It is not really pricing. The pricing there, the issue is productivity, where, as you know, we drill meters and we get paid by the meter, and we are just not getting the productivity. When you are there, you are at the rig and you have the staff and you have all the associated other costs, you need to get meters. You need to get productivity.
Speaker #3: And it's not really pricing. The issue there is productivity. As you know, we drill meters, and we get paid by the meter.
Speaker #3: And we're just not getting the productivity. And when you're there, you're at the rig and you have the staff and you have all the associated other costs.
Speaker #3: You need to get meters. You need to get productivity. And for some of these accounts, it's just not happening. So some of them are—I'm not going to take you through every account—but on a positive, we do have some very good accounts in Chile.
Greg Borsk: For some of these accounts, it is just not happening. So, some of them are, I am not going to take you through every account, but on a positive, we do have some very good accounts in Chile. They are going to continue for at least into 2027. But high level, the plan is for unprofitable accounts to try and address those as quickly as possible and then focus, like I said, continue to focus on the profitable accounts in Chile.
Speaker #3: And they're going to continue for at least into 2027. But, so, high level, the plan is for unprofitable accounts to try and address those as quickly as possible.
Greg Borsk: But high level, the plan is for unprofitable accounts to try and address those as quickly as possible and then focus, like I said, continue to focus on the profitable accounts in Chile.
Speaker #3: And then focus, like I said, continue to focus on the profitable accounts in Chile.
Speaker #2: Okay, thanks for that. And I'm not sure if you can answer this one, but if we could potentially strip out Chile, I'm just wondering what gross margins would have looked like, relative to the 24% last year.
Don Volpe: Okay. Thanks for that. And then I am not sure if you can answer this one, but if we could potentially strip out Chile, just wondering what gross margins would have looked like respective to the 24% last year.
Don Volpe: Okay. Thanks for that. And then I am not sure if you can answer this one, but if we could potentially strip out Chile, just wondering what gross margins would have looked like respective to the 24% last year.
Speaker #3: Yeah, sorry, Don. I don't have that at my fingertips. But the regions in West Africa—the two primary countries are Ghana and Côte d'Ivoire, and then, to a lesser extent, Senegal. In the MENA region currently, we're only operating in Egypt.
Greg Borsk: Yeah. Sorry, Don, I do not have that at my fingertips. But the regions in West Africa, our two primary countries, Ghana, Cote d'Ivoire, and then to a lesser extent, Senegal. And in the MENA region, currently, we are only operating in Egypt, but we are profitable in all of those regions. So the good news is, in West Africa and MENA, the group is doing well. We have to address Chile.
Greg Borsk: Yeah. Sorry, Don, I do not have that at my fingertips. But the regions in West Africa, our two primary countries, Ghana, Cote d'Ivoire, and then to a lesser extent, Senegal. And in the MENA region, currently, we are only operating in Egypt, but we are profitable in all of those regions. So the good news is, in West Africa and MENA, the group is doing well. We have to address Chile.
Speaker #3: But we're profitable in all of those regions. So the good news is, in West Africa and MENA, the group's doing well. We have to address Chile.
Speaker #2: Okay, yeah. I was curious there just because I think we're entering the wet season for Q3, so I was just trying to get an idea of the impact we would see on Q3 margins.
Don Volpe: Okay. Yeah, I was curious there just because I think we are entering wet season for Q3. So I was just trying to get an idea of the impact we would see for Q3 margins. But we can discuss offline. I will hop back in the queue.
Don Volpe: Okay. Yeah, I was curious there just because I think we are entering wet season for Q3. So I was just trying to get an idea of the impact we would see for Q3 margins. But we can discuss offline. I will hop back in the queue.
Speaker #2: But we can discuss offline. I'll hop back in the queue.
Speaker #3: Thank you, Donnie.
Greg Borsk: Thank you, Don.
Greg Borsk: Thank you, Don.
Speaker #1: Thank you once again. Please press door one should you wish to ask a question.
Operator: Thank you. Once again, please press star one should you wish to ask a question.
Operator: Thank you. Once again, please press star one should you wish to ask a question.
Speaker #3: Okay. Operator, if there are no other questions, I’d like to thank everyone for listening, and thank Donnie for the question.
Greg Borsk: Okay. Operator, if there's no other questions, I guess I can thank everyone for listening and thank Don for the question.
Greg Borsk: Okay. Operator, if there's no other questions, I guess I can thank everyone for listening and thank Don for the question.
Speaker #1: Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for joining. You may now disconnect your lines.
Operator: Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for joining. You may now disconnect your lines.
Operator: Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for joining. You may now disconnect your lines.
Greg Borsk: Thank you.
Greg Borsk: Thank you.
