by Sy Van Dyk, CEO and Murray Pollock, Co-founder and Non Executive Director at DDH1 Limited
Based in Perth, Western Australia, DDH1 Limited (DDH1) commenced operations in July 2006 with one drill rig. Today, just sixteen years later, DDH1 is by any metric Australia’s largest drilling contractor by number of operating rigs, meters drilled, revenue, profitability and dividends paid. DDH1 now includes four specialist brands, including DDH1 Drilling, Strike Drilling, Ranger Drilling and Swick Mining Services, providing the industry with a complete suite of mineral drilling services. Regardless of the brand, the common commitment to excellent customer service has resulted in continuous growth and consistent profitability.
A short history
In 2006, DDH1’s founders, namely Murray Pollock and Matt Thurston, who had a long history of managing and growing directional drilling operations, decided to form a new company to specialize in deep directional core drilling. DDH1’s first hole, a multiple intersection directional hole more than 2000 m (6560 ft), was drilled for Newcrest at the Cadia Gold Mine in New South Wales. Murray’s and Matt’s intention was to stay small with a maximum of four identical rigs. Their fleet grew to four rigs over the first three years and then, due to demand for the company’s specialist services, it rapidly exceeded this initial number in the ensuing years.
By 2017, DDH1 operated 40 rigs and decided to seek a corporate partner to accelerate its growth strategy. Oaktree Capital Management came on board purchasing a 50% equity stake in DDH1. Management was strengthened with the appointment of a group CEO and CFO and a representative board was formed and led by an experienced Independent Non-Executive Chairperson.
Prior to this time, DDH1 sub-contracted Strike Drilling or Ranger Drilling to meet customer demand. The potential of joining forces had often been discussed, which led to Strike Drilling being acquired in 2018 and Ranger Drilling in 2019. The founders of each company retained a significant equity stake in the overall group and continued to lead their respective business units.
In March 2021, DDH1 was listed on the Australian Stock Exchange (ASX) with a market capitalization of AUD 380 million. The prospectus outlined a plan of organic and acquisition growth, a dividend policy and the company’s commitment to crew safety and client service. Subsequently, in February 2022, DDH1 acquired the ASX-listed Swick Mining Services (Swick) by a scheme of arrangement with Swick shareholders becoming DDH1 shareholders. Since listing, DDH1 has grown both organically and by acquisition to now operate 180 surface and underground rigs, paid over AUD 16 million in fully franked dividends and met its IPO Prospectus forecast.
Business structure
Each of the company’s brands offers a specialized drilling service and serves a unique industry or geographic segment. DDH1’s acquisition strategy is based on companies that offer parallel but complementary drilling services with a record of safety and consistent profitability, while achieving organic growth throughout periods of fluctuating demand. Fleet age and uniformity are important, but most critical are the management’s commitment to their brand, employees and clients. Each brand is responsible for generating contracts, employing staff, ensuring operational safety, planning organic growth, setting budgets and achieving its set goals. Corporate functions naturally include consolidated accounting and group procurement. All brands co-operate to leverage business development opportunities by introducing parallel services from other group companies and often two or three brands are onsite at the same time providing their unique services.
All four business units share many common values, such as caring for their staff, continuous focus on operating safety, protecting the environment, and providing outstanding client service.
DDH1 group of companies
Strike Drilling (15 rigs)
Strike Drilling (Strike) specialize in Air Core (AC) and Reverse Circulation (RC) exploration and mine site drilling, utilizing AWD truck-mounted Schramm and KWL drilling rigs. With an ability to mobilize over large distances and the expertise to operate independently in remote environments, Strike’s services are highly valued in early-stage exploration. Of note, their Schramm 450 dual-purpose AC/ RC rigs run 6 m (20 ft) rods with hands-free rod handling, stationary core sampling and gyro surveying, which brings a new level of safety, production, and sample quality to AC drilling. This unique rig is designed for a seamless transition from AC to RC, providing clients with flexibility on early-stage programs and avoiding the cost of mobilizing a second rig.
As programs develop and require deeper holes, then Strike’s Schramm 685 and KWL700 heavy-duty RC rigs, combined with auxiliary compressors and boosters, are the rigs of choice. Strike’s EnviroPodsTM are designed to contain all drilling spoil and groundwater when AC or RC drilling. These highly awarded units are in demand when drilling on valuable farmland or environmentally fragile sites.
Drilling in remote locations isolated from support services requires safe and resourceful drilling crews which goes to the heart of Strike’s unique can-do culture. At Strike, camaraderie is one of their values and they actively support mental health programs. Strategically, Strike’s first pass exploration drilling services, assuming exploration success, can potentially introduce the group’s RC, surface coring, mine engineering and underground drilling services.
Ranger Exploration Drilling (24 rigs)
Ranger Exploration Drilling (Ranger) are a specialist iron ore-focused driller operating in Western Australia’s Pilbara region performing long-term multi-rig contracts for the major iron ore miners. Their fleet of
AWD truck-mounted heavy-duty DRA & WDM RC Rigs and mid-duty Austex RC rigs are manufactured in Western Australia. Ranger also operate a group of BL LF160 and LF350 core drills, these rigs are manufactured offshore then upgraded locally with Ranger’s data monitoring system and to meet both Australian standards and their clients’ engineering standards.
Ranger and their client base are focused on drilling automation and data integration with the aim of drilling unattended to improve safety, increase efficiency and lower costs. By purchasing rigs manufactured in Western Australia, Ranger actively contributes to the evolvement of rig design and manufacturers are familiar with the iron ore industries standards, as well as Ranger’s bespoke monitoring system installed during manufacture. Over the recent years, Ranger’s automation drive has generated real progress in rig design, but the best is yet to come with the next generation of automated rig designs to be delivered this year.
Iron ore drilling is highly structured with non-negotiable compliance to agreed standards and systems of work. Rigs are likely to stay on one site for many years, site accommodation is of a high standard and rosters are family-friendly. Throughout their operations, Ranger exhibit a culture of disciplined compliance and the predictability of this work appeals to many, who otherwise may not be attracted to the drilling industry. As a company, Ranger have a high focus on employee and employee family mental health programs and support several community causes.
DDH1 Drilling (72 rigs)
DDH1 Drilling offer a complete range of core drilling services, however the company is best known for deep hole multiple intersection directional drilling. Operating across Australia with offices in Perth and Brisbane, DDH1 Drilling design and drill complex multiple intersection holes and have completed holes with over 30 intersections from a single parent with incredible spatial accuracy.
The company’s specialization in directional core drilling provides a foundation for mine engineering drilling where directional drilling skills are used to drill from surface to accurately break into mine workings at depth. Breakthrough holes are often inclined to avoid mine infrastructure and may be enlarged to insert casing for paste backfill operations, to drop electrical cables or pump water directly to surface rather than pumping or running cables in a decline.
Of interest are two inclined H-size cored electrical drop holes drilled at the Sons of Gwalia Mine that broke through at 1338 m (4390 ft) and 1450 m (4757 ft) and were then opened out to 12.25 in (31 cm), cased with 9.5/8 in (244 mm) oilfield casing and grouted to surface. Another contract called for two inclined water bores designed to intersect old shafts at around 1200 m (3937 ft) beneath Kalgoorlie’s Super Pit. Holes were collared at 70° with a directionally drilled hole path designed to avoid historic workings and intersect the target at 50°. These holes were then enlarged with Down Hole Hammers to 21 in (53.3 cm) with all spoil lifted to surface before running composite casing and grouting to surface.
The hole opening and casing work is completed by one of DDH1 Drilling’s larger rigs equipped with hands-free rod and casing handlers. This mine engineering fleet includes a 180 000 lb (81.65 tonnes) WEI-capable of shallow angle holes and fitted with a 1000 RPM core drilling rotation head, a 130 000 lb (59 tonnes) Foremost Explorer and a much loved 100 000 lb (45.39 tonnes) UDR5000.
A major contribution to DDH1 Drilling’s growth is their participation in early-stage exploration and sharing the excitement of drilling a discovery hole which then grows into a multi-rig program, mine development and many years of resource drilling. Their commitment to supporting exploration has resulted in contract opportunities with years of continuous drilling and the opportunity to provide a complete range of drilling services. In recognition of the importance of successful exploration, DDH1 Drilling sponsor the prestigious Australian Mining and Exploration Companies (AMEC) annual Prospector Award. Over the past twelve years of their involvement, DDH1 Drilling have been privileged to have drilled some of the awarded economic mineral discoveries.
DDH1 Drilling are committed to operator safety and the current focus is on hands-free rod handling solutions. Their challenge is to retain the efficiency of their current fleet of Sandvik DE880 rigs but operate them hands-free. DDH1 Drilling have commissioned Evolution Drill Rigs to design and build a 9 m (29.53 ft) system which is currently undergoing final trials; Exploration Drill Masters are also supplying multiple rigs, suitable for 9 m units and several BL LF160 rigs with freedom loaders are on order for delivery in calendar 2022.
Swick Mining Services (72 rigs)
Swick, based in Perth, Western Australia are arguably the world’s largest underground coring contractor with 72 rigs drilling over 1 million meters (3 280 40 ft) annually. The company’s founder, Kent Swick revolutionized underground drilling when he designed and built the mobile underground core rig utilizing a jumbo carrier base, and today Swick continue to lead the world in underground rig design. Swick contract across Australia, North America and Europe and manufacture all of the rigs they own.
Swick are the most recent addition to the DDH1 group and come with a mature culture of safety, teamwork, and ethics. Of note is Swick’s Perth training facility which houses an operational underground rig and replicates the underground environment including lighting and humidity. New employees spend four 12-hour shifts in training which is invaluable in preparing them to perform safely in such a unique work environment. As with the other group companies, Swick have an independent EAP provider and run a mental health program in collaboration with Curtin University.
Within Swick, DeepEx is a special deep hole drilling division employing the most experienced drillers to operate a more powerful Swick-built 3000 m (9843 ft) N-size capacity rig for deep and directional drilling. Most contracts include multiple rigs on the same site and when required will include a mix of DeepEx and standard rigs. In general, most contracts run for many years and often transcend mine ownership, some current contracts have run for over ten years and include up to 14 rigs on a site.
Swick’s manufacturing and rebuild capacity is significant on a global scale and of real value across the wider DDH1 group. Swick’s Futures Department is where highly-qualified staff with the help of external specialist providers research and develop new drilling concepts. Of special interest is the development of direct electric drive which draws significantly less power from a mine grid and creates less heat without any loss of drilling performance. This work is advancing well and in time will also have application in reducing carbon across surface drilling, especially once emerging energy sources replace diesel for primary power. Swick’s manufacturing facility includes a dynamometer allowing R&D staff to quantify improvements and maintenance staff to measure the efficiency of new and rebuilt drill rigs. Other mature development projects include automated unattended drilling, hands-free rod handling and a unique reverse flush coring system.
Productivity
DDH1 are optimistic about the future and especially the opportunities presented on the pathway to a lower-carbon environment both from what they can do directly and their role in the discovery of critical elements located in secure jurisdictions that are required for electrification. One measure of environmental efficiency is meters drilled in relation to the number of operating rigs. The DDH1 group of companies are on track to drill 3.5 million meters (11 483 000 ft) for FY22 with an average of 177 rigs.
Diversity & inclusion
The DDH1 group is actively committed to increasing the diversity of their workforce including increasing the participation of indigenous employees in the drilling industry.
For more information visit: www.ddh1.com.au
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