On Christmas Eve, Ironbridge completed a deal to merge its majority-owned business, Australian Drilling Solutions, which focuses on the mining and infrastructure sectors, with Toowoomba-based Easternwell Group, a provider of oil and gas drilling and integrated services.

“We had two distinct areas where we were operating, being minerals and infrastructure,” Ironbridge director for portfolio development, Gary Berger, told the Australian Financial Review.  “Where we’ve been trying to focus is the energy space.

“Easternwell is a long-term player in that industry and clearly with the growth of coal-seam gas – no matter what forecast you believe or how big you think it’s going to be – there are thousands or probably tens of thousands of wells to be drilled.”

Although the exact terms of the merger are confidential, Mr Berger said “Ironbridge retained majority ownership of the new entity, which employs 1,000 people and has 70 drilling rigs around Australia.

He said the deal had created a business with expected revenue of more than $300 million next financial year.  By comparison, listed driller Ausdrill, which has a market capitalisation of $410 million, had revenue of $509 million in financial year 2009.

Ironbridge formed ADS in June 2008 by acquiring and combining three specialist drilling contractors, Gorey & Cole, Sides and Nudrill.  In December that year it bolstered the business with the addition of Western Australian Iron ore drillers Peak Drilling and Colby Drilling. 

Mr. Berger said that although the newly merged company was of sufficient scale to list on the ASX, Ironbridge was not yet thinking about exiting the investment.

“Either a float or trade sale will be on the cards at some stage, but it’s probably a bit early to call,” he said.  “We’ll get there once we’ve got the integration happening and the businesses are performing as one.”

Mr. Berger estimated that Easternwell controlled 60% of the national coal-seam gas well servicing market but the company also had a strong presence in conventional oil and gas.

Earlier this month, it won a five year $50 million contract to supply, manage and maintain two well-servicing rigs for Chevron’s oil operations at Barrow Island in WA.

“The Chevron contract provides the first, tangible opportunity to show how we can enhance our service offering as part of a larger organisation,” said Easternwell chief executive Troy Campbell, who is also chief executive of the merged entity.

Delivering its full-year results on Friday, Boart Longyear, the world’s largest supplier of drilling services and equipment, said its overall rig utilisation rate had improved to about 60-65%, while in Australia it was higher still.

“What we’re seeing now in Australia is a lot of those rigs are going back to work and in some cases we think they’re almost out of capacity,” Boart chief executive Craig Kipp said.