The session and the half-year will be out shortly. We will have the Investor Presentation and probably a bit more of a detailed update, but we'll certainly open it up for questions this morning. Firstly, look, we'll just take the document as being read, and I'll touch on a few key points. I think firstly, we are saying in here that we expect H2 to be stronger than H1. Again, that hangs together with the commentary regarding utilization and some of that investment that we have made into the business in the first half. Importantly, I think at the bottom of the second page, top of the third page, I do genuinely believe that the business is in a wonderful position, and that balance sheet is certainly giving us the option to invest into these opportunities that we've been successful in.
It's better not the sort of numbers you want from an impact perspective in the first half, but certainly, I think the team is doing the right things. We're focusing on the right opportunity. We're certainly in a strong position when delivering on that strategy that we've outlined there with the dot points on page three. So just looking at some of those things there, obviously, from a strategy perspective, the PNG market, we've mentioned to people before, it's a multi-year contract with a global gold mining client. We're not looking at running off and starting up a big PNG business. It's really just extending the relationship with a very good client. And certainly, the commercials there are good. It's specialist drilling, and we're on site. We're mobilizing now and hopefully drilling in February.
Obviously, that's taken a lot of time, effort, and cost to get that organized and mobilized over there. Secondly, with the SIS drilling, that's a form of drilling that Nathan invented back in the day here in Queensland. MSV being back in Australia now for 10 years, we've re-entered that market and had our first contract. Again, the cost of getting that up and running, but again, highly specialized drilling that's going to hold the company in good stead to offer that service into the future. Nathan can probably touch on that in the questions and his views on that type of drilling and the gas market. Then lastly, Loop, our decarbonization joint venture with Talisman Partners, has moved faster than anticipated.
Rather than expenses, the first contract being in H2, we've effectively incurred expenses in H1 and are now mobilizing that rig to site as we speak. Again, should be drilling in February as well. That has had some good momentum too. I think all in all, again, strong balance sheet. We've got some growth opportunities that we're investing in, some jobs we've won that are going to be mobilizing in H2, H2 better than H1. The buyback, obviously, is still on foot. We're nibbling away in that. Yesterday, we bought a few more opportunistically. Again, Nathan can probably talk to his views on capital management. I think all in all, again, very good position and second half we're looking forward to. Allen, I'll hand back to you and let people raise any questions they have, and we'll go from there.
Thank you, Andrew. So yeah, there's a few questions on the board now, so we'll go through them. The first one comes from Nick. Can you talk to the margin impact of imminent commissions, obviously in regards to PNG, specialist drilling, and Loop? Are they likely to be favorable to existing contracts?
Yeah, I mean, we've always said to people, when we look at the drilling business, in an ideal world, you sort of look at it on a 30, 10, 20% basis, a 30% gross margin, 10% overheads, 20% EBITDA. That's in an ideal world. Obviously, the business doesn't do those sort of numbers on an ongoing basis, but that's what you'd like to do. Obviously, depending on the nature of the work within the business, the margins vary. There's work that's more of a commodity style nature, but it's more sure, it's ongoing, it's long- term, it might have a lower margin. There's work that stops and starts that's highly specialist in nature with very high margins. And again, we make the point in this strategy, maintaining and where possible, improving the profitability of the existing business. And that's what we're trying to do with these opportunities.
PNG, again, offshore, specialist drilling, the margin is good. It certainly meets that 30, 10 hurdle that we're talking about. SIS drilling, again, specialist in nature, stops, starts, very experienced crews dealing with gas, good margins again. Loop, again, first mover. It's a new market. It's a new opportunity. What we're doing is, again, very specialist in nature. So absolutely, it's a good question. We are trying to invest where the margins are better, and there is a better return on capital, better return for our shareholders. We'll still obviously keep investing in the business and undertaking those other jobs and opportunities as they come, but certainly from a growth perspective, trying to put the money where we can get a better return.
Next question, Daniel. Gold price in Australian dollars continuing to hit records. Is the industry seeing any uptick in exploration demand from this as yet?
Yeah, you would think so, but not really. I don't see it in the gold sector. There's a bit of a drop- off in WA. It seems to be picking back up again. I think on the East Coast, the smaller companies, the juniors, are still struggling to raise capital. I think there's a fear that the cost to actually get a mine up and running now is fairly expensive here. So I think there's a lot of opportunities around brownfield as people are still looking for old mines and trying to milk as much as they can out of the current mines. So I think I do think potentially now, with what's happened in the U.S., there should really be good sentiment coming forward. Hopefully, a lot of that will rub off onto Australia and elsewhere. Certainly, there's in the copper market and the gold market.
If the U.S. administration says that they're going back to a gold standard soon, you would hope that that wouldn't be opportunistic for us as well. So yeah, I think in the last sort of six months leading up to the election in the U.S., there's certainly been a pullback last year. And you probably see that in the numbers. And I think that's something we envisaged. But hopefully now, with the right direction the U.S. is going, things should pick up. But as Andrew said before, our focus was sort of to wheel into the higher margin businesses. We did that purposely 12 months ago. It obviously costs a lot of money to gear up into a whole new industry like Loop and the SIS. And that also reflects in the risk and the cost for us to do that.
But we can't sit around and just wait for these things to happen. So we've made those decisions, and we're happy with those decisions. So obviously, you see things kick down, and hopefully, we'll see things kick back up again.
Good. Thanks, Nathan. Another question from Nick. Revenue per rig seems to have dipped to a two-year low after a period of trending up. What are the causes of this? Is there anything beyond seasonality?
Thanks, Allen. Look, seasonality would be the large reason there. Just given typically in December, that break over Christmas, you generally see less shifts per rig, and if there's less shifts per rig, revenue per rig as a consequence tends to drop, but in addition to that, it probably ties back to what Andrew said earlier around the specialist work. FY 2025 Q2 probably saw one of the lowest levels of that specialist work in the organization for various reasons, but you sort of think of Grosvenor as one, and the large diameter rig's probably not as productive as has been the case in the past, so that's probably the second reason. But to Andrew's point, obviously, the expectation is that that would begin to increase again as the specialist work comes back online, sort of noting PNG, decarb, potentially SIS, and large diameter as well.
Great. Last question, Glenn. What is the forecast improvement for second half of 2025, given the setup spend in PNG and specialist work at Loop, of course?
Yeah, look, I suppose we're not going to give any forecasts away in here or any guidance away in here. I think we're happy to say that it's going to be improved. And again, we're hoping that it's obviously to that degree going to be impact positive in H2. What I would say is it's probably fair to assume that analysts, Q Value and Morgans, will see this quarterly come out, the half year come out, and update their notes and papers. And I'd probably point people to those once they've been updated.
Thank you, Andrew. Next question from Jason's a long one, so I will read it slowly. Additionally, there are other players in the fugitive gas market and Safeguard Mechanism space, such as Carbon Logica and QPM, who appear to be active and established players in the area. As a drilling organization, is there an opportunity to collaborate with these entities to strengthen our position under the Loop brand?
Yeah, sure. We obviously know those two players well, and there's other players in the market at the same time, and definitely, I think Carbon Logica is really targeting the waste gas market from a power generation point of view. They're essentially replacing EDL in some ways. They're all ex-EDL players. QPM, I think they're certainly on the path of being a gas producer. They're currently doing drilling up there at the moment, but I think they're really focused on trying to maximize their field. So yeah, we're in conversation for those guys. They're right in the same area we are. Obviously, we're a service provider, and those other two are more different business to us in some ways. But certainly, that market's going to get hotter, we think, in the next two to three years, that's for sure.
Yeah. And I think just to add to that, I think just looking at what the Loop business is currently doing, I mean, obviously, as Nathan says, there's opportunities for that business to grow in breadth. But we're really focused at the moment on the gas drainage from open-cut coal mines. So we're an open-cut coal mine now with blast and dig, and the gas in the coal would emit into the atmosphere. We'd effectively work with those clients to provide a turnkey decarbonization solution where we would, from the engineering at the very front of potentially what gas is there, to drilling planning, to the drilling, to gathering the gas, etc., flaring the gas. We're looking at draining that gas out of the coal in advance of their mining. So when they mine, there's no emission up into the atmosphere.
So it's a pretty specialist niche opportunity that we're targeting at the moment. Obviously, we've got our first project starting in February, as I said. But absolutely, to Nathan's point, the opportunities for that business to partner and look at other areas is exactly what we set it up for.
Thank you. Question from Michelle. Can you provide an update on the previous Anglo Coal assets where Mitchell operates and what operating conditions have been like under Peabody?
No change. No change. I don't think the transaction's closed yet. So I think obviously Peabody are there in the background somewhere, and they're working together. But for us, it's just Anglo is normal at the moment, day to day. So I think down the track, we'll probably be able to answer that a little bit differently, maybe.
Another question . With the decarb strategy getting traction faster than expected, when do you think you'll be in a position to order additional rigs?
We have signed up a second client. The second client has obviously signed up on the basis of conducting some initial engineering studies and works in advance of potential drilling, so I think before we make any decisions on a second rig, get the first one out, make sure everything goes to plan and as we expect, and then secondly, get a little bit more visibility on that second client that we've signed up and see where that's going, and then after that, you'd probably look to make a decision.
Question from Tom. Can you also confirm on some of the drivers of the lower rig count called out last quarter? For example, some roll-off contracts in gold, notionally to the sector of M&A or change in geology strategy in some operations. Have those rigs been slower or harder to redeploy?
It's sort of been a little bit of all of those, to be honest. You've had the M&A, which we called out in quarterlies, has delayed decision-making. There's been obviously some Victoria Gold we've spoken about previously. Company strategy, yes. I mean, I think a few companies heading into the end of the year, just from a budget perspective, just said, "Look, can you just pull up a bit early and turn a few rigs off as well?" So yeah, it's sort of a little bit of all of those. I think slower or harder to redeploy. I think it's always hard to redeploy. Sometimes you get lucky and you can go straight there, but other times it does take a bit of time. And I think this has just been one of those years where we've probably had a few more roll-off than ordinarily.
But as we've sort of said, it should start to normalize into this second half and generate some better returns for us.
Good. Question again. Can the company confirm that based on the impact lost in the first half, there will not be an interim dividend?
Good question. I think we'll have that discussion in about an hour's time at the board meeting.
Thanks, Nathan. Another question from Nick. Any idea if and when Grosvenor might reopen?
No. Last time, it took Anglo approximately 18 months to get it going again. Again, we're not the operator, but all I can say is the anecdotal evidence that we've heard is that they do intend to go in there, and they do intend to get it going again. But from a timeline perspective, I can't say. I'm sorry.
Next question. I think we've partially answered on dividend and governance being discussed near term. I guess second part, what's the intention for dividends and capital management going forward, obviously with the current strong balance sheet?
Look, I think we'll have that. That's our first board meeting for this year, lunch today. So I think that part of that discussion will be, again, looking at that capital management. Where are we? Obviously, the share price is quite low. As Andrew said earlier, that we bought in some more shares yesterday. Again, it's always going to be one of those four pillars is, do we deploy our capital into new assets, which we have in the Loop, potentially second rig, as Andrew just said, and hopefully more after that. We've currently got rigs that are idle that we're hoping to deploy as quickly as possible. So that'll take some money to ramp up again. And obviously, the dividend. So there's those three things there we'll look at again.
And I think we're looking at it with a different lens about where, again, where does the U.S. sit in all this? And what will happen now with our customers and with the market in general? I think there just generally was a soft sentiment last year. Just not sure whether brand new deal or whether the mining was the flavor of the month. And I think now with a change of government over there, my feeling is that things will start to ramp up, certainly in the U.S. But hopefully, that will drive new investments into minerals and copper and whatnot.
Question from Glenn. Maybe elaborate on pipeline of new orders for rigs usage, I guess, for standard joint types. That's a broad question.
Pipeline of new order rigs. We really aren't on the hunt for a lot of new rigs. I think we've made a decision with regards to the decarbonization. As Andrew said before, we really need to get that thing up and running and tweak it and make sure that it is the right fit. I think the rig is fine. It's really just making sure the whole spread is the way it should be before we start investing more millions into that. But the company itself has got a strategy on a new rig design for going forward on exploration and also a new rig design on underground. So we're just rolling that out as per normal course of business. But we don't have a real pipeline.
I think we've done very well over the last sort of, I don't know, few years to sell off the old equipment and to replace it with the state-of-the-art new equipment, and that's been very successful for us, so I think that's, so we'll just continue down that path, but we don't have a path of another 10 rigs or another 20 rigs to buy, that's not on our agenda at this stage.
Just to add to that, Nathan, any rigs up for sale or possibility? Is that.
I think we have one left.
Yeah. Look, we're always, as Nathan says, buying rigs and selling rigs or it's sort of ordinary course of business that there's one for sale and then you pick up another one and that sort of thing. So I think there's one for sale that we've got at the moment. And then just to touch on Glenn's second part of his question there, rig usage more shifts. Yeah, look, it's what we've said in here is that the wins and the money we've spent, you will see rig count, shift count increase in the second half versus the first half. There's been some good wins, and we'll get those out and running in the near future.
Thank you. I guess, just back on Grosvenor, obviously, there's two rigs underground. Andrew, I guess, what happens with them in the sense they're not recovered and insurance?
Yeah. How does it play out?
Answer that one.
Yeah. So look, from an insurance perspective, Allen, fully insured, I think importantly, the rigs are insured on two things, really. Number one, they're insured on an agreed-upon value basis. So in the event of a claim, you're not arguing with insurers around market value. So we're confident that the values that we've got them insured will be adequate enough to buy new rigs. There's also an endorsement in those policies for an abandonment as well, which may or may not prove to be the case in this instance. But to answer your question, the insurers were put on notice back in July, and we'll just continue to monitor the state of affairs, as Andrew said. There are three rigs down there, all fully insured. And if and when it gets to a scenario where there's a claim, we're confident that the claim would be sufficient to cover those costs.
But obviously, remain hopeful at the stage that they will at some stage get back up and running.
That was the last question for now. If there's any other questions, please type your question down, and I'll address them. I think that'll be it, gentlemen. Nathan, Andrew, Greg, thank you very much. Everyone on the call, thank you again. Again, this is being recorded, so I will distribute the webinar recording post this call. Any further questions, again, feel free to chat to myself or Andrew on the team. Again, thank you, Andrew, Nathan, Greg.
Thanks, Allen. Thanks, everyone.
Thanks, Allen. Thanks, everyone.