It is intended that customers will benefit from these initiatives through guarantee of supply and quality, standard contract terms, consistent use of experienced crews and safe drilling practices. Global account management will enable Boart Longyear to re-allocate rigs to customers who perform a higher proportion of development and production drilling, which will provide more stable work over time and increased exposure to the less cyclical exploration expenditure of the Majors. Global account management is also expected to provide geographic expansion via contracts with mining houses in new geographies where Boart Longyear’s market share is below its global average.
The response of customers to the initiatives has been sufficiently positive that Boart Longyear has had to slow the global account management program roll-out in FY2007 so that it can focus on delivering on its value proposition to customer accounts that have already been targeted. As capacity grows, additional key account relationships will be developed.
The Company has achieved a sizeable increase in drilling income directly resulting from key account management. Management is targeting a 50% share of the Majors’ drilling expenditure. The Company’s global account management initiative is of increasing
importance, given the consolidation of the mining industry led by the Majors and the lower volatility of Majors’ exploration drilling spend.
