Greenfield drilling service price

IBISWorld forecasts greenfield drilling service prices to climb by 0.2% in 2024-25, to $484.42 per metre. Severe workforce shortages in the mining sector under tight labour market conditions are set to elevate labour costs for drilling companies. Despite an easing in commodity prices, exploration activity is expected to remain elevated and to boost demand for greenfield drilling services over the year. These factors are set to keep greenfield drilling service prices high over the year.

Greenfield exploration expenditure has hiked over the past five years. The number of greenfield metres drilled peaked in 2020-21 to 4.1 million. However, rising drilling and capital costs have constrained greenfield exploration activity, reducing the number of greenfield metres drilled in more recent years. Funding for greenfield exploration is influenced by investor sentiment, the ability to fund exploration drilling programs and the outlook for commodity prices and demand. Access to capital has become more difficult over the past few years as rising interest rates and inflationary pressures have dulled investor sentiment.

Greenfield exploration expenditure has increased across all states, except for Victoria over the past five years, with South Australia and Tasmania experiencing the strongest growth. Western Australia topped the greenfield drilling expenditure and accounted for 62.8% of total greenfield exploration expenditure in 2022-23 (latest available data). Expenditure on exploration for copper, mineral sands, uranium and base metals has grown strongly over the past five years. Exploration for gold represents the largest share expenditure, accounting for just over 30% of total exploration spend.

Operating costs for drilling companies have risen over the past five years, causing greenfield drilling service prices to rise. The Russia-Ukraine conflict has caused global energy prices to rise as European buyers have become more active in global markets and sought to diversify supply sources. Tight labour market conditions have also placed upwards pressure on drilling costs. Overall, IBISWorld forecasts greenfield drilling service prices to climb at a compound annual rate of 11.0% over the five years through 2024-25.