The world's biggest drilling services company, Boart Longyear, says higher costs and lower prices are weighing on earnings but revenue is expected to pick up.
As mining companies around the world slash their exploration budgets, Boart says the performance of its drilling services division is at the weaker end of analysts' estimates.
The company now expects to achieve $US30 million in earnings in calendar 2014, below the range of $US34 million to $US48 million expected by analysts.
Boart shares dropped one cent, or 5.4 per cent, to 17.5 cents, down 64 per cent since late January.
Weaker pricing, higher than anticipated costs, and falling currency values against the US dollar, were responsible for weaker earnings, Boart said.
"Even though utilisation rates appear to have stabilised, we are experiencing higher than anticipated rig maintenance costs and mobilisation/demobilisation costs," chief executive Richard O'Brien said.
"We will continue to review these and other costs and to evaluate our contracting practices to improve our performance and profitability in the coming year."
Full year revenues were expected to be at the stronger end of the range of analyst estimates of $US819 million to $US852 million, Boart said.
The company was recently thrown a $US300 million lifeline in the form of a complex recapitalisation plan, as it struggles to turn around its ailing business, which is carrying debt of $US551 million.
Mr O'Brien said the company looked forward to shareholders voting on the recapitalisation plan at an extraordinary meeting in Melbourne on December 17.
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