Key highlights

  • Mitchell Services Ltd (ASX:MSV) shares touched a 52-week high during the 19 October 2026 session and closed at $0.60, up 2.56%.
  • A 19 October 2026 investor update reports September quarter Revenue of $66.5 million, EBITDA of $18.7 million and EBT of $13.3 million.
  • The company has signed contracts for a further 10 underground rigs and sees a pathway to 80 operating rigs before the end of FY27.

Mitchell Services Ltd (ASX:MSV) is a drilling services company that provides exploration, mine site and geotechnical drilling to miners in Australia and Papua New Guinea. The shares touched a 52-week high during the Trading session on 19 October 2026 and closed at $0.60, up 2.56%. In a letter to shareholders dated 19 October 2026, the same date as the session, the company reported unaudited results for the September 2026 quarter (FY27 Q1). This article does not attribute the day’s share price movement to the update.

September quarter results

Revenue was $66.55 million, up 24.6% on FY26 Q1. EBITDA was $18.655 million, up 58.3%, at a Margin of 28.0%, and EBT was $13.297 million, up 117.6%. The company attributes the improvement to an average of 66 operating rigs, compared with 62, a 7% increase in shifts worked to 10,132, and a 17% increase in revenue per shift.

EBITDA includes a one-off benefit of about $3.4 million from the finalisation of the Grosvenor underground insurance claim. Excluding it, underlying EBITDA was $15.3 million, up 29%, at a 22.9% margin, and underlying EBT was $9.9 million, up 62%. Return on invested Capital was 41.3%, compared with 29.9%.

Rigs, contracts and market commentary

The company operated an average of 66 rigs from a fleet of 93. It has recently signed drilling contracts for a further 10 underground rigs and says it can see a pathway to 80 operating rigs before the end of FY27, which would represent utilisation of about 85% of the existing fleet. The update says market conditions are as favourable as they have been for some time in the underground minerals sector, with gold and copper prices remaining high and clients’ drilling budgets increasing. It adds that higher coal prices have not yet translated into increased Demand for drill rigs.

Cash flow and balance sheet

Cash was $11.9 million at 30 September 2026, compared with $12.1 million at 30 June, after payment of a $4.2 million fully franked final FY26 Dividend of 2 cents per share. Debt, all equipment finance, was $10.8 million, up from $8.7 million. Operating Cash Flow was $10.1 million and Capital Expenditure was $11.8 million, compared with $3.6 million. Operating cash conversion was 53.9%, compared with 82.9%; the company links this to higher receivables, the classification of insurance proceeds as investing cash flow, $0.9 million of tax payments and increased inventory ahead of wet seasons.

Loop Decarbonisation

The company reports that its contract with a customer, identified as BMA, is progressing, and that the team drilled a Horizontal Well from within a pit that intersected a vertical well about 1,540 metres away. It says BHP referenced the initiative in a public ESG roundtable presentation dated 16 September 2026, and that other clients continue to show interest in initial advisory services.

Sector backdrop

Across the market on 19 October 2026, the S&P/ASX 200 (ASX: XJO) stood at 8,845.70 at 4:25 pm (GMT+11) on 19 October 2026, up 0.44%, or 39.00 points, for the day. On the sector map, Industrials rose 0.93% and Energy rose 2.16%, but drilling services for the Mining industry do not have a separate label on the map. The sector map shows that Energy rose 2.16%, Industrials 0.93%, Financials 0.85%, Utilities 0.38% and Consumer Staples 0.25%, and that Information Technology fell 1.35%, A-REIT 0.34%, Consumer Discretionary 0.18%, Telecommunication Services 0.16% and Health Care 0.13%. One unlabelled segment added 0.11%.

The Mitchell update was released on the same date as the session. It is based on unaudited management accounts for the quarter to 30 September 2026.

Risks shareholders should weigh

The update is based on unaudited management accounts. The quarterly figures include a one-off insurance benefit, and operating cash conversion fell to 53.9%. Debt rose and cash slipped slightly while capital expenditure more than tripled to $11.8 million.

The pathway to 80 rigs is described as a pathway rather than a firm commitment, and the company states Earnings growth assumes utilisation levels remain high. Demand depends on client drilling budgets, which are linked to Commodity prices. The company also notes that coal-related demand has not yet improved, and the Loop Decarbonisation Business remains at an early stage.

What’s next

The company expects inventory levels to reduce through the wet season and conversion ratios to normalise. It plans to continue mobilising the newly contracted rigs and says capital management will balance Shareholder returns, growth and debt levels. It reports that it will keep advancing its decarbonisation contract with BMA.