Written by Sean Galea-Pace at APAC
“Drilling in Australia is relatively buoyant at the moment,” declares Brett Tredinnick, CEO of AJ Lucas (ASX: AJL).
“Our coal mine centred market has shown solid demand and there is still plenty of opportunity to place rigs in the general exploration market. It’s always a challenge to continue to increase efficiency and reduce cost in a safe workspace.”
Mining in Australia is one of the country’s most renowned and well-established industries. It is a key contributor to its national economy, consisting of around seven percent of total GDP. As the fourth largest mining country worldwide, after China, Russia and the United States, Australia continues to experience ongoing demand for high-tech equipment, which showcases potential opportunities for suppliers.
Over the past few decades, the industry and Lucas have grown together in tandem. Founded in 1958, AJ Lucas established itself as a high-quality building sub-contractor. In the years that followed, it has utilised its engineering expertise to provide specialist, niche engineering, construction and drilling services to the key sectors of energy, water and wastewater, resources and solid project management.
Based in Brisbane, Lucas possesses a fleet of 41 multi-purpose drill rigs designed specifically to service the coal market, supported by around 400 technical and administrative staff. The organisation has operations in major coal producing basins of Australia’s east coast including the Southern Coalfields, the Western Coalfield, the Gunnedah Coalfield, the Hunter Coalfield and the Bowen Basin.
Tredinnick grew up in Newcastle, New South Wales, and was surrounded by the coal and steelmaking industries, providing a backdrop for a seamless transition into the sector following the completion of his schooling. Prior to becoming the Group CEO in January 2020, Tredinnick had been involved with the organisation for over 20 years. He has worked in a variety of roles within the company and has led and introduced initiatives that have kept Lucas’s Australian business safe, profitable, innovative and a leader in its field.
“We’ve previously successfully led the drilling business through a significant coal market downturn, with minimal impact and disruption to business, employees and customers,” he explains. “We have also managed to restructure and integrate the pipeline, drilling and support functions into a centralised lean operating platform while the business was undergoing severe market downturn and cash flow problems.
“Since becoming CEO, our team have managed to maintain our market share and stay ahead of customer requirements during the COVID-19 pandemic.”
Tredinnick affirms that one of his biggest challenges so far in his tenure has been navigating the COVID-19 landscape – however, the way in which the organisation has mitigated its impact is cause for pride.
“It’s been difficult to manage a mostly fly in fly out workforce during the pandemic,” adds Tredinnick. “Thanks to early action, commitment from our customers and our people, we have remained COVID free and downtime on site has been negligible.”
Short term COVID impact aside, Lucas is primarily exposed to metallurgical coal which has strong long-term fundamentals. Base world steel demand in tandem with significant rises in Indian steel production are anticipated to drive increased global demand over the next 15 years.
In addition to being a leading provider of drilling services, primarily to the Australian coal industry, the organisation is also an investor in the exploration, appraisal and commercialisation of oil and gas prospects in the UK, with a long and proven history of returns from conventional and unconventional hydrocarbon resource investments.
Tredinnick believes that the organisation’s competitive advantage comes from its determination to deliver best-in-class customer support, the CEO going on to describe some of the firm’s ongoing activities.
“Lucas delivers intelligent and practical solutions to support the Australian mining sector in green and brownfield exploration as well as pre and post drainage of mine gas via vertical and specialised directional drilling methods,” he says.
“Geographically, we’re currently drilling on the eastern seaboard of Australia, but have and will continue to drill anywhere across Australia. Our strategic bases in Moranbah, Queensland, and the Illawarra, New South Wales, provide a solid foundation for strong customer support. Our clients are predominantly Tier 1 coal mining companies, where we employ around 300 people and drilled 569,500 metres during the latest financial year.”
Indeed, Lucas is the only drilling company in Australia that offers an integrated, end-to-end, solution to design and drill a customer’s wells.
The organisation has in-house drilling engineering and directional drilling (steering) capability that it uses daily, and Tredinnick believes his company’s ability to be agile and respond to the latest trends and demands within the market is vital.
“Lucas has always looked for market openings coupled with the right people to deliver a safe performance for our customers,” he affirms. “We’re also not scared to alter and adapt our processes to suit our clients’ requirements, and we continue to look for better ways to do every job. We get in and roll up our sleeves to deliver for our customers. This includes designing and building a new type of surface to in-seam drilling rig.”
Tredinnick works hard to ensure his organisation meets the demands of its customers and affirms Lucas’s wide-ranging expertise truly sets it apart from its competitors.
“One of our customers is a Tier 1 mining company and requires a wide range of drilling to be undertaken over two coal mine sites,” he continues. “We drill a full suite of well types, from exploration through vertical drainage to specialised surface to in-seam (SIS) extended reach drainage to drain methane from the mining area to enable safe extraction of the coal.
“Our crews and their safe performance are integral to our customer’s overall performance and as such are closely monitored by our customer for safe operations. Recently, we achieved one-year injury free across both sites with 13 rigs, more than 100 people and over 250,000 hours worked. The feedback from our customer was that our crews were seen to be part of the customer’s team and they were very proud of our performance.”
Tredinnick also understands the value of an efficient and effective supply chain and believes Lucas’s key suppliers are at the heart of operations.
“Without our key suppliers delivering for our operations we wouldn’t be able to support our customers at the high level that we do,” he explains. “Our suppliers also share our vision of unlocking efficiency and reducing overall cost for our customers. Most of our suppliers have been a part of our success for a long period of time. We are proud of the supplier relationships that we have been able to forge over the last 20 years and we are looking forward to continuing them.”
With the future in mind, Tredinnick has a clear idea of what he hopes the next few years to look like at AJ Lucas.
“I expect us to continue to provide safe and efficient operations as well as reduce well construction times with zero incidents. Ultimately, our overall aim is to decrease the cost for customers,” he says.
“It’s important that we continue to explore new technologies to the drilling market in order to improve data delivery and reduce cost. There are exciting trials underway to significantly reduce well construction cost for our customers. In addition, we plan to continue to explore other market opportunities on a case-by-case basis.”