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SHARES in Hughes Drilling (ASX: HDX) surged more than 27 per cent today in the wake of a robust interim profit result reported last week.
The Yatala-based Hughes, Australia's leading production drilling company, reported a 44.7 per cent increase in net profit to $6.5 million.
Revenue surged 39.5 per cent to $54.5 million despite the slowdown in exploration activity across the mining sector.
Hughes says its east coast drilling operations, which accounted for 36 per cent of revenue, fell 14 per cent to $19.7 million.
However west coast operations were buoyed by the acquisition of JSW Australia at the end of 2013, leading to a full six-month contribution of $26.7 million for the December half, up from a three-month figure of $9.9 million a year earlier.
Hughes says JLW's focus on safety and cost minimisation has helped it secure a number of quality drilling contracts during the half-year.
In January, Hughes announced a new three-year drilling contract with Glencore for its Collinsville Coal Mine, as well as a short-term contract with BHP Billiton (ASX: BHP) for the Mt Arthur coal mine in NSW.
Hughes shares hit a high of 13c following announcement of these deals in January, but they fell to a low of 10c by late February.
Managing director Bob Hughes says debt repayment has been a priority for the group which accounts for no interim dividend being declared.
Hughes is still trading well below net tangible asset backing of 31c per share, up from 28c a year earlier. The shares shot to a high of 14.5c today.
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