In its commitment to always finding a better way, the respected Brisbane-based Mitchell Services Limited is now presenting its clients, and prospective new clients, with a revolutionary new technology called MPD, or Mineral Performance Drilling.

In short, MPD allows mineral explorers to target geological sequences rapidly, efficiently and safely under deep cover, with pinpoint accuracy.

Designed in-house, MPD combines oil and gas technology with traditional mud rotary techniques, enabling mineral exploration drilling through deep cover sequences at speeds of up to 60 metres per hour.

With mineral deposits getting deeper and hidden further under cover, MPD makes it economically viable to explore, discover and drill out the orebodies of the future.

Mitchell Services believes that with MPD, no target is out of reach. This cutting-edge technology is designed to get more out of every hole, finding deep geological formations with greater speed and accuracy.

The company points out that drilling the cover sequences in a fraction of the time directly correlates to a lower cost-per-metre drilled and by being able to hit targets within centimetres, 'wasted' metres drilled becomes a thing of the past.

Increasing the time taken to complete programs substantially reduces overall program costs, with money spent on flights, accommodation, messing and other on-costs materially reduced.

By controlling deviation, there are further savings down hole as casing is easily retrieved for re-use and less directional drilling is required as part of the diamond drilling sequence.

In order to demonstrate the efficacy of MPD over traditional drilling campaigns, Mitchell Services performed a case study in the Paterson Province of Western Australia.

This region of Western Australia presents many historical challenges, from production issues to substantial deviation from the target - and hole failure. These factors combined dramatically increased the cost per metre.

Mitchell Services found that when MPD was applied on site, production and performance transformed the program from the very first hole.

These are the abbreviated key findings of the Paterson Province case study:

• Completion/production time improved by 255%.

• Average metres per shift (including rig moves, setup, collaring) with MPD amounted to 140m, compared to historic 55m.

• Deviation from target was less than 0.5m compared to historic results of more than 10m.

MPD represents a culmination of experience and innovation that allows clients to maximise their drilling budget and increase the chances of exploration success.

These key benefits have come just at the right time for miners and explorers alike, as a broad range of commodities continue to be highly regarded and trending above historical price averages. Trade figures released recently showed that Australia's resource exports topped $400 billion in 2021, a record level.

Earnings from coal and natural gas - the nation's second and third-largest exports behind iron ore - have both more than doubled in the past 12 months. And despite a recent softening of precious and base metals prices, demand for a host of the globe's future facing minerals remain markedly buoyant. Forecasts on the impending copper supply deficit are certainly reflective of this consensus.

As a result, Tier-1 miners and junior explorers alike are now exerting all efforts on near-mine extensions and new mineral developments at a pace not seen since the crisis of 2008.

These activities are in turn driving huge demand for drilling services, benefiting companies like Mitchell Services, who are one of the rare drilling contractors operating across all key commodities.

Mitchell Services is focused on shareholder returns, launching a share buy-back program and a new dividend policy that began this financial year.

As part of its organic growth strategy announced in August 2021, Mitchell has taken delivery of 12 new, state of the art LF160 drill rigs, with all of these rigs now contracted to long-term contracts with Tier-1, major miners.

Mitchell Services chief executive officer Andrew Elf spells it out. "We foresaw the current resources upcycle and invested to expand our rig fleet before it impacted supply costs and lead times.

"Commodity prices are high and demand for drilling services is strong. We are certainly seeing budgets increase across the board for many of our major clients."

Mitchell Services has a world-class fleet of around 100 drill rigs and services miners and explorers in Queensland, New South Wales, Victoria, the Northern Territory and Western Australia, making it one of the leading contractors in Australia.

Around 90% of its revenue comes from global Tier-1 companies that include the names Newcrest, Newmont, Anglo American, Agnico Eagle, Glencore and South32.

Revenue is a 50/50 split between surface and underground drilling operations with a focus on brownfields or operating mine sites. Gold mining makes up around 50% revenue, 30% is from metallurgical coal, and the balance is from various other commodities demonstrating the diversity and quality of Mitchell Services revenue.

The company's confidence in returning cash to shareholders is built on its positive outlook for the industry, particularly the demand for drilling services across a range of commodities.

"The Tier-1 miners we work for have got world-class assets and high-quality sites, and they're also performing well financially which is seeing their drilling budgets increasing," Mr Elf said.

"If you look through the cycle, we're operating on some excellent sites that are low on the cost curve and regardless of commodity prices, there's always going to be a solid level of activity across a lot of those sites."

For the mid-tier miners and the junior sector, the demand is equally strong and the outlook also looks positive.

"There have been strong capital raisings and some good drilling results that have been recognised," Mr Elf said.

The share buyback and dividend policy the company recently announced is part of the Capital Management Policy that is following on from its successful organic growth strategy.

"This disciplined approach to Capital Management will see us significantly reduce the company's debt profile over the next two years, while paying strong dividends and buying back shares," Mr Elf said.

Mitchell Services says it will pay up to 75% of its reported post tax profits to shareholders in dividends.

Under the new dividend policy, an interim dividend will be declared with the company's half year results (expected February 2023), with a final dividend to be declared at the company's full year results (expected August 2023).

Meanwhile, the share buy-back program began on July 15, where the company will purchase not more than 10% of its fully paid ordinary shares (about 22.5 million shares) as stated under existing ASX rules.

The price of the buyback will be no more than 5% above the volume weighted average price of its shares over the five days of trading prior to the purchase.

The competitive profile of the drilling services sector has improved, and the company is in a very strong position to generate material returns for shareholders.

Andrew Elf says Mitchell Services is in the best position it has ever been in and the high barriers of entry for competitors planning on entering the industry bodes well for existing drilling services companies.

"There are lots of barriers like requirements to comply with the labour laws, cost of capital in buying rigs, access to capital to buy rigs and most importantly accessing the skills and knowledge of the right people to start this business," Elf said.

He is also very positive about what investors should expect from Mitchell Services looking forward.

"We've invested heavily in our fleet over the last couple of years, and the fleet is world-class. It's now time to use that fleet and generate a material increase in revenue and earnings.

"The heavy lifting is done, and we will reduce capex where it makes sense to do. It's now time to reward our shareholders who have been very supportive" Mr Elf said.