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Costs

Cost Per Metre

Determining the cost associated with producing one metre of drilling can help you to evaluate the efficiency of your drilling spend and make predictions about future costs.

The easiest way to calculate cost per metre is to cross-check your drillers’ invoices against your drilling data (DDRs/plods). You can use this information to calculate cost per metre by dividing the total cost for a selected period against the total number of metres drilled in the same period.

To understand how you’re tracking in the context of your entire exploration program spend, you could compare the metres drilled versus the metres planned, and extrapolate your current cost per metre against the planned metres to predict overall drilling spend versus your project budget.

An important limitation of cost per metre is that, by default, it doesn’t discern between different types of drilling or rigs, so it may not be the most appropriate way to evaluate and predict drilling spend if you’re using multiple drill types.

Eg a cost per metre that includes auger and diamond drilling would over inflate the auger cost and under-represent the cost of drilling a diamond metre, depending on the distribution of metres between the two drill types for your program.

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Cost Per Metre Per Rig

Cost per metre per rig can address some of the potential issues associated with looking at your all-in cost per metre if you’re drilling with more than one rig.

You can calculate it in the same way as cost per metre, but by drilling down into the summary of costs per rig for the selected period versus the metres drilled by that same rig for that period.

Cost per metre per rig is an excellent measure if you want to:

compare costs between multiple drills of the same type
track the cost trend of a single drill over time
make more accurate future cost predictions by removing the bias of all-in cost per metre.

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What is a good cost per metre?

I’d love to give you an exact number - but, unfortunately, it depends on a wide range of factors such as your budget, the type of drill rig you need, the depth you’re drilling, other services you need your drill contractor to provide, and many more.

Having visibility over your cost per metre is important to track trends over time and ensure that you’re hitting the right numbers to fit within your project budget. If it looks like things might be heading off track, a good drilling contractor can provide a wealth of insight into getting the most out of the rig within the goals of your project.

It’s also important to remember that cost, whilst important, is not the only factor to consider when determining drilling ROI. This is why I’d recommend looking at a range of different metrics that balance costs with productivity and quality, through a lens of which is most important to your project.

Here are some other metrics you could look at in conjunction with cost per metre per rig to determine value.

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Productivity

Metres per shift - but better

Measuring the number of metres drilled per shift can indicate a driller's output (productivity). But, in isolation, it doesn’t tell you a whole lot about how a shift performed overall unless you’re able to consider it in the context of other shifts worked by the same rig or driller, or the ground conditions encountered during that shift.

If you want to be able to understand the performance of drillers on the same rig type to one another, or compare different shifts by the same rig or driller, here are a few different metrics you could add to your analysis for a deeper understanding and fairer comparison.

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Driller efficiency

This metric indicates the proportion of time that a driller was actively using the rig to drill versus the time it was required to be operating.

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Driller efficiency = drilling time / time available to drill

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You can use driller efficiency to directly compare how drillers spend shift time, but it won’t tell you how ‘well’ they used that time (ie metre output).

To make driller efficiency a fair measure, you’ll need to remove the non-negotiable tasks for shifts that always impact drilling time where the rig is inactive, such as safety meetings.

For example, most drilling shifts are scheduled for 12 hours. If a safety meeting takes around 30 minutes, then the actual availability of that rig for the day was only 11.5 hours. If the rig drilled for the entirety of that 11.5 hours, then the drillers’ efficiency would be 100%.

Of course, rarely will drills ever be able to operate at 100% capacity for all of the time. This is why the DDR/plod is a wealth of contextual information for understanding what's going on at the rig. You wouldn't judge two drillers with the same metre output the same if one of them spent three hours waiting for your geologist on-site, right?

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Metres per available hour

This metric can give us more clarity when it comes to how productive a driller was on a shift - barring a few contextual factors like ground conditions.

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Metres per available hour = metres / total available hours to drill

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It can be easy to confuse metres per hour and penetration rate but each tells a slightly different story.

A driller's total output for the day can be increased by increasing either the available time to drill or the penetration rate, but a penetration rate increase is generally quite small, as the drill can only go so fast without damaging the material to be sampled.

Much larger gains in productivity can be made by reducing things like standby time and breakdowns that can improve rig availability and allow the driller to spend a larger proportion of shift time drilling, rather than trying to make up for it by drilling faster.

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Quality

‍Penetration Rate per Rig per Shift vs Core Recovery or Sample Bag Weight

Pen rate is a reliable indicator of drilling speed, but not always a great comparative performance measure. Different rigs drill at different speeds, so breaking this down on a per rig, per shift basis can help you make direct comparisons between rigs of the same type, drillers working opposite shifts on the same rig, or track rig performance and even understand ground conditions over time.

However, it's important to note that faster drilling doesn't necessarily equate to better quality. In RC drilling, for example, if the penetration rate is too high, the sample can be accidentally pulverised, mixed with different intervals, or lost as dust.

Although, spending more time on drilling also doesn’t necessarily create better samples either. The truth lies somewhere in the middle, which is why pairing sample recovery measures with penetration rate can help you find the optimal band of tolerance for your project.

Looking at core recovery or core loss in the context of productivity and spend can help you:

determine the overall effectiveness and skill of a driller
strike the right balance between quality, timing and spend
justify spend on a particular driller based on a preferred metric
identify potential sources of bias in your core sample.

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I’ve discussed the relationship between sample quality and drilling data - and the consequences of storing it on spreadsheets - in a previous blog.

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What represents ‘good’ ROI? Finding the sweet spot for your operation

Every exploration manager needs to find their unique sweet spot between timeliness, cost and quality. But ultimately, what is ‘good’ will vary depending on the objectives of your exploration campaign and the contextual factors behind performance hidden in the data.

Leveraging the data you have can help you to ask better questions and make more informed decisions. For instance, some of the metrics we’ve looked at today might help you answer the following questions:

Is driling time being used efficiently, and what are the leading factors driving how time is used both on individual shifts and between shifts?
Based on our existing cost per metre, average penetration rate and metres remaining to be drilled, what is the likelihood that we’ll overspend on drilling?
Should we extend the duration of the drill program to obtain higher-quality samples, and is this something our drillers are capable of delivering?
Should we make any adjustments to the bit types we’ve planned to use based on what we’ve learned from previous holes on this prospect?

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So, should you hire that drilling contractor again?

There is an almost endless amount of data you could use to evaluate the performance of your drill contractors. The metrics listed are just some of the many different ways you could slice and dice your data, but as I suggested, it's important to strike your unique balance between the critical factors of productivity, cost and quality, plus the requirements of your project and ground conditions.

You may wish to use the metrics discussed today to have more productive conversations when looking for a drill contractor, so you can make a decision that aligns with your project goals.

In summary - hiring the right drilling contractor for your next exploration program requires you to consider multiple metrics and contextual data. By using the right metrics and bringing in contextual information, you can make informed decisions around drill contractor selection and ROI determination.

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Save yourself time and effort by getting CorePlan to analyse drilling performance for you

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