report by Miguel Camacho

Executive summary The drilling sector in Colombia is currently in a vulnerable state due to a combination of factors including a shrinking market and over supply. The global contraction in funding for exploration means fewer exploration companies have drilling budgets and consequently the amount of drilling has fallen considerably since its peak in 2011. Colombia saw dozens of exploration companies enter the country within the last five to ten years as it opened up to exploration. The influx of exploration companies was accompanied by an influx of drilling contractors, to the extent that it is estimated that there are now over 220 drill rigs available from about 24 drilling contractors. Low demand and high supply means that less than 10% of the drilling rig fleet in Colombia is currently being utilized and as a result, drilling tariffs have fallen by 30-50% in the last two years, with most contractors marginally profitable at best at the time of writing, and many offering their services at prices close to cost. Adopting a contrarian viewpoint, the precarious economic state of many drilling contractors and their need to obtain funds potentially provides a new entrant with the opportunity to acquire drilling rigs at discount prices, and the necessary personnel to operate them and manage the business.

Drilling companies There are 24 drilling contractors in Colombia with approximately 220 drilling rigs between them. The median size company has 5-10 drill rigs, with four companies having more than 20 rigs. The sector has experienced a sharp contraction in the 2012-2013 period as finance for exploration has dried up leaving exploration companies without funds to drill. The tough market conditions mean that several of the smaller companies may not be able to remain viable, and the market is awash with rumours of companies that may be leaving Colombia or selling their rigs. The fact that some junior explorers have left Colombia and/or gone bankrupt without paying their drilling contractors has added to the poor financial condition of some contractors. Canadian Drilling is one company that is no longer operating and is looking to sell its rigs, for example.

Colombian Rig Fleet By Company NUMBER OF RIGS

PERFOTEC MD COLOMBIA KLUANE COLOMBIA GEOMINAS LOGAN DRILLING ANDINA PERFORACIONES AK DRILLING INTERNATIONAL INTEGRAL ENERGOLD MATRIX DRILLING G4 PERFORACIONES CABO DRILLING MPX DRILLING MONTAÑA PERFORACIONES EXPLOMIN SMART DRILLING CANCHI PERFORACIONES TERRA COLOMBIA SEDIGEO PERFORANDO PERFORACIONES CHITARERAS GMS GHM INGENIERIA

Market Share of Colombian Drillers

PERFOTEC

KLUANE

MD COLOMBIA

20%

18%

GEOMIINAS

LOGAN DRILLING

OTHERS 28%

ANDINA PERFORACIONES

The larger companies tend to have more of a financial reserve with which to withstand current market conditions. Their depth and breadth of experience also means that they are the companies most likely to win drilling contracts as explorers can obtain their services at low rates. Although some smaller companies are charging at close to breakeven rates, explorers are increasingly risk averse and reluctant to use them for the fear that they may not be able to complete the job for technical or financial reasons. Several publically-traded contractors are present in Colombia including Major Drilling (TSX: MDI), Energold (TSXV: EGD) an Cabo Drilling (TSXV: CBE). It was not possible to obtain the sales volume or turnover for the drilling companies as the vast majority of them are private companies and this is highly sensitive commercial information. The few publicly traded companies typically report their sales by region rather than individual countries for the sale commercially sensitive reasons.

Equipment A range of different drill makes and models are used in Colombia, although all are diamond drills that produce a drill core. Reverse circulation drilling has only been used on ad hoc occasions, with machines imported specifically for a particular job. The most popular rigs are made by Sandvik, Boart Longyear, and Duralite.

Rig Fleet by Manufacturer for Selected Companies Petrotec

Logan Drilling

MPX Drilling

Explomin

Energold

Sandvik UDR 200

Duralite ManPortable 500

Duralite track

Sandvik DE740

JS1500

Mancore manportable

Sandvik DE710

Canchi 300

Boart Longyear LF-70 Boart Longyear 44 Sprague 142

Duralite DL-600 Duralite DL-800

Boart Longyear 38

Duralite ManPortable 800

Boyles BBS-15

Duralite DL-1000

Sprague 37

Silver Bear A5

Boart Longyear LF-90 Canchi Portable 500 Sandvik DE140

Hydracore Gopher

The layout of the facilities will depend upon the terrain of operations to a certain extent, with the focus being the drill rig on the drilling platform. Immediately adjacent to the drill rig will be a lay down area where the drill rods and recently drilled drill core are stored. The water supply tank is also positioned close to the drill rig with will be supplied by hoses from the water source. The water recirculation and sedimentation circuit is positioned downhill from the drill rig using gravity for the used drilling water to flow into the tanks where particulate matter will fall out. The water is then recirculated to the water supply tank. For a camp for the drilling crews, the drilling contractor typically rents a nearby house or finca and employs a local person to prepare food and clean.

Effect of Terrain Colombia’s terrain and the remoteness of some project locations have led exploration companies to favor certain types of drill rigs. In the Colombian cordilleras, exploration companies want to use man-portable rigs, as truck-mounted and even track-mounted rigs are too big to access drill sites in steep terrain. Man-portable rigs also need smaller drill pads and do not need paths to be cut to access drill sites, reducing the environmental impact of a drilling program. Skid-mounted rigs, which can be moved by helicopter and winched into location, are also widely used in remote projects. Energold and MPX Drilling are two firms that have focused their Colombia operations on providing man-portable and helicopter-portable rigs. With most exploration work focused on surface drilling, the market for underground rigs is smaller. However, many projects having access to the adits of former mine workings and major projects—such as Continental Gold’s Buriticá mine—are entering the development stage, meaning demand may grow.

Directional Drilling Due to Colombia’s mountainous terrain and the fact that near-surface targets have already been drilled, some explorers are looking at the directional drilling option as they seek information on ore bodies at depth. Directional drilling may allow an explorer to drill the equivalent of 100,000 meters using conventional technology with just 30,000 meters of drilling. This technology has yet to be used in Colombia, although a couple of exploration companies are considering it.

Drilling Diameter Drilling as part of gold exploration in Colombia typically uses HQ and NQ diameters, as the majority of exploration is relatively near surface. Drill hole depths are typically in the range of 300 meters to 600 meters, although a handful of explorers have drilled deep holes of over 1,000 meters. Drilling contractors in Colombia typically offer a range of diameters from PQ to BQ.

Personnel A drilling project will typically see a drill operated in two 12-hour shifts. Each shift will include an experienced driller with a minimum of two helpers. The driller will usually have several years’ experience operating rigs and may well be a foreign person, given that modern exploration and drilling is relatively new in Colombia and few local drillers have gained the necessary experience to run a drill crew. The helpers tend to be less skilled, with up to two years’ experience learning the trade. They service the drill, loading new drill rods, placing cores in core boxes, etc. If a project has a high drilling mud use there may be a third helper to manage the muds. There will also be a supervisor and a mechanic. A drilling project can thus have up to nine people working per drill. These employees will be lodged near the project. A helper typically works six months to one year before becoming a junior driller and learning how to drill. After a year as a junior driller, he may become a driller and operate drills on his own, with supervision. A supervisor has 10 years’ experience or more. A driller currently earns about $4,000 per month and a helper $1,200. This is significantly less than at the 2010–11 peak, when drillers earned $6,000 per month. They also earn a meterage bonus, which is typically $3 per meter for drillers and $1 per meter for helpers.

Drilling Tariffs Historically, Colombian drilling contractors quoted jobs at an all-inclusive price per meter. The arrival of foreign drilling contractors such as Major Drilling, Kluane, and AK Drilling changed the way jobs are quoted. Foreign contractors quote a lower price per meter, but one that is not all-inclusive, with many extra charges levied on top of the base rate. Thus while these drillers appeared cheaper at face value, further analysis revealed them to be in fact more expensive. Clients, however, mainly look at the baseline price per meter. In 2012, Colombian companies changed the way they quote jobs to align with their foreign counterparts. In 2013, there is so much offer that some companies will certainly fail. We hope that in 2014–15 the market starts to improve again, but profitability is currently low. Foreign companies can offer very low rates on the basis that they have operations in other countries with which to outlast the market lull.

$173/m

Average tariff per meter drilled 2011*

$137/m

Average tariff per meter drilled 2013*

*As told to RPM by nine publicly traded miners Due to the number of variables in drilling contracts and the different characteristics of each project, standard drilling tariffs do not exist. When an exploration company is planning a drilling program, it invites several drilling contractors to bid on a job. In pricing their bids, drilling contractors take into account several basic factors: • Meterage to be drilled • Depth of holes to be drilled • Project location • Diameter of holes to be drilled • Core recovery rates In addition to these, other elements will be priced either within the meterage quotation or as separate billable items: use of muds and other additives, downtime or idle time, mobilization and demobilization costs, drill bits, and the lodging and alimentation of crews. In 2010–11, when it was more difficult for explorers to find free drill rigs, most if not all of the additional costs were billed as extras. In the current market, drilling contractors are including the majority of additional costs within the basic quotation. While it is not possible to give standard drilling tariffs, a study of tariffs paid by individual projects reveals drilling rates have fallen approximately 30%–40% between the 2010–11 and 2012–13 periods. This reduction in drilling tariffs was confirmed in interviews with drilling contractors.

PROJECT 1 (ANTIOQUIA)

PROJECT 2 (ANTIOQUIA)

PROJECT 3 (ANTIOQUIA)

Total direct drilling cost including consumables, logistics, and core presented in the box has been just short of $200/m on average.

All-in drilling costs, includes drilling, mobilizing, sampling, overhead interpretation, and modeling: $177/m in 2012, $175/m in 2011, $182/m in 2010, $189/m in 2009.

All-in costs including drilling time, working time, reaming, pushing, pulling, surveying, all consumables, and water management came in at $165/m. The basic drill rate was about $125/m.

PROJECT 4 (ANTIOQUIA)

PROJECT 5 (ANTIOQUIA)

PROJECT 6 (ANTIOQUIA)

$125/m. Total costs are close to $220/m.

Around $250/m in 2011, around $118/m in 2013.

$110-$115/m for 2011–13.

PROJECT 7 (ANTIOQUIA)

PROJECT 8 (BOLIVAR)

PROJECT 9 (RISARALDA)

Prices of bids fall from the $180–$200/m range to $85–$125/m range.

Base rate of $180/m, but with standby and extras that raised that price.

Price, not including: bits, reaming, transportation, platforms, support personnel, and additional costs: $137 in 2013, $137 in 2012, $135 in 2011, $130 in 2010.

PROJECT 10 (SANTANDER)

PROJECT 11 (SANTANDER)

Total direct drilling cost including consumables, logistics, and core presented in the box has been just short of $200/m on average.

The causes of these plummeting tariffs are the arrival of new drilling companies in recent years and the sudden deflation of the drilling due to the drying up of funds among the exploration companies. It is now not uncommon for five to eight companies to bid on jobs. As more companies compete for an increasingly shrinking pool of projects, contractors are bidding at cost, or even under their breakeven point, thought to be approximately $100 per meter. With the junior exploration sector seeing few signs of recovery in the next 18 months, drilling tariffs are likely to stay at these depressed levels for some time.

Most clients are principally concerned about two performance aspects: productivity and recovery.

Productivity Drill productivity is highly dependent upon the specific geological conditions of the project and type of drill and as such it is hard to generalize. Productivity depends upon several factors, including: • Type of rock being drilled (hardness and abrasiveness) • Presence or absence of former underground workings whose tunnels create voids in the drill path • Extent to which the geological conditions require additives such as drilling muds • Depth of the perforations The arrival of foreign drilling companies in Colombia in recent years produced an influx of newer and more modern drills than those operated by many of the local drilling contractors. Newer drills should be able to average 50 to 55 meters per day compared with 30 to 35 per day for older drills. However, due to the range of drilling conditions, drill productivity ranges from 20 to 100 meters per day.

Recovery Recovery is the amount of the drill core that is recovered in good condition. It is affected by the ability of the drilling team and the type of rock or ground conditions being drilled. Drilling contracts will often specify a minimum recovery percentage, such as 80%, with penalties or fines for failure to achieve these. Continued failure to achieve the required recovery may also lead to contract termination and the hiring of another drilling contractor.

Mobilization costs Mobilization costs are variable and depend upon several factors, including:

• Number and type of drills to be used • Location of the drills prior to mobilization • Location of the project • Location of the drillers

Some companies bring in experienced drillers from Canada, Peru, or Central America to operate a project. In 2010–11, when it was more difficult for explorers to find free drill rigs, mobilization costs were often assumed by the client. That is no longer the case. In the current environment, to minimize demobilization costs, drillers are looking to leave rigs on site rather than return them to their base, in the hope that a subsequent drilling contract will arise.

Profitability Profitability of drilling jobs is very subjective and variable. The highly competitive nature of the business, with up to eight contractors bidding on drilling jobs, means that companies are unwilling to discuss their margins. However, with bids converging towards the breakeven point, it can be assumed that contractors are marginally profitable at best, in the 5%–10% range.

Exploration projects Since 2009, at least 56 exploration projects in Colombia have had some drilling performed. Exploration drilling peaked in 2011 at over 653,000 meters, as the wave of mainly Canadian juniors advanced projects to the drilling stage. The downturn in the mining finance market and its particularly hard impact on the junior exploration sector has seen exploration drilling fall to around 163,000 meters in 2013. Several of the exploration companies interviewed reported that they have exploration drilling programs planned, but they are waiting for funding to execute them. At least 90,000 meters of drilling is planned but yet to be executed between the fourth quarter of 2013 and the second quarter of 2014.

800,000

Total Diamond Drilling in Colombia 2007â&#x20AC;&#x201C;14 (meters)

700,000 653,180 600,000

517,684

500,000

400,000 361,821 300,000

200,000 175,132 100,000

30,921

0 2007

(proposed) 96,200

90,113

68,541

2008

2009

2010

2011

2012

2013

2014

Ranking of Top 10 Projects by Meters Drilled 338,857 317,846

184,224 143,959 121,650

117,146 99,997

LA BODEGA

ANGOSTURA

BURITICÁ

TITIRIBÍ

MARMATO

GRAMALOTE

LA COLOSA

83,000

CALIFORNIA

71,755

71,000

QUINCHÍA

VETAS

Tender Process Once a drill program is defined by the project head and/or head of exploration, an exploration company issues a bid for tender to those drilling contractors that it thinks have the technical experience and expertise to perform the work. During the 2011 peak, exploration companies would send a tender to three to five companies. Now that there is a scarcity of drilling work, explorers are inviting up to eight contractors to bid in order to obtain the services and performance that they require. Bids are reviewed by the project head and/or head of exploration, and a winner chosen. Increasingly, exploration companies are discriminating on the suitability of a drilling contractor based on their approach to environmental management, their environmental performance, and their approach to community relations in addition to their bid.

Drilling Programs An exploration company undertakes a drilling program to test its geological hypothesis about where an ore body may be. The geological hypothesis will be formed based on preliminary work to determine the geological environment such as regional geology, geochemistry (rock chip sampling, stream sediment sampling, soil sampling), surface and airborne geophysics (magnetics, induced polarity, resistivity), and geological mapping. These processes provide evidence about the presence of geological anomalies, some of which will become drill targets. Diamond drilling is the definitive test of the geological hypothesis, as the drill core will show if there is mineralization present, as well as its concentration. Drilling is the most expensive part of the exploration process. If mineralization is determined to be present, further drilling will delimitate the area or size of the ore body so that initial calculations can be made about its potential to be economically exploited. If this potential is deemed high, the explorer will undertake infill drilling to fully define the ore body with a drill spacing (the space between drill holes) sufficient to allow for an accurate resource calculation. This data is essential for an economic analysis of a projectâ&#x20AC;&#x2122;s potential, such as the preliminary economic assessment, the prefeasibility study, and the bankable feasibility study. In addition to resource definition drilling, geotechnical and hydrological drilling is undertaken to obtain a better understanding of the geotechnical characteristics of the rocks and water table, information that is used in mine design. A drilling program can take from two weeks to many months depending upon the number of meters to be drilled, the number of holes and their depth, and the number of drilling rigs used. The size of drilling programs has reduced considerably since the peak period. In 2011, drilling programs of 5,000 to 10,000 meters and above were the norm. Now, the typical size is 1,000 to 3,000 meters. This has caused contractors to alter their parameters. In the peak period, the larger companies such as Major Drilling had a minimum bid size of, for instance, 5,000 meters. Now, because of the scarcity of contracts, they will compete for the smaller jobs as well. Exploration companies now tend to use fewer rigs to complete a drilling program. While this increases the time needed to complete the program, exploration companies are prepared to accept this for two main reasons: First, it enables them to exercise greater control over the drilling program, because they can receive assay results while drilling is underway and decide whether to continue drilling in a particular sector depending upon the results. Second, the stock market is not recognizing or rewarding exploration companies for good results, thus diminishing the urgency to publish drilling results to boost stock prices and improve the possibility of refinancing. In the currentâ&#x20AC;&#x2122;s climate, a 1,000-meter drilling program in five holes with one rig may take up to one month to complete.

In the past, a drilling contractor undertook much of the preparatory work for a drill program, such as preparing drill pads and sourcing water. Nowadays, and in Colombia in particular, exploration companies are under such scrutiny from the government, NGOs, and local communities, that they themselves complete the preparatory tasks or hire service providers to do so. Consequently, a drilling contractor now arrives on site with the drill pads prepared and ready to drill. The exploration company provides the water source—whether from a local watercourse or watertank trucks—and the drilling contractor supplies the pumps and tubing for its use. Water management is a key concern for exploration companies, as it may impact their relationship with local communities and indeed government agencies. Drilling contractors therefore adopt measures to control water discharge and contamination from drilling activities. Used drill water that contains rock fragments and drilling muds and additives are pumped into a series of sedimentation tanks so solid particles settle out. This water is then pumped back to the drill to be reused. Oil-absorbent membranes are typically installed around and under the drill in order to capture and control any spillage or leakage of oils or fuels during drilling operation. The more reputable companies often contract waste management firms in order to provide solid, semi-solid, and liquid waste disposal. Prior to bidding for a job, a drilling contractor will typically undertake a site visit in order to develop a rudimentary understanding of site logistics and the operating terrain. These variables will affect the driller’s performance, drill move times, drill resupply, etc. Once a contract has been awarded, the drilling contractor will undertake a site visit prior to beginning the drill program in order to plan it in detail, ensure that adequate logistics are in place, and foresee any potential problems. Depending upon the location and the length of the drilling program, the more reputable drilling contractors also undertake social programs, separate from and in addition to the social programs undertaken by their clients, as a means to establish and maintain good relations with the communities within which its personnel may be working for an extended period of time. At the time of writing barely a handful of exploration projects are drilling. These are Buriticá (Continental Gold) in Antioquia undertaken by Major Drilling and AK Drilling, El Dovio (Colombian Mines) in Valle de Cauca and Ancal (Tolima Gold & Iamgold Gold JV) in Antioquia being undertaken by Kluane.

Antioquia

Santander

Antioquia

Nariño

California

Vetas

Segovia

Mazamorras

Galway Resources

Gran Colombia Gold

El Dovio

Colombian Mines

Buriticá

Valle de Cauca

Yarumalito

Colombian Mines

Santa Elena

Antioquia

Arabia

Cuoro Resources

Huila

Antioquia

San Lucas

Cliffmont Resources

Colombia Crest Gold

Continental Gold

Santander

Vetas

CB Gold

Au-Cu

Bolivar

Santander

Mejia

California

Au-Cu

Calvista Gold

Antioquia

Cu-Au

Cabia Goldhills

Antioquia

Mutata

Balastera

Bullet

Antioquia

Bullet

Antioquia

El Condor

San Cristobal

Bullet

La Mina

Bellhaven

Bullet

Risaralda

Antioquia

Quinchia

Batero Gold

Cu-Mo

Putumayo

Antioquia

B2Gold

Mocoa

Antioquia

Gramalote

Quebradona

B2Gold

Belmira

Bolivar

Santa Cruz

Ashmont Resources

B2Gold

Cordoba

Alacran

Bandera Gold

Antioquia

Cisneros

Antioquia Gold

Ashmont Resources

Tolima

Antioquia

El Cafetal

La Colosa

Angel Gold

AngloGold Ashanti

Antioquia

La Montanita

Alder Resources

MINERAL

DEPT

PROJECT

COMPANY

30000

2000

12000

9000

16000

PROPOSED

23290

29829

2500

4000

7000

1156

160

1000

3065

12273

25692

8500

1550

2013

1880

30000

25500

57795

6574

5000

31000

7500

1968

679

1000

14518

1350

11571

24489

3757

13100

34817

2012

12000

40428

10000

23000

12700

56000

8196

20000

10000

893

5165

55755

3290

3003

29488

11230

19000

47619

2100

2011

1788

30000

11300

23000

7434

13000

4787

2000

16000

3477

9400

9061

2010

4500

17600

3900

2009

Drilling on Colombian Exploration Projects (meters)

7280

22000

2008

12000

2007

HISTORICAL

12000

67386

40000

83000

24000

184224

2500

19630

6574

5000

71000

22287

1156

2128

1000

679

1893

24748

71755

3290

1350

34127

117146

12757

27230

45400

99997

1550

2100

SUM TOTAL

32470

46000

83000

189000

15630

6500

71000

33567

45426

REPORTED TOTAL NOTES

Proposed

Au-Ag

Caldas

Antioquia

Bolivar

Antioquia

Tolima

Cordoba

Risaralda

Guayabales

Nechi

Guaduas

San Lucas

Santa Rosa

Pavo Real

San Matais

Miraflores

Miraflores Geotech & hydrology

Dos Quebradas

La Loma

Tesorito

Mercer Gold

Mineros SA

New Colombia Resources

Quia Resources

Red Eagle Mining

Sabre Metals

Seafield Resources

Antioquia

Santander

Antioquia

Quebraditas

La Bodega

Anza

Trident Gold

Ventana Gold

Waymar Resources

Tolima

Antioquia

Nortol

Rio Pescado

Antioquia

Ancal

Tolima Gold

Antioquia

Remedios

Tolima Gold

Touchstone Gold

Antioquia

Titiribi

Sunward Resources

Au-Cu

Antioquia

Solvista Gold

Antioquia

Caramanta

Guadalupe

Solvista Gold

Au-Ag

Cu-Au

Au-Ag

Caldas

Santander

Cristo Rey

Eco Oro Minerals

Antioquia

Santander

Violetal

Eco Oro Minerals

Ancal

Santander

La Plata

Eco Oro Minerals

Marmato

Santander

Mongora

Eco Oro Minerals

Gran Colombia Gold

Santander

Angostura

Eco Oro Minerals

Iamgold

Antioquia

Zancudo

Gran Colombia Gold

15000

11000

1200

1525

1717

1000

1557

3874

750

3262

4857

575

22000

10000

4000

12093

100000

3850

2200

4200

60848

3060

6238

1676

6562

16000

1157

4319

22983

5315

100000

6274

42505

1222

8302

7403

5000

7000

3134

56973

7162

4786

17863

10374

110000

3639

24449

1724

4133

5000

60358

3778

15490

2003

3400

1521

25457

2819

32557

56541

14600

587

187902

17408

338857

1525

17001

1000

2200

4200

143959

3060

10112

750

12289

3262

22955

575

5000

45000

4291

1200

10000

5000

121650

4000

3778

2819

7162

20276

317846

12377

17000

126000

144778

8112

1500

10527

25884

2819

7162

20276

350000

Drilling complete

Tender

Starting

Coal

Institutionality & Permits In terms of permits, drilling in Colombia requires two: water extraction and water discharge permits, which are obtained by the client (the exploration company) from the local regional autonomous corporation (CAR). One of the administrative bottlenecks of the exploration sector is the time it takes to obtain these permits, typically from several months to over a year. Due to the delays in obtaining water extraction permits, many explorers truck water to their drill sites until the permits are received. While more costly, this reduces the opportunity cost of waiting for permits, allowing explorers to continue with their work programs. The widespread sentiment among explorers is that the CARs are overly protective of water resources given that drilling uses relatively little water and rainfall is abundant. However, water usage is a sensitive issue, particularly where local farmers are concerned, even though the low level of technology that they use means that the farmers themselves often use water very inefficiently. Most reputable drillers install containment measures to stop muds, fuel, or oils from contaminating the soil or water sources. A typical platform now has containment membranes installed so no fluids make ground contact. Despite this, the mineral exploration sector is not allowed to drill within 30 meters of a watercourse, a negative legacy from the oil exploration sector, where a 30-meter spacing is prudent. No environmental permits are required for the drilling pad, though the client must obtain permission from the landowner. This is often secured for a modest payment and the commitment to rehabilitate and revegetate the drill pad after usage. However, given the sensitivity toward the environmental footprint of mining and exploration, the majority of clients adopt stringent internal environmental policies in order to defend against any potential criticism by NGOs, government agencies, or the communities within which they work. Consequently, they tend to prefer working with drilling contractors that are able to maintain high environmental standards in terms of solid, semi-solid, and liquid waste management. Environmental performance is increasingly a service that drilling contractors are expected to provide. Colombia has many Forest Reserve areas where it is possible to drill once the exploration company has completed the necessary Forest Reserve substraction process. Drilling in Forest Reserve areas brings with it more stringent observation and control from the relevant authorities, who establish the conditions under which drilling can be undertaken. This typically involves the explorer agreeing to not cut down trees and to make minimal disturbance of the flora. In extreme examples, the drilling company may be required to construct elevated drilling platforms so that the drilling rig is not actually on the ground. This increases the cost of building the drilling pad for the client and must be undertaken in consultation with the drilling contractor to ensure that the platform is adequate for the drill rig.