Strong structures build strong drilling businesses

In the dynamic world of Australian drilling, success isn’t just about breaking new ground – it’s about building a business on solid foundations. 

Whether you are a drilling contractor, supplier or service provider, the way your business is structured can directly influence your ability to weather market cycles, optimise tax outcomes, protect assets and plan for the future. Just as the wrong drill bit can derail a project, the wrong business structure can limit long-term performance.

Business structuring is far more than a compliance exercise. When done well, it is a strategic tool that supports growth, resilience and legacy.

Tax planning

Tax is often the first trigger for reviewing a business structure. The right structure can mean the difference between paying more tax than necessary and retaining cash for reinvestment, fleet upgrades or workforce development.

Each structure has distinct implications. Sole traders are taxed at personal marginal rates, which can become punitive as profits increase. Companies benefit from a flat tax rate (currently 25 percent for base rate entities), while trusts offer flexibility in distributing income among beneficiaries, potentially reducing overall tax exposure.

Restructuring may also be required as circumstances change – business growth, new tax legislation, mergers or major asset acquisitions can all necessitate a rethink. Forward planning avoids costly, reactive changes and ensures tax efficiency is embedded from the outset.

That said, tax outcomes should never be considered in isolation. A structure that looks efficient on paper must still align with commercial realities and strategic objectives. 

Structuring for growth and flexibility

Effective business structuring is about enabling growth, not constraining it. The right framework can support expansion, attract investment and provide operational flexibility.

For drilling businesses, this may involve joint ventures on large contracts, separate entities for different service lines, or holding companies to manage multiple operations. Structures should be designed with longevity in mind, allowing the business to adapt as it scales, diversifies or enters new markets.

Starting with a clear end goal helps ensure your structure evolves with your commercial strategy, rather than lagging behind it. 

“The wrong business structure can undo years of hard work just as quickly as a bad contract or a market downturn.” - Murray Fong

Future planning

Succession and estate planning are frequently deferred, yet they are critical in an industry dominated by family-owned and closely held businesses.

Succession planning involves more than naming a successor. It requires a clear strategy for transferring ownership and management, whether to family members, key staff or an external buyer, while preserving business continuity and value.

Estate planning tools such as wills, trusts and powers of attorney ensure assets and decision-making responsibilities are managed effectively in the event of death or incapacity. These arrangements should be reviewed regularly to reflect changes in family structures, business scale and legislation.

Multi-generational businesses, in particular, are often exposed over time to changing family dynamics, evolving tax laws and growth that exceeds the original framework. Periodic restructuring is essential to realign business and family objectives and maintain optimal outcomes.

If sale is part of your succession plan, advance planning is critical. Certain structures, such as trusts, cannot be sold outright, which can materially affect exit value if not addressed early.

Asset protection

Asset protection is a cornerstone of sound structuring, especially in a high-risk operating environment.

Sole traders and partnerships offer little protection, with personal assets exposed to business liabilities. Companies and trusts create legal separation when structured correctly. High-value assets such as land, equipment and licences should be held separately from trading entities to reduce exposure.

Personal guarantees deserve particular caution. Poorly considered guarantees can undo even the most robust structures. Similarly, proactively managing retained profits and working capital can significantly reduce exposure in the event of creditor claims.

Ultimately, just as drilling success relies on planning and precision, so too does business success. The right structure underpins tax efficiency, commercial flexibility, future planning and asset protection.

The question is simple: Is your business structure still aligned with where your enterprise is heading – and are you prepared for the unexpected?

FOR MORE INFORMATION

For more information, please contact Murray Fong.

This article was featured in Australasian Drilling Magazine , p. 78, Feb-March Edition 2026