Trinidad Drilling Ltd. Expands 2012 Rig Build Program

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./

TSX SYMBOL:  TDG

CALGARY, Nov. 3, 2011 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or "the Company") is pleased to announce that it has agreed to build two new rigs under long-term, take-or-pay contract for delivery into its Canadian operations in mid-2012.

"Demand continues to remain high for our efficient, technically advanced equipment. Despite economic uncertainty, our customers are clearly demonstrating their intention to continue drilling by signing multi-year drilling commitments," said Lyle Whitmarsh, Trinidad's President and Chief Executive Officer. "We have received a large number of enquiries to build new rigs over the past 12 to 18 months; however, we have been very selective in choosing the best opportunities that fit with our business plan and meet our investment hurdles. The opportunities we have pursued have expanded our customer base and allowed us to form new strategic alliances with premier operators. In addition, they have placed our equipment in some of the most active drilling areas across North America."

The two new rigs will be telescopic doubles with 850 horsepower draw works and a depth capacity of 3,500 metres (approximately 11,500 feet). The rigs are contracted with a senior producer for a five-year term with a guarantee of 250 days per year. They will be built at Trinidad's in-house manufacturing facility and are expected to cost approximately $15 million each. The rigs should begin operations in Canada towards the middle of next year.

In 2011, the Company expects to deliver five new, technically advanced rigs to its operations; the first three rigs have been delivered to Trinidad's US operations and the final two are expected to be delivered to the Canadian operations prior to the end of the year. Trinidad also expects to add five new rigs to its operations in 2012, two destined for the US and three for Canada. All ten rigs built in 2011 and 2012 have associated contracts ranging in term from three to five years, consistent with Trinidad's practice of reducing its risk by backing up all rig builds with long-term, take-or-pay contracts.

Trinidad is confident in its ability to crew these new rigs, along with its existing fleet despite the tight labour markets present in the industry. The Company's industry-leading utilization levels and modern equipment provide a strong draw card for rig hands and Trinidad has proven its strength in this area, reaching 100% utilization levels earlier in the year in its Canadian operations.

In light of the market volatility over the past few years, Trinidad has followed a measured growth program while also lowering its debt levels. Capital expenditures in 2011, net of acquisitions and dispositions, to complete the planned rig builds and fund selected rig upgrades are expected to total $100 million to $110 million. In 2012, the Company expects to spend approximately $80 million to complete the construction of the five planned rigs. Trinidad will continue to assess further growth opportunities moving forward; however, the Company expects to remain focused on balancing growth opportunities with its debt reduction plans.

Including the rigs under construction, Trinidad has approximately 60% of its fleet under long-term, take or pay contract with an average term remaining of approximately two years.

Following the completion of the rigs in Trinidad's current construction program, the Company will have 131 drilling rigs with 69 rigs in the US, 59 rigs in Canada and 3 rigs in Mexico. In addition, Trinidad has 20 pre-set and coring rigs and five barge drilling rigs.

Trinidad is encouraged by the strong industry fundamentals that are present in today's market. The Company has taken advantage of these conditions over the past year by building new rigs under contract, re-signing rigs at higher dayrates and extending the terms of many of its existing contracts. In addition, the Company has lowered its overall leverage. Although Trinidad does not believe that an economic downturn is imminent, the Company believes that by strengthening its contract position and improving its balance sheet during strong industry conditions it will be better positioned to take advantage of the industry cycles.

Trinidad is a growth-oriented corporation that trades on the Toronto Stock Exchange under the symbol TDG. Trinidad's divisions operate in the drilling, coring and barge-drilling sectors of the North American oil and natural gas industry with operations in Canada, the United States and Mexico. Trinidad is focused on providing modern, reliable, expertly designed equipment operated by well-trained and experienced personnel. Trinidad's drilling fleet is one of the most adaptable, technologically advanced and competitive in the industry.

FORWARD-LOOKING STATEMENTS

The document contains certain forward-looking statements relating to Trinidad's plans, strategies, objectives, expectations and intentions.  The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "confident", "might" and similar expressions are intended to identify forward-looking information or statements.  Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this document.  The forward-looking information and statements included in this document are not guarantees of future performance and should not be unduly relied upon.  Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements.  Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements.  In particular, but without limiting the foregoing, this document may contain forward-looking information and statements pertaining to the completion of announced rig construction programs on a timely basis and on economical terms; the assumption that Trinidad's customers will honour their take-or-pay contracts; fluctuations in the demand for Trinidad's services; the ability for Trinidad to attract and retain qualified personnel, in particular field staff to crew the Company's rigs; the existence of competitors, technological changes and developments in the oilfield services industry; the existence of operating risks inherent in the oilfield services industry; assumptions respecting capital expenditure programs and other expenditures by oil and gas exploration and production companies; assumptions regarding commodity prices, in particular oil and natural gas; assumptions respecting supply and demand for commodities, in particular oil and natural gas; assumptions regarding foreign currency exchange rates and interest rates; the existence of regulatory and legislative uncertainties; the possibility of changes in tax laws; and general economic conditions including the capital and credit markets. Trinidad cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive.  The forward-looking information and statements contained in this document speak only as of the date of this document and Trinidad assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the shares in any jurisdiction.  The shares offered will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States or to a United States person, absent registration, or an applicable exemption therefrom.

SOURCE Trinidad Drilling Ltd.

For further information:

Lyle Whitmarsh
President and Chief Executive Officer
(403) 265-6525





Brent Conway
Executive Vice President and Chief Financial Officer
(403) 265-6525
         
Lisa Ciulka
Director of Investor Relations
(403) 294-4401
email: lciulka@trinidaddrilling.com






 

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