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TSX SYMBOL: TDG
CALGARY, Oct. 2, 2014 /CNW/ - Trinidad Drilling Ltd. (Trinidad or "the Company") today announced that it has agreed to build five new rigs under long-term, take-or-pay contracts for its US operations.
"We have continued to be very disciplined in assessing new build opportunities over the past year," said Lyle Whitmarsh, Trinidad's Chief Executive Officer. "Activity levels in the US have increased in 2014 and we are seeing growing demand for high performance rigs in a number of areas throughout our operations. Our existing US fleet is currently fully utilized and we are starting to meet the additional demand from our customers with this new equipment."
The new rigs will all be high performance, Candrill, 1,500 horsepower, AC rigs with walking systems and 7,500 PSI circulating systems. The rigs will be built by Trinidad's manufacturing division in Houston and Nisku and are expected to be delivered into the Company's US operations during the first three quarters of 2015. All five rigs have long-term, take-or-pay contracts signed with three different customers. In total, Trinidad expects to spend approximately $130 million constructing the rigs, half of which will be spent in 2014 and the remainder in 2015.Trinidad anticipates that its capital program for 2014 will remain unchanged at approximately $315 million. Strong demand from customers to keep equipment working and delayed delivery of long-lead equipment has pushed some of the upgrades Trinidad had originally scheduled for 2014 into 2015. The impact of these delays on the capital program is offset by the costs associated with the new builds, leaving the 2014 capital program largely unchanged.
Activity levels across Trinidad's North American and international operations are strengthening. In Canada, activity levels are currently ahead of the same time last year and the Company is expecting a solid winter drilling season. In the US, an ongoing move to modern, high performance equipment is improving demand for Trinidad's largely high spec fleet, driving higher activity levels and increased dayrates. The Company's international joint venture operations are growing with the fourth rig expected to be operational in Saudi Arabia in the fourth quarter of 2014. In addition, the four new builds being constructed for the joint venture's Mexican operations are currently under construction and are expected to be delivered in late 2014/early 2015.
Trinidad is a corporation focused on sustainable growth that trades on the Toronto Stock Exchange under the symbol TDG. Trinidad's divisions operate in the drilling and barge-drilling sectors of the North American oil and natural gas industry with operations in Canada and the United States. In addition, through a joint venture agreement signed in the previous year, Trinidad began operating drilling rigs in Saudi Arabia, expects to begin operations in Mexico by the end of 2014, and is currently looking into operations in other international markets. 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.
This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking information") within the meaning of applicable Canadian securities laws. The use of any of the words "expect", "anticipate", "will", "future" and similar expressions are intended to identify forward-looking information. In particular, this press release contains forward-looking information pertaining to Trinidad's plans, strategies, objectives, expectations and intentions including, without limitation: the manufacturing and upgrading of drilling rigs; the timing of the delivery of the rigs into operation; Trinidad's and the joint venture's growth opportunities; Trinidad's 2014 and 2015 capital expenditure program; Trinidad's expectation that it will fund the building and upgrading of rigs through cash flow from operations; and the potential success of the joint venture and Trinidad's ability to enter new international markets.
The forward-looking information included in this press release reflects several factors, expectations and assumptions including, without limitation: oil and gas industry conditions and oil and gas production levels; commodity prices; supply and demand for commodities; scheduling and timing of certain projects and Trinidad's and the joint venture's strategy for growth; capital expenditure programs and other expenditures by oil and gas exploration and production companies; Trinidad's and the joint venture's future operating and financial results; that Trinidad will continue to conduct its operations, including with respect to rig design and manufacturing, in a manner consistent with its past performance.
The forward-looking information included in this press release is not a guarantee of future performance and should not be unduly relied upon. Forward-looking information is 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 information including, without limitation: volatility in market prices for oil, natural gas and LNG; liabilities inherent in the drilling and manufacturing industries, including technical problems; competition for skilled personnel; changes in general economic, market and business conditions; actions by governmental or regulatory authorities including changes to tax or environmental laws; the ability of Trinidad's customers to raise capital and to continue with their drilling programs; increases and overruns in construction costs; supply and demand for commodities; and the risks inherent in Trinidad's ability to generate sufficient cash flow from operations to meet its current and future obligations. Should any one of a number of issues arise, Trinidad may find it necessary to alter its current business strategy and/or capital expenditure program. Additional risks that could impact the business and operations of Trinidad are detailed under the heading "Risk Factors" in Trinidad's annual information form for the year ended December 31, 2013. Trinidad cautions that the foregoing list of risks and uncertainties is not exhaustive. The forward-looking information contained in this press release speaks only as of the date of this press release and Trinidad assumes no obligation to publicly update or revise such forward-looking information 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, Chief Executive Officer; Brent Conway, President; Lisa Ottmann, Vice President, Investor Relations, (403) 294-4401, [email protected]