Trinidad Drilling Ltd. announces additional customer backed rig construction program



    CALGARY, July 17 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or the
"Corporation") is pleased to announce a seven drilling rig construction
program backed by long-term, take-or-pay contracts with two major North
American oil and gas exploration and production companies. This rig
construction program is in addition to the nine drilling rigs and six service
rigs Trinidad announced it is constructing earlier this year.
    "Trinidad's reputation for providing superior equipment and performance
continues to be recognized by our customers," said Lyle Whitmarsh, Trinidad's
President and Chief Executive Officer. "The strong demand we are seeing for
our 'built-for-purpose' rigs demonstrates the growing need in the industry for
high-quality, technologically-advanced drilling rigs and reflects our
customer's confidence in our ability to meet these needs."
    "After recognizing the trend towards deeper, more technically-challenging
drilling in the U.S., we made our initial expansion into the Texas area in
2005. We will now have more than half our drilling fleet based in the U.S.
market and consider this a core part of our business and key area for future
growth opportunities. This construction program continues our strategic
direction and further increases our presence in the U.S., providing more
stability to revenue through additional long-term contracts and greater
exposure to a less seasonal market," said Mr. Whitmarsh.

    Customer Backed Seven Drilling Rig Construction Program

    Trinidad has signed long-term contracts to provide seven new 1500
horsepower drilling rigs with a depth capacity of 18,000 feet. All seven rigs
will be operating in the United States, with six rigs backed by five-year
take-or-pay contracts and one backed by a three-year take-or-pay contract.
These contracts provide Trinidad with a guaranteed utilization rate of 100
percent on these rigs over their respective contract terms.
    The total construction costs for the seven rigs are expected to be
approximately C$105 million. Trinidad intends to fund the rig construction
program from operating cash flow and funds available under its existing credit
facility. In addition, Trinidad expects to use the funds received from the
recently announced barge rig sale of approximately US$54 million to partially
fund its current construction plans. Once completed, these rigs are expected
to add a stable stream of additional revenue for Trinidad and generate solid
returns on our original investment, in turn creating value for our
    Trinidad will construct and commission the rigs at its in-house
manufacturing facility, Mastco, and they will be equipped with a suite of AC
driven machinery which will be monitored and operated by the company's
state-of-the-art proprietary control systems. Additionally, the rigs will have
built in skidding systems which will allow them the ability to drill multiple
pad or single pad well sites without affecting their mobility between these
types of locations.
    The rigs are all expected to be delivered before the end of 2009 and are
currently planned to drill in the Haynesville Shale in North Louisiana, one of
the key emerging unconventional gas plays in the U.S.
    The key benefits following the completion of this rig construction
program are anticipated to include:

    -  Increased operating cash flow per common share and free cash flow
       available for future growth opportunities or debt repayment;

    -  Additional revenue stability and protection from industry volatility
       with the long-term, take-or-pay contracts;

    -  Lower debt levels relative to cash flow, total assets and equity and

    -  Increased presence in the larger and less seasonal United States
       drilling market.

    In May 2008, Trinidad announced that it was constructing nine new
drilling rigs all backed by long-term, take-or-pay contracts and six new
service rigs. The construction of these rigs is proceeding as expected and
Trinidad does not anticipate any issues with delivery timing or cost
escalation at this stage.
    Following the completion of both construction programs, Trinidad's United
States drilling fleet will increase to 64 rigs. The United States fleet
combined with the Canadian drilling fleet of 62 rigs will give Trinidad a
total of 126 drilling rigs.
    Trinidad is a growth oriented corporation that trades on the TSX under
the symbol TDG. Trinidad's divisions operate in the drilling, well servicing
and barge drilling sectors of the North American oil and gas industry. With
the completion of the current rig construction programs, Trinidad will have
126 drilling rigs ranging in depths from 1,000 - 6,500 metres. In addition to
its drilling rigs, Trinidad will have 26 service rigs, 20 pre-set and coring
rigs and 4 barge rigs currently operating in the Gulf of 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.

    Advisory Respecting Forward-Looking Statements

    This news release contains certain forward-looking information and
statements within the meaning of applicable securities laws. 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. In particular, but without limiting
the foregoing, this news release contains forward-looking information and
statements pertaining to the following: (i) the completion of the rig
construction programs on a timely basis and on economical terms; (ii) the
assumption that Trinidad's customers will honour their take or pay contracts;
(iii) the ability for Trinidad to attract and retain qualified crews to crew
their rigs; (iv) assumptions respecting capital expenditure programs and other
expenditures by oil and gas exploration and production companies; (v)
assumptions respecting commodity prices, foreign currency exchange rates and
interest rates; (vi) assumptions respecting supply and demand for commodities;
and (vii) other expectations, beliefs, plans, goals, objectives, assumptions,
information and statements about possible future events, conditions, results
of operations or performance. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release.
    The forward-looking information and statements included in this news
release 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.
    Trinidad cautions that the foregoing list of assumptions, risks and
uncertainties is not exhaustive. The forward-looking information and
statements contained in this news release speak only as of the date of this
news release, 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

For further information:

For further information: Lyle Whitmarsh, President & Chief Executive
Officer, (403) 265-6525; Brent Conway, Chief Financial Officer, (403)
265-6525; Lisa Ciulka, Director of Investor Relations, (403) 294-4401, email:

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Trinidad Drilling Ltd.

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