Trinidad Drilling Ltd. provides updated 2009 capital expenditure budget and declares first quarter dividend



    CALGARY, Feb. 19 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or the
"Corporation") announced its updated capital expenditure budget for 2009. The
revised budget lowers Trinidad's capital expenditure expectations for 2009,
reflecting the Corporation's prudent capital management planning and strong
customer relationships. The reduced budget includes changes to Trinidad's
previously announced rig construction program, most notably: a 12-month delay
in the delivery of six new drilling rigs (out of a total 16 rig construction
program) and the cancellation of four new service rigs. In addition,
Trinidad's Board of Directors has declared the dividend for the first quarter
of 2009 at the reduced level of $0.05 cents per share.
    "Trinidad's decision to adjust its capital spending budget demonstrates
our ongoing focus on a balanced approach towards capital management," said
Lyle Whitmarsh, Trinidad's President and Chief Executive Officer. "Given the
uncertain economic environment, we believe that a reduction in capital
spending and lower expected debt levels for 2009 is the prudent direction to
take. The decision to delay the construction of six drilling rigs was reached
in conjunction with our customers, reflecting the strength of our
relationships and their ongoing need for our equipment."

    Updated 2009 Capital Expenditure Budget
    Trinidad anticipates spending approximately $165 million, including the
expenditures associated with its rig build program, in capital expenditures in
2009, a reduction of $165 million from its initial expectations of $330
million. This reduction includes a combination of capital for delayed drilling
rigs and cancelled service rigs estimated to total $90 million. In addition,
Trinidad has removed $75 million in optional planned capital expenditures
aimed at improving and enhancing its existing fleet. In light of the current
financial markets, Trinidad has delayed these capital expenditures until more
robust market conditions return.
    "Given the uncertain economic environment, we are managing Trinidad's
capital base to preserve balance sheet strength. In 2009, growth for us will
come in the form of redeploying assets to other markets where we can achieve
better utilization and returns with very limited capital investment," said
Brent Conway, Trinidad's Executive Vice President & Chief Financial Officer.
    The six delayed drilling rigs remain under long-term, take-or-pay
contracts with the original customer and are expected to be completed in 2010,
assuming improved market conditions. A portion of the capital costs associated
with these rigs has been incurred due to the long-lead times on receiving some
items of equipment. The customer for the rigs is anticpated to pay Trinidad
interest on the capital it has spent to date until the rigs are completed.
Total capital costs incurred to date on these rigs total approximately $37
million. In 2008, Trinidad completed and delivered on schedule the first three
drilling rigs in the construction program, the first rig was built at the
Corporation's in-house manufacturing facility and the remaining two were built
by an independent rig builder. As well, two service rigs were completed in the
second half of 2008. Capital expenditures incurred on the total rig
construction program were $130 million at the end of 2008. In addition, as
part of the previously announced Victory Rig Equipment acquisition, Trinidad
added an additional 2,800 metre service rig to its fleet.
    The remaining seven drilling rigs in the construction program are
expected to be delivered by the end of the third quarter of 2009. The
customers for these rigs have confirmed their commitment and the associated
long-term, take-or-pay contracts are unchanged.
    Trinidad recently announced the renewal of its existing revolving credit
facility for Canadian $225 million. At December 31, 2008, Trinidad had drawn
$65 million on this facility leaving $160 million or 71 percent available.
With the reduction in the expected capital expenditures in 2009, and barring 
unforseen circumstances, Trinidad does not anticipate utilizing the full
capacity of its revolving credit facility and expects to remain well within
all debt covenants.
    Based upon a consensus (the average of thirteen research analysts)
estimated cash flow for 2009 of approximately $175 million, the revised
capital expenditures budget of $165 million and the dividend reduction of a
further approximately $40 million dollars we would expect the revolving debt
facility (net of cash) to peak at approximately $125 million and be
approximately $60 million by the end of the year. In total Trinidad has
redeployed $205 million of capital from its capital budget and dividends
towards reducing otherwise anticipated debt levels. The change in the 2009
capital program is expected to allow Trinidad to fund its anticipated capital
expenditure and dividend requirements from internally generated cash flow.
    With the changes to the rig construction program, Trinidad has 45 percent
of its fleet under long-term, take-or-pay contracts. Our customers continue to
stand by their contracts, providing Trinidad a high level of visibility around
a significant portion of its revenue stream.
    An updated summary of the 2008/2009 rig construction program follows:

    Rig Number (feet/metres)  Rig Description      Delivery Status
    123         18,000 ft     Candrill 1500ac      Delivered in 2008
    126         18,000 ft     Ideal 2000hp         Delivered in 2008
    127         18,000 ft     Ideal 2000hp         Delivered in 2008
    124         18,000 ft     Candrill 1500ac      Delivery in 2009
    125         18,000 ft     Candrill 1500ac      Delivery in 2009
    128         18,000 ft     Ideal 2000hp         Delivery in 2009
    129         16,000 ft     Candrill 1500ac      Delivery in 2009
    130         16,000 ft     Candrill 1500ac      Delivery in 2009
    131         16,000 ft     Candrill 1500ac      Delivery in 2009
    132         18,000 ft     Candrill 1500ac      Delivery in 2009
    133         18,000 ft     Candrill 1500ac      Delayed to 2010
    134         18,000 ft     Candrill 1500ac      Delayed to 2010
    135         18,000 ft     Candrill 1500ac      Delayed to 2010
    136         18,000 ft     Candrill 1500ac      Delayed to 2010
    137         18,000 ft     Candrill 1500ac      Delayed to 2010
    138         18,000 ft     Candrill 1500ac      Delayed to 2010
    Rigs 1 -2   2,800 m       KSM                  Delivered in 2008
    Rigs 3-6    2,400 - 3,500 m                    Cancelled

    Trinidad is a leader in the North American drilling industry and has
assembled a fleet of top-quality drilling equipment. Our strategy to add
technically-advanced, deep-drilling capacity rigs has positioned Trinidad well
in the current lower commodity price environment. Our "built-for-purpose"
style rigs continue to be in demand, shown by our industry leading utilization
levels and high proportion of long-term, take-or-pay contracts. Our customers,
who are largely major North American exploration and production companies,
require this style of equipment to develop the growing number of complex
unconventional resource plays. These plays tend to have stronger economics
than conventional drilling and remain viable to develop at lower commodity

    First Quarter 2009 Dividend Declaration
    The Board of Directors of Trinidad declared a cash dividend for the first
quarter of 2009 of $0.05 per common share to be paid April 15, 2009 to
shareholders of record on March 31, 2009. The dividend is designated as an
"eligible dividend" for Canadian Income Tax purposes.
    The current dividend declaration represents a reduction from the previous
dividend level of $0.15 per share per quarter. On an annualized basis and
using current market prices, the revised dividend level provides a
cash-on-cash yield of approximately seven percent.
    "Our Board of Directors understands the importance of dividend income to
many of our investors," said Brent Conway, Trinidad's Executive Vice President
and Chief Financial Officer. "Given the current uncertain economic conditions
the Board determined that retaining a larger portion of cash flow within the
company to provide the flexibility to reduce debt levels and/or fund capital
expenditures while continuing to provide a reasonable cash yield was a prudent
course of action for the long-term benefit of the company and our investors."

    Trinidad is a growth-oriented corporation that trades on the Toronto
Stock Exchange (TSX) under the symbol TDG and TDG.DB. Trinidad's divisions
operate in the drilling, well-servicing, coring and barge-drilling sectors of
the North American oil and natural gas industry. With the completion of the
2008/2009 rig construction program, Trinidad will have 120 land drilling rigs
ranging in depths from 1,000 - 6,500 metres and operations in Canada, the
United States and Mexico. In addition to its land drilling rigs, Trinidad has
23 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, Executive Vice President and Chief
Financial Officer, (403) 265-6525; Lisa Ciulka, Director of Investor
Relations, (403) 294-4401, email:

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