Trinidad Drilling laying off employees, cutting executive salaries to reduce expenses

Trinidad says it aims to become drilling company with lowest cost structure among competition

Calgary-based Trinidad Drilling is lowering its 2018 general and administrative expenses to $43 million following a thorough review of its cost structure, according to a press release.

Trinidad says it undertook a review of its cost structure to ensure it is in-line or ahead of its competitors and providing long-term value for its shareholders.

Following the review, Trinidad decided to reduce headcount, roll back salaries and tighten expense management. The majority of headcount reductions will affect the corporate office.

As part of the cost cutting and restructuring efforts, Randy Hawkings, executive VP, US Operations has elected to step down from his operational position.

Hawkings will continue to consult with the company’s performance drilling business group with a focus on growth and maximizing returns.

Cost-cutting initiatives include a 15 per cent reduction in executive salaries and directors’ board fees.

Trinidad is currently reviewing its operations for additional opportunities to create efficiencies, including a review of under-utilized facilities for further cost savings or potential asset sales.

Trinidad notes that it has made several changes to its compensation programs in the past few years to align them with shareholders’ interests.

These changes include:

• Performance metrics on the Company’s Performance Stock Unit (PSU) long-term incentives were moved from the grant date to the vesting date;
• Performance metrics on PSUs were altered to include Total Shareholder Return and Return on Gross Assets¹ over a three-year period; and
• The award pool for short term incentives was capped at 3 per cent of Adjusted EBITDA¹ for 2015, 2016 and 2017 and in future years, depending on industry conditions.

Trinidad says they will continue to develop performance metrics and ensure they are aligned with both best practice and enhancement of shareholder value.

The company says it believes new and prior initiatives improve the efficiency of the company and position it as a cost-efficient drilling contractor with one of the lowest cost structures in the drilling sector.