Calgary-based Trinidad Drilling relocating Canadian rigs to Permian Basin, Texas

70% of Trinidad revenue generated by operations outside Canada

Trinidad Drilling Ltd. has announced it’s moving eight rigs to the Permian Basin, TX to meet increased customer demand, according to a press release.

The rigs will be redeployed from the company’s existing global operations, including Canada. Trinidad says it is prepared and well positioned to respond quickly to the improving market conditions with a low cost structure.

Due to strong customer demand in the Permian Basin for high-specification, efficient equipment, Trinidad has chosen to redeploy idle assets from areas of weaker demand.

The costs to move three idle rigs from Saudi Arabia will be partly covered by Saudi customer-paid demobilization fees, with the remaining costs and the costs to move rigs within North America expected to be largely covered by Permian customers.

“We are focused on optimizing the utilization and profitability of our existing equipment and improving our return on capital,” said Brent Conway, president and CEO at Trinidad.

Trinidad is in active discussions with customers to sign one to two-year contracts for these rigs that include either pricing that steps up over time or has the ability to increase in line with commodity prices.

“To date, the impact of the capital we spent upgrading rigs in 2017 is on track, or ahead of our initial profitability expectations. On average, dayrates were higher than expected and have provided stronger margins and return on capital than originally forecast. By moving under-utilized rigs to the Permian Basin, we are able to continue to drive improved activity levels and better profitability,” said Conway.

Following arrival in the US, the Saudi Arabian rigs will need minor re-configuration and are expected to begin work in the third quarter of 2018. The rigs moving from Canada and within the US will be upgraded to meet customer requirements and are anticipated to begin work in the Permian in early to mid-2018.

Activity levels in the US have increased strongly in the past year as customer demand has grown, Trinidad has participated in these improving industry conditions and its active rig count is up almost 40 per cent from the same time last year.

With Trinidad’s US presence and international operations, approximately 70 per cent of the company’s revenue is generated by operations outside Canada.

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