Trinidad Drilling Provides an Update on its Operations
Canada Newswire Trinidad Drilling Provides an Update on its Operations and the Advancement of its Technology Platform 07/12/2018 7:30:00 AM CALGARY, July 12, 2018 /CNW/ - Trinidad Drilling Ltd. (TSX: TDG) (Trinidad) today provided an operational update outlining increasing activity levels across its operations. In addition, the Company also announced the acquisition of GMXSteering, a proven completion optimization software product, which is an addition to its technology platform. Operational update Activity levels across Trinidad's operations have improved throughout 2018 as strengthening commodity prices have driven increased customer demand. Activity in the US has increased, with demand remaining strong in the Permian Basin in Texas; but, also expanding to additional areas. In the US, Trinidad currently has 41 rigs earning revenue, up seven rigs or 21% from same time last year. Average dayrates continue to improve, with commodity-price linked contracts generating additional upside given the higher commodity prices. Trinidad is completing its planned upgrade program and expects to put additional rigs back to work, bringing its total US active rig count to approximately 45 rigs by the end of the year. In Canada, Trinidad currently has 27 active rigs or 40% utilization, well ahead of the industry average utilization of 36% and up from 30% at the same time last year. Trinidad expects additional rigs to start up in the coming weeks, bringing its utilization to over 50% by the end of August. Dayrates in Canada have strengthened since the end of the first quarter of 2018, and visibility for future work has improved significantly from the second quarter of 2017. Trinidad's international joint venture (TDI) currently has two rigs operating, one in Bahrain and one in Mexico. Two additional rigs are expected to begin operations in Kuwait in 2019. In addition, TDI has closed the previously announced sale of its three Saudi Arabian rigs for gross proceeds of US$55 million (Trinidad's 60% share). Advancement of technology platform Following the successful completion of two customer-partnered test programs, one in the US and one in Canada, Trinidad has agreed to purchase GMXSteering for US$2 million. The software and associated licenses use surface measurements recorded while drilling to assess rock properties and position the well bore for optimal frac stimulation and production. Trinidad is already marketing this product to its customers, with revenue streams including both lump sum per-well fees and fees tied to dayrate. The acquisition of GMXSteering further expands Trinidad's technology platform. It also follows the Company's strategy of leveraging technology with its existing fleet to generate strong returns with lower capital investment. This increased capital will also accelerate software-licensing revenues and provide additional customer adoption of Trinidad's enhanced technology platform. In response to anticipated customer demand, Trinidad has increased its Electronic Data Recorder (EDR) manufacturing program, adding an additional 30 units to its planned program for 2018. By deploying additional EDRs to its fleet, Trinidad increases the exposure of its technology platform to its customer base. This accelerated manufacturing program brings the total number of units being built this year to 50 and adds an incremental US$2.6 million to the Company's 2018 capital expenditure budget. Currently, Trinidad has 13 EDR units deployed in its fleet, with an additional nine units deployed on third-party rigs. After including the incremental capital for the technology platform, Trinidad's 2018 capital budget, including its portion of TDI capital and net of proceeds from expected asset sales, moves to $81.6 million from $75.8 million, an 8% increase. Trinidad expects to fund its capital program through cash flow generated from operations and the proceeds from the sale of assets.