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Trinidad Drilling Reports First Quarter Results; Improving Industry Conditions Drive Increased Activity

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Trinidad Drilling Reports First Quarter Results; Improving Industry Conditions Drive Increased Activity

Trinidad Drilling Reports First Quarter Results; Improving Industry Conditions Drive Increased Activity

CALGARY, ALBERTA--(Marketwired - May 9, 2017) - Trinidad Drilling Ltd. (TSX:TDG) (Trinidad) announced its first quarter 2017 results today.

In the first quarter of 2017, Trinidad responded quickly to growing customer demand and increasing activity levels. The Company reactivated rigs in both its Canadian and US operations, and began an upgrade program on existing equipment to meet ongoing demand, particularly in the US.

Trinidad recorded Adjusted EBITDA(1) of $51.3 million in the first quarter of 2017, up 15.9% from the same quarter last year as the impact of higher activity levels and early termination revenue received in the Company's joint venture offset lower dayrates than in the first quarter of 2016. Net income(2) was a loss of $11.9 million or $(0.05) per share in the first quarter of 2017 compared to net income of $11.3 million or $0.05 per share in the first quarter of 2016, largely as a result of one-time general and administrative costs primarily related to bad debt expense, higher foreign exchange expenses and a smaller gain from investments in joint ventures in the current quarter. These additional costs in the quarter were partly offset by the impact of cost cutting initiatives implemented during the past two years. In addition, earnings per share was impacted by an increase in the number of shares outstanding due to the issuance of 47.5 million shares during the first quarter of 2017.

"Industry conditions began to improve in late 2016 and continued to strengthen in the first quarter of 2017," said Brent Conway, Trinidad's President and Chief Executive Officer. "Our Canadian and US and international divisions worked over 40% more operating days this quarter than the same quarter last year, and we are continuing to see positive momentum in customer demand. With increasing activity, we are also seeing opportunities to increase dayrates, particularly for high performance equipment in our US operations. Our 2017 upgrade program is focused on meeting these growing customer requests and is targeted towards high-spec equipment that can be relatively easily upgraded to meet changing customer requirements. The upgrade program is largely backed by customer commitments that provide solid returns and have early termination provisions that cover almost all the upgrade capital."

"During the first quarter, we refinanced our long-term debt, lowering overall leverage, extending debt maturity and lowering interest costs. As part of this refinancing, we also raised approximately $150 million through an equity offering. In addition to lowering leverage, these transactions have allowed us the financial flexibility to capture the opportunities we saw growing. With our strong balance sheet, in-demand equipment and well-trained crews, we are well positioned for success in the improving industry conditions."

(1) See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section of this document for further details.
(2) Net income is net income attributable to shareholders of Trinidad.

FIRST QUARTER 2017 HIGHLIGHTS

  • Revenue increased by $25.1 million in the first quarter of 2017 compared to the same period in 2016 primarily as a result of higher activity levels in Canada and the US, partly offset by lower dayrates in the current period.


  • Operating days increased by 43.4% in the Canadian and US and international drilling operations compared to the same quarter last year, as industry conditions continued to improve throughout the first quarter of 2017.


  • Dayrates decreased in both the Canadian and US and international drilling operations due to changes in the active rig mix and an increased number of rigs working under spot market pricing compared to contract pricing during the quarter.


  • Net loss attributable to shareholders of Trinidad was $11.9 million during the first quarter of 2017, down from $11.3 million net income in the same quarter last year. Net income lowered largely due to fluctuations in foreign exchange, one-time general and administrative (G&A) costs and a smaller gain from investments in joint ventures in the current quarter.


  • Adjusted EBITDA was $51.3 million in the first quarter, an increase of 15.9% from 2016. Adjusted EBITDA increased primarily due to higher activity levels in the Canadian and US divisions associated with growing customer demand and re-activation of rigs.


  • Adjusted EBITDA from investments in joint ventures increased in the current period mainly due to the recognition of early termination revenue in Mexico.


  • During the quarter, Trinidad began its upgrade program and invested $23.2 million, which included $17.8 million in capital upgrades and enhancements to meet growing demand for high performance rigs.


  • During the first quarter of 2017, Trinidad refinanced its long-term debt, lowering overall leverage, extending debt maturity and lowering interest costs. The Company redeemed its outstanding US$450 million of 7.875% senior unsecured notes due in 2019 (2019 Senior Notes) and issued US$350 million of senior unsecured notes which accrue interest at a rate of 6.625% per annum and mature in February 2025 (2025 Senior Notes), collectively referred to as Senior Notes. The reduction of the principal amount outstanding and interest rates is expected to decrease interest expense throughout 2017.


  • The Company completed an offering of 47,460,317 common shares at a price of $3.15 per share for gross proceeds of $149.5 million.


  • Subsequent to March 31, 2017, Trinidad received a US$30.0 million distribution from our joint venture with Halliburton, Trinidad Drilling International (TDI).


HIGHLIGHTS

Three months ended March 31,
($ thousands except share and per share data) 2017 2016 % Change
FINANCIAL HIGHLIGHTS
Revenue 132,737 107,650 23.3
Operating income (1) 48,638 46,679 4.2
Operating income - net percentage (1) 38.8 % 45.4 % (14.5 )
Adjusted EBITDA (1) 51,258 44,207 15.9
Per share (diluted) (2) 0.21 0.20 5.0
Funds flow (1) 237 8,700 (97.3 )
Per share (basic / diluted) (2) - 0.04 (100.0 )
Net (loss) Income (3) (11,936 ) 11,303 (205.6 )
Per share (basic / diluted) (2)(3) (0.05 ) 0.05 (200.0 )
Capital expenditures 23,172 20,164 14.9
Shares outstanding - diluted
(weighted average) (2) 249,883,461 222,087,270 12.5
OPERATING HIGHLIGHTS
Operating days (1)
Canada 2,888 2,001 44.3
United States and International 2,465 1,733 42.2
TDI Joint Venture (4) 354 690 (48.7 )
Rate per operating day (1)
Canada (CDN$) 22,965 24,635 (6.8 )
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