Market Overview

Trinidad Drilling Reports Third Quarter and Year-to-Date 2017 Results; Improving Industry Conditions Continue to Drive Increased Activity

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CALGARY, Alberta, Nov. 08, 2017 (GLOBE NEWSWIRE) -- Trinidad Drilling Ltd. (TSX:TDG) (Trinidad) announced its third quarter and year-to-date 2017 results today.

In the third quarter and first nine months of 2017, activity grew strongly over the levels recorded in the previous year, driven by higher commodity prices and increased customer demand.

"Industry conditions continued to improve through the third quarter and our operating days increased significantly, particularly in our US operations," said Brent Conway, Trinidad's President and Chief Executive Officer. "In the third quarter of 2017, operating days in our Canadian and US and international divisions were up 79% and 146%, respectively, from the same period last year. Operating income also increased in the quarter as activity levels grew and there was less impact from rig re-activation and transportation costs. In addition, underlying dayrates in the US continued to improve for the second sequential quarter, as the impact of rigs starting up on new contracts more than offset the impact of rigs rolling off legacy contracts."

"As part of our strategy to expand our service offering to customers and to share in the benefits of improved industry efficiency, we acquired RigMinder, a global provider of rig technology in the third quarter. This acquisition allows Trinidad to provide its customers with an integrated rig performance solution by integrating drilling software and data collection, along with Trinidad's proprietary control system. We believe our customers will benefit from this combined service offering through improved drilling efficiency, while Trinidad will benefit from an increased product offering and greater revenue generation."

THIRD QUARTER AND YEAR-TO-DATE 2017 HIGHLIGHTS

(Compared to corresponding prior-year period unless otherwise noted)

  • Effective August 25, 2017, Trinidad acquired RigMinder Operating LLC (RigMinder). Through this strategic business acquisition, Trinidad acquired significant technology rights that are complementary to its industry-leading drilling fleet and added future revenue generating streams to its customer product offering.
     
  • Revenue increased in the third quarter and first nine months of 2017, due to higher activity levels in both Canada and the US, partly offset by lower dayrates in the current periods and lower early termination and standby revenue year to date in 2017. In Canada, dayrates lowered due to a higher proportion of smaller rigs operating; and in both Canada and the US and international drilling operations, dayrates lowered due to the number of rigs working under spot market pricing.
     
  • Operating days during the third quarter and first nine months of 2017 increased by 110.9% and 88.5%, respectively, in the Canadian and US and international drilling operations, as industry conditions continued to strengthen due to higher commodity prices and improved customer demand.
     
  • Operating income increased during the third quarter of 2017, due largely to increased activity levels, partly offset by lower dayrates as more rigs operated in the spot market. Year to date in 2017, operating income lowered due to less early termination and standby revenue received in the current year. As well, higher rig re-activation costs offset the impact of increased activity levels to date in 2017.
     
  • Adjusted EBITDA increased in the third quarter, primarily as a result of the increased operating income, partly offset by higher general and administrative (G&A) expenses. Year to date in 2017, adjusted EBITDA decreased due to lower operating income and higher G&A expenses. G&A expenses increased in the current year due to an increase in salary expenses and professional fees, as well as one-time severance and bad debt expenses incurred in the first quarter of 2017.
     
  • Net (loss) increased in the third quarter and first nine months of 2017 as a result of higher depreciation and amortization expenses, a non-cash valuation adjustment on the Company's non-controlling interests and a loss on foreign exchange. The impact of these factors was partly offset by lower finance and transaction costs and a larger recovery on deferred taxes. In addition, year to date in 2017, net (loss) was positively impacted by a larger gain from investments in joint ventures.
     
  • To date in 2017, Trinidad has completed a significant portion of its capital program, spending $142.8 million.  Included in the total spend is $87.2 million in capital upgrades and enhancements to meet customer demand for high performance rigs, and $31.4 million on the RigMinder acquisition.
     
  • In the first quarter of 2017, Trinidad redeemed its outstanding US$450 million of 7.875% senior unsecured notes due in 2019 (2019 Senior Notes) and issued US$350 million of 6.625% senior unsecured notes which mature in 2025 (2025 Senior Notes), collectively the Senior Notes. This debt refinancing lowered Trinidad's overall indebtedness and reduced interest costs moving forward.


HIGHLIGHTS

  Three months ended September 30, Nine months ended September 30,
($ thousands except share and per share data) 2017   2016   % Change   2017   2016   % Change  
FINANCIAL HIGHLIGHTS            
Revenue 129,810   66,960   93.9   363,713   269,086   35.2  
Operating income (1) 37,061   22,979   61.3   109,425   131,337   (16.7 )
Operating income - net percentage (1) 30.4 % 35.9 % (15.3 ) 31.9 % 50.7 % (37.1 )
Adjusted EBITDA (1) 27,458   17,990   52.6   93,370   119,233   (21.7 )
  Per share (diluted) (2) 0.10   0.08   25.0   0.35   0.54   (35.2 )
Funds flow (1) 7,956   (10,576 ) 175.2   18,710   45,022   (58.4 )
  Per share (basic / diluted) (2) 0.03   (0.05 ) 160.0   0.07   0.20   (65.0 )
Net (loss) (3) (44,408 ) (35,780 ) (24.1 ) (61,927 ) (40,733 ) (52.0 )
  Per share (diluted) (2)(3) (0.16 ) (0.16 )   (0.23 ) (0.18 ) (27.8 )
Capital expenditures 52,570   13,682   284.2   111,128   38,345   189.8  
Shares outstanding - diluted            
  (weighted average) (2) 271,005,687   222,501,495   21.8   263,847,819   222,501,495   18.6  
OPERATING HIGHLIGHTS            
Operating days (1)            
   Canada 2,520   1,411   78.6   6,507   4,077   59.6  
   United States and International 3,212   1,307   145.8   8,634   3,955   118.3  
  TDI Joint Venture (4) 317   274   15.7   1,010   1,425   (29.1 )
Rate per operating day (1)            
  Canada (CDN$) 17,961   18,856   (4.7 ) 20,500   23,696   (13.5 )
  United States and International (US$) 18,515   21,557   (14.1 ) 18,233   29,779   (38.8 )
  TDI Joint Venture (US$) (4) 50,595   67,133   (24.6 ) 70,440   53,609   31.4  
Utilization rate - operating day (1)            
  Canada 39 % 21 % 85.7   34 % 21 % 61.9  
  United States and International 52 % 21 % 147.6   47 % 22 % 113.6  
  TDI Joint Venture (4) 43 % 37 % 16.2   46 % 65 % (29.2 )
Number of drilling rigs at period end (5)          
  Canada 70   72   (2.8 ) 70   72   (2.8 )
  United States and International 69   67   3.0   69   67   3.0  
   TDI Joint Venture (4) 8  
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