Market Overview

Trinidad Drilling Reports Fourth Quarter and Year-End 2017 Results; Improving Industry Conditions Drive Higher Fourth Quarter Adjusted EBITDA

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CALGARY, Alberta, Feb. 26, 2018 (GLOBE NEWSWIRE) -- Trinidad Drilling Ltd. (TSX:TDG) (Trinidad) announced its fourth quarter and year-end 2017 results today.

In 2017, activity grew significantly over the levels recorded in the previous year. In the US and international operations, activity increased by 108.6%, and in the Canadian operations, activity grew by 46.5%. The increase in activity was mainly driven by higher commodity prices and increased customer demand.

Conditions continued to strengthen in the fourth quarter of 2017 and Trinidad benefited from improved profitability in its US and international operations, driven by growing activity levels, less rig reactivation costs and improving underlying dayrates. These improving conditions allowed Trinidad to record increased adjusted EBITDA1 in the fourth quarter of 2017 when compared to the same period of the prior year.

"Industry conditions improved in 2017 and our operating days increased significantly, particularly in our US operations," said Brent Conway, Trinidad's President and Chief Executive Officer. "Throughout the year we saw our underlying dayrates in the US improve each quarter as the impact of rigs starting up on new contracts under market rates more than offset the impact of rigs rolling off legacy contracts. In Canada, market conditions improved, but not to the extent seen in the US."

"Due to this growing customer demand, we expanded our upgrade program and relocated rigs to high demand areas such as the Permian Basin in 2017. These strategic decisions positioned Trinidad with a strong market presence in the most active play in North America and with a fleet of high quality rigs that meet customer demands." added Conway.

In addition, in response to customer requests for improved efficiency and performance, Trinidad acquired RigMinder Operating LLC (RigMinder), a global provider of rig technology in the third quarter of 2017. This acquisition allows Trinidad to deliver an integrated rig performance solution and reduce costs for customers.

1.                 See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section of this document for further details.

Fourth Quarter 2017 Highlights Versus Prior Year

  • Revenue increased in the fourth quarter of 2017 compared to fourth quarter of 2016 largely due to increased activity levels in both the US and international and Canadian divisions, partly offset by lower dayrates in Canada and a negative currency translation impact on the Company's US dollar-based revenues. 
     
  • Activity levels were higher in the US and international and Canadian divisions for the current period compared to 2016, as commodity prices improved and customer demand increased, particularly in the US.
     
  • Operating income increased by 69.9% in the fourth quarter of 2017 compared to the same period of 2016. The increased level of activity, combined with relatively flat dayrates and lower operating costs, drove improved operating income.
     
  • Operating income - net percentage increased to 37.3% in the current period, from 32.3% in 2016, due to a reduction in operating costs in the current period. In the fourth quarter of 2016, the US division had commenced its rig reactivation program and incurred extra costs, while this program was completed and rigs were largely in operation by the fourth quarter of 2017.
     
  • Adjusted EBITDA increased to $36.1 million in the fourth quarter of 2017, compared to $23.8 million in the fourth quarter of 2016, as a result of the same drivers that increased operating income.

  • Net loss increased in the fourth quarter of 2017 compared to the same period of 2016 mainly due to higher depreciation and amortization expenses and a lower contribution from Trinidad's joint venture operations. The impact of these factors was partly offset by lower finance and transaction costs due to the refinancing of the senior notes earlier in 2017.

HIGHLIGHTS

     
  Three months ended December 31, For the years ended December 31,
($ thousands except share and per share data) 2017   2016   % Change   2017   2016   % Change  
FINANCIAL HIGHLIGHTS            
Revenue 137,902   93,058   48.2   501,615   362,144   38.5  
Operating income (1) 47,895   28,240   69.6   157,320   159,577   (1.4)  
Operating income - net percentage (1) 37.3 % 32.3 % 15.5   33.5 % 46.1 % (27.3)  
Adjusted EBITDA (1) 36,075   23,769   51.8   129,445   143,002   (9.5)  
  Per share (diluted) (2) 0.13   0.11   18.2   0.49   0.64   (23.4)  
Funds flow (1) 32,719   17,596   85.9   51,429   62,618   (17.9)  
  Per share (basic / diluted) (2) 0.12   0.08   50.0   0.19   0.28   (32.1)  
Net (loss) (3) (17,691)   (11,813)   (49.8)   (79,618)   (52,546)   (51.5)  
  Per share (basic/diluted) (2)(3) (0.06)   (0.05)   (20.0)   (0.30)   (0.24)   (25.0)  
Capital expenditures 51,989   5,981   769.2   163,117   44,326   268.0  
Shares outstanding - diluted            
  (weighted average) (2) 273,457,951   222,496,995   22.9   266,014,405   222,496,995   19.6  
OPERATING HIGHLIGHTS 2017   2016   % Change   2017   2016   % Change  
Operating days (1)            
   United States and International 3,290   1,761   86.8   11,924   5,716   108.6  
   Canada 2,497   2,067   20.8   9,004   6,144   46.5  
  TDI Joint Venture (4) 268   284   (5.6)   1,278   1,709   (25.2)  
Rate per operating day (1)            
  United States and International (US$) 19,170   19,191   (0.1)   18,492   26,518   (30.3)  
  Canada (CDN$) 19,478   20,118   (3.2)   20,216   22,492   (10.1)  
  TDI Joint Venture (US$) (4) 48,923   65,529   (25.3)   65,929   55,594   18.6  
Utilization rate - operating day (1)            
  United States and International 52 % 29 % 79.3   48 % 23 % 108.7  
  Canada 39 % 31 % 25.8   35 % 23 % 52.2  
  TDI Joint Venture (4) 36 % 39 % (7.7)   44 % 58 % (24.1)  
Number of drilling rigs at period end (5)          
  United States and International 69   67   3.0   69   67   3.0  
  Canada 70   72   (2.8)   70   72   (2.8)  
   TDI Joint Venture (4) 8
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