Press release from CNW Group
Trinidad Drilling Ltd. signs contract to build new rig for Northern Canada LNG project
Tuesday, July 30, 2013
Trinidad Drilling Ltd. signs contract to build new rig for Northern Canada LNG project11:48 EDT Tuesday, July 30, 2013
TSX SYMBOL: TDG
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./
CALGARY, July 30, 2013 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or "the Company") is pleased to announce that it has signed a contract to build one of Canada's largest and most technically-advanced land rigs. The rig is being constructed to drill natural gas in the Liard Basin, an area that is being developed to supply gas for the future liquefied natural gas (LNG) plants proposed for the west coast of British Columbia.
The new rig will be constructed at Trinidad's in-house manufacturing facility in Nisku, Alberta and will be equipped with the Company's latest advancements in high-performance drilling technology, including an automated rig moving system. The rig will be a 1.25 million pound hook load, 3,000 horsepower AC rig with a depth capacity of 8,000 metres (26,250 feet). The rig will be operating under a five-year, take-or-pay contract with a minimum of 350 days per year and is expected to be delivered in to operations in the second half of 2014.
"Trinidad's reputation for designing, building and operating high-performance drilling equipment, along with its strong safety culture and well-trained crews are the reasons we were successful in being awarded this contract," said Lyle Whitmarsh, Trinidad's Chief Executive Officer. "We have made a name for ourselves drilling deep, technically-challenging wells throughout North America and this is exactly the type of experience needed to be successful in the growing LNG development opportunity in Canada. We look forward to further developing our partnership with this customer who has shown long-term commitment to the advancement of LNG in Canada."
"We have shown continued focus and discipline over the past few years by lowering our debt levels significantly and we are now emerging with high levels of free cash flow and strong growth opportunities to add value for our shareholders", continued Mr. Whitmarsh. "As we near our leverage targets, we are in the enviable position of evaluating a number of exciting opportunities and selecting those that provide the strongest returns and best fit our future strategic direction."
There are several current proposals to build LNG plants along the British Columbian coastline with anticipated start up time lines from 2015 and beyond. These plants are expected to produce LNG for export to Asian markets where natural gas is sold at a premium to North American prices. While all of these proposals may not be completed, those participants further along in the process are looking to prove their supply of natural gas by developing a number of plays in north-western Canada including the Montney, Duvernay, Horn River and Liard Basin. This added interest is driving increased demand for deep, modern drilling equipment in Canada.
In addition to this new build opportunity, Trinidad has also received numerous requests from customers for upgraded equipment. In response to these requests and its new rig construction program, Trinidad is expanding its 2013 capital expenditure program to approximately $140 million which the Company expects to fund from cash flow from operations.
Trinidad is a corporation focused on sustainable growth that trades on the Toronto Stock Exchange (TSX) under the symbol TDG. Trinidad's divisions operate in the drilling and barge-drilling sectors of the North American oil and natural gas industry with operations in Canada, the United States and Mexico. Trinidad is focused on providing modern, reliable, expertly designed equipment operated by well-trained and experienced personnel. Trinidad's drilling fleet is one of the most adaptable, technologically advanced and competitive in the industry.
The document contains forward-looking statements and forward-looking information (collectively, "forward-looking information") within the meaning of applicable Canadian securities laws. The use of any of the words "expect", "anticipate", "will", "future" and similar expressions are intended to identify forward-looking information. In particular, this document contains forward-looking information pertaining to Trinidad's plans, strategies, objectives, expectations and intentions including, without limitation: the manufacturing and specifications of a new high-spec rig; the operating agreement and timing of the delivery of the rig in to operations; Trinidad's growth opportunities; Trinidad's 2013 capital expenditure program; and Trinidad's expectation that it will fund its 2013 capital expenditure program through cash flow from operations.
The forward-looking information included in this document reflects several factors, expectations and assumptions including, without limitation: LNG industry conditions and LNG production levels; commodity prices; supply and demand for commodities; scheduling and timing of certain projects and Trinidad's strategy for growth; capital expenditure programs and other expenditures by oil and gas exploration and production companies; Trinidad's future operating and financial results; that Trinidad will continue to conduct its operations, including with respect to rig design and manufacturing, in a manner consistent with its past performance.
The forward-looking information included in this document is not a guarantee of future performance and should not be unduly relied upon. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking information including, without limitation: volatility in market prices for oil, natural gas and LNG; liabilities inherent in the drilling and manufacturing industries, including technical problems; competition for skilled personnel; changes in general economic, market and business conditions; actions by governmental or regulatory authorities including changes to tax or environmental laws; the ability of Trinidad's customers to raise capital and to continue with their drilling programs; increases and overruns in construction costs; supply and demand for commodities; and the risks inherent in Trinidad's ability to generate sufficient cash flow from operations to meet its current and future obligations. Although the current capital expenditure program is based upon the current expectations of the management of Trinidad, there may be circumstances in which, for unforeseen reasons, a reallocation of funds may be necessary as may be determined at the discretion of Trinidad and there can be no assurance as at the date of this document as to how those funds may be reallocated. Should any one of a number of issues arise, Trinidad may find it necessary to alter its current business strategy and/or capital expenditure program. Additional risks that could impact the business and operations of Trinidad are detailed under the heading "Risk Factors" in Trinidad's annual information form for the year ended December 31, 2012. Trinidad cautions that the foregoing list of risks and uncertainties is not exhaustive. The forward-looking information contained in this document speaks only as of the date of this document and Trinidad assumes no obligation to publicly update or revise such forward-looking information to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy the shares in any jurisdiction. The shares offered will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States or to a United States person, absent registration, or an applicable exemption therefrom.
SOURCE Trinidad Drilling Ltd.
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