Press release from CNW Group
Trinidad Drilling enters joint venture arrangement with Halliburton; signs long term contract for four rigs in Kingdom of Saudi Arabia
Tuesday, September 03, 2013
Trinidad Drilling enters joint venture arrangement with Halliburton; signs long term contract for four rigs in Kingdom of Saudi Arabia07:58 EDT Tuesday, September 03, 2013
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TSX SYMBOL: TDG
CALGARY, Sept. 3, 2013 /CNW/ - Trinidad Drilling Ltd. (Trinidad) is pleased to announce that it has entered into a joint venture arrangement with a wholly-owned subsidiary of Halliburton Company (Halliburton) to provide and operate drilling rigs for Halliburton's international integrated projects.
The joint venture is expected to concentrate initially on the Kingdom of Saudi Arabia and Mexico, with future growth opportunities in other international markets. Under this arrangement, the joint venture will have a right of first look to provide drilling rigs for all of Halliburton's managed onshore projects outside of Canada and the United States. Additionally, the joint venture will have a right of first look at Trinidad's onshore contract drilling opportunities outside of Canada and the United States.
Trinidad will be the majority shareholder in the joint venture with 60% ownership, and Halliburton will have 40% ownership, with each party contributing future capital in these respective proportions. The joint venture will conduct business under the name Trinidad Drilling International (TDI).
"We see this agreement as a significant milestone for Trinidad in international markets" said Lyle Whitmarsh, Trinidad's Chief Executive Officer. "By aligning ourselves with a major oilfield services company, such as Halliburton, we are able to open the doors to a new level of international growth. Trinidad will benefit from Halliburton's international operating experience and infrastructure and will gain access to the integrated project management market. In return, we can provide Halliburton with high-performance drilling services and strong operating performance that will enhance their ability to win future integrated projects."
Halliburton currently has integrated projects in over 20 countries, and expects that number to increase as more operators adopt this model for their drilling operations. "We are very excited to be partnering with a top tier drilling company such as Trinidad for the benefit of our customers on our integrated projects" said Paul Koeller, Halliburton's Vice President for Consulting & Project Management. "The integration of Trinidad's high-performance drilling services with Halliburton's leading edge technology, coupled with Trinidad's manufacturing capabilities, will provide a new level of drilling integration not seen in integrated project management".
The joint venture has an indefinite term; although, either party may exit after five years, or earlier under certain circumstances. The joint venture arrangement includes non-competition provisions and Trinidad and Halliburton will provide certain services to the joint venture.
Affiliates of Trinidad and Halliburton have signed an agreement to provide four rigs for work in the Kingdom of Saudi Arabia for three years, with a one year optional extension. This agreement will be assigned to the joint venture. The rigs for these initial contracts will include three upgraded rigs from Trinidad's US fleet and one new build rig. The funds for this capital program will be provided by the joint venture partners in line with their ownership levels. TDI estimates that the capital cost of the upgrades and the new build will be approximately $120 million (net impact to Trinidad of $72 million).
With respect to Trinidad's $72 million commitment, approximately $35 million to $40 million is anticipated to be spent in 2013, with the remainder in 2014. The rigs will be built and upgraded at Trinidad's in-house facilities and TDI expects that the rigs will be completed and operating by mid-2014. Including these changes, Trinidad expects its 2013 capital program will be $175 million. Trinidad expects to fund its portion of the program from funds 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.
This press release 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 press release contains forward-looking information pertaining to Trinidad's plans, strategies, objectives, expectations and intentions including, without limitation: the manufacturing and upgrading of drilling rigs; the timing of the delivery of the rigs into operation; Trinidad's and the joint venture's growth opportunities; Trinidad's 2013 capital expenditure program; Trinidad's expectation that it will fund the building and upgrading of rigs through cash flow from operations; and the potential success of the joint venture and Trinidad's ability to enter new international markets.
The forward-looking information included in this press release reflects several factors, expectations and assumptions including, without limitation: oil and gas industry conditions and oil and gas production levels; commodity prices; supply and demand for commodities; scheduling and timing of certain projects and Trinidad's and the joint venture's strategy for growth; capital expenditure programs and other expenditures by oil and gas exploration and production companies; Trinidad's and the joint venture'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 press release 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. 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 press release speaks only as of the date of this press release 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.
For further information:
Chief Executive Officer
Vice President, Investor Relations